Business Wire | Jan 25, 2021 07:30AM EST

City Holding Company Announces Record Annual Earnings

Jan. 25, 2021

CHARLESTON, W. Va.--(BUSINESS WIRE)--Jan. 25, 2021--City Holding Company ("Company" or "City") (NASDAQ:CHCO), a $5.8 billion bank holding company headquartered in Charleston, West Virginia, today announced record net income of $89.6 million and diluted earnings of $5.55 per share for the year ended December 31, 2020.

City's CEO Charles Hageboeck stated that, "2020 was a year unlike any before for City Holding Company, City National Bank, the financial industry, and the world. COVID-19 has impacted all facets of our lives from personal to professional. As a result of disruptions to our communities and the economy, City's staff was presented with many unusual and unforeseen challenges during 2020. While the task at hand for our Company and employees was more difficult, our employees rose to the occasion and not only persevered, but excelled at providing outstanding service to our customers. For the third year in a row, City was recognized by the JD Power organization as the "Highest in Customer Satisfaction" in the North Central US. I applaud our employees for this achievement, particularly in the midst of a world-wide pandemic."

"The COVID-19 crisis also created pressure on financial results. As a result of the pandemic, the Federal Reserve slashed interest rates to nearly zero in mid-March. Consequently, both loan and deposit rates fell and net interest margins for financial institutions contracted significantly in 2020. City's net interest margin declined by 43 basis points and our reported net interest income decreased $6.8 million. While deposit rates dropped precipitously, deposit balances at banks increased dramatically, with total deposits at City increasing $576 million, or 14.1%, from December 31, 2019 to December 31, 2020. As the economy flattened during 2020, commercial loan demand for the majority of 2020 was weak, except for Government-sponsored Paycheck Protection Program ("PPP") loans administered by the Small Business Administration ("SBA"). During the fourth quarter however, City had commercial loan growth of $32 million, or approximately 7.3%, on an annualized basis, exclusive of PPP loan repayments."

"Asset quality remains in the forefront for those in the investment community focused on financial institutions. City's asset quality remains stellar at December 31, 2020. Nonperforming assets, past due loans, and troubled debt restructurings at December 31, 2020, are all below the levels reported at December 31,2019. City has also continued to see a decline in deferred loans as of the quarter ended December 31, 2020. Commercial loan deferrals have dropped from $180 million at September 30, 2020 to $99 million at December 31, 2020. Of that, $88 million of the commercial deferrals at December 31, 2020 were for hotel and lodging related loans. While occupancy levels for our loan customers in this industry are still below pre-pandemic levels, our loan customers are continuing to see occupancy levels continue to slowly increase. Residential mortgage deferrals at December 31, 2020 were approximately $9 million."

"In summary, 2020 presented a myriad of obstacles for all of us to overcome and I am pleased with how City and our employees managed these obstacles and are moving into 2021 from a position of strength."

Net Interest Income

The Company's net interest income decreased from $161.4 million for the year ended December 31, 2019 to $154.6 million for the year ended December 31, 2020. The Company's tax equivalent net interest income decreased $6.5 million, or 4.0%, from $162.2 million for the year ended December 31, 2019 to $155.7 million for the year ended December 31, 2020. Lower loan yields (68 basis points) and investment yields (48 basis points) decreased net interest income by $24.5 million and $5.4 million, respectively. These decreases were partially offset by lower rates paid on interest bearing liabilities (40 basis points), higher investment balances ($195.9 million), and higher commercial loan balances ($99.3 million, driven largely by PPP loans) which increased net interest income by $13.1 million, $6.5 million, and $4.7 million, respectively. In addition, the Company recognized $1.6 million of loan fees associated with PPP loans during 2020. The Company's reported net interest margin declined from 3.59% for the year ended December 31, 2019 to 3.16% for the year ended December 31, 2020. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.08% for the year ended December 31, 2020 and 3.51% for the year ended December 31, 2019.

The Company's net interest income increased from $38.0 million during the third quarter of 2020 to $38.2 million during the fourth quarter of 2020. During the fourth quarter of 2020, the Company's tax equivalent net interest income increased $0.2 million, or 0.6%, to $38.5 million from $38.3 million during the third quarter of 2020. Higher investment balances ($133.3 million) and lower rates on interest bearing deposits (12 basis points) increased net interest income by $0.9 million and $0.8 million, respectively. In addition, loan fees increased $0.8 million due to an increase in PPP loan fees recognized as $33.1 million of PPP loans were fully repaid by the SBA during the quarter ended December 31, 2020. These increases were partially offset by lower investment yields (51 basis points) and lower loan yields (7 basis points) which decreased net interest income by $1.6 million and $0.7 million, respectively. The Company's reported net interest margin declined from 3.02% for the third quarter of 2020 to 2.99% for the fourth quarter of 2020. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 2.94% for the quarter ended December 31, 2020 and 2.97% for the quarter ended September 30, 2020.

Credit Quality

The Company's ratio of nonperforming assets to total loans and other real estate owned decreased from 0.45% at December 31, 2019 to 0.38% at December 31, 2020. Total nonperforming assets decreased from $16.4 million at December 31, 2019 to $13.9 million at December 31, 2020. Excluded from this ratio are purchased credit-impaired loans in which the Company estimated cash flows and estimated a credit mark. Such loans would be considered nonperforming loans if the loan's performance deteriorates below the Company's initial expectations. Total past due loans decreased from $11.4 million, or 0.32% of total loans outstanding, at December 31, 2019 to $8.9 million, or 0.25% of total loans outstanding, at December 31, 2020.

The Company adopted ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" effective January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures. ASU No. 2016-16 replaced the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new current expected credit losses model ("CECL") will apply to the allowance for loan losses, available-for-sale and held-to-maturity debt securities, purchased financial assets with credit deterioration and certain off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under ASU No. 2016-13, while prior period amounts continue to be reported in accordance with previously applicable GAAP. As a result of adopting ASU No. 2016-13, the Company increased its allowance for credit losses ("ACL") by $3.0 million and decreased retained earnings by $2.3 million on January 1, 2020. In addition, the adoption of ASU No. 2016-13 required the Company to "gross up" its previously purchased credit impaired loans through the allowance at January 1, 2020. As a result, the Company increased its ACL and loan balances as of January 1, 2020, by $2.7 million.

As a result of the Company's quarterly analysis of the adequacy of the ACL, the Company recorded a provision for credit losses of $0.5 million in the fourth quarter of 2020 and $10.7 million for the year ended December 31, 2020, compared to a recovery of credit losses of $0.1 million and $1.3 million for the comparable periods in 2019. The provision for credit losses recorded during 2020 largely reflects the expected economic impact from the COVID-19 pandemic. The Company's estimate of future economic conditions used in its CECL estimates is primarily dependent on expected unemployment ranges. As a result of COVID-19, expected unemployment ranges have significantly increased and resulted in an increase in the Company's ACL of $4.1 million. Additionally, adjustments in qualitative and other factors due to COVID-19 added $3.4 million. Due to changes in the Company's loan portfolio and their associated loss rates, exclusive of COVID-19, the Company's ACL increased by $3.1 million during 2020, while downgrades of certain credit relationships resulted in an increase in the ACL of $2.9 million during 2020. Partially offsetting these increases in the ACL, was a decrease in the ACL due to the upgrade of a specific credit that was downgraded in 2017, but has since seen improved financial performance. This upgrade released $2.2 million of ACL reserves during 2020.

Non-interest Income

Non-interest income was $82.7 million for 2020 as compared to $68.5 million for 2019. During 2020, the Company sold the entirety of its Visa Inc. Class B common shares (86,605 shares) in a cash transaction which resulted in a pre-tax gain of $17.8 million, or $0.84 diluted per share on an after-tax basis. Additionally, the Company reported $0.9 million of unrealized fair value losses on the Company's equity securities compared to $0.9 million of unrealized fair value gains on the Company's equity securities during 2019. Exclusive of these items, non-interest income decreased from $67.5 million for the year ended December 31, 2019 to $65.6 million for the year ended December 31, 2020. This decrease was largely attributable to a decrease of $5.8 million, or 18.3%, in service charges as average deposit balances have increased during the COVID-19 pandemic. This decrease was partially offset by an increase of $2.0 million, or 9.3%, in bankcard revenues, an increase of $0.7 million, or 17.3%, in other income (largely due to fees from loan interest rate swap originations), an increase of $0.7 million in bank owned life insurance due to higher death benefit proceeds received during 2020 compared to 2019, and an increase of $0.6 million in trust and investment management fee income.

Non-interest income was $17.7 million during the quarter ended December 31, 2020 as compared to $18.0 million during the quarter ended December 31, 2019. During the fourth quarter of 2020, the Company reported $0.8 million of unrealized fair value gains on the Company's equity securities compared to $0.9 million of unrealized fair value gains on the Company's equity securities during the fourth quarter of 2019. Exclusive of these unrealized fair value gains, non-interest income decreased from $17.1 million for the fourth quarter of 2019 to $16.9 million for the fourth quarter of 2020. This decrease was largely attributable to a decrease of $1.5 million, or 17.8%, in service charges as average deposit balances have increased during the COVID-19 pandemic. This decrease was partially offset by increases in our bankcard revenues ($0.8 million) and other income due primarily to fees from loan interest rate swap originations ($0.3 million).

Non-interest Expenses

During 2019, the Company recognized $0.8 million of acquisition and integration expenses associated with the completed acquisitions of Poage Bankshares, Inc. ("Poage") and Farmers Deposit Bancorp, Inc. ("Farmers"). Excluding these expenses, non-interest expenses decreased from $116.8 million for 2019 to $115.3 million for 2020. This decrease was primarily due to a decrease in occupancy related expense of $0.8 million, other expenses of $0.8 million (largely on the strength of a gain from the sale of a branch bank location acquired in connection with the acquisition of Farmers), advertising of $0.6 million, repossessed asset losses of $0.4 million, and telecommunication expense of $0.3 million. These decreases were partially offset by an increase in equipment and software related expenses ($1.2 million), bankcard expenses ($0.3 million), and FDIC insurance expense ($0.2 million).

Non-interest expenses decreased $0.4 million from $29.0 million in the quarter ended December 31, 2019 to $28.6 million in the quarter ended December 31, 2020. This decrease was primarily due to a decrease in other expenses of $0.5 million, repossessed asset losses of $0.3 million, and legal and professional fees of $0.3 million. These decreases were partially offset by increases in FDIC insurance expense ($0.4 million) and equipment and software related expense ($0.4 million).

Balance Sheet Trends

Loans increased $6.0 million (0.2%) from December 31, 2019 to $3.62 billion at December 31, 2020. Largely as a result of the Company's participation in the PPP loans administered by the SBA, commercial and industrial loans increased $65.0 million. The Company originated $88.5 million of PPP loans, with $33.1 million of these loans being repaid by the SBA as of December 31, 2020. Excluding outstanding PPP loans, total loans decreased $49.4 million, (1.4%), from December 31, 2019 to $3.57 billion at December 31, 2020. Residential real estate loans decreased $52.7 million (3.2%), home equity loans decreased $12.5 million (8.4%) and consumer loans decreased $6.6 million (12.1%). These decreases were partially offset by an increase in commercial real estate loans of $15.0 million (1.0%) and commercial and industrial loans of $9.5 million (3.1%) (excluding PPP loans). Decreases in loan outstandings are reflective of the low-interest rate environment driving residential mortgage originations toward fixed rate loans.

Total average depository balances for the year ended December 31, 2020 increased $306.7 million, or 7.6%, as compared to the year ended December 31, 2019. Average noninterest bearing demand deposits increased $217.6 million, average savings deposits increased $94.4 million, and average interest bearing demand deposits increased $33.6 million. These increases were partially offset by a decrease in average time deposits of $38.9 million. These increases were likely associated with the infusion of government transfer payments for unemployment insurance, PPP loans and stimulus checks issued early in the second quarter of 2020 and again in December 2020.

Income Tax Expense

The Company's effective income tax rate for the quarter and year ended December 31, 2020 was 17.0% and 19.5%, respectively, compared to 21.8% and 21.3% for the comparable periods in 2019. The Company's effective tax rate declined for the year ended December 31, 2020 due to higher tax exempt loan interest income, an increase in bank owned life insurance death benefit proceeds, an increase in low income housing tax credits due to growth in such investments, and the ability to utilize a net operating loss obtained from an acquisition via the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").

Capitalization and Liquidity

The Company's loan to deposit ratio was 77.9% and the loan to asset ratio was 62.9% at December 31, 2020. The Company maintained investment securities totaling 20.9% of assets as of the same date. The Company's deposit mix is weighted toward checking and saving accounts that fund 58.9% of assets at December 31, 2020. Time deposits fund 21.9% of assets at December 31, 2020, but very few of these deposits are in accounts that have balances of more than $250,000.

The Company continues to be strongly capitalized with tangible equity growing from $538 million at December 31, 2019 to $583 million at December 31, 2020. Due to the influx of deposits during 2020, the Company's tangible equity ratio decreased from 11.0% at December 31, 2019 to 10.3% at December 31, 2020. At December 31, 2020, City National Bank's Leverage Ratio was 8.97%, its Common Equity Tier I ratio was 14.10%, its Tier I Capital ratio was 14.10%, and its Total Risk-Based Capital ratio was 14.68%. These regulatory capital ratios are significantly above levels required to be considered "well capitalized," which is the highest possible regulatory designation.

On December 16, 2020, the Board approved a quarterly cash dividend of $0.58 cents per share payable January 29, 2021, to shareholders of record as of January 15, 2021. This dividend increase represents a 1.75% increase from the $0.57 per share paid on October 30, 2020. During the year ended December 31, 2020, the Company repurchased 573,000 common shares at a weighted average price of $63.68 per share as part of a one million share repurchase plan authorized by the Board of Directors in February 2019. As of December 31, 2020, the Company could repurchase approximately 166,000 shares under the current plan.

City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 94 branches across West Virginia, Kentucky, Virginia, and Ohio.

Forward-Looking Information

This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements express only management's beliefs regarding future results or events and are subject to inherent uncertainty, risks, and changes in circumstances, many of which are outside of management's control. Uncertainty, risks, changes in circumstances and other factors could cause the Company's actual results to differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ from those discussed in such forward-looking statements include, but are not limited to those set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 under "ITEM 1A Risk Factors" and the following: (1) general economic conditions, especially in the communities and markets in which we conduct our business; (2) theuncertainties on the Company's business, results of operations and financial condition, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its continued influence on financial markets, the effectiveness of the Company's work from home arrangements and staffing levels in operational facilities, the impact of market participants on which the Company relies and actions taken by governmental authorities and other third parties in response to the pandemic; (3) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for loan losses may not be sufficient to absorb actual losses in our loan portfolio, and risk from concentrations in our loan portfolio; (4) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (5) changes in the interest rate environment; (6) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (7) changes in technology and increased competition, including competition from non-bank financial institutions; (8) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers' performance and creditworthiness; (9) difficulty growing loan and deposit balances; (10) our ability to effectively execute our business plan, including with respect to future acquisitions; (11) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries; (12) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions; (13) regulatory enforcement actions and adverse legal actions; (14) difficulty attracting and retaining key employees; (15) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its December 31, 2020 Form 10-K. The Company will continue to evaluate the impact of any subsequent events on the preliminary December 31, 2020 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIESFinancial Highlights(Unaudited) Three Months Ended Twelve Months Ended

December September June 30, March 31, December December December 31, 30, 2020 2020 31, 31, 31, 2020 2020 2019 2020 2019

EarningsNet InterestIncome (fully $ 38,514 $ 38,278 $ 38,287 $ 40,603 $ 40,036 $ 155,683 $ 162,151 taxableequivalent)Net Incomeavailable to 22,222 20,126 18,251 29,000 22,611 89,595 89,352 commonshareholders Per ShareDataEarnings pershareavailable tocommonshareholders:Basic $ 1.40 $ 1.25 $ 1.12 $ 1.79 $ 1.38 $ 5.55 $ 5.43

Diluted 1.40 1.25 1.12 1.78 1.38 5.55 5.42

Weightedaveragenumber ofshares (inthousands):Basic 15,708 15,950 16,081 16,080 16,207 15,975 16,314

Diluted 15,733 15,970 16,097 16,101 16,230 15,995 16,333

Period-endnumber of 15,768 15,848 16,077 16,140 16,303 15,768 16,303 shares (inthousands)Cash $ 0.58 $ 0.57 $ 0.57 $ 0.57 $ 0.57 $ 2.29 $ 2.20 dividendsdeclaredBook value $ 44.47 $ 43.62 $ 43.15 $ 42.45 $ 40.36 $ 44.47 $ 40.36 per share(period-end)Tangible bookvalue per 36.94 36.11 35.72 35.03 32.98 36.94 32.98 share(period-end)Market data:High closing $ 70.77 $ 67.98 $ 71.19 $ 82.40 $ 82.72 $ 82.40 $ 82.72 priceLow closing 56.98 55.37 55.18 57.11 74.33 55.18 67.58 pricePeriod-end 69.55 57.61 65.17 66.53 81.95 69.55 81.95 closing priceAverage daily 56 67 89 69 54 70 56 volume (inthousands)Treasuryshareactivity:Treasuryshares 81 231 79 182 - 573 261 repurchased(inthousands)Averagetreasury $ 60.32 $ 59.49 $ 61.75 $ 71.31 $ - $ 63.68 $ 74.54 sharerepurchaseprice Key Ratios(percent)Return on 1.59 % 1.46 % 1.35 % 2.29 % 1.80 % 1.66 % 1.80 %averageassetsReturn onaverage 15.3 % 13.8 % 12.6 % 20.6 % 16.8 % 15.6 % 17.3 %tangibleequityYield oninterest 3.32 % 3.43 % 3.64 % 4.22 % 4.22 % 3.64 % 4.40 %earningassetsCost ofinterest 0.47 % 0.58 % 0.71 % 0.91 % 1.00 % 0.66 % 1.06 %bearingliabilitiesNet Interest 2.99 % 3.02 % 3.13 % 3.54 % 3.46 % 3.16 % 3.59 %MarginNon-interestincome as a 30.7 % 30.3 % 27.4 % 30.6 % 31.2 % 34.8 % 29.8 %percent oftotal revenueEfficiency 51.0 % 51.6 % 53.3 % 49.7 % 50.0 % 51.3 % 50.0 %RatioPrice/ 12.41 11.53 14.50 17.63 14.82 12.52 15.10 EarningsRatio (a) Capital(period-end)AverageShareholders' 12.46 % 12.71 % 12.91 % 13.50 % 13.12 %Equity toAverageAssetsTangibleequity to 10.33 % 10.61 % 10.62 % 11.38 % 10.98 %tangibleassetsConsolidated City Holding Company risk based capital ratios (b):CET I 16.18 % 15.93 % 16.10 % 16.02 % 16.05 %

Tier I 16.18 % 15.93 % 16.10 % 16.02 % 16.05 %

Total 16.75 % 16.50 % 16.69 % 16.46 % 16.40 %

Leverage 10.22 % 10.19 % 10.45 % 11.10 % 10.90 %

City National Bank risk based capital ratios (b):CET I 14.10 % 14.46 % 14.55 % 14.32 % 13.92 %

Tier I 14.10 % 14.46 % 14.55 % 14.32 % 13.92 %

Total 14.68 % 15.04 % 15.15 % 14.82 % 14.28 %

Leverage 8.97 % 9.32 % 9.29 % 9.98 % 9.51 %

Other(period-end)Branches 94 94 94 95 95

FTE 926 925 911 922 922

Assets per $ 6,219 $ 5,984 $ 6,058 $ 5,525 $ 5,467 FTE (inthousands)Deposits per 5,024 4,799 4,834 4,400 4,440 FTE (inthousands) (a) The price/earnings ratio is computed based on annualized quarterly earnings(excludes gain for sale of VISA shares, net of taxes).(b) December 31, 2020 risk-based capital ratios are estimated.CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Statements of Income(Unaudited) ($ in 000s, except per share data)Three Months EndedTwelve Months EndedDecember 31,2020September 30,2020June 30,2020March 31,2020December 31,2019December 31,2020December 31,2019Interest IncomeInterest and fees on loans$

35,685

$

35,761

$

37,718

$

41,335

$

41,615

$

150,498

$

170,012

Interest on investment securities:Taxable5,500

6,266

5,718

5,871

5,924

23,355

23,389

Tax-exempt1,254

1,132

821

707

711

3,914

2,967

Interest on deposits in depository institutions60

72

55

304

298

492

1,332

Total Interest Income42,499

43,231

44,312

48,217

48,548

178,259

197,700

Interest ExpenseInterest on deposits4,198

5,123

5,963

7,238

7,897

22,522

32,666

Interest on short-term borrowings120

131

279

464

762

993

3,491

Interest on long-term debt-

-

-

100

42

100

182

Total Interest Expense4,318

5,254

6,242

7,802

8,701

23,615

36,339

Net Interest Income38,181

37,977

38,070

40,415

39,847

154,644

161,361

Provision for (recovery of) credit losses474

1,026

1,250

7,972

(75

)

10,722

(1,250

)

Net Interest Income After Provision for (Recovery of) Credit Losses37,707

36,951

36,820

32,443

39,922

143,922

162,611

Non-Interest IncomeNet gains (losses) on sale of investment securities6

-

(6

)

63

-

62

69

Unrealized gains (losses) recognized on equity securities still held835

461

242

(2,402

)

914

(863

)

888

Service charges6,771

6,295

4,945

7,723

8,233

25,733

31,515

Bankcard revenue5,991

6,065

5,888

5,115

5,162

23,059

21,093

Trust and investment management fee income2,162

1,844

1,931

1,799

2,016

7,736

7,159

Bank owned life insurance813

1,088

848

1,676

856

4,424

3,766

Sale of VISA shares-

-

-

17,837

-

17,837

-

Other income1,143

1,232

783

1,536

861

4,692

4,000

Total Non-Interest Income17,721

16,985

14,631

33,347

18,042

82,680

68,490

Non-Interest ExpenseSalaries and employee benefits15,989

15,361

14,873

15,851

15,918

62,074

62,138

Occupancy related expense2,447

2,428

2,402

2,488

2,540

9,765

10,595

Equipment and software related expense2,660

2,607

2,504

2,429

2,302

10,200

8,964

FDIC insurance expense363

355

167

-

-

884

638

Advertising538

462

933

843

694

2,776

3,344

Bankcard expenses1,443

1,517

1,498

1,435

1,285

5,893

5,555

Postage, delivery, and statement mailings546

513

592

616

588

2,268

2,416

Office supplies413

396

353

394

392

1,556

1,559

Legal and professional fees438

548

589

601

706

2,176

2,371

Telecommunications540

547

531

511

563

2,129

2,455

Repossessed asset (gains) losses, net of expenses(68

)

39

76

198

224

245

634

Merger related expenses-

-

-

-

-

-

797

Other expenses3,332

3,939

3,950

4,102

3,822

15,324

16,148

Total Non-Interest Expense28,641

28,712

28,468

29,468

29,034

115,290

117,614

Income Before Income Taxes26,787

25,224

22,983

36,322

28,930

111,312

113,487

Income tax expense4,565

5,098

4,732

7,322

6,319

21,717

24,135

Net Income Available to Common Shareholders$

22,222

$

20,126

$

18,251

$

29,000

$

22,611

$

89,595

$

89,352

Distributed earnings allocated to common shareholders$

9,053

$

8,944

$

9,073

$

9,117

$

9,209

$

35,745

$

35,542

Undistributed earnings allocated to common shareholders12,947

10,984

8,998

19,620

13,200

52,963

53,003

Net earnings allocated to common shareholders$

22,000

$

19,928

$

18,071

$

28,737

$

22,409

$

88,708

$

88,545

Average common shares outstanding15,708

15,950

16,081

16,080

16,207

15,975

16,314

Shares for diluted earnings per share15,733

15,970

16,097

16,101

16,230

15,995

16,333

Basic earnings per common share$

1.40

$

1.25

$

1.12

$

1.79

$

1.38

$

5.55

$

5.43

Diluted earnings per common share$

1.40

$

1.25

$

1.12

$

1.78

$

1.38

$

5.55

$

5.42

CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Statements of Income(Unaudited) ($ in 000s, except per share data) Three Months Ended Twelve Months Ended December September June 30, March 31, December December December 31, 30, 2020 2020 31, 31, 31, 2020 2020 2019 2020 2019 Interest IncomeInterest and fees on $ 35,685 $ 35,761 $ 37,718 $ 41,335 $ 41,615 $ 150,498 $ 170,012 loansInterest oninvestmentsecurities:Taxable 5,500 6,266 5,718 5,871 5,924 23,355 23,389

Tax-exempt 1,254 1,132 821 707 711 3,914 2,967

Interest on deposits 60 72 55 304 298 492 1,332 in depositoryinstitutionsTotal Interest 42,499 43,231 44,312 48,217 48,548 178,259 197,700 Income Interest ExpenseInterest on deposits 4,198 5,123 5,963 7,238 7,897 22,522 32,666

Interest on 120 131 279 464 762 993 3,491 short-termborrowingsInterest on - - - 100 42 100 182 long-term debtTotal Interest 4,318 5,254 6,242 7,802 8,701 23,615 36,339 ExpenseNet Interest Income 38,181 37,977 38,070 40,415 39,847 154,644 161,361

Provision for 474 1,026 1,250 7,972 (75 ) 10,722 (1,250 )(recovery of) creditlossesNet Interest IncomeAfter Provision for 37,707 36,951 36,820 32,443 39,922 143,922 162,611 (Recovery of) CreditLosses Non-Interest IncomeNet gains (losses)on sale of 6 - (6 ) 63 - 62 69 investmentsecuritiesUnrealized gains(losses) recognized 835 461 242 (2,402 ) 914 (863 ) 888 on equity securitiesstill heldService charges 6,771 6,295 4,945 7,723 8,233 25,733 31,515

Bankcard revenue 5,991 6,065 5,888 5,115 5,162 23,059 21,093

Trust and investment 2,162 1,844 1,931 1,799 2,016 7,736 7,159 management feeincomeBank owned life 813 1,088 848 1,676 856 4,424 3,766 insuranceSale of VISA shares - - - 17,837 - 17,837 -

Other income 1,143 1,232 783 1,536 861 4,692 4,000

Total Non-Interest 17,721 16,985 14,631 33,347 18,042 82,680 68,490 Income Non-Interest ExpenseSalaries and 15,989 15,361 14,873 15,851 15,918 62,074 62,138 employee benefitsOccupancy related 2,447 2,428 2,402 2,488 2,540 9,765 10,595 expenseEquipment and 2,660 2,607 2,504 2,429 2,302 10,200 8,964 software relatedexpenseFDIC insurance 363 355 167 - - 884 638 expenseAdvertising 538 462 933 843 694 2,776 3,344

Bankcard expenses 1,443 1,517 1,498 1,435 1,285 5,893 5,555

Postage, delivery, 546 513 592 616 588 2,268 2,416 and statementmailingsOffice supplies 413 396 353 394 392 1,556 1,559

Legal and 438 548 589 601 706 2,176 2,371 professional feesTelecommunications 540 547 531 511 563 2,129 2,455

Repossessed asset (68 ) 39 76 198 224 245 634 (gains) losses, netof expensesMerger related - - - - - - 797 expensesOther expenses 3,332 3,939 3,950 4,102 3,822 15,324 16,148

Total Non-Interest 28,641 28,712 28,468 29,468 29,034 115,290 117,614 ExpenseIncome Before Income 26,787 25,224 22,983 36,322 28,930 111,312 113,487 TaxesIncome tax expense 4,565 5,098 4,732 7,322 6,319 21,717 24,135

Net Income Available $ 22,222 $ 20,126 $ 18,251 $ 29,000 $ 22,611 $ 89,595 $ 89,352 to CommonShareholders Distributed earnings $ 9,053 $ 8,944 $ 9,073 $ 9,117 $ 9,209 $ 35,745 $ 35,542 allocated to commonshareholdersUndistributedearnings allocated 12,947 10,984 8,998 19,620 13,200 52,963 53,003 to commonshareholdersNet earnings $ 22,000 $ 19,928 $ 18,071 $ 28,737 $ 22,409 $ 88,708 $ 88,545 allocated to commonshareholders Average common 15,708 15,950 16,081 16,080 16,207 15,975 16,314 shares outstandingShares for diluted 15,733 15,970 16,097 16,101 16,230 15,995 16,333 earnings per share Basic earnings per $ 1.40 $ 1.25 $ 1.12 $ 1.79 $ 1.38 $ 5.55 $ 5.43 common shareDiluted earnings per $ 1.40 $ 1.25 $ 1.12 $ 1.78 $ 1.38 $ 5.55 $ 5.42 common shareCITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Balance Sheets($ in 000s)(Unaudited)(Unaudited)(Unaudited)(Unaudited)December 31,2020September 30,2020June 30,2020March 31,2020December 31,2019AssetsCash and due from banks$

77,412

$

76,451

$

87,658

$

92,365

$

88,658

Interest-bearing deposits in depository institutions451,247

176,267

285,596

18,271

51,486

Cash and cash equivalents528,659

252,718

373,254

110,636

140,144

Investment securities available-for-sale, at fair value1,178,789

1,157,399

1,055,185

934,113

810,106

Investment securities held-to-maturity, at amortized cost-

-

-

-

49,036

Other securities27,372

26,548

26,144

26,827

28,490

Total investment securities1,206,161

1,183,947

1,081,329

960,940

887,632

Gross loans3,622,119

3,663,966

3,665,596

3,613,050

3,616,099

Allowance for credit losses(24,549

)

(24,867

)

(25,199

)

(24,393

)

(11,589

)

Net loans3,597,570

3,639,099

3,640,397

3,588,657

3,604,510

Bank owned life insurance118,243

117,501

116,746

116,000

115,261

Premises and equipment, net76,925

77,031

77,991

78,948

76,965

Accrued interest receivable15,793

16,627

14,200

12,570

11,569

Net deferred tax assets-

-

-

2,159

6,669

Intangible assets118,592

119,004

119,417

119,829

120,241

Other assets96,697

105,361

105,438

98,710

55,765

Total Assets$

5,758,640

$

5,511,288

$

5,528,772

$

5,088,449

$

5,018,756

LiabilitiesDeposits:Noninterest-bearing$

1,176,990

$

1,061,310

$

1,079,469

$

857,501

$

805,087

Interest-bearing:Demand deposits1,027,201

940,791

921,761

837,966

896,465

Savings deposits1,188,003

1,117,684

1,067,254

989,609

1,009,771

Time deposits1,260,022

1,300,291

1,342,631

1,366,977

1,364,571

Total deposits4,652,216

4,420,076

4,411,115

4,052,053

4,075,894

Short-term borrowingsFederal Funds purchased-

-

-

9,900

-

Customer repurchase agreements295,956

279,866

282,676

224,247

211,255

Long-term debt-

-

-

-

4,056

Net deferred tax liabilities3,202

1,601

2,598

-

-

Other liabilities106,160

118,386

138,633

117,021

69,568

Total Liabilities5,057,534

4,819,929

4,835,022

4,403,221

4,360,773

Stockholders' EquityPreferred stock-

-

-

-

-

Common stock47,619

47,619

47,619

47,619

47,619

Capital surplus171,304

170,526

169,881

170,096

170,309

Retained earnings589,988

576,901

565,804

556,718

539,253

Cost of common stock in treasury(139,038

)

(134,177

)

(120,583

)

(116,665

)

(105,038

)

Accumulated other comprehensive income:Unrealized gain on securities available-for-sale36,894

36,760

37,299

33,730

12,110

Underfunded pension liability(5,661

)

(6,270

)

(6,270

)

(6,270

)

(6,270

)

Total Accumulated Other Comprehensive Income31,233

30,490

31,029

27,460

5,840

Total Stockholders' Equity701,106

691,359

693,750

685,228

657,983

Total Liabilities and Stockholders' Equity$

5,758,640

$

5,511,288

$

5,528,772

$

5,088,449

$

5,018,756

Regulatory CapitalTotal CET 1 capital$

557,641

$

548,269

$

548,972

$

547,040

$

532,829

Total tier 1 capital557,641

548,269

548,972

547,040

532,829

Total risk-based capital577,292

568,153

569,213

561,944

544,479

Total risk-weighted assets3,446,774

3,442,629

3,410,589

3,412,591

3,319,998

CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Balance Sheets($ in 000s) (Unaudited) (Unaudited) (Unaudited) (Unaudited) December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 AssetsCash and due from $ 77,412 $ 76,451 $ 87,658 $ 92,365 $ 88,658 banksInterest-bearingdeposits in 451,247 176,267 285,596 18,271 51,486 depositoryinstitutionsCash and cash 528,659 252,718 373,254 110,636 140,144 equivalents Investmentsecurities 1,178,789 1,157,399 1,055,185 934,113 810,106 available-for-sale,at fair valueInvestmentsecurities - - - - 49,036 held-to-maturity,at amortized costOther securities 27,372 26,548 26,144 26,827 28,490

Total investment 1,206,161 1,183,947 1,081,329 960,940 887,632 securities Gross loans 3,622,119 3,663,966 3,665,596 3,613,050 3,616,099

Allowance for (24,549 ) (24,867 ) (25,199 ) (24,393 ) (11,589 )credit lossesNet loans 3,597,570 3,639,099 3,640,397 3,588,657 3,604,510

Bank owned life 118,243 117,501 116,746 116,000 115,261 insurancePremises and 76,925 77,031 77,991 78,948 76,965 equipment, netAccrued interest 15,793 16,627 14,200 12,570 11,569 receivableNet deferred tax - - - 2,159 6,669 assetsIntangible assets 118,592 119,004 119,417 119,829 120,241

Other assets 96,697 105,361 105,438 98,710 55,765

Total Assets $ 5,758,640 $ 5,511,288 $ 5,528,772 $ 5,088,449 $ 5,018,756

LiabilitiesDeposits:Noninterest-bearing $ 1,176,990 $ 1,061,310 $ 1,079,469 $ 857,501 $ 805,087

Interest-bearing:Demand deposits 1,027,201 940,791 921,761 837,966 896,465

Savings deposits 1,188,003 1,117,684 1,067,254 989,609 1,009,771

Time deposits 1,260,022 1,300,291 1,342,631 1,366,977 1,364,571

Total deposits 4,652,216 4,420,076 4,411,115 4,052,053 4,075,894

Short-termborrowingsFederal Funds - - - 9,900 - purchasedCustomer repurchase 295,956 279,866 282,676 224,247 211,255 agreementsLong-term debt - - - - 4,056

Net deferred tax 3,202 1,601 2,598 - - liabilitiesOther liabilities 106,160 118,386 138,633 117,021 69,568

Total Liabilities 5,057,534 4,819,929 4,835,022 4,403,221 4,360,773

Stockholders'EquityPreferred stock - - - - -

Common stock 47,619 47,619 47,619 47,619 47,619

Capital surplus 171,304 170,526 169,881 170,096 170,309

Retained earnings 589,988 576,901 565,804 556,718 539,253

Cost of common (139,038 ) (134,177 ) (120,583 ) (116,665 ) (105,038 )stock in treasuryAccumulated othercomprehensiveincome:Unrealized gain on 36,894 36,760 37,299 33,730 12,110 securitiesavailable-for-saleUnderfunded pension (5,661 ) (6,270 ) (6,270 ) (6,270 ) (6,270 )liabilityTotal Accumulated 31,233 30,490 31,029 27,460 5,840 Other ComprehensiveIncomeTotal Stockholders' 701,106 691,359 693,750 685,228 657,983 EquityTotal Liabilities $ 5,758,640 $ 5,511,288 $ 5,528,772 $ 5,088,449 $ 5,018,756 and Stockholders'Equity Regulatory CapitalTotal CET 1 capital $ 557,641 $ 548,269 $ 548,972 $ 547,040 $ 532,829

Total tier 1 557,641 548,269 548,972 547,040 532,829 capitalTotal risk-based 577,292 568,153 569,213 561,944 544,479 capitalTotal risk-weighted 3,446,774 3,442,629 3,410,589 3,412,591 3,319,998 assetsCITY HOLDING COMPANY AND SUBSIDIARIESLoan Portfolio(Unaudited) ($ in 000s)December 31,2020September 30,2020June 30,2020March 31,2020December 31,2019Residential real estate (1)$

1,587,694

$

1,621,265

$

1,631,151

$

1,629,578

$

1,640,396

Home equity - junior liens136,469

140,135

142,672

146,034

148,928

Commercial and industrial372,989

383,980

369,122

308,567

308,015

Commercial real estate (2)1,474,782

1,464,701

1,467,673

1,470,949

1,459,737

Consumer47,688

50,541

52,278

54,749

54,263

DDA overdrafts2,497

3,344

2,700

3,173

4,760

Gross Loans$

3,622,119

$

3,663,966

$

3,665,596

$

3,613,050

$

3,616,099

Construction loans included in:(1) - Residential real estate loans$

27,078

$

28,947

$

28,252

$

28,870

$

29,033

(2) - Commercial real estate loans40,449

42,449

42,092

44,453

64,049

CITY HOLDING COMPANY AND SUBSIDIARIESLoan Portfolio(Unaudited) ($ in 000s) December September June 30, March 31, December 31, 30, 2020 2020 31, 2020 2020 2019 Residential $ 1,587,694 $ 1,621,265 $ 1,631,151 $ 1,629,578 $ 1,640,396real estate ^(1)Home equity - 136,469 140,135 142,672 146,034 148,928junior liensCommercial and 372,989 383,980 369,122 308,567 308,015industrialCommercial 1,474,782 1,464,701 1,467,673 1,470,949 1,459,737real estate ^(2)Consumer 47,688 50,541 52,278 54,749 54,263

DDA overdrafts 2,497 3,344 2,700 3,173 4,760

Gross Loans $ 3,622,119 $ 3,663,966 $ 3,665,596 $ 3,613,050 $ 3,616,099

Constructionloans includedin:^(1) -Residential $ 27,078 $ 28,947 $ 28,252 $ 28,870 $ 29,033real estateloans^(2) -Commercial 40,449 42,449 42,092 44,453 64,049real estateloansCITY HOLDING COMPANY AND SUBSIDIARIESAsset Quality Information(Unaudited) ($ in 000s)Three Months EndedTwelve Months EndedDecember 31,2020September 30,2020June 30,2020March 31,2020December 31,2019December 31,2020December 31,2019Allowance for Credit LossesBalance at beginning of period$

24,867

$

25,199

$

24,393

$

11,589

$

13,186

$

11,589

$

15,966

Charge-offs:Commercial and industrial(9

)

(757

)

-

(77

)

(193

)

(843

)

(261

)

Commercial real estate(616

)

(75

)

(39

)

(383

)

(964

)

(1,113

)

(1,358

)

Residential real estate(139

)

(252

)

(376

)

(483

)

(226

)

(1,250

)

(787

)

Home equity(88

)

(126

)

(161

)

(45

)

(134

)

(420

)

(294

)

Consumer(27

)

(74

)

(36

)

(55

)

(338

)

(192

)

(1,177

)

DDA overdrafts(629

)

(554

)

(459

)

(703

)

(792

)

(2,345

)

(2,777

)

Total charge-offs(1,508

)

(1,838

)

(1,071

)

(1,746

)

(2,647

)

(6,163

)

(6,654

)

Recoveries:Commercial and industrial74

3

5

9

581

91

764

Commercial real estate150

44

128

203

10

525

624

Residential real estate57

24

8

95

87

184

369

Home equity47

33

9

47

-

136

-

Consumer55

42

128

13

54

238

265

DDA overdrafts333

334

349

451

393

1,467

1,505

Total recoveries716

480

627

818

1,125

2,641

3,527

Net charge-offs(792

)

(1,358

)

(444

)

(928

)

(1,522

)

(3,522

)

(3,127

)

Provision for (recovery of) credit losses474

1,026

1,250

7,972

(75

)

10,722

(1,250

)

Impact of Adopting ASC 326-

-

-

5,760

-

5,760

-

Balance at end of period$

24,549

$

24,867

$

25,199

$

24,393

$

11,589

$

24,549

$

11,589

Loans outstanding$

3,622,119

$

3,663,966

$

3,665,596

$

3,613,050

$

3,616,099

Allowance as a percent of loans outstanding0.68

%

0.68

%

0.69

%

0.68

%

0.32

%

Allowance as a percent of non-performing loans200.7

%

182.7

%

185.1

%

202.2

%

98.6

%

Average loans outstanding$

3,635,673

$

3,661,569

$

3,660,174

$

3,608,868

$

3,607,864

$

3,641,610

$

3,567,143

Net charge-offs (annualized) as a percent of average loans outstanding0.09

%

0.15

%

0.05

%

0.10

%

0.17

%

0.10

%

0.09

%

CITY HOLDING COMPANY AND SUBSIDIARIESAsset Quality Information, continued(Unaudited) ($ in 000s)December 31,2020September 30,2020June 30,2020March 31,2020December 31,2019Nonaccrual LoansResidential real estate$

2,968

$

3,983

$

3,477

$

2,750

$

3,393

Home equity95

74

265

249

531

Commercial and industrial768

728

1,087

1,175

1,182

Commercial real estate8,401

8,479

8,715

7,865

6,384

Consumer-

-

-

1

-

Total nonaccrual loans12,232

13,264

13,544

12,040

11,490

Accruing loans past due 90 days or more-

345

68

26

267

Total non-performing loans12,232

13,609

13,612

12,066

11,757

Other real estate owned1,650

2,080

3,997

3,922

4,670

Total non-performing assets$

13,882

$

15,689

$

17,609

$

15,988

$

16,427

Non-performing assets as a percent of loans and other real estate owned0.38

%

0.43

%

0.48

%

0.44

%

0.45

%

Past Due LoansResidential real estate$

5,993

$

5,153

$

5,261

$

7,815

$

7,485

Home equity575

474

393

430

956

Commercial and industrial1,241

691

160

71

458

Commercial real estate625

602

917

1,021

1,580

Consumer113

121

67

177

187

DDA overdrafts341

379

273

467

730

Total past due loans$

8,888

$

7,420

$

7,071

$

9,981

$

11,396

Total past due loans as a percent of loans outstanding0.25

%

0.20

%

0.19

%

0.28

%

0.32

%

Troubled Debt Restructurings ("TDRs")Residential real estate$

19,226

$

20,398

$

20,631

$

21,413

$

21,029

Home equity2,001

2,100

2,138

2,294

3,628

Commercial and industrial-

-

-

-

-

Commercial real estate4,638

4,894

4,915

5,163

4,973

Consumer277

260

185

184

-

Total TDRs$

26,142

$

27,652

$

27,869

$

29,054

$

29,630

CITY HOLDING COMPANY AND SUBSIDIARIESAsset Quality Information(Unaudited) ($ in 000s) Three Months Ended Twelve Months Ended December 31, September 30, June 30, March 31, December 31, December 31, December 31, 2020 2020 2020 2020 2019 2020 2019Allowance forCredit LossesBalance at $ 24,867 $ 25,199 $ 24,393 $ 11,589 $ 13,186 $ 11,589 $ 15,966 beginning ofperiod Charge-offs:Commercial and (9 ) (757 ) - (77 ) (193 ) (843 ) (261 )industrialCommercial (616 ) (75 ) (39 ) (383 ) (964 ) (1,113 ) (1,358 )real estateResidential (139 ) (252 ) (376 ) (483 ) (226 ) (1,250 ) (787 )real estateHome equity (88 ) (126 ) (161 ) (45 ) (134 ) (420 ) (294 )

Consumer (27 ) (74 ) (36 ) (55 ) (338 ) (192 ) (1,177 )

DDA overdrafts (629 ) (554 ) (459 ) (703 ) (792 ) (2,345 ) (2,777 )

Total (1,508 ) (1,838 ) (1,071 ) (1,746 ) (2,647 ) (6,163 ) (6,654 )charge-offs Recoveries:Commercial and 74 3 5 9 581 91 764 industrialCommercial 150 44 128 203 10 525 624 real estateResidential 57 24 8 95 87 184 369 real estateHome equity 47 33 9 47 - 136 -

Consumer 55 42 128 13 54 238 265

DDA overdrafts 333 334 349 451 393 1,467 1,505

Total 716 480 627 818 1,125 2,641 3,527 recoveries Net (792 ) (1,358 ) (444 ) (928 ) (1,522 ) (3,522 ) (3,127 )charge-offsProvision for 474 1,026 1,250 7,972 (75 ) 10,722 (1,250 )(recovery of)credit lossesImpact of - - - 5,760 - 5,760 - Adopting ASC326Balance at end $ 24,549 $ 24,867 $ 25,199 $ 24,393 $ 11,589 $ 24,549 $ 11,589 of period Loans $ 3,622,119 $ 3,663,966 $ 3,665,596 $ 3,613,050 $ 3,616,099 outstandingAllowance as apercent of 0.68 % 0.68 % 0.69 % 0.68 % 0.32 %loansoutstandingAllowance as apercent of 200.7 % 182.7 % 185.1 % 202.2 % 98.6 %non-performingloans Average loans $ 3,635,673 $ 3,661,569 $ 3,660,174 $ 3,608,868 $ 3,607,864 $ 3,641,610 $ 3,567,143 outstandingNetcharge-offs(annualized) 0.09 % 0.15 % 0.05 % 0.10 % 0.17 % 0.10 % 0.09 %as a percentof averageloansoutstanding CITY HOLDING COMPANY AND SUBSIDIARIESAsset Quality Information, continued(Unaudited) ($ in 000s) December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019NonaccrualLoansResidential $ 2,968 $ 3,983 $ 3,477 $ 2,750 $ 3,393 real estateHome equity 95 74 265 249 531

Commercial and 768 728 1,087 1,175 1,182 industrialCommercial 8,401 8,479 8,715 7,865 6,384 real estateConsumer - - - 1 -

Total 12,232 13,264 13,544 12,040 11,490 nonaccrualloansAccruing loans - 345 68 26 267 past due 90days or moreTotal 12,232 13,609 13,612 12,066 11,757 non-performingloansOther real 1,650 2,080 3,997 3,922 4,670 estate ownedTotal $ 13,882 $ 15,689 $ 17,609 $ 15,988 $ 16,427 non-performingassets Non-performingassets as apercent of 0.38 % 0.43 % 0.48 % 0.44 % 0.45 %loans andother realestate owned Past Due LoansResidential $ 5,993 $ 5,153 $ 5,261 $ 7,815 $ 7,485 real estateHome equity 575 474 393 430 956

Commercial and 1,241 691 160 71 458 industrialCommercial 625 602 917 1,021 1,580 real estateConsumer 113 121 67 177 187

DDA overdrafts 341 379 273 467 730

Total past due $ 8,888 $ 7,420 $ 7,071 $ 9,981 $ 11,396 loans Total past dueloans as a 0.25 % 0.20 % 0.19 % 0.28 % 0.32 %percent ofloansoutstanding Troubled DebtRestructurings("TDRs")Residential $ 19,226 $ 20,398 $ 20,631 $ 21,413 $ 21,029 real estateHome equity 2,001 2,100 2,138 2,294 3,628

Commercial and - - - - - industrialCommercial 4,638 4,894 4,915 5,163 4,973 real estateConsumer 277 260 185 184 -

Total TDRs $ 26,142 $ 27,652 $ 27,869 $ 29,054 $ 29,630

CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Average Balance Sheets, Yields, and Rates(Unaudited) ($ in 000s)Three Months EndedDecember 31, 2020September 30, 2020December 31, 2019AverageYield/AverageYield/AverageYield/BalanceInterestRateBalanceInterestRateBalanceInterestRateAssets:Loan portfolio (1):Residential real estate (2)$

1,744,952

$

17,623

4.02

%

$

1,766,796

$

17,899

4.03

%

$

1,792,186

$

20,135

4.46

%

Commercial, financial, and agriculture (2)1,837,044

17,077

3.70

%

1,839,939

16,910

3.66

%

1,755,775

20,371

4.60

%

Installment loans to individuals (2), (3)53,677

800

5.93

%

54,834

804

5.83

%

59,903

902

5.97

%

Previously securitized loans (4)***184

******148

******207

***Total loans3,635,673

35,684

3.90

%

3,661,569

35,761

3.89

%

3,607,864

41,615

4.58

%

Securities:Taxable976,897

5,500

2.24

%

877,623

6,266

2.84

%

790,317

5,925

2.97

%

Tax-exempt (5)238,198

1,587

2.65

%

204,178

1,433

2.79

%

94,248

900

3.79

%

Total securities1,215,095

7,087

2.32

%

1,081,801

7,699

2.83

%

884,565

6,825

3.06

%

Deposits in depository institutions275,106

60

0.09

%

304,498

72

0.09

%

92,579

298

1.28

%

Total interest-earning assets5,125,874

42,831

3.32

%

5,047,868

43,532

3.43

%

4,585,008

48,738

4.22

%

Cash and due from banks73,900

80,505

66,351

Premises and equipment, net76,956

77,647

76,998

Goodwill and intangible assets118,855

119,267

120,510

Other assets231,309

229,667

191,991

Less: Allowance for credit losses(25,112

)

(25,311

)

(12,881

)

Total assets$

5,601,782

$

5,529,643

$

5,027,977

Liabilities:Interest-bearing demand deposits$

953,604

$

171

0.07

%

$

931,152

$

187

0.08

%

$

872,639

$

694

0.32

%

Savings deposits1,148,717

225

0.08

%

1,093,886

303

0.11

%

1,003,063

944

0.37

%

Time deposits (2)1,278,698

3,801

1.18

%

1,322,423

4,633

1.39

%

1,362,277

6,260

1.82

%

Short-term borrowings287,059

120

0.17

%

260,518

131

0.20

%

221,685

762

1.36

%

Long-term debt-

-

--

-

-4,055

42

4.11

%

Total interest-bearing liabilities3,668,078

4,317

0.47

%

3,607,979

5,254

0.58

%

3,463,719

8,702

1.00

%

Noninterest-bearing demand deposits1,130,084

1,114,822

838,192

Other liabilities105,445

104,084

66,232

Stockholders' equity698,175

702,758

659,834

Total liabilities and stockholders' equity$

5,601,782

$

5,529,643

$

5,027,977

Net interest income$

38,514

$

38,278

$

40,036

Net yield on earning assets2.99

%

3.02

%

3.46

%

(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of net loan fees have been included in interest income:Loan fees, net$

962

$

156

$

152

(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions:Residential real estate$

153

$

132

$

159

Commercial, financial, and agriculture304

250

398

Installment loans to individuals29

38

46

Time deposits155

155

316

$

641

$

575

$

919

(3) Includes the Company's consumer and DDA overdrafts loan categories.(4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%.CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Average Balance Sheets, Yields, and Rates(Unaudited) ($ in 000s) Three Months Ended December 31, 2020 September 30, 2020 December 31, 2019 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets:Loan portfolio ^(1):Residential real $ 1,744,952 $ 17,623 4.02 % $ 1,766,796 $ 17,899 4.03 % $ 1,792,186 $ 20,135 4.46 %estate ^(2)Commercial, financial, 1,837,044 17,077 3.70 % 1,839,939 16,910 3.66 % 1,755,775 20,371 4.60 %and agriculture ^(2)Installment loans to 53,677 800 5.93 % 54,834 804 5.83 % 59,903 902 5.97 %individuals ^(2), (3)Previously securitized *** 184 *** *** 148 *** *** 207 ***loans ^(4)Total loans 3,635,673 35,684 3.90 % 3,661,569 35,761 3.89 % 3,607,864 41,615 4.58 %

Securities:Taxable 976,897 5,500 2.24 % 877,623 6,266 2.84 % 790,317 5,925 2.97 %

Tax-exempt ^(5) 238,198 1,587 2.65 % 204,178 1,433 2.79 % 94,248 900 3.79 %

Total securities 1,215,095 7,087 2.32 % 1,081,801 7,699 2.83 % 884,565 6,825 3.06 %

Deposits in depository 275,106 60 0.09 % 304,498 72 0.09 % 92,579 298 1.28 %institutionsTotal interest-earning 5,125,874 42,831 3.32 % 5,047,868 43,532 3.43 % 4,585,008 48,738 4.22 %assetsCash and due from 73,900 80,505 66,351 banksPremises and 76,956 77,647 76,998 equipment, netGoodwill and 118,855 119,267 120,510 intangible assetsOther assets 231,309 229,667 191,991

Less: Allowance for (25,112 ) (25,311 ) (12,881 )credit lossesTotal assets $ 5,601,782 $ 5,529,643 $ 5,027,977

Liabilities:Interest-bearing $ 953,604 $ 171 0.07 % $ 931,152 $ 187 0.08 % $ 872,639 $ 694 0.32 %demand depositsSavings deposits 1,148,717 225 0.08 % 1,093,886 303 0.11 % 1,003,063 944 0.37 %

Time deposits ^(2) 1,278,698 3,801 1.18 % 1,322,423 4,633 1.39 % 1,362,277 6,260 1.82 %

Short-term borrowings 287,059 120 0.17 % 260,518 131 0.20 % 221,685 762 1.36 %

Long-term debt - - - - - - 4,055 42 4.11 %

Total interest-bearing 3,668,078 4,317 0.47 % 3,607,979 5,254 0.58 % 3,463,719 8,702 1.00 %liabilitiesNoninterest-bearing 1,130,084 1,114,822 838,192 demand depositsOther liabilities 105,445 104,084 66,232

Stockholders' equity 698,175 702,758 659,834

Total liabilities and $ 5,601,782 $ 5,529,643 $ 5,027,977 stockholders' equityNet interest income $ 38,514 $ 38,278 $ 40,036

Net yield on earning 2.99 % 3.02 % 3.46 %assets (1) For purposes of this table, non-accruing loans have been included inaverage balances and the following amounts (in thousands) of net loan fees havebeen included in interest income: Loan fees, net $ 962 $ 156 $ 152

(2) Included in the above table are the following amounts (in thousands) forthe accretion of the fair value adjustments related to the Company'sacquisitions: Residential real $ 153 $ 132 $ 159estateCommercial, financial, 304 250 398and agricultureInstallment loans to 29 38 46individualsTime deposits 155 155 316

$ 641 $ 575 $ 919

(3) Includes the Company's consumer and DDA overdrafts loan categories.(4) Effective January 1, 2012, the carrying value of the Company's previouslysecuritized loans was reduced to $0.(5) Computed on a fully federal tax-equivalent basis assuming a tax rate ofapproximately 21%.CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Average Balance Sheets, Yields, and Rates(Unaudited) ($ in 000s)Twelve Months EndedDecember 31, 2020December 31, 2019AverageYield/AverageYield/BalanceInterestRateBalanceInterestRateAssets:Loan portfolio (1):Residential real estate (2)$

1,768,789

$

74,452

4.21

%

$

1,791,636

$

81,603

4.55

%

Commercial, financial, and agriculture (2)1,816,658

72,128

3.97

%

1,717,381

84,167

4.90

%

Installment loans to individuals (2), (3)56,163

3,319

5.91

%

58,126

3,559

6.12

%

Previously securitized loans (4)***599

******684

***Total loans3,641,610

150,498

4.13

%

3,567,143

170,013

4.77

%

Securities:Taxable890,771

23,355

2.62

%

761,358

23,389

3.07

%

Tax-exempt (5)164,740

4,954

3.01

%

98,217

3,756

3.82

%

Total securities1,055,511

28,309

2.68

%

859,575

27,145

3.16

%

Deposits in depository institutions230,043

492

0.21

%

84,826

1,332

1.57

%

Total interest-earning assets4,927,164

179,299

3.64

%

4,511,544

198,490

4.40

%

Cash and due from banks76,173

65,664

Premises and equipment, net77,670

78,103

Goodwill and intangible assets119,471

121,460

Other assets221,864

191,422

Less: Allowance for credit losses(22,770

)

(14,466

)

Total assets$

5,399,572

$

4,953,727

Liabilities:Interest-bearing demand deposits$

912,306

$

1,005

0.11

%

$

878,716

$

3,490

0.40

%

Savings deposits1,071,727

1,591

0.15

%

977,327

4,405

0.45

%

Time deposits (2)1,329,841

19,927

1.50

%

1,368,752

24,771

1.81

%

Short-term borrowings253,456

993

0.39

%

211,452

3,491

1.65

%

Long-term debt830

100

12.05

%

4,054

182

4.49

%

Total interest-bearing liabilities3,568,160

23,616

0.66

%

3,440,301

36,339

1.06

%

Noninterest-bearing demand deposits1,035,801

818,161

Other liabilities100,166

57,350

Stockholders' equity695,445

637,915

Total liabilities and stockholders' equity$

5,399,572

$

4,953,727

Net interest income$

155,683

$

162,151

Net yield on earning assets3.16

%

3.59

%

(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of net loan fees have been included in interest income:Loan fees, net$

1,842

$

863

(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions:Residential real estate$

630

$

323

Commercial, financial, and agriculture2,445

2,366

Installment loans to individuals143

47

Time deposits622

843

$

3,840

$

3,579

(3) Includes the Company's consumer and DDA overdrafts loan categories.(4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%.CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Average Balance Sheets, Yields, and Rates(Unaudited) ($ in 000s) Twelve Months Ended December 31, 2020 December 31, 2019 Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Assets:Loan portfolio ^(1):Residential real $ 1,768,789 $ 74,452 4.21 % $ 1,791,636 $ 81,603 4.55 %estate ^(2)Commercial, 1,816,658 72,128 3.97 % 1,717,381 84,167 4.90 %financial, andagriculture ^(2)Installment loans 56,163 3,319 5.91 % 58,126 3,559 6.12 %to individuals ^(2), (3)Previously 599 684securitized loans ^ *** *** *** ***(4)Total loans 3,641,610 150,498 4.13 % 3,567,143 170,013 4.77 %

Securities:Taxable 890,771 23,355 2.62 % 761,358 23,389 3.07 %

Tax-exempt ^(5) 164,740 4,954 3.01 % 98,217 3,756 3.82 %

Total securities 1,055,511 28,309 2.68 % 859,575 27,145 3.16 %

Deposits in 230,043 492 0.21 % 84,826 1,332 1.57 %depositoryinstitutionsTotal 4,927,164 179,299 3.64 % 4,511,544 198,490 4.40 %interest-earningassetsCash and due from 76,173 65,664 banksPremises and 77,670 78,103 equipment, netGoodwill and 119,471 121,460 intangible assetsOther assets 221,864 191,422

Less: Allowance for (22,770 ) (14,466 )credit lossesTotal assets $ 5,399,572 $ 4,953,727

Liabilities:Interest-bearing $ 912,306 $ 1,005 0.11 % $ 878,716 $ 3,490 0.40 %demand depositsSavings deposits 1,071,727 1,591 0.15 % 977,327 4,405 0.45 %

Time deposits ^(2) 1,329,841 19,927 1.50 % 1,368,752 24,771 1.81 %

Short-term 253,456 993 0.39 % 211,452 3,491 1.65 %borrowingsLong-term debt 830 100 12.05 % 4,054 182 4.49 %

Total 3,568,160 23,616 0.66 % 3,440,301 36,339 1.06 %interest-bearingliabilitiesNoninterest-bearing 1,035,801 818,161 demand depositsOther liabilities 100,166 57,350

Stockholders' 695,445 637,915 equityTotal liabilities $ 5,399,572 $ 4,953,727 and stockholders'equityNet interest income $ 155,683 $ 162,151

Net yield on 3.16 % 3.59 %earning assets (1) For purposes of this table, non-accruing loans have been included inaverage balances and the following amounts (in thousands) of net loan fees havebeen included in interest income: Loan fees, net $ 1,842 $ 863

(2) Included in the above table are the following amounts (in thousands) forthe accretion of the fair value adjustments related to the Company'sacquisitions: Residential real $ 630 $ 323estateCommercial, 2,445 2,366financial, andagricultureInstallment loans 143 47to individualsTime deposits 622 843

$ 3,840 $ 3,579

(3) Includes the Company's consumer and DDA overdrafts loan categories.(4) Effective January 1, 2012, the carrying value of the Company's previouslysecuritized loans was reduced to $0.(5) Computed on a fully federal tax-equivalent basis assuming a tax rate ofapproximately 21%.CITY HOLDING COMPANY AND SUBSIDIARIESNon-GAAP Reconciliations(Unaudited) ($ in 000s, except per share data)Three Months EndedTwelve Months EndedDecember 31,2020September 30,2020June 30,2020March 31,2020December 31,2019December 31,2020December 31,2019Net Interest Income/MarginNet interest income ("GAAP")$

38,181

$

37,977

$

38,070

$

40,415

$

39,847

$

154,644

$

161,361

Taxable equivalent adjustment333

301

217

188

189

1,039

790

Net interest income, fully taxable equivalent$

38,514

$

38,278

$

38,287

$

40,603

$

40,036

$

155,683

$

162,151

Average interest earning assets$

5,125,874

$

5,047,868

$

4,914,242

$

4,617,157

$

4,585,008

$

4,927,164

$

4,511,544

Net Interest Margin2.99

%

3.02

%

3.13

%

3.54

%

3.46

%

3.16

%

3.59

%

Accretion related to fair value adjustments-0.05

%

-0.05

%

-0.08

%

-0.14

%

-0.08

%

-0.08

%

-0.08

%

Net Interest Margin (excluding accretion)2.94

%

2.97

%

3.05

%

3.40

%

3.38

%

3.08

%

3.51

%

Tangible Equity Ratio (period end)Equity to assets ("GAAP")12.18

%

12.54

%

12.55

%

13.47

%

13.11

%

Effect of goodwill and other intangibles, net-1.85

%

-1.93

%

-1.93

%

-2.09

%

-2.13

%

Tangible common equity to tangible assets10.33

%

10.61

%

10.62

%

11.38

%

10.98

%

Return on Tangible EquityReturn on tangible equity ("GAAP")15.3

%

13.8

%

12.6

%

20.6

%

16.8

%

15.6

%

17.3

%

Impact of merger related expenses----0.1

%

Impact of sale of VISA shares---9.7

%

--2.4

%

-Return on tangible equity, excluding merger related expenses and sale of VISA shares15.3

%

13.8

%

12.6

%

10.9

%

16.8

%

13.2

%

17.4

%

Return on AssetsReturn on assets ("GAAP")1.59

%

1.46

%

1.35

%

2.29

%

1.80

%

1.66

%

1.80

%

Impact of merger related expenses----0.01

%

Impact of sale of VISA shares---1.08

%

--0.24

%

-Return on assets, excluding merger related expenses and sale of VISA shares1.59

%

1.46

%

1.35

%

1.21

%

1.80

%

1.41

%

1.81

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210125005057/en/

CONTACT: Charles R. Hageboeck, Chief Executive Officer and President (304) 769-1102