Business Wire | Jul 23, 2020 07:30AM EDT

City Holding Company Announces Second Quarter Results

Jul. 23, 2020

CHARLESTON, W. Va--(BUSINESS WIRE)--Jul. 23, 2020--City Holding Company ("Company" or "City") (NASDAQ:CHCO), a $5.5 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $18.3 million and diluted earnings of $1.12 per share for the quarter ended June 30, 2020. For the second quarter of 2020, the Company achieved a return on assets of 1.35% and a return on tangible equity of 12.6%.

Charles R. ("Skip") Hageboeck, the President and Chief Executive Officer of City Holding Company, commented: "As the impact of COVID-19 continues to disrupt the communities that we serve and economic conditions of the United States and worldwide, City was able to produce results that we believe will compare very favorably amongst our peers. As we operate under these conditions, our staff members continue to provide excellent service to our customers via our drive-thrus, limited in-person branch appointments and our various electronic options, including our mobile platform which recently underwent a successful and well received upgrade. For the third year in a row, J.D. Power recognized City for its exceptional customer service by naming City for providing the highest level of customer satisfaction in the north central region of the U.S."

"In early April our retail and commercial staff were very busy assisting our customers in obtaining Paycheck Protection Program ("PPP") loans administered by the Small Business Administration ("SBA"). As a result of these efforts and the demand level of our customers, City originated over 1,500 PPP loans totaling over $85 million, with an average balance of approximately $60,000 per PPP loan. As a result of these loans, City recognized approximately $0.3 million of loan fees in the quarter ended June 30, 2020 and expects to recognize approximately $3.0 million, net of associated expenses, over the life of these PPP loans."

"As of June 30, 2020, approximately $430 million of commercial loans have been granted deferrals as compared to approximately $380 million as of April 24, 2020, while approximately $125 million of mortgage loans have been granted deferrals as June 30, 2020, as compared to approximately $80 million at April 24, 2020. At June 30, 2020, approximately $260 million of the commercial loan deferments were for hotel and lodging related loans. We know that our hotel and lodging loan customers continue to suffer low demand as a result of reduced business and personal travel. However, we are encouraged by reports from certain hotel and lodging loan customers that, although still depressed compared to pre-pandemic periods, occupancy rates have improved during the past 30-45 days."

Net Interest Income

The Company's net interest income decreased from $40.4 million during the first quarter of 2020 to $38.1 million during the second quarter of 2020. During the second quarter of 2020, the Company's tax equivalent net interest income decreased $2.3 million, or 5.7%, from $40.6 million for the first quarter of 2020 to $38.3 million for the second quarter of 2020. Lower loan yields (42 basis points) and lower investment yields (34 basis points) decreased net interest income by $3.8 million and $0.9 million, respectively. City has approximately $715 million of commercial loans tied to LIBOR rates, and the average 3 month Libor rate fell from 1.40% in for the quarter ended March 31, 2020 to 0.35% for the quarter ended June 30, 2020. The yield on investment securities decreased predominantly as a result of additional securities purchased in the quarter ended June 30, 2020 due to increased liquidity. Approximately $100 million of new securities were purchased that are tied to one month LIBOR rates and approximately $80 million of additional securities were purchased at lower yields than our overall portfolio yield. These decreases were partially offset by a decrease in rates paid on deposits (20 basis points) and an increase in average loan balances ($51.3 million) which increased net interest income by $1.5 million and $0.6 million, respectively. The Company's reported net interest margin decreased from 3.54% for the first quarter of 2020 to 3.13% for the second quarter of 2020. Excluding the favorable impact of the accretion from fair value adjustments, the net interest margin would have been 3.05% for the quarter ended June 30, 2020 and 3.40% for the quarter ended March 31, 2020.

Credit Quality

The Company's ratio of nonperforming assets to total loans and other real estate owned increased slightly from 0.44% at March 31, 2020 to 0.48% at June 30, 2020. Total nonperforming assets increased from $16.0 million at March 31, 2020 to $17.6 million at June 30, 2020. Total past due loans decreased from $10.0 million, or 0.28% of total loans outstanding, at March 31, 2020 to $7.1 million, or 0.19% of total loans outstanding, at June 30, 2020.

As a result of the Company's quarterly analysis of the adequacy of the allowance for credit losses ("ACL"), the Company recorded a provision for credit losses of $1.25 million in the second quarter of 2020, compared to a recovery of loan loss provision of $0.6 million for the comparable period in 2019 and a provision for credit losses of $8.0 million for the first quarter of 2020. The provision for credit losses is largely dependent on expected unemployment ranges. The expected unemployment ranges utilized at June 30, 2020, have not changed significantly from those utilized at March 31, 2020 which reflected the expected economic impact of the COVID-19 pandemic. Additionally, adjustments in qualitative and other factors have not been revised significantly from March 31, 2020, to June 30, 2020. The provision for credit losses recognized in the second quarter of 2020 primarily relates to updated valuations for two specific credits during the quarter based on current market conditions which increased the Company's ACL by $1.7 million. Partially offsetting these increases in the ACL was a decrease in the ACL due to lower amounts of DDA overdrafted balances which released $0.5 million of ACL reserves. Due to the guarantee from the SBA for the PPP loans that were issued during the quarter ended June 30, 2020, no reserve for credit losses was deemed necessary for these loans.

Non-interest Income

Non-interest income was $14.6 million for the second quarter of 2020 as compared to $17.8 million for the second quarter of 2019. During the second quarter of 2020, the Company reported $0.2 million of unrealized fair value gains on the Company's equity securities compared to $0.1 million of unrealized fair value gains on the Company's equity securities in the second quarter of 2019. Exclusive of these gains, non-interest income decreased from $17.7 million for the second quarter of 2019 to $14.4 million for the second quarter of 2020. This decrease was largely attributable to a decrease of $2.8 million, or 36.4%, in service charges as average deposit balances have increased during the COVID-19 pandemic. In addition, other income decreased $0.8 million due to recognition of a $0.7 million gain from the sale of our Virginia Beach, VA, branch in June 2019. These decreases were partially offset by increases in our bankcard revenues ($0.4 million) and trust and investment management fee income ($0.2 million).

Non-interest Expenses

During the quarter ended June 30, 2019, the Company incurred an additional $0.5 million of acquisition and integration expenses associated with the acquisitions of Poage Bankshare, Inc. and Farmers Deposit Bankcorp, Inc. Excluding this expense, non-interest expenses decreased $1.8 million (5.8%), from $30.2 million in the second quarter of 2019 to $28.5 million in the second quarter of 2020. This decrease was primarily due to a decrease in salaries and employee benefits of $0.9 million due primarily to lower health insurance and incentive expenses. Additionally, other expenses decreased $0.5 million, occupancy related expenses decreased $0.2 million, FDIC expense decreased $0.2 million and repossessed asset losses decreased $0.2 million. These decreases were partially offset by an increase in equipment and software related expenses of $0.3 million.

Balance Sheet Trends

Loans increased $49.5 million (1.4%) from December 31, 2019 to $3.67 billion at June 30, 2020. As a result of the Company's participation in the PPP loans administered by the SBA, commercial and industrial loans increased $88.4 million. Excluding PPP loans, total loans decreased $39.0 million, (1.1%), from December 31, 2019 to $3.58 billion at June 30, 2020. Commercial and industrial loans decreased $27.4 million (8.9%) (excluding PPP loans), residential real estate loans decreased $9.3 million (0.6%), home equity loans decreased $6.3 million (4.2%) and DDA overdrafts decreased $2.1 million (43.3%). These decreases were partially offset by an increase in commercial real estate loans of $7.9 million (0.5%).

Total average depository balances increased $235.4 million, or 5.8%, from the quarter ended March 31, 2020 to the quarter ended June 30, 2020. Average noninterest-bearing demand deposit balances increased $191.6 million, average savings deposit balances increased $31.6 million, and average interest-bearing demand deposit balances increased $23.9 million. We believe that these increases were largely attributable to stimulus checks received by our customers from the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") (approximately $90 million) and proceeds from PPP loans (approximately $90 million). These increases were partially offset by a decrease in time deposit balances of $11.6 million.

Income Tax Expense

The Company's effective income tax rate for the second quarter of 2020 was 20.6% compared to 21.3% for the year ended December 31, 2019, and 20.4% for the quarter ended June 30, 2019.

Capitalization and Liquidity

The Company's loan to deposit ratio was 83.1% and the loan to asset ratio was 66.3% at June 30, 2020. The Company maintained investment securities totaling 19.6% of assets as of the same date. The Company's deposit mix is weighted heavily toward checking and saving accounts, which fund 55.5% of assets at June 30, 2020. Time deposits fund 24.3% of assets at June 30, 2020, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.

The Company continues to be strongly capitalized. The Company's tangible equity ratio decreased from 11.0% at December 31, 2019 to 10.6% at June 30, 2020. At June 30, 2020, City National Bank's Leverage Ratio was 9.29%, its Common Equity Tier I ratio was 14.55%, its Tier I Capital ratio was 14.55%, and its Total Risk-Based Capital ratio was 15.15%. These regulatory capital ratios are significantly above levels required to be considered "well capitalized," which is the highest possible regulatory designation.

On June 24, 2020, the Board of Directors of the Company approved a quarterly cash dividend of $0.57 per share payable July 31, 2020, to shareholders of record as of July 15, 2020. During the quarter ended June 30, 2020, the Company repurchased 79,000 common shares at a weighted average price of $61.75 as part of a one million share repurchase plan authorized by the Board of Directors in February 2019. As of June 30, 2020, the Company could repurchase approximately 478,000 additional shares under the 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) the uncertainties 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 June 30, 2020 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2020 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights(Unaudited) Three Months Ended Six Months Ended June 30, March 31, December September June 30, June 30, June 30, 2020 2020 31, 2019 30, 2019 2019 2020 2019 EarningsNet InterestIncome (fully $ 38,287 $ 40,603 $ 40,036 $ 40,729 $ 41,113 $ 78,892 $ 81,387 taxableequivalent)Net Incomeavailable to 18,251 29,000 22,611 22,371 22,751 47,249 44,370 commonshareholders Per ShareDataEarnings pershareavailable tocommonshareholders:Basic $ 1.12 $ 1.79 $ 1.38 $ 1.36 $ 1.38 $ 2.90 $ 2.68

Diluted 1.12 1.78 1.38 1.36 1.38 2.90 2.68

Weightedaveragenumber ofshares (inthousands):Basic 16,081 16,080 16,207 16,271 16,368 16,123 16,390

Diluted 16,097 16,101 16,230 16,289 16,386 16,142 16,408

Period-endnumber of 16,077 16,140 16,303 16,302 16,397 16,077 16,397 shares (inthousands)Cash $ 0.57 $ 0.57 $ 0.57 $ 0.57 $ 0.53 $ 1.14 $ 1.06 dividendsdeclaredBook value $ 43.15 $ 42.45 $ 40.36 $ 39.85 $ 38.84 $ 43.15 $ 38.84 per share(period-end)Tangible bookvalue per 35.72 35.03 32.98 32.44 31.44 35.72 31.44 share(period-end)Market data:High closing $ 71.19 $ 82.40 $ 82.72 $ 78.30 $ 82.56 $ 82.40 $ 82.56 priceLow closing 55.18 57.11 74.33 72.35 73.05 55.18 67.58 pricePeriod-end 65.17 66.53 81.95 76.25 76.26 65.17 76.26 closing priceAverage daily 89 69 54 62 53 79 53 volume (inthousands)Treasuryshareactivity:Treasuryshares 79 182 - 99 107 261 162 repurchased(inthousands)Averagetreasury $ 61.75 $ 71.31 $ - $ 74.17 $ 74.81 $ 68.41 $ 74.77 sharerepurchaseprice Key Ratios(percent)Return on 1.35 % 2.29 % 1.80 % 1.81 % 1.84 % 1.81 % 1.80 %averageassetsReturn onaverage 12.6 % 20.6 % 16.8 % 17.0 % 17.9 % 16.6 % 17.8 %tangibleequityYield oninterest 3.64 % 4.22 % 4.22 % 4.42 % 4.48 % 3.92 % 4.48 %earningassetsCost ofinterest 0.71 % 0.91 % 1.00 % 1.10 % 1.09 % 0.81 % 1.07 %bearingliabilitiesNet Interest 3.13 % 3.54 % 3.46 % 3.59 % 3.65 % 3.33 % 3.66 %MarginNon-interestincome as a 27.4 % 30.6 % 31.2 % 29.2 % 30.3 % 37.9 % 29.4 %percent oftotal revenueEfficiency 53.3 % 49.7 % 50.0 % 48.2 % 50.5 % 51.4 % 50.9 %RatioPrice/ 14.50 17.63 14.82 13.98 13.84 11.23 14.21 EarningsRatio (a) Capital(period-end)AverageShareholders' 12.91 % 13.50 % 13.12 % 13.12 % 12.76 %Equity toAverageAssetsTangibleequity to 10.62 % 11.38 % 10.98 % 10.93 % 10.70 %tangibleassetsConsolidatedCity HoldingCompany riskbased capitalratios (b):CET I 16.10 % 16.02 % 16.05 % 15.62 % 15.91 %

Tier I 16.10 % 16.02 % 16.05 % 15.74 % 16.03 %

Total 16.69 % 16.46 % 16.40 % 16.14 % 16.47 %

Leverage 10.45 % 11.10 % 10.90 % 10.87 % 10.70 %

City NationalBank riskbased capitalratios (b):CET I 14.55 % 14.32 % 13.92 % 14.00 % 14.19 %

Tier I 14.55 % 14.32 % 13.92 % 14.00 % 14.19 %

Total 15.15 % 14.82 % 14.28 % 14.40 % 14.63 %

Leverage 9.29 % 9.98 % 9.51 % 9.72 % 9.51 %

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

FTE 913 921 918 916 935

Assets per $ 6,058 $ 5,525 $ 5,467 $ 5,412 $ 5,284 FTE (inthousands)Deposits per 4,834 4,400 4,440 4,399 4,312 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) June 30, 2020 risk-based capital ratios are estimated.

CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Statements of Income(Unaudited) ($ in 000s, except per share data) Three Months Ended Six Months Ended June 30, March 31, December September June 30, June 30, June 30, 2020 2020 31, 2019 30, 2019 2019 2020 2019 Interest IncomeInterest and fees $ 37,718 $ 41,335 $ 41,615 $ 42,944 $ 43,174 $ 79,053 $ 85,453 on loansInterest oninvestmentsecurities:Taxable 5,718 5,871 5,924 6,044 5,732 11,589 11,421

Tax-exempt 821 707 711 722 755 1,528 1,534

Interest ondeposits in 55 304 298 271 577 360 763 depositoryinstitutionsTotal Interest 44,312 48,217 48,548 49,981 50,238 92,530 99,171 Income Interest ExpenseInterest on 5,963 7,238 7,897 8,585 8,417 13,201 16,184 depositsInterest on 279 464 762 814 863 743 1,915 short-termborrowingsInterest on - 100 42 45 47 100 95 long-term debtTotal Interest 6,242 7,802 8,701 9,444 9,327 14,044 18,194 ExpenseNet Interest 38,070 40,415 39,847 40,537 40,911 78,486 80,977 IncomeProvision for 1,250 7,972 (75 ) 274 (600 ) 9,222 (1,449 )(recovery of)credit lossesNet InterestIncome After 36,820 32,443 39,922 40,263 41,511 69,264 82,426 Provision for(Recovery of)Credit Losses Non-InterestIncomeNet (losses) gainson sale of (6 ) 63 - (40 ) 21 56 109 investmentsecuritiesUnrealized gains(losses) 242 (2,402 ) 914 (214 ) 113 (2,159 ) 188 recognized onequity securitiesstill heldService charges 4,945 7,723 8,233 8,183 7,778 12,667 15,099

Bankcard revenue 5,888 5,115 5,162 5,440 5,522 11,003 10,491

Trust andinvestment 1,931 1,799 2,016 1,802 1,699 3,730 3,341 management feeincomeBank owned life 848 1,676 856 762 1,132 2,523 2,148 insuranceSale of VISA - 17,837 - - - 17,837 - sharesOther income 783 1,536 861 765 1,560 2,318 2,374

Total Non-Interest 14,631 33,347 18,042 16,698 17,825 47,975 33,750 Income Non-InterestExpenseSalaries and 14,873 15,851 15,918 15,210 15,767 30,724 31,010 employee benefitsOccupancy related 2,402 2,488 2,540 2,725 2,598 4,890 5,330 expenseEquipment and 2,504 2,429 2,302 2,248 2,223 4,933 4,414 software relatedexpenseFDIC insurance 167 - - - 347 167 638 expenseAdvertising 933 843 694 861 920 1,776 1,789

Bankcard expenses 1,498 1,435 1,285 1,554 1,534 2,933 2,716

Postage, delivery, 592 616 588 659 545 1,208 1,169 and statementmailingsOffice supplies 353 394 392 382 399 747 785

Legal and 589 601 706 539 605 1,190 1,126 professional feesTelecommunications 531 511 563 569 597 1,042 1,323

Repossessed asset 76 198 224 (59 ) 253 274 469 losses (gains),net of expensesMerger related - - - - 547 - 797 expensesOther expenses 3,950 4,102 3,822 3,709 4,437 8,052 8,617

Total Non-Interest 28,468 29,468 29,034 28,397 30,772 57,936 60,183 ExpenseIncome Before 22,983 36,322 28,930 28,564 28,564 59,303 55,993 Income TaxesIncome tax expense 4,732 7,322 6,319 6,193 5,813 12,054 11,623

Net IncomeAvailable to $ 18,251 $ 29,000 $ 22,611 $ 22,371 $ 22,751 $ 47,249 $ 44,370 CommonShareholders Distributedearnings allocated $ 9,073 $ 9,117 $ 9,209 $ 9,213 $ 8,615 $ 18,147 $ 17,231 to commonshareholdersUndistributedearnings allocated 8,998 19,620 13,200 12,966 13,939 28,639 26,757 to commonshareholdersNet earningsallocated to $ 18,071 $ 28,737 $ 22,409 $ 22,179 $ 22,554 $ 46,786 $ 43,988 commonshareholders Average common 16,081 16,080 16,207 16,271 16,368 16,123 16,390 shares outstandingShares for diluted 16,097 16,101 16,230 16,289 16,386 16,142 16,408 earnings per share Basic earnings per $ 1.12 $ 1.79 $ 1.38 $ 1.36 $ 1.38 $ 2.90 $ 2.68 common shareDiluted earnings $ 1.12 $ 1.78 $ 1.38 $ 1.36 $ 1.38 $ 2.90 $ 2.68 per common share

CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Balance Sheets($ in 000s) (Unaudited) (Unaudited) (Unaudited) (Unaudited) June 30, 2020 March 31, December 31, September 30, June 30, 2019 2020 2019 2019 AssetsCash and due from $ 87,658 $ 92,365 $ 88,658 $ 71,332 $ 53,373 banksInterest-bearingdeposits in 285,596 18,271 51,486 44,862 115,346 depositoryinstitutionsCash and cash 373,254 110,636 140,144 116,194 168,719 equivalents Investmentsecurities 1,055,185 934,113 810,106 798,930 796,237 available-for-sale,at fair valueInvestmentsecurities - - 49,036 51,211 53,362 held-to-maturity,at amortized costOther securities 26,144 26,827 28,490 28,070 28,014

Total investment 1,081,329 960,940 887,632 878,211 877,613 securities Gross loans 3,665,596 3,613,050 3,616,099 3,582,571 3,519,367

Allowance for (25,199 ) (24,393 ) (11,589 ) (13,186 ) (13,795 )credit lossesNet loans 3,640,397 3,588,657 3,604,510 3,569,385 3,505,572

Bank owned life 116,746 116,000 115,261 114,616 113,855 insurancePremises and 77,991 78,948 76,965 76,929 78,263 equipment, netAccrued interest 14,200 12,570 11,569 12,929 12,719 receivableNet deferred tax - 2,159 6,669 6,432 8,835 assetsIntangible assets 119,417 119,829 120,241 120,773 121,322

Other assets 105,438 98,710 55,765 62,248 53,569

Total Assets $ 5,528,772 $ 5,088,449 $ 5,018,756 $ 4,957,717 $ 4,940,467

LiabilitiesDeposits:Noninterest-bearing $ 1,079,469 $ 857,501 $ 805,087 $ 795,548 $ 798,056

Interest-bearing:Demand deposits 921,761 837,966 896,465 898,704 891,742

Savings deposits 1,067,254 989,609 1,009,771 980,539 974,847

Time deposits 1,342,631 1,366,977 1,364,571 1,354,787 1,366,991

Total deposits 4,411,115 4,052,053 4,075,894 4,029,578 4,031,636

Short-termborrowingsFederal Funds - 9,900 - - - purchasedCustomer repurchase 282,676 224,247 211,255 202,622 207,033 agreementsLong-term debt - - 4,056 4,055 4,054

Net deferred tax 2,598 - - - - liabilitiesOther liabilities 138,633 117,021 69,568 71,859 60,836

Total Liabilities 4,835,022 4,403,221 4,360,773 4,308,114 4,303,559

Stockholders'EquityPreferred stock - - - - -

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

Capital surplus 169,881 170,096 170,309 169,794 169,374

Retained earnings 565,804 556,718 539,253 525,933 512,911

Cost of common (120,583 ) (116,665 ) (105,038 ) (105,138 ) (98,084 )stock in treasuryAccumulated othercomprehensiveincome:Unrealized gain on 37,299 33,730 12,110 17,266 10,959 securitiesavailable-for-saleUnderfunded pension (6,270 ) (6,270 ) (6,270 ) (5,871 ) (5,871 )liabilityTotal Accumulated 31,029 27,460 5,840 11,395 5,088 Other ComprehensiveIncomeTotal Stockholders' 693,750 685,228 657,983 649,603 636,908 EquityTotal Liabilities $ 5,528,772 $ 5,088,449 $ 5,018,756 $ 4,957,717 $ 4,940,467 and Stockholders'Equity Regulatory CapitalTotal CET 1 capital $ 548,972 $ 547,040 $ 532,829 $ 518,175 $ 511,344

Total tier 1 548,972 547,040 532,829 522,175 515,344 capitalTotal risk-based 569,213 561,944 544,479 535,441 529,230 capitalTotal risk-weighted 3,410,589 3,412,591 3,319,998 3,318,386 3,214,153 assets

CITY HOLDING COMPANY AND SUBSIDIARIESLoan Portfolio(Unaudited) ($ in 000s) June 30, March 31, December September June 30, 2020 2020 31, 2019 30, 2019 2019 Residential real $ 1,631,151 $ 1,629,578 $ 1,640,396 $ 1,643,416 $ 1,644,494estate ^(1)Home equity - 142,672 146,034 148,928 150,808 150,676junior liensCommercial and 369,122 308,567 308,015 296,927 288,803industrialCommercial real 1,467,673 1,470,949 1,459,737 1,431,983 1,378,116estate ^(2)Consumer 52,278 54,749 54,263 54,799 53,356

DDA overdrafts 2,700 3,173 4,760 4,638 3,922

Gross Loans $ 3,665,596 $ 3,613,050 $ 3,616,099 $ 3,582,571 $ 3,519,367

Construction loansincluded in:^(1) - Residential $ 28,252 $ 28,870 $ 29,033 $ 24,955 $ 23,673real estate loans^(2) - Commercial 42,092 44,453 64,049 55,267 43,432real estate loans

CITY HOLDING COMPANY AND SUBSIDIARIESAsset Quality Information(Unaudited) ($ in 000s) Three Months Ended Six Months Ended June 30, 2020 March 31, December 31, September 30, June 30, 2019 June 30, 2020 June 30, 2019 2020 2019 2019Allowance forCredit LossesBalance at $ 24,393 $ 11,589 $ 13,186 $ 13,795 $ 14,646 $ 11,589 $ 15,966 beginning ofperiod Charge-offs:Commercial and - (77 ) (193 ) (17 ) (51 ) (77 ) (51 )industrialCommercial (39 ) (383 ) (964 ) (216 ) (133 ) (422 ) (178 )real estateResidential (376 ) (483 ) (226 ) (194 ) (230 ) (859 ) (631 )real estateHome equity (161 ) (45 ) (134 ) (43 ) (71 ) (206 ) (117 )

Consumer (36 ) (55 ) (338 ) (279 ) (184 ) (91 ) (296 )

DDA overdrafts (459 ) (703 ) (792 ) (772 ) (588 ) (1,162 ) (1,213 )

Total (1,071 ) (1,746 ) (2,647 ) (1,521 ) (1,257 ) (2,817 ) (2,486 )charge-offs Recoveries:Commercial and 5 9 581 43 5 14 140 industrialCommercial 128 203 10 7 575 331 607 real estateResidential 8 95 87 157 50 103 125 real estateHome equity 9 47 - - - 56 -

Consumer 128 13 54 68 46 141 143

DDA overdrafts 349 451 393 363 330 800 749

Total 627 818 1,125 638 1,006 1,445 1,764 recoveries Net (444 ) (928 ) (1,522 ) (883 ) (251 ) (1,372 ) (722 )(charge-offs)/recoveriesProvision for 1,250 7,972 (75 ) 274 (600 ) 9,222 (1,449 )(recovery of)credit lossesImpact of - 5,760 - - - 5,760 - Adopting ASC326Balance at end $ 25,199 $ 24,393 $ 11,589 $ 13,186 $ 13,795 $ 25,199 $ 13,795 of period Loans $ 3,665,596 $ 3,613,050 $ 3,616,099 $ 3,582,571 $ 3,519,367 outstandingAllowance as apercent of 0.69 % 0.68 % 0.32 % 0.37 % 0.39 %loansoutstandingAllowance as apercent of 185.1 % 202.2 % 98.6 % 84.3 % 115.3 %non-performingloans Average loans $ 3,660,174 $ 3,608,868 $ 3,607,864 $ 3,544,548 $ 3,539,077 $ 3,634,522 $ 3,557,927 outstandingNetcharge-offs(recoveries)(annualized) 0.05 % 0.10 % 0.17 % 0.10 % 0.03 % 0.08 % 0.04 %as a percentof averageloansoutstanding

CITY HOLDING COMPANY AND SUBSIDIARIESAsset Quality Information, continued(Unaudited) ($ in 000s) June 30, March 31, December September June 30, 2020 2020 31, 2019 30, 2019 2019Nonaccrual LoansResidential real estate $ 3,477 $ 2,750 $ 3,393 $ 2,570 $ 2,354

Home equity 265 249 531 469 161

Commercial and 1,087 1,175 1,182 2,059 2,149 industrialCommercial real estate 8,715 7,865 6,384 10,099 7,204

Consumer - 1 - - -

Total nonaccrual loans 13,544 12,040 11,490 15,197 11,868

Accruing loans past due 68 26 267 452 94 90 days or moreTotal non-performing 13,612 12,066 11,757 15,649 11,962 loansOther real estate owned 3,997 3,922 4,670 2,326 2,581

Total non-performing $ 17,609 $ 15,988 $ 16,427 $ 17,975 $ 14,543 assets Non-performing assets as 0.48 % 0.44 % 0.45 % 0.50 % 0.41 %a percent of loans andother real estate owned Past Due LoansResidential real estate $ 5,261 $ 7,815 $ 7,485 $ 6,859 $ 7,302

Home equity 393 430 956 796 322

Commercial and 160 71 458 526 166 industrialCommercial real estate 917 1,021 1,580 1,276 1,026

Consumer 67 177 187 124 172

DDA overdrafts 273 467 730 626 487

Total past due loans $ 7,071 $ 9,981 $ 11,396 $ 10,207 $ 9,475

Total past due loans as 0.19 % 0.28 % 0.32 % 0.28 % 0.27 %a percent of loansoutstanding Troubled DebtRestructurings ("TDRs")Residential real estate $ 20,631 $ 21,413 $ 21,029 $ 21,320 $ 22,373

Home equity 2,138 2,294 3,628 3,034 3,062

Commercial and - - - 83 83 industrialCommercial real estate 4,915 5,163 4,973 8,100 8,044

Consumer 185 184 - - -

Total TDRs $ 27,869 $ 29,054 $ 29,630 $ 32,537 $ 33,562



CITY HOLDING COMPANY AND SUBSIDIARIESConsolidated Average Balance Sheets, Yields, and Rates(Unaudited) ($ in 000s) Three Months Ended June 30, 2020 March 31, 2020 June 30, 2019 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets:Loan portfolio ^(1):Residential real $ 1,785,631 $ 19,048 4.29 % $ 1,780,473 $ 19,881 4.49 % $ 1,783,718 $ 20,454 4.60 %estate ^(2)Commercial, 1,818,344 17,665 3.91 % 1,770,178 20,476 4.65 % 1,698,186 21,658 5.12 %financial, andagriculture ^(2)Installment loans to 56,199 852 6.10 % 58,217 863 5.96 % 57,173 889 6.24 %individuals ^(2), (3)Previously 152 115 174 securitized loans ^ *** *** *** *** *** ***(4)Total loans 3,660,174 37,717 4.14 % 3,608,868 41,335 4.61 % 3,539,077 43,175 4.89 %

Securities:Taxable 896,997 5,718 2.56 % 810,766 5,871 2.91 % 749,346 5,732 3.07 %

Tax-exempt ^(5) 120,751 1,039 3.46 % 94,591 895 3.81 % 100,348 956 3.82 %

Total securities 1,017,748 6,757 2.67 % 905,357 6,766 3.01 % 849,694 6,688 3.16 %

Deposits in 236,320 55 0.09 % 102,932 304 1.19 % 113,176 577 2.04 %depositoryinstitutionsTotal 4,914,242 44,529 3.64 % 4,617,157 48,405 4.22 % 4,501,947 50,440 4.49 %interest-earningassetsCash and due from 79,501 70,763 64,478 banksPremises and 78,717 77,368 79,116 equipment, netGoodwill and 119,681 120,091 121,628 intangible assetsOther assets 230,423 195,875 189,618

Less: Allowance for (24,700 ) (15,905 ) (15,057 )credit lossesTotal assets $ 5,397,864 $ 5,065,349 $ 4,941,730

Liabilities:Interest-bearing $ 893,832 $ 178 0.08 % $ 869,976 $ 468 0.22 % $ 874,039 $ 909 0.42 %demand depositsSavings deposits 1,037,387 363 0.14 % 1,005,829 700 0.28 % 980,089 1,236 0.51 %

Time deposits ^(2) 1,353,619 5,422 1.61 % 1,365,268 6,070 1.79 % 1,384,017 6,272 1.82 %

Short-term borrowings 256,790 279 0.44 % 209,010 464 0.89 % 199,648 863 1.73 %

Long-term debt - - 0.00 % 3,340 100 12.04 % 4,053 47 4.65 %

Total 3,541,628 6,242 0.71 % 3,453,423 7,802 0.91 % 3,441,846 9,327 1.09 %interest-bearingliabilitiesNoninterest-bearing 1,044,009 852,384 820,689 demand depositsOther liabilities 115,110 75,922 48,803

Stockholders' equity 697,117 683,620 630,392

Total liabilities andstockholders' equity $ 5,397,864 $ 5,065,349 $ 4,941,730

Net interest income $ 38,287 $ 40,603 $ 41,113

Net yield on earning 3.13 % 3.54 % 3.66 %assets (1)^ For purposes of this table, non-accruing loans have been included inaverage balances and the following amounts (in thousands) of loan fees havebeen included in interest income: Loan fees $ 609 $ 116 $ 481

(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 $ 194 $ 151 $ 83 estateCommercial, 651 1,240 668 financial, andagricultureInstallment loans to 37 39 (6 )individualsTime deposits 155 155 196

$ 1,037 $ 1,585 $ 941

(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) Six Months Ended June 30, 2020 June 30, 2019 Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Assets:Loan portfolio ^(1):Residential real $ 1,785,795 $ 38,930 4.38 % $ 1,791,263 $ 40,904 4.60 %estate ^(2)Commercial, 1,791,510 38,141 4.28 % 1,710,281 42,503 5.01 %financial, andagriculture ^(2)Installment loans to 57,217 1,715 6.03 % 56,383 1,728 6.18 %individuals ^(2),(3)Previously 267 317 securitized loans ^ *** *** *** ***(4)Total loans 3,634,522 79,053 4.37 % 3,557,927 85,452 4.84 %

Securities:Taxable 853,882 11,589 2.73 % 731,976 11,420 3.15 %

Tax-exempt ^(5) 107,671 1,934 3.61 % 101,356 1,942 3.86 %

Total securities 961,553 13,523 2.83 % 833,332 13,362 3.23 %

Deposits in 169,626 360 0.43 % 87,031 767 1.78 %depositoryinstitutionsTotal 4,765,701 92,936 3.92 % 4,478,290 99,581 4.48 %interest-earningassetsCash and due from 75,132 64,583 banksPremises and 78,042 78,671 equipment, netGoodwill and 119,886 122,114 intangible assetsOther assets 213,147 192,768

Less: Allowance for (20,303 ) (15,617 )credit lossesTotal assets $ 5,231,605 $ 4,920,809

Liabilities:Interest-bearing $ 881,904 $ 647 0.15 % $ 880,401 $ 1,842 0.42 %demand depositsSavings deposits 1,021,608 1,063 0.21 % 963,804 2,302 0.48 %

Time deposits ^(2) 1,359,442 11,491 1.70 % 1,376,284 12,040 1.76 %

Short-term 232,900 743 0.64 % 218,527 1,915 1.77 %borrowingsLong-term debt 1,670 100 12.04 % 4,053 95 4.73 %

Total 3,497,524 14,044 0.81 % 3,443,069 18,194 1.07 %interest-bearingliabilitiesNoninterest-bearing 948,196 804,489 demand depositsOther liabilities 95,516 52,070

Stockholders' equity 690,369 621,181

Total liabilitiesandstockholders' equity $ 5,231,605 $ 4,920,809

Net interest income $ 78,892 $ 81,387

Net yield on earning 3.33 % 3.66 %assets (1) For purposes of this table, non-accruing loans have been included inaverage balances and the following amounts (in thousands) of loan fees havebeen included in interest income: Loan fees $ 725 $ 615

(2) Included in the above table are the following amounts (in thousands) forthe accretion of the fair value adjustments related to the Company's acquisitions: Residential real $ 345 $ 115 estateCommercial, 1,891 858 financial, andagricultureInstallment loans to 76 (12 )individualsTime deposits 311 452

$ 2,623 $ 1,413

(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 Ended Six Months Ended June 30, 2020 March 31, December 31, September 30, June 30, 2019 June 30, 2020 June 30, 2019 2020 2019 2019Net InterestIncome/MarginNet interest $ 38,070 $ 40,415 $ 39,847 $ 40,537 $ 40,911 $ 78,486 $ 80,977 income("GAAP")Taxable 217 188 189 192 202 406 410 equivalentadjustmentNet interestincome, $ 38,287 $ 40,603 $ 40,036 $ 40,729 $ 41,113 $ 78,892 $ 81,387 fullytaxableequivalent Averageinterest $ 4,914,242 $ 4,617,157 $ 4,585,008 $ 4,503,502 $ 4,513,503 $ 4,765,701 $ 4,478,290 earningassets Net Interest 3.13 % 3.54 % 3.46 % 3.59 % 3.66 % 3.33 % 3.66 %MarginAccretionrelated to -0.08 % -0.14 % -0.08 % -0.11 % -0.08 % -0.11 % -0.06 %fair valueadjustmentsNet InterestMargin 3.05 % 3.40 % 3.38 % 3.48 % 3.58 % 3.22 % 3.60 %(excludingaccretion) TangibleEquity Ratio(period end)Equity to 12.55 % 13.47 % 13.11 % 13.10 % 12.89 %assets("GAAP")Effect ofgoodwill and -1.93 % -2.09 % -2.13 % -2.17 % -2.19 %otherintangibles,netTangiblecommon 10.62 % 11.38 % 10.98 % 10.93 % 10.70 %equity totangibleassets Return onTangibleEquityReturn ontangible 12.6 % 20.6 % 16.8 % 17.0 % 17.9 % 16.6 % 17.8 %equity("GAAP")Impact ofmerger 0.0 % 0.0 % 0.0 % 0.0 % 0.3 % 0.0 % 0.2 %relatedexpensesImpact of 0.0 % -9.7 % 0.0 % 0.0 % 0.0 % -4.8 % 0.0 %sale of VISAsharesReturn ontangibleequity,excluding 12.6 % 10.9 % 16.8 % 17.0 % 18.2 % 11.8 % 18.0 %mergerrelatedexpenses andsale of VISAshares Return onAssetsReturn on 1.35 % 2.29 % 1.80 % 1.81 % 1.84 % 1.81 % 1.80 %assets("GAAP")Impact ofmerger 0.00 % 0.00 % 0.00 % 0.00 % 0.04 % 0.00 % 0.03 %relatedexpensesImpact of 0.00 % -1.08 % 0.00 % 0.00 % 0.00 % -0.52 % 0.00 %sale of VISAsharesReturn onassets,excludingmerger 1.35 % 1.21 % 1.80 % 1.81 % 1.88 % 1.29 % 1.83 %relatedexpenses andsale of VISAshares

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