NEWS RELEASE

For Immediate Release
April 28, 2020

For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102

City Holding Company Announces Record Quarterly Results

Charleston, West Virginia - City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $5.1 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $29.0 million and diluted earnings of $1.78 per share for the quarter ended March 31, 2020. The results for the quarter ending March 31, 2020, include $17.8 million, or $0.84 diluted per share on an after-tax basis, from the Company’s sale of 86,605 shares of Visa Inc. Class B common stock.

Highlights of the Company’s performance and results for the quarter ended March 31, 2020 include the following:

•
Return on assets and return on tangible equity of 2.29% and 20.6%, respectively. Excluding the gain from the sale of Visa shares, return on assets and return on tangible equity would have been 1.21% and 10.9%, respectively.
•
Reported net interest income increased $0.6 million (1.4%) from the quarter ended December 31, 2019, while net interest income exclusive of accretion from fair value adjustments on recent acquisitions decreased $0.1 million (0.3%) from the quarter ended December 31, 2019.
•
Reported a provision for credit losses of $8.0 million for the quarter ended March 31, 2020, primarily due to the potential economic impact of the COVID-19 pandemic.
•
Using capital created from the sale of Visa stock, City repurchased 182,000 common shares at a weighted average price of $71.31 per share as part of a one million share repurchase plan authorized by the Board of Directors in February 2019. City maintained its quarterly dividend of $0.57 per share payable on April 30, 2020 to shareholders of record on April 15, 2020. Increased our tangible equity ratio from 11.0% at December 31, 2019 to 11.4% at March 31, 2020.
•
Repaid $4.1 million of Junior Subordinated Deferrable Interest Debentures assumed by the Company in conjunction with the acquisition of Poage Bankshares, Inc. (“Poage”).

City’s CEO Charles Hageboeck stated that, “In recent weeks, we have seen our communities, country and world disrupted by the onset of a global pandemic, COVID-19, which has also resulted in an economic crisis. Although many of the markets in which City operates have had relatively low exposure to COVID-19, in order to protect our staff and customers, we began taking necessary steps to revise our operations and customer service protocols in mid-March. Operating in slightly different manners than our




historic norm, our innovative staff have found many ways to continue providing exceptional customer service to our customers and communities in a timely and safe manner. As a result, we are conducting the majority of our customer service transactions at our drive-thrus and via electronic capabilities - interactive-teller machines (ITMs), automated-teller machines (ATMs), mobile banking, on-line banking, and interactive voice response systems. We temporarily closed seven of our locations that do not have drive-thru facilities.”

“When necessary, our staff have also been assisting customers with loan payment deferrals for up to six months for customers whose job or business have been impacted by stay at home actions taken by federal, state and local authorities. As of April 24, 2020 we have granted deferrals of approximately $82.2 million for mortgage borrowers and approximately $377.9 million for commercial borrowers. City is also participating in the Paycheck Protection Program loans administered by the Small Business Administration (“SBA”). Although internal deposit growth has been strong, the Company may utilize the Federal Reserve’s Paycheck Protection Program Liquidity Fund to fund these loans.”

“As a result of the COVID-19 crisis, and the associated increase in unemployment, businesses and consumers across the nation are experiencing economic challenges. Heavily impacted industries include hotels, restaurants, entertainment establishments, multi-family housing, energy, healthcare, senior housing, and unsecured credit (particularly credit cards). As of March 31, 2020, the Company had loans totaling $1.78 billion secured by residential residences (49.6% of total loans); $434.2 million secured by nonresidential commercial properties (12.0% of total loans); $340.9 million secured by multi-family housing (9.4% of total loans); and $292.1 million secured by hotel and lodging real estate (8.1% of total loans). City has very limited lending exposure to restaurants, energy, hospital, or senior housing industries. Additionally, City has no exposure to credit losses in unsecured credit cards. City’s loan portfolio is mostly in markets where City has branch distribution, and these are markets experiencing relatively less impact by COVID-19 than the nation as a whole. As of April 24, 2020, principal and interest deferrals total $222.4 million for hotel and lodging real estate and $9.8 million for restaurants. The Company will continue to closely monitor the risks associated with these portfolios and will work with our customers to minimize our losses in these and all segments of our loan portfolio.”

“Although these times are challenging, we remain committed to serving our customers and communities and, together, we will get through these tough times.”

Net Interest Income

The Company’s net interest income increased from $39.9 million during the fourth quarter of 2019 to $40.4 million during the first quarter of 2020. During the first quarter of 2020, the Company’s tax equivalent net interest income increased $0.6 million, or 1.4%, from $40.0 million for the fourth quarter of 2019 to $40.6 million for the first quarter of 2020. Lower rates paid on interest-bearing liabilities lowered interest expense by $1.1 million during the quarter ended March 31, 2020. In addition, accretion from favorable fair value adjustments on recent acquisitions increased $0.7 million from the quarter ended December 31, 2019. These increases were partially offset by lower interest income from loans ($1.0 million) due to lower yields (6 basis points). The Company’s reported net interest margin increased from 3.46% for the fourth quarter of 2019 to 3.54% for the first quarter of 2020. Excluding the favorable impact of the accretion from fair value adjustments, the net interest margin would have been 3.40% for the quarter ended March 31, 2020 and 3.38% for the quarter ended December 31, 2019.

As a result of the COVID-19 crisis, on March 15th, the Federal Reserve cut the target range for Fed Funds Rate to a range of 0-25 basis points, which had the impact of lowering interest rates on variable rate loans tied to Prime, Libor or Fed Funds as well as the decreases in deposit rates discussed above for the last 15




days in the first quarter. City’s loan portfolio has historically included a significant portion of adjustable rate residential mortgage loans made in markets where City has a presence, and significant commercial loans collateralized with real estate.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned improved modestly from 0.45% at December 31, 2019 to 0.44% at March 31, 2020. Total nonperforming assets decreased from $16.4 million at December 31, 2019 to $16.0 million at March 31, 2020. Total past due loans decreased from $11.4 million, or 0.32% of total loans outstanding, at December 31, 2019 to $10.0 million, or 0.28% of total loans outstanding, at March 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 $8.0 million in the first quarter of 2020, compared to a recovery of loan loss provision of $0.8 million for the comparable period in 2019 and a recovery of loan loss provision of $0.1 million for the fourth quarter of 2019. The provision for credit losses recorded in the first quarter of 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 loss rates, exclusive of COVID-19, the Company’s ACL increased $1.1 million. During the quarter ended March 31, 2020, the downgrade of a hotel/motel related credit (located in North Central West Virginia) due to occupancy rates continuing to decline as a result of a slowdown in the oil and gas industry resulted in an increase to the ACL of $0.25 million. Partially offsetting these increases in the ACL, were payoffs from purchase credit-impaired loans that released $0.85 million of ACL reserves.

Non-interest Income

During the quarter ended March 31, 2020, the Company sold the entirety of its Visa Inc. Class B common shares (86,605) 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 $2.4 million of unrealized fair value losses on the Company’s equity securities compared to $0.1 million of unrealized fair value gains on the Company’s equity securities during the first quarter of 2019. The Company’s portfolio of equity securities




consists primarily of holdings in First National Corporation (a commercial banking company headquartered in Strasburg VA) and Eagle Financial Services (a commercial banking company headquartered in Berryville, VA). Exclusive of these items, non-interest income increased from $15.8 million for the first quarter of 2019 to $17.8 million for the first quarter of 2020. This increase was largely attributable to an increase of $0.7 million, or 88.7%, in other income primarily due to fees from loan interest rate swap originations and bank owned life insurance revenues increased $0.7 million due to death benefit proceeds received in the first quarter of 2020. Additionally, service charges increased $0.4 million (5.5%) and trust and investment management fee income increased $0.2 million (9.6%). While revenues for service fees and bankcard revenues for the quarter ending March 31, 2020, were only modestly impacted by COVID-19, such revenues are likely to trend downward for the quarter ended June 30, 2020. Through mid-April 2020, the run rate for these revenues has decreased approximately 25% due to reductions in discretionary spending from our customer base likely attributable to “stay at home” requirements in most markets in which City has a presence.
  
Non-interest Expenses

During the quarter ended March 31, 2019, the Company incurred $0.3 million of acquisition and integration expenses associated with the acquisitions of Poage and Farmers Deposit Bancorp, Inc. Excluding this expense, non-interest expenses increased $0.3 million, or 1.0%, from $29.2 million in the first quarter of 2019 to $29.5 million in the first quarter of 2020. Salaries and employee benefits increased $0.6 million due primarily to annual salary adjustments, bankcard expense increased $0.3 million, and equipment and software related expenses increased $0.2 million. These increases were partially offset by lower FDIC insurance expense ($0.3 million), occupancy related expense ($0.2 million), and telecommunication expense ($0.2 million).
 
Balance Sheet Trends

Loans remained stable from December 31, 2019 to March 31, 2020 at $3.61 billion. Increases in commercial real estate loans of $11.2 million (0.8%) were mostly offset by a decrease in residential loans of $10.8 million (0.7%).

Total average depository balances increased $17.3 million, or 0.4%, from the quarter ended December 31, 2019 to the quarter ended March 31, 2020. Average noninterest-bearing demand increased $14.2 million, average time deposit balances increased $3.0 million, and average savings deposit balances increased $2.8 million. These increases were partially offset by lower interest-bearing demand deposit balances of $2.7 million. Following the reduction in the target fed funds rate in mid-March, in order to provide our wealth management clients the best possible return, City transferred approximately $135 million in cash invested on behalf of City’s wealth management customers previously held in bank deposits into a higher yielding investment vehicle not on the bank’s balance sheet.

Income Tax Expense

The Company’s effective income tax rate for the first quarter of 2020 was 20.2% compared to 21.3% for the year ended December 31, 2019, and 21.2% for the quarter ended March 31, 2019.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 89.2% and the loan to asset ratio was 71.0% at March 31, 2020. The Company maintained investment securities totaling 18.9% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 52.8% of




assets at March 31, 2020. Time deposits fund 26.9% of assets at March 31, 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 is also strongly capitalized. The Company’s tangible equity ratio increased from 11.0% at December 31, 2019 to 11.4% at March 31, 2020. At March 31, 2020, City National Bank’s Leverage Ratio was 9.98%, its Common Equity Tier I ratio was 14.32%, its Tier I Capital ratio was 14.32%, and its Total Risk-Based Capital ratio was 14.82%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On March 25, 2020, the Board of Directors of the Company approved a quarterly cash dividend of $0.57 per share payable April 30, 2020, to shareholders of record as of April 15, 2020. During the quarter ended March 31, 2020, the Company repurchased 182,000 common shares at a weighted average price of $71.31 per share as part of a one million share repurchase plan authorized by the Board of Directors in February 2019. As of March 31, 2020, the Company could repurchase approximately 557,000 additional shares under the current program.

City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 95 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 March 31, 2020 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2020 results and will adjust the amounts if necessary.








CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 
Three Months Ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2020
2019
2019
2019
2019
 
 
 
 
 
 
Earnings
 
 
 
 
 
Net Interest Income (FTE)
$
40,603

$
40,036

$
40,729

$
41,113

$
40,274

Net Income available to common shareholders
29,000

22,611

22,371

22,751

21,619

 
 
 
 
 
 
Per Share Data
 
 
 
 
 
Earnings per share available to common shareholders:
 
 
 
 
 
   Basic
$
1.79

$
1.38

$
1.36

$
1.38

$
1.31

   Diluted
1.78

1.38

1.36

1.38

1.30

Weighted average number of shares:
 
 
 
 
 
   Basic
16,080

16,207

16,271

16,368

16,411

   Diluted
16,101

16,230

16,289

16,386

16,429

Period-end number of shares
16,140

16,303

16,302

16,397

16,484

Cash dividends declared
$
0.57

$
0.57

$
0.57

$
0.53

$
0.53

Book value per share (period-end)
42.45

40.36

39.85

38.84

37.57

Tangible book value per share (period-end)
35.03

32.98

32.44

31.44

30.18

Market data:
 
 
 
 
 
   High closing price
$
82.40

$
82.72

$
78.30

$
82.56

$
80.21

   Low closing price
57.11

74.33

72.35

73.05

67.58

   Period-end closing price
66.53

81.95

76.25

76.26

76.19

   Average daily volume
69

54

62

53

54

Treasury share activity:
 
 
 
 
 
      Treasury shares repurchased
182

—

99

107

55

      Average treasury share repurchase price
$
71.31

$
—

$
74.17

$
74.81

$
74.69

 
 
 
 
 
 
Key Ratios (percent)
 
 
 
 
 
Return on average assets
2.29
%
1.80
%
1.81
%
1.84
%
1.76
%
Return on average tangible equity
20.6
%
16.8
%
17.0
%
17.9
%
17.7
%
Yield on interest earning assets
4.22
%
4.22
%
4.42
%
4.48
%
4.46
%
Cost of interest bearing liabilities
0.91
%
1.00
%
1.10
%
1.09
%
1.04
%
Net Interest Margin
3.54
%
3.46
%
3.59
%
3.65
%
3.66
%
Non-interest income as a percent of total revenue
30.6
%
31.2
%
29.2
%
30.3
%
28.3
%
Efficiency Ratio
49.7
%
50.0
%
48.2
%
50.5
%
51.2
%
Price/Earnings Ratio (a)
17.58

14.82

13.98

13.84

14.58

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
Capital (period-end)
 
 
 
 
 
Average Shareholders' Equity to Average Assets
13.50
%
13.12
%
13.12
%
12.76
%
12.49
%
Tangible equity to tangible assets
11.38
%
10.98
%
10.93
%
10.70
%
10.37
%
Consolidated City Holding Company risk based capital ratios (b):
 
 
 
 
 
   CET I
16.02
%
16.05
%
15.62
%
15.91
%
15.55
%
   Tier I
16.02
%
16.05
%
15.74
%
16.03
%
15.67
%
   Total
16.46
%
16.40
%
16.14
%
16.47
%
16.13
%
   Leverage
11.10
%
10.90
%
10.87
%
10.70
%
10.62
%
City National Bank risk based capital ratios (b):
 
 
 
 
 
   CET I
14.32
%
13.92
%
14.00
%
14.19
%
13.89
%
   Tier I
14.32
%
13.92
%
14.00
%
14.19
%
13.89
%
   Total
14.82
%
14.28
%
14.40
%
14.63
%
14.36
%
   Leverage
9.98
%
9.51
%
9.72
%
9.51
%
9.45
%
 
 
 
 
 
 
Other
 
 
 
 
 
Branches
95

95

95

95

97

FTE
921

918

916

935

927

 
 
 
 
 
 
   Assets per FTE
$
5,525

$
5,467

$
5,412

$
5,284

$
5,305

   Deposits per FTE
4,400

4,440

4,399

4,312

4,361

 
 
 
 
 
 
(a) The price/earnings ratio is computed based on annualized quarterly earnings.
(b) March 31, 2020 risk-based capital ratios are estimated.





CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
 
Three Months Ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2020
2019
2019
2019
2019
Interest Income
 
 
 
 
 
   Interest and fees on loans
$
41,335

$
41,615

$
42,944

$
43,174

$
42,279

   Interest on investment securities:
 
 
 
 
 
     Taxable
5,871

5,924

6,044

5,732

5,689

     Tax-exempt
707

711

722

755

779

   Interest on deposits in depository institutions
304

298

271

577

186

Total Interest Income
48,217

48,548

49,981

50,238

48,933

 
 
 
 
 
 
Interest Expense
 
 
 
 
 
   Interest on deposits
7,238

7,897

8,585

8,417

7,767

   Interest on short-term borrowings
464

762

814

863

1,052

   Interest on long-term debt
100

42

45

47

48

Total Interest Expense
7,802

8,701

9,444

9,327

8,867

Net Interest Income
40,415

39,847

40,537

40,911

40,066

Provision for (recovery of) credit losses
7,972

(75
)
274

(600
)
(849
)
Net Interest Income After Provision for (Recovery of) Credit Losses
32,443

39,922

40,263

41,511

40,915

 
 
 
 
 
 
Non-Interest Income
 
 
 
 
 
Net gains (losses) on sale of investment securities
63

—

(40
)
21

88

Unrealized (losses) gains recognized on securities still held
(2,402
)
914

(214
)
113

75

   Service charges
7,723

8,233

8,183

7,778

7,321

   Bankcard revenue
5,115

5,162

5,440

5,522

4,969

   Trust and investment management fee income
1,799

2,016

1,802

1,699

1,642

   Bank owned life insurance
1,676

856

762

1,132

1,016

   Sale of VISA shares
17,837

—

—

—

—

   Other income
1,536

861

765

1,560

814

Total Non-Interest Income
33,347

18,042

16,698

17,825

15,925

 
 
 
 
 
 
Non-Interest Expense
 
 
 
 
 
   Salaries and employee benefits
15,851

15,918

15,210

15,767

15,243

   Occupancy related expense
2,488

2,540

2,725

2,598

2,732

   Equipment and software related expense
2,429

2,302

2,248

2,223

2,191

   FDIC insurance expense
—

—

—

347

291

   Advertising
843

694

861

920

869





   Bankcard expenses
1,435

1,285

1,554

1,534

1,182

   Postage, delivery, and statement mailings
616

588

659

545

624

   Office supplies
394

392

382

399

386

   Legal and professional fees
601

706

539

605

521

   Telecommunications
511

563

569

597

726

   Repossessed asset losses (gains), net of expenses
198

224

(59
)
253

216

   Merger related expenses
—

—

—

547

250

   Other expenses
4,102

3,822

3,709

4,437

4,180

Total Non-Interest Expense
29,468

29,034

28,397

30,772

29,411

Income Before Income Taxes
36,322

28,930

28,564

28,564

27,429

   Income tax expense
7,322

6,319

6,193

5,813

5,810

Net Income Available to Common Shareholders
$
29,000

$
22,611

$
22,371

$
22,751

$
21,619

 
 
 
 
 
 
Distributed earnings allocated to common shareholders
$
9,117

$
9,209

$
9,213

$
8,615

$
8,661

Undistributed earnings allocated to common shareholders
19,620

13,200

12,966

13,939

12,772

Net earnings allocated to common shareholders
$
28,737

$
22,409

$
22,179

$
22,554

$
21,433

 
 
 
 
 
 
 
 
 
 
 
 
Average common shares outstanding
16,080

16,207

16,271

16,368

16,411

Shares for diluted earnings per share
16,101

16,230

16,289

16,386

16,429

 
 
 
 
 
 
Basic earnings per common share
$
1.79

$
1.38

$
1.36

$
1.38

$
1.31

Diluted earnings per common share
$
1.78

$
1.38

$
1.36

$
1.38

$
1.30

 
 
 
 
 
 





CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
 
(Unaudited)
 
(Unaudited)
(Unaudited)
(Unaudited)
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2020
2019
2019
2019
2019
Assets
 
 
 
 
 
Cash and due from banks
$
92,365

$
88,658

$
71,332

$
53,373

$
50,522

Interest-bearing deposits in depository institutions
18,271

51,486

44,862

115,346

93,328

Cash and cash equivalents
110,636

140,144

116,194

168,719

143,850

 
 
 
 
 
 
Investment securities available-for-sale, at fair value
934,113

810,106

798,930

796,237

755,081

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

49,036

51,211

53,362

55,326

Other securities
26,827

28,490

28,070

28,014

26,182

Total investment securities
960,940

887,632

878,211

877,613

836,589

 
 
 
 
 
 
Gross loans
3,613,050

3,616,099

3,582,571

3,519,367

3,559,322

Allowance for credit losses
(24,393
)
(11,589
)
(13,186
)
(13,795
)
(14,646
)
Net loans
3,588,657

3,604,510

3,569,385

3,505,572

3,544,676

 
 
 
 
 
 
Bank owned life insurance
116,000

115,261

114,616

113,855

114,256

Premises and equipment, net
78,948

76,965

76,929

78,263

78,747

Accrued interest receivable
12,570

11,569

12,929

12,719

13,657

Net deferred tax assets
2,159

6,669

6,432

8,835

12,734

Intangible assets
119,829

120,241

120,773

121,322

121,790

Other assets
98,710

55,765

62,248

53,569

51,309

Total Assets
$
5,088,449

$
5,018,756

$
4,957,717

$
4,940,467

$
4,917,608

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Deposits:
 
 
 
 
 
   Noninterest-bearing
$
857,501

$
805,087

$
795,548

$
798,056

$
793,633

   Interest-bearing:
 
 
 
 
 
   Demand deposits
837,966

896,465

898,704

891,742

879,279

   Savings deposits
989,609

1,009,771

980,539

974,847

988,182

   Time deposits
1,366,977

1,364,571

1,354,787

1,366,991

1,381,913

Total deposits
4,052,053

4,075,894

4,029,578

4,031,636

4,043,007

Short-term borrowings
 
 
 
 
 
Federal Funds purchased
9,900

—

—

—

—

Customer repurchase agreements
224,247

211,255

202,622

207,033

194,683

Long-term debt
—

4,056

4,055

4,054

4,053

Other liabilities
117,021

69,568

71,859

60,836

56,624

Total Liabilities
4,403,221

4,360,773

4,308,114

4,303,559

4,298,367

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Stockholders' Equity
 
 
 
 
 
Preferred stock
—

—

—

—

—

Common stock
47,619

47,619

47,619

47,619

47,619

Capital surplus
170,096

170,309

169,794

169,374

170,215

Retained earnings
556,718

539,253

525,933

512,911

498,847

Cost of common stock in treasury
(116,665
)
(105,038
)
(105,138
)
(98,084
)
(91,589
)
Accumulated other comprehensive income (loss):
 
 
 
 
 
Unrealized gain (loss) on securities available-for-sale
33,730

12,110

17,266

10,959

20

Underfunded pension liability
(6,270
)
(6,270
)
(5,871
)
(5,871
)
(5,871
)
Total Accumulated Other Comprehensive Income (Loss)
27,460

5,840

11,395

5,088

(5,851
)
Total Stockholders' Equity
685,228

657,983

649,603

636,908

619,241

Total Liabilities and Stockholders' Equity
$
5,088,449

$
5,018,756

$
4,957,717

$
4,940,467

$
4,917,608

 
 
 
 
 
 
Regulatory Capital
 
 
 
 
 
Total CET 1 capital
$
547,040

$
532,829

$
518,175

$
511,344

$
504,148

Total tier 1 capital
547,040

532,829

522,175

515,344

508,148

Total risk-based capital
561,944

544,479

535,441

529,230

523,053

Total risk-weighted assets
3,412,591

3,319,998

3,318,386

3,214,153

3,241,989







CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2020
2019
2019
2019
2019
 
 
 
 
 
 
Residential real estate (1)
$
1,629,578

$
1,640,396

$
1,643,416

$
1,644,494

$
1,625,647

Home equity - junior liens
146,034

148,928

150,808

150,676

152,251

Commercial and industrial
308,567

308,015

296,927

288,803

289,327

Commercial real estate (2)
1,470,949

1,459,737

1,431,983

1,378,116

1,436,190

Consumer
54,749

54,263

54,799

53,356

52,483

DDA overdrafts
3,173

4,760

4,638

3,922

3,424

Gross Loans
$
3,613,050

$
3,616,099

$
3,582,571

$
3,519,367

$
3,559,322

 
 
 
 
 
 
Construction loans included in:
 
 
 
 
 
(1) - Residential real estate loans
$
28,870

$
29,033

$
24,955

$
23,673

$
22,635

(2) - Commercial real estate loans
44,453

64,049

55,267

43,432

56,282






CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information
(Unaudited) ($ in 000s)

 
Three Months Ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2020
2019
2019
2019
2019
Allowance for Loan Losses
 
 
 
 
 
Balance at beginning of period
$
11,589

$
13,186

$
13,795

$
14,646

$
15,966

 
 
 
 
 
 
Charge-offs:
 
 
 
 
 
Commercial and industrial
(77
)
(193
)
(17
)
(51
)
—

Commercial real estate
(383
)
(964
)
(216
)
(133
)
(45
)
Residential real estate
(483
)
(226
)
(194
)
(230
)
(137
)
Home equity
(45
)
(134
)
(43
)
(71
)
(46
)
Consumer
(55
)
(338
)
(279
)
(184
)
(376
)
DDA overdrafts
(703
)
(792
)
(772
)
(588
)
(625
)
Total charge-offs
(1,746
)
(2,647
)
(1,521
)
(1,257
)
(1,229
)
 
 
 
 
 
 
Recoveries:
 
 
 
 
 
Commercial and industrial
9

581

43

5

135

Commercial real estate
203

10

7

575

32

Residential real estate
95

87

157

50

75

Home equity
47

—

—

—

—

Consumer
13

54

68

46

97

DDA overdrafts
451

393

363

330

419

Total recoveries
818

1,125

638

1,006

758

 
 
 
 
 
 
Net (charge-offs)/recoveries
(928
)
(1,522
)
(883
)
(251
)
(471
)
Provision for (recovery of) credit losses
7,972

(75
)
274

(600
)
(849
)
Impact of adopting ASC 326
5,760

—

—

—

—

Balance at end of period
$
24,393

$
11,589

$
13,186

$
13,795

$
14,646

 
 
 
 
 
 
Loans outstanding
$
3,613,050

$
3,616,099

$
3,582,571

$
3,519,367

$
3,559,322

Allowance as a percent of loans outstanding
0.68
%
0.32
%
0.37
%
0.39
%
0.41
%
Allowance as a percent of non-performing loans
202.2
%
98.6
%
84.3
%
115.3
%
119.9
%
 
 
 
 
 
 
Average loans outstanding
$
3,608,868

$
3,607,864

$
3,544,548

$
3,539,077

$
3,576,984

Net charge-offs (recoveries) (annualized) as a percent of average loans outstanding
0.10
%
0.17
%
0.10
%
0.03
%
0.05
%








CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, Continued
(Unaudited) ($ in 000s)
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2020
2019
2019
2019
2019
Nonaccrual Loans
 
 
 
 
 
Residential real estate
$
2,750

$
3,393

$
2,570

$
2,354

$
3,263

Home equity
249

531

469

161

41

Commercial and industrial
1,175

1,182

2,059

2,149

1,526

Commercial real estate
7,865

6,384

10,099

7,204

7,282

Consumer
1

—

—

—

1

   Total nonaccrual loans
12,040

11,490

15,197

11,868

12,113

Accruing loans past due 90 days or more
26

267

452

94

106

   Total non-performing loans
12,066

11,757

15,649

11,962

12,219

Other real estate owned
3,922

4,670

2,326

2,581

3,186

   Total non-performing assets
$
15,988

$
16,427

$
17,975

$
14,543

$
15,405

 
 
 
 
 
 
Non-performing assets as a percent of loans and other real estate owned
0.44
%
0.45
%
0.50
%
0.41
%
0.43
%
 
 
 
 
 
 
Past Due Loans
 
 
 
 
 
Residential real estate
$
7,815

$
7,485

$
6,859

$
7,302

$
7,972

Home equity
430

956

796

322

720

Commercial and industrial
71

458

526

166

101

Commercial real estate
1,021

1,580

1,276

1,026

1,414

Consumer
177

187

124

172

264

DDA overdrafts
467

730

626

487

535

   Total past due loans
$
9,981

$
11,396

$
10,207

$
9,475

$
11,006

 
 
 
 
 
 
Total past due loans as a percent of loans outstanding
0.28
%
0.32
%
0.28
%
0.27
%
0.31
%
 
 
 
 
 
 
Troubled Debt Restructurings ("TDRs")
 
 
 
 
 
   Residential real estate
$
21,413

$
21,029

$
21,320

$
22,373

$
23,481

   Home equity
2,294

3,628

3,034

3,062

3,018

   Commercial and industrial
—

—

83

83

89

   Commercial real estate
5,163

4,973

8,100

8,044

8,164

   Consumer
184

—

—

—

—

     Total TDRs
$
29,054

$
29,630

$
32,537

$
33,562

$
34,752








CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)

 
Three Months Ended
 
March 31, 2020
December 31, 2019
March 31, 2019
 
Average
 
Yield/
Average
 
Yield/
Average
 
Yield/
 
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
 
 
 
 
 
 
 
 
 
Loan portfolio (1):
 
 
 
 
 
 
 
 
 
Residential real estate (2)
$
1,780,473

$
19,881

4.49
%
$
1,792,186

$
20,135

4.46
%
$
1,806,233

$
20,451

4.59
%
Commercial, financial, and agriculture (2)
1,770,178

20,476

4.65
%
1,755,775

20,371

4.60
%
1,715,524

20,845

4.93
%
Installment loans to individuals (2), (3)
58,217

863

5.96
%
59,903

902

5.97
%
55,227

840

6.17
%
Previously securitized loans (4)
 ***
115

 ***
 ***
207

 ***
 ***
144

 ***
Total loans
3,608,868

41,335

4.61
%
3,607,864

41,615

4.58
%
3,576,984

42,280

4.79
%
Securities:
 
 
 
 
 
 
 
 
 
Taxable
810,766

5,871

2.91
%
790,317

5,925

2.97
%
714,413

5,689

3.23
%
Tax-exempt (5)
94,591

895

3.81
%
94,248

900

3.79
%
102,375

986

3.91
%
Total securities
905,357

6,766

3.01
%
884,565

6,825

3.06
%
816,788

6,675

3.31
%
Deposits in depository institutions
102,932

304

1.19
%
92,579

298

1.28
%
60,596

186

1.24
%
Total interest-earning assets
4,617,157

48,405

4.22
%
4,585,008

48,738

4.22
%
4,454,368

49,141

4.47
%
Cash and due from banks
70,763

 
 
66,351

 
 
64,688

 
 
Premises and equipment, net
77,368

 
 
76,998

 
 
78,220

 
 
Goodwill and intangible assets
120,091

 
 
120,510

 
 
122,605

 
 
Other assets
195,875

 
 
191,991

 
 
195,954

 
 
Less: Allowance for loan losses
(15,905
)
 
 
(12,881
)
 
 
(16,182
)
 
 
       Total assets
$
5,065,349

 
 
$
5,027,977

 
 
$
4,899,653

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
869,976

$
468

0.22
%
$
872,639

$
694

0.32
%
$
886,833

$
933

0.43
%
Savings deposits
1,005,829

700

0.28
%
1,003,063

944

0.37
%
947,337

1,066

0.46
%
Time deposits (2)
1,365,268

6,070

1.79
%
1,362,277

6,260

1.82
%
1,368,465

5,768

1.71
%
Short-term borrowings
209,010

464

0.89
%
221,685

762

1.36
%
237,616

1,052

1.80
%
Long-term debt
3,340

100

12.04
%
4,055

42

4.11
%
4,053

48

4.80
%
   Total interest-bearing liabilities
3,453,423

7,802

0.91
%
3,463,719

8,702

1.00
%
3,444,304

8,867

1.04
%
Noninterest-bearing demand deposits
852,384

 
 
838,192

 
 
788,109

 
 
Other liabilities
75,922

 
 
66,232

 
 
55,372

 
 
Stockholders' equity
683,620

 
 
659,834

 
 
611,868

 
 
Total liabilities and
 
 
 
 
 
 
 
 
 
stockholders' equity
$
5,065,349

 
 
$
5,027,977

 
 
$
4,899,653

 
 
Net interest income
 
$
40,603

 
 
$
40,036

 
 
$
40,274

 
Net yield on earning assets
 
 
3.54
%
 
 
3.46
%
 
 
3.67
%
 
 
 
 
 
 
 
 
 
 
(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income:
 
 
 
 
 
 
 
 
 
 
Loan fees
 
$
116

 
 
$
152

 
 
$
134

 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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
 
$
151

 
 
$
159

 
 
$
32

 
Commercial, financial, and agriculture
 
1,240

 
 
398

 
 
190

 
Installment loans to individuals
 
39

 
 
46

 
 
(6
)
 
Time deposits
 
155

 
 
316

 
 
256

 
 
 
$
1,585

 
 
$
919

 
 
$
472

 
 
 
 
 
 
 
 
 
 
 
(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 SUBSIDIARIES
Non-GAAP Reconciliations
(Unaudited) ($ in 000s)
 
Three Months Ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2020
2019
2019
2019
2019
Net Interest Income/Margin
 
 
 
 
 
Net interest income ("GAAP")
$
40,415

$
39,847

$
40,537

$
40,911

$
40,066

Taxable equivalent adjustment
188

189

192

202

208

Net interest income, fully taxable equivalent
$
40,603

$
40,036

$
40,729

$
41,113

$
40,274

 
 
 
 
 
 
Average interest earning assets
$
4,617,157

$
4,585,008

$
4,503,502

$
4,513,503

$
4,466,495

 
 
 
 
 
 
Net Interest Margin
3.54
 %
3.46
 %
3.59
 %
3.65
 %
3.66
 %
Accretion related to fair value adjustments
(0.14
)%
(0.08
)%
(0.11
)%
(0.08
)%
(0.05
)%
Net Interest Margin (excluding accretion)
3.40
 %
3.38
 %
3.48
 %
3.57
 %
3.61
 %
 
 
 
 
 
 
Tangible Equity Ratio (period end)
 
 
 
 
 
Equity to assets ("GAAP")
13.47
 %
13.11
 %
13.10
 %
12.89
 %
12.59
 %
Effect of goodwill and other intangibles, net
(2.09
)%
(2.13
)%
(2.17
)%
(2.19
)%
(2.22
)%
Tangible common equity to tangible assets
11.38
 %
10.98
 %
10.93
 %
10.70
 %
10.37
 %
 
 
 
 
 
 
Return on Tangible Equity
 
 
 
 
 
Return on tangible equity ("GAAP")
20.6
 %
16.8
 %
17.0
 %
17.9
 %
17.7
 %
Impact of merger related expenses
—
 %
—
 %
—
 %
0.3
 %
0.1
 %
Impact of sale of VISA shares
(9.7
)%
—
 %
—
 %
—
 %
—
 %
Return on tangible equity, excluding merger related expenses and sale of VISA shares
10.9
 %
16.8
 %
17
 %
18.2
 %
17.8
 %
 
 
 
 
 
 
Return on Assets
 
 
 
 
 
Return on assets ("GAAP")
2.29
 %
1.80
 %
1.81
 %
1.84
 %
1.76
 %
Impact of merger related expenses
—
 %
—
 %
—
 %
0.04
 %
0.02
 %
Impact of sale of VISA shares
(1.08
)%
—
 %
—
 %
—
 %
—
 %
Return on assets, excluding merger related expenses and sale of VISA shares
1.21
 %
1.80
 %
1.81
 %
1.88
 %
1.78
 %