Regulatory Requirements And Capital Ratios

12 Months Ended

Dec. 31, 2020

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Regulatory Requirements And Capital Ratios

REGULATORY REQUIREMENTS AND CAPITAL RATIOS

    The principal source of income and cash for City Holding (the "Parent Company") is dividends from City National. Dividends paid by City National to the Parent Company are subject to certain legal and regulatory limitations. Generally, any dividends in amounts that exceed the earnings retained by City National in the current year plus retained net profits for the preceding two years must be approved by regulatory authorities. Approval is also required if dividends declared would cause City National’s regulatory capital to fall below specified minimum levels.  At December 31, 2020, City National could pay dividends up to $67.7 million without prior regulatory permission.

    During 2020, the Parent Company used cash obtained from the dividends received primarily to: (1) pay common dividends to shareholders and (2) fund repurchases of the Company's common shares. As of December 31, 2020, the Parent Company reported a cash balance of approximately $22.3 million.  Management believes that the Parent Company’s available cash balance, together with cash dividends from City National, is adequate to satisfy its funding and cash needs in 2021.

    As of January 1, 2019, the Basel III Capital Rules require City Holding and City National to maintain minimum CET 1, Tier 1 and Total Capital ratios, along with a capital conservation buffer, effectively resulting in new minimum capital ratios (which are shown in the table below). The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The Basel III Capital Rules also provide for a "countercyclical capital buffer" that is applicable to only certain covered institutions and does not have any current applicability to City Holding Company or City National Bank.

The Company’s regulatory capital ratios for both City Holding and City National include the 2.5% capital conservation buffer and are illustrated in the following tables (in thousands):

December 31, 2020	Actual				Minimum Required - Basel III				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	557,641	16.2	%	$	241,221	7.0	%	$	223,991	6.5	%
City National Bank	482,754		14.1	%	239,569		7.0	%	222,457		6.5	%
Tier 1 Capital
City Holding Company	557,641		16.2	%	292,911		8.5	%	275,681		8.0	%
City National Bank	482,754		14.1	%	290,906		8.5	%	273,793		8.0	%
Total Capital
City Holding Company	577,292		16.8	%	361,831		10.5	%	344,601		10.0	%
City National Bank	502,405		14.7	%	359,354		10.5	%	342,242		10.0	%
Tier 1 Leverage Ratio
City Holding Company	557,641		10.2	%	218,163		4.0	%	272,704		5.0	%
City National Bank	482,754		9.0	%	215,277		4.0	%	269,097		5.0	%

December 31, 2019:	Actual				Minimum Required - Basel III				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	532,640	16.0	%	$	232,358	7.0	%	$	215,761	6.5	%
City National Bank	459,006		13.9	%	230,808		7.0	%	214,322		6.5	%
Tier 1 Capital
City Holding Company	536,640		16.2	%	282,150		8.5	%	265,552		8.0	%
City National Bank	459,006		13.9	%	280,267		8.5	%	263,781		8.0	%
Total Capital
City Holding Company	548,291		16.5	%	348,538		10.5	%	331,941		10.0	%
City National Bank	470,656		14.3	%	346,213		10.5	%	329,726		10.0	%
Tier 1 Leverage Ratio
City Holding Company	536,640		11.0	%	195,558		4.0	%	244,448		5.0	%
City National Bank	459,006		9.5	%	193,074		4.0	%	241,342		5.0	%

    As of December 31, 2020, management believes that City Holding Company, and its banking subsidiary, City National, were "well capitalized." City Holding is subject to regulatory capital requirements administered by the Federal Reserve, while City National is subject to regulatory capital requirements administered by the Office of the Comptroller of the Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC"). Regulatory agencies can initiate certain mandatory actions if either City Holding or City National fails to meet the minimum capital requirements, as shown above. As of December 31, 2020, management believes that City Holding and City National meet all capital adequacy requirements.

    In November 2019, the federal banking regulators published final rules implementing a simplified measure of capital adequacy for certain banking organizations that have less than $10 billion in total consolidated assets. Under the final rules, which went into effect on January 1, 2020, depository institutions and depository institution holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio of greater than 9%, off–balance–sheet exposures of 25% or less of total consolidated assets and trading assets plus trading liabilities of 5% or less of total consolidated assets, are deemed "qualifying community banking organizations" and are eligible to opt into the

"community bank leverage ratio framework." A qualifying community banking organization that elects to use the community bank leverage ratio framework and that maintains a leverage ratio of greater than 9% is considered to have satisfied the generally applicable risk–based and leverage capital requirements under the Basel III Rules and, if applicable, is considered to have met the "well capitalized" ratio requirements for purposes of its primary federal regulator’s prompt corrective action rules, discussed below. The final rules include a two–quarter grace period during which a qualifying community banking organization that temporarily fails to meet any of the qualifying criteria, including the greater–than–9% leverage capital ratio requirement, is generally still deemed "well capitalized" so long as the banking organization maintains a leverage capital ratio greater than 8%. A banking organization that fails to maintain a leverage capital ratio greater than 8% is not permitted to use the grace period and must comply with the generally applicable requirements under the Basel III Rules and file the appropriate regulatory reports. The Company and its subsidiary bank do not have any immediate plans to elect to use the community bank leverage ratio framework but may make such an election in the future.