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Published: 2023-07-25 15:04:49 ET

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EX-99.1 2 chco06-30x23exhibit991.htm EX-99.1 Document

NEWS RELEASE

For Immediate Release

July 25, 2023

For Further Information Contact:

David L. Bumgarner, Executive Vice President and Chief Financial Officer

(304) 769-1169

City Holding Company Announces Record Quarterly Results

Charleston, West Virginia – City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $6.1 billion bank holding company headquartered in Charleston, West Virginia, today announced record quarterly net income of $32.7 million and diluted earnings of $2.16 per share for the quarter ended June 30, 2023. For the second quarter of 2023, the Company achieved a return on assets of 2.12% and a return on tangible equity of 27.4%.

Net Interest Income

The Company’s net interest income increased approximately $2.0 million, or 3.8%, from $53.5 million during the first quarter of 2023 to $55.5 million during the second quarter of 2023. The Company’s tax equivalent net interest income increased $2.0 million, or 3.7%, from $53.8 million for the first quarter of 2023 to $55.8 million for the second quarter of 2023. The acquisition of Citizens Commerce Bancshares, Inc., and its subsidiary, Citizens Commerce Bank, (“Citizens”), during the first quarter of 2023 added $2.9 million of net interest income during the quarter ended June 30, 2023. Due to recent increases in the Federal Funds rate, net interest income increased by $1.7 million due to an increase in loan yields (net of loan fees and accretion) of 13 basis points and by $0.4 million due to an increase in the yield on deposits in depository institutions of 60 basis points. In addition, net interest income increased $0.6 million due to an increase in balances of deposits in depository institutions from the quarter ended March 31, 2023. These increases were partially offset by an increase in the cost of interest bearing liabilities (40 basis points) which decreased net interest income by $3.8 million. The Company’s reported net interest margin decreased from 4.05% for the first quarter of 2023 to 4.00% for the second quarter of 2023.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned remained stable at 0.17%, or $6.5 million, at both March 31, 2023 and June 30, 2023. Total past due loans increased from $5.9 million, or 0.15% of total loans outstanding, at March 31, 2023, to $7.4 million, or 0.19% of total loans outstanding at June 30, 2023.

As a result of the Company’s quarterly analysis of the adequacy of the allowance for credit losses, the Company recorded a provision for credit losses of $0.4 million in the second quarter of 2023, compared to

no provision for credit losses for the comparable period in 2022, and a provision for credit losses of $2.9 million for the first quarter of 2023. The provision for credit losses in the second quarter was primarily the result of net charge-offs.

Non-interest Income

Non-interest income was $20.3 million during the quarter ended June 30, 2023, as compared to $17.9 million during the quarter ended June 30, 2022. During the second quarter of 2023, the Company reported $0.3 million of unrealized fair value losses on the Company’s equity securities as compared to $0.6 million of unrealized fair value losses on the Company’s equity securities during the second quarter of 2022.

Exclusive of these items, non-interest income increased $2.1 million, or 11.6%, from $18.5 million for the second quarter of 2022 to $20.6 million for the second quarter of 2023. This increase was largely attributable to an increase of $2.2 million in bank owned life insurance due to higher death benefit proceeds and an increase of $0.2 million, or 11.4%, in trust and investment management fee income. These increases were partially offset by a decrease in other income of $0.3 million and a decrease in service fees of $0.2 million, or 2.3%. Citizens’ contribution to non-interest income for the quarter ended June 30, 2023 was less than $0.1 million.

Non-interest Expenses

Non-interest expenses increased $4.1 million, or 13.3%, from $30.7 million in the second quarter of 2022 to $34.8 million in the second quarter of 2023. This increase was largely due to an increase in salaries and employee benefits of $2.0 million due to the acquisition of Citizens ($0.6 million), salary adjustments, and increased health insurance cost. In addition, other expenses increased $1.2 million, and FDIC insurance expenses increased $0.3 million.

Balance Sheet Trends

Loans increased $27.5 million (0.7%) from March 31, 2023 to $3.92 billion at June 30, 2023. Commercial and industrial loans increased $27.0 million (6.9%) and residential real estate loans increased $9.0 million (0.5%) during the quarter ended June 30, 2023. These increases were partially offset by a decrease in commercial real estate loans of $7.8 million.

Period-end deposit balances decreased $121.7 million from March 31, 2023, to June 30, 2023. Total average depository balances increased $141.9 million, or 2.9%, from the quarter ended March 31, 2023 to the quarter ended June 30, 2023. This growth was primarily attributable to deposits acquired from Citizens ($226.5 million). Exclusive of these contributions, average depository balances declined $84.6 million, or 1.7%, from the quarter ended March 31, 2023. Average savings deposit balances decreased $64.0 million and average non-interest bearing demand deposit balances decreased $44.8 million. These decreases were partially offset by increases in average interest bearing demand deposit balances of $15.4 million and average time balances of $12.4 million.

Income Tax Expense

The Company’s effective income tax rate for the second quarter of 2023 was 19.4% compared to 19.8% for the year ended December 31, 2022, and 20.3%, for the quarter ended June 30, 2022.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 78.2% and its loan to asset ratio was 63.8% at June 30, 2023. The Company maintained investment securities totaling 23.6% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 66.0% of assets at June 30, 2023. Time deposits fund 15.6% of assets at June 30, 2023, with only 11.4% of time deposits having balances of more than $250,000, reflecting the core retail orientation of the Company.

City Holding Company is the parent company of City National Bank of West Virginia (“City National”). City National has borrowing facilities with the Federal Reserve Bank and the Federal Home Loan Bank that can be accessed as necessary to fund operations and to provide contingency funding. As of June 30, 2023, City National had the capacity to borrow an additional $2.0 billion from these existing borrowing facilities. In addition, $826.3 million of City National’s investment securities were unpledged at June 30, 2023.

The Company continues to be strongly capitalized with tangible equity of $473 million at June 30, 2023. The Company’s tangible equity ratio decreased slightly from 8.0% at December 31, 2022 to 7.9% at June 30, 2023. At June 30, 2023, City National’s Leverage Ratio was 9.36%, its Common Equity Tier I ratio was 14.82%, its Tier I Capital ratio was 14.82%, and its Total Risk-Based Capital ratio was 15.36%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On May 31, 2023, the Board of Directors of the Company approved a quarterly cash dividend of $0.65 per share payable July 31, 2023, to shareholders of record as of July 14, 2023. During the quarter ended June 30, 2023, the Company repurchased 269,000 common shares at a weighted average price of $88.93 per share as part of a one million share repurchase plan authorized by the Board of Directors in May 2022. As of June 30, 2023, the Company could repurchase 329,000 additional shares under the current program.

City National operates 99 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, 2022 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) ongoing uncertainties on the Company’s business, results of operations and financial condition caused by the scope of the recovery of the COVID-19 pandemic; (3) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for credit 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; and (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, 2023 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2023 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 31,			September 30,			June 30,			June 30,			June 30,
	2023			2023			2022			2022			2022			2023			2022

Earnings
Net Interest Income (FTE)	$	55,757		$	53,767		$	52,381		$	49,108		$	41,611		$	109,524		$	79,850
Net Income available to common shareholders	32,733			24,341			30,672			27,374			22,683			57,074			44,025

Per Share Data
Earnings per share available to common shareholders:
Basic	$	2.16		$	1.63		$	2.06		$	1.84		$	1.51		$	3.80		$	2.92
Diluted	2.16			1.63			2.05			1.83			1.51			3.79			2.92
Weighted average number of shares (in thousands):
Basic	14,994			14,818			14,756			14,776			14,888			14,897			14,930
Diluted	15,012			14,844			14,785			14,800			14,909			14,919			14,954
Period-end number of shares (in thousands)	15,007			15,260			14,788			14,856			14,864			15,007			14,864
Cash dividends declared	$	0.65		$	0.65		$	0.65		$	0.65		$	0.60		$	1.30		$	1.2
Book value per share (period-end)	42.39			42.66			39.08			36.91			39.83			42.39			39.83
Tangible book value per share (period-end)	31.50			31.91			31.25			29.09			31.99			31.50			31.99
Market data:
High closing price	$	97.92		$	100.27		$	101.94		$	90.24		$	83.07		$	100.27		$	85.99
Low closing price	83.57			89.17			89.32			78.40			73.88			83.57			73.88
Period-end closing price	89.99			90.88			93.09			88.69			79.88			89.99			79.88
Average daily volume (in thousands)	80			84			75			58			87			82			73
Treasury share activity:
Treasury shares repurchased (in thousands)	269			218			69			9			208			488			246
Average treasury share repurchase price	$	88.93		$	92.10		$	93.12		$	80.24		$	78.33		$	90.35		$	78.29

Key Ratios (percent)
Return on average assets	2.12		%	1.63		%	2.08		%	1.83		%	1.51		%	1.89		%	1.47		%
Return on average tangible equity	27.4		%	19.9		%	27.3		%	21.8		%	18.1		%	23.7		%	16.6		%
Yield on interest earning assets	4.87		%	4.66		%	4.23		%	3.72		%	3.15		%	4.76		%	3.04		%
Cost of interest bearing liabilities	1.22		%	0.86		%	0.48		%	0.21		%	0.15		%	1.05		%	0.16		%
Net Interest Margin	4.00		%	4.05		%	3.89		%	3.57		%	3.04		%	4.02		%	2.93		%
Non-interest income as a percent of total revenue	27.1		%	24.7		%	26.5		%	27.2		%	30.9		%	26.0		%	30.8		%
Efficiency Ratio	44.6		%	45.7		%	45.3		%	46.3		%	50.5		%	49.0		%	51.1		%
Price/Earnings Ratio (a)	10.40			13.95			11.30			12.08			13.23			11.85			13.67


Capital (period-end)
Average Shareholders' Equity to Average Assets	10.38		%	10.31		%	9.57		%	10.32		%	10.26		%
Tangible equity to tangible assets	7.90		%	8.05		%	8.02		%	7.41		%	7.76		%
Consolidated City Holding Company risk based capital ratios (b):
CET I	15.47		%	15.64		%	16.23		%	15.82		%	15.85		%
Tier I	15.47		%	15.64		%	16.23		%	15.82		%	15.85		%
Total	16.01		%	16.18		%	16.62		%	16.22		%	16.26		%
Leverage	9.80		%	10.20		%	10.01		%	9.74		%	9.42		%
City National Bank risk based capital ratios (b):
CET I	14.82		%	14.08		%	13.88		%	14.68		%	14.80		%
Tier I	14.82		%	14.08		%	13.88		%	14.68		%	14.80		%
Total	15.36		%	14.63		%	14.28		%	15.07		%	15.21		%
Leverage	9.36		%	9.18		%	8.55		%	9.05		%	8.81		%

Other (period-end)
Branches	99			99			94			94			94
FTE	963			958			909			903			915

Assets per FTE (in thousands)	$	6,383		$	6,483		$	6,467		$	6,588		$	6,825
Deposits per FTE (in thousands)	5,208			5,362			5,357			5,492			5,621

(a) The price/earnings ratio is computed based on annualized quarterly earnings.
(b) June 30, 2023 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										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2023		2023		2022		2022		2022		2023		2022
Interest Income
Interest and fees on loans	$	52,352	$	47,004	$	42,963	$	38,493	$	33,208	$	99,356	$	65,082
Interest on investment securities:
Taxable	11,794		11,773		11,119		9,556		7,547		23,567		13,770
Tax-exempt	950		1,162		1,262		1,228		1,205		2,112		2,421
Interest on deposits in depository institutions	2,585		1,591		1,244		1,530		782		4,176		1,020
Total Interest Income	67,681		61,530		56,588		50,807		42,742		129,211		82,293

Interest Expense
Interest on deposits	8,567		5,690		3,010		1,585		1,328		14,257		2,849
Interest on short-term borrowings	2,963		2,381		1,533		440		124		5,344		238
Interest on long-term debt	649		—		—		—		—		649		—
Total Interest Expense	12,179		8,071		4,543		2,025		1,452		20,250		3,087
Net Interest Income	55,502		53,459		52,045		48,782		41,290		108,961		79,206
Provision for (Recovery of) credit losses	425		2,918		500		730		—		3,343		(756)
Net Interest Income After Provision for (Recovery of) Credit Losses	55,077		50,541		51,545		48,052		41,290		105,618		79,962

Non-Interest Income
Net gains on sale of investment securities	—		773		4		—		—		773		—
Unrealized gains (losses) recognized on equity securities still held	(294)		361		(262)		1		(601)		67		(1,324)
Service charges	6,906		6,563		7,056		7,487		7,067		13,469		13,792
Bankcard revenue	7,190		6,603		6,791		7,052		7,062		13,793		13,506
Trust and investment management fee income	2,339		2,252		2,343		2,158		2,100		4,591		4,297
Bank owned life insurance	3,208		804		1,813		754		978		4,012		2,992
Other income	952		1,326		791		792		1,243		2,278		2,034
Total Non-Interest Income	20,301		18,682		18,536		18,244		17,849		38,983		35,297

Non-Interest Expense
Salaries and employee benefits	18,429		17,673		17,148		17,398		16,413		36,102		31,990
Occupancy related expense	2,811		2,640		2,725		2,664		2,620		5,451		5,329
Equipment and software related expense	2,883		3,092		3,341		2,949		2,732		5,975		5,501
FDIC insurance expense	690		445		413		416		409		1,135		844
Advertising	974		760		802		854		951		1,734		1,749
Bankcard expenses	1,736		1,509		1,356		1,405		1,665		3,245		3,271


Postage, delivery, and statement mailings	596		647		597		578		551		1,243		1,187
Office supplies	591		420		441		466		427		1,011		837
Legal and professional fees	558		470		610		532		525		1,028		1,052
Telecommunications	623		606		627		651		754		1,229		1,338
Repossessed asset losses (gains), net of expenses	22		16		54		(3)		(32)		38		8
Merger related expenses	—		5,645		268		—		—
Other expenses	4,848		4,700		4,203		3,591		3,674		9,548		7,110
Total Non-Interest Expense	34,761		38,623		32,585		31,501		30,689		73,384		60,216
Income Before Income Taxes	40,617		30,600		37,496		34,795		28,450		71,217		55,043
Income tax expense	7,884		6,259		6,824		7,421		5,767		14,143		11,018
Net Income Available to Common Shareholders	$	32,733	$	24,341	$	30,672	$	27,374	$	22,683	$	57,074	$	44,025

Distributed earnings allocated to common shareholders	$	9,668	$	9,833	$	9,521	$	9,564	$	8,837	$	19,336	$	17,671
Undistributed earnings allocated to common shareholders	22,774		14,294		20,857		17,555		13,643		37,233		25,951
Net earnings allocated to common shareholders	$	32,442	$	24,127	$	30,378	$	27,119	$	22,480	$	56,569	$	43,622


Average common shares outstanding	14,994		14,818		14,756		14,776		14,888		14,897		14,930
Shares for diluted earnings per share	15,012		14,844		14,785		14,800		14,909		14,919		14,954

Basic earnings per common share	2.16		1.63		2.06		1.84		1.51		3.80		2.92
Diluted earnings per common share	2.16		1.63		2.05		1.83		1.51		3.79		2.92

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

($ in 000s)


	(Unaudited)		(Unaudited)				(Unaudited)		(Unaudited)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2023		2023		2022		2022		2022
Assets
Cash and due from banks	$	66,350	$	69,804	$	68,333	$	65,051	$	90,449
Interest-bearing deposits in depository institutions	164,931		233,006		131,667		233,302		606,530
Cash and cash equivalents	231,281		302,810		200,000		298,353		696,979

Investment securities available-for-sale, at fair value	1,419,933		1,456,259		1,505,520		1,489,392		1,497,227
Other securities	29,262		24,728		23,807		24,372		24,383
Total investment securities	1,449,195		1,480,987		1,529,327		1,513,764		1,521,610

Gross loans	3,922,142		3,894,686		3,646,258		3,628,752		3,566,758
Allowance for credit losses	(22,751)		(22,724)		(17,108)		(17,011)		(17,015)
Net loans	3,899,391		3,871,962		3,629,150		3,611,741		3,549,743

Bank owned life insurance	117,173		124,238		120,674		121,283		120,528
Premises and equipment, net	73,118		73,430		70,786		71,686		72,388
Accrued interest receivable	17,973		18,395		18,287		17,256		16,342
Net deferred tax assets	46,944		42,146		44,884		49,888		30,802
Intangible assets	163,426		164,099		115,735		116,081		116,428
Other assets	148,333		132,715		149,263		147,716		118,375
Total Assets	$	6,146,834	$	6,210,782	$	5,878,106	$	5,947,768	$	6,243,195

Liabilities
Deposits:
Noninterest-bearing	$	1,373,106	$	1,420,990	$	1,351,415	$	1,429,281	$	1,531,660
Interest-bearing:
Demand deposits	1,337,445		1,356,017		1,233,482		1,160,970		1,189,056
Savings deposits	1,343,571		1,397,523		1,396,869		1,427,785		1,435,645
Time deposits	960,941		962,235		888,100		939,769		985,567
Total deposits	5,015,063		5,136,765		4,869,866		4,957,805		5,141,928
Short-term borrowings
Customer repurchase agreements	271,714		293,256		290,964		304,807		402,368
Long-term debt	100,000		—		—		—		—
Other liabilities	123,865		129,711		139,424		136,868		106,906
Total Liabilities	5,510,642		5,559,732		5,300,254		5,399,480		5,651,202

Stockholders' Equity
Preferred stock	—		—		—		—		—
Common stock	47,619		47,619		47,619		47,619		47,619
Capital surplus	176,746		177,529		170,980		170,138		169,557
Retained earnings	744,248		721,727		706,696		685,657		667,933


Cost of common stock in treasury	(201,973)		(179,436)		(215,955)		(209,644)		(209,133)
Accumulated other comprehensive (loss) income:
Unrealized (loss) gain on securities available-for-sale	(127,026)		(112,967)		(128,066)		(141,997)		(80,498)
Underfunded pension liability	(3,422)		(3,422)		(3,422)		(3,485)		(3,485)
Total Accumulated Other Comprehensive (Loss) Income	(130,448)		(116,389)		(131,488)		(145,482)		(83,983)
Total Stockholders' Equity	636,192		651,050		577,852		548,288		591,993
Total Liabilities and Stockholders' Equity	$	6,146,834	$	6,210,782	$	5,878,106	$	5,947,768	$	6,243,195

Regulatory Capital
Total CET 1 capital	$	605,661	$	606,675	$	598,068	$	582,213	$	564,158
Total tier 1 capital	605,661		606,675		598,068		582,213		564,158
Total risk-based capital	626,730		627,718		612,654		596,708		578,657
Total risk-weighted assets	3,913,870		3,878,994		3,685,207		3,679,511		3,558,249

CITY HOLDING COMPANY AND SUBSIDIARIES

Loan Portfolio

(Unaudited) ($ in 000s)


	June 30,		March 31,		December 31,		September 30,		June 30,
	2023		2023		2022		2022		2022

Commercial and industrial	$	417,847	$	390,861	$	373,890	$	375,735	$	360,481

1-4 Family	123,701		119,017		116,192		109,710		108,765
Hotels	324,745		327,554		340,404		355,001		337,910
Multi-family	191,483		195,042		174,786		186,440		203,856
Non Residential Non-Owner Occupied	673,921		679,782		585,964		569,369		551,240
Non Residential Owner Occupied	222,852		223,096		174,961		177,673		180,188
Commercial real estate (1)	1,536,702		1,544,491		1,392,307		1,398,193		1,381,959

Residential real estate (2)	1,746,618		1,737,604		1,693,523		1,678,770		1,651,005
Home equity	151,012		151,341		134,317		130,837		125,742
Consumer	65,201		66,994		48,806		41,902		44,580
DDA Overdrafts	4,762		3,395		3,415		3,315		2,991
Gross Loans	$	3,922,142	$	3,894,686	$	3,646,258	$	3,628,752	$	3,566,758

Construction loans included in:
(1) - Commercial real estate loans	$	3,361	$	4,715	$	4,130	$	4,125	$	6,767
(2) - Residential real estate loans	20,470		25,224		21,122		19,333		18,751

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information

(Unaudited) ($ in 000s)


	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2023			2023			2022			2022			2022			2023			2022
Allowance for Credit Losses
Balance at beginning of period	$	22,724		$	17,108		$	17,011		$	17,015		$	17,280		$	17,108		$	18,166

Charge-offs:
Commercial and industrial	(69)			—			(120)			(408)			—			(69)			(34)
Commercial real estate	(117)			(3)			(31)			—			(24)			(120)			(24)
Residential real estate	(20)			(32)			(66)			(93)			(56)			(52)			(106)
Home equity	(200)			(67)			(189)			(71)			(19)			(267)			(19)
Consumer	(109)			(62)			(15)			(16)			(9)			(171)			(32)
DDA overdrafts	(357)			(450)			(670)			(719)			(604)			(807)			(1,235)
Total charge-offs	(872)			(614)			(1,091)			(1,307)			(712)			(1,486)			(1,450)

Recoveries:
Commercial and industrial	86			83			94			149			32			169			91
Commercial real estate	28			158			120			9			25			186			78
Residential real estate	5			10			49			1			4			15			49
Home equity	12			4			34			2			3			16			20
Consumer	28			23			31			29			19			51			47
DDA overdrafts	315			398			360			383			364			713			770
Total recoveries	474			676			688			573			447			1,150			1,055

Net recoveries (charge-offs)	(398)			62			(403)			(734)			(265)			(336)			(395)
Provision for (recovery of) credit losses	425			2,918			500			730			—			3,343			(756)
PCD Loan Reserves	—			2,811			—			—			—
Adoption of ASU 2022-02	—			(175)			—			—			—
Balance at end of period	$	22,751		$	22,724		$	17,108		$	17,011		$	17,015		$	22,751		$	17,015

Loans outstanding	$	3,922,142		$	3,894,686		$	3,646,258		$	3,628,752		$	3,566,758
Allowance as a percent of loans outstanding	0.58		%	0.58		%	0.47		%	0.47		%	0.48		%
Allowance as a percent of non-performing loans	405.5		%	400.1		%	317.3		%	320.5		%	292.6		%

Average loans outstanding	$	3,896,284		$	3,700,194		$	3,648,996		$	3,596,523		$	3,559,713		$	3,798,781		$	3,543,642
Net charge-offs (annualized) as a percent of average loans outstanding	0.04		%	(0.01)		%	0.04		%	0.08		%	0.03		%	0.02		%	0.02		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information, Continued

(Unaudited) ($ in 000s)


	June 30,			March 31,			December 31,			September 30,			June 30,
	2023			2023			2022			2022			2022
Nonaccrual Loans
Residential real estate	$	2,774		$	2,700		$	1,969		$	2,089		$	1,561
Home equity	24			35			55			140			54
Commercial and industrial	741			994			1,015			785			1,360
Commercial real estate	1,821			1,931			2,166			2,293			2,783
Consumer	36			19			—			—			—
Total nonaccrual loans	5,396			5,679			5,205			5,307			5,758
Accruing loans past due 90 days or more	215			—			187			—			58
Total non-performing loans	5,611			5,679			5,392			5,307			5,816
Other real estate owned	874			843			909			1,071			946
Total non-performing assets	$	6,485		$	6,522		$	6,301		$	6,378		$	6,762

Non-performing assets as a percent of loans and other real estate owned	0.17		%	0.17		%	0.17		%	0.18		%	0.19		%

Past Due Loans
Residential real estate	$	5,884		$	4,783		$	7,091		$	3,452		$	5,298
Home equity	784			551			650			521			282
Commercial and industrial	142			98			234			221			130
Commercial real estate	238			148			710			221			46
Consumer	57			3			100			27			49
DDA overdrafts	341			276			391			561			430
Total past due loans	$	7,446		$	5,859		$	9,176		$	5,003		$	6,235

Total past due loans as a percent of loans outstanding	0.19		%	0.15		%	0.25		%	0.14		%	0.17		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)


	Three Months Ended
	June 30, 2023						March 31, 2023						June 30, 2022
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,894,269	$	21,702	4.60	%	$	1,840,828	$	20,007	4.41	%	$	1,730,617	$	16,156	3.74	%
Commercial, financial, and agriculture (2)	1,933,238		29,754		6.17	%	1,795,309		26,248		5.93	%	1,785,511		16,421		3.69	%
Installment loans to individuals (2), (3)	68,777		898		5.24	%	64,057		749		4.74	%	43,585		631		5.81	%
Total loans	3,896,284		52,354		5.39	%	3,700,194		47,004		5.15	%	3,559,713		33,208		3.74	%
Securities:
Taxable	1,301,063		11,794		3.64	%	1,322,060		11,773		3.61	%	1,269,049		7,548		2.39	%
Tax-exempt (4)	174,410		1,203		2.77	%	204,957		1,471		2.91	%	215,603		1,526		2.84	%
Total securities	1,475,473		12,997		3.53	%	1,527,017		13,244		3.52	%	1,484,652		9,074		2.45	%
Deposits in depository institutions	224,064		2,585		4.63	%	160,115		1,590		4.03	%	441,239		781		0.71	%
Total interest-earning assets	5,595,821		67,936		4.87	%	5,387,326		61,838		4.66	%	5,485,604		43,063		3.15	%
Cash and due from banks	71,949						67,891						102,532
Premises and equipment, net	73,450						71,422						72,887
Goodwill and intangible assets	163,847						124,546						116,645
Other assets	313,925						327,442						256,354
Less: Allowance for credit losses	(23,046)						(18,143)						(17,755)
Total assets	$	6,195,946					$	5,960,484					$	6,016,267

Liabilities:
Interest-bearing demand deposits	$	1,328,520	$	2,773	0.84	%	$	1,234,981	$	1,741	0.57	%	$	1,156,200	$	148	0.05	%
Savings deposits	1,365,894		1,942		0.57	%	1,376,317		1,348		0.40	%	1,430,121		182		0.05	%
Time deposits (2)	962,299		3,852		1.61	%	902,583		2,601		1.17	%	1,004,356		999		0.40	%
Customer repurchase agreements	294,255		2,963		4.04	%	281,861		2,381		3.43	%	288,031		123		0.17	%
Long-term debt	65,934		649		3.95	%	—		—		—	%	—		—		—	%
Total interest-bearing liabilities	4,016,902		12,179		1.22	%	3,795,742		8,071		0.86	%	3,878,708		1,452		0.15	%
Noninterest-bearing demand deposits	1,419,771						1,420,676						1,435,256
Other liabilities	116,083						129,411						85,075
Stockholders' equity	643,190						614,655						617,228
Total liabilities and
stockholders' equity	$	6,195,946					$	5,960,484					$	6,016,267
Net interest income			$	55,757					$	53,767					$	41,611
Net yield on earning assets					4.00	%					4.05	%					3.04	%

(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 (includes PPP fees)			$	393					$	518					$	3



(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	$	78	$	39	$	77
Commercial, financial, and agriculture	709		146		118
Installment loans to individuals	8		3		15
Time deposits	154		9		21
	$	949	$	198	$	231

(3) Includes the Company’s consumer and DDA overdrafts loan categories.
(4) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%.

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)


	Six Months Ended
	June 30, 2023						June 30, 2022
	Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,869,375	$	41,707	4.50	%	$	1,697,727	$	31,892	3.79	%
Commercial, financial, and agriculture (2)	1,866,177		56,001		6.05	%	1,801,999		31,952		3.58	%
Installment loans to individuals (2), (3)	63,229		1,648		5.26	%	43,916		1,238		5.68	%
Previously securitized loans (4)
Total loans	3,798,781		99,356		5.27	%	3,543,642		65,082		3.70	%
Securities:
Taxable	1,312,118		23,567		3.62	%	1,238,361		13,770		2.24	%
Tax-exempt (5)	188,984		2,674		2.85	%	223,992		3,065		2.76	%
Total securities	1,501,102		26,241		3.53	%	1,462,353		16,835		2.32	%
Deposits in depository institutions	192,266		4,176		4.38	%	490,445		1,020		0.42	%
Total interest-earning assets	5,492,149		129,773		4.76	%	5,496,440		82,937		3.04	%
Cash and due from banks	69,931						102,171
Premises and equipment, net	72,441						73,354
Goodwill and intangible assets	144,305						116,818
Other assets	320,646						237,115
Less: Allowance for loan losses	(20,608)						(18,103)
Total assets	$	6,078,864					$	6,007,795

Liabilities:
Interest-bearing demand deposits	$	1,282,009	$	4,513	0.71	%	$	1,149,277	$	278	0.05	%
Savings deposits	1,371,077		3,290		0.48	%	1,407,416		357		0.05	%
Time deposits (2)	932,606		6,453		1.40	%	1,026,149		2,214		0.44	%
Customer repurchase agreements	288,092		5,344		3.74	%	282,228		238		0.17	%
Long-term debt	33,149		649		3.95	%	—		—		—	%
Total interest-bearing liabilities	3,906,933		20,249		1.05	%	3,865,070		3,087		0.16	%
Noninterest-bearing demand deposits	1,420,221						1,417,060
Other liabilities	122,709						79,610
Stockholders' equity	629,001						646,055
Total liabilities and
stockholders' equity	$	6,078,864					$	6,007,795
Net interest income			$	109,524					$	79,850
Net yield on earning assets					4.02	%					2.93	%

(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, net (includes PPP fees)			911						301



(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	$	117	$	167
Commercial, financial, and agriculture	855		404
Installment loans to individuals	11		34
Time deposits	164		41
	1,147		646

(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, except per share data)


	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2023			2023			2022			2022			2022			2023			2022
Net Interest Income/Margin
Net interest income ("GAAP")	$	55,502		$	53,459		$	52,045		$	48,782		$	41,290		$	108,961		$	79,206
Taxable equivalent adjustment	255			308			336			326			321			563			644
Net interest income, fully taxable equivalent	$	55,757		$	53,767		$	52,381		$	49,108		$	41,611		$	109,524		$	79,850

Average interest earning assets	$	5,595,821		$	5,387,326		$	5,338,507		$	5,460,409		$	5,485,604		$	5,492,149		$	5,496,440

Net Interest Margin	4.00		%	4.05		%	3.89		%	3.57		%	3.04		%	4.02		%	2.93		%
Accretion related to fair value adjustments	(0.07)		%	(0.02)		%	(0.02)		%	(0.01)		%	(0.02)		%	(0.04)		%	(0.02)		%
Net Interest Margin (excluding accretion)	3.93		%	4.03		%	3.87		%	3.56		%	3.02		%	3.98		%	2.91		%

Tangible Equity Ratio (period end)
Equity to assets ("GAAP")	10.35		%	10.48		%	9.83		%	9.22		%	9.48		%
Effect of goodwill and other intangibles, net	(2.45)		%	(2.43)		%	(1.81)		%	(1.81)		%	(1.72)		%
Tangible common equity to tangible assets	7.90		%	8.05		%	8.02		%	7.41		%	7.76		%

Return on average tangible equity ("GAAP")	27.4		%	19.9		%	27.3		%	21.8		%	18.1		%
Impact of merger related expenses	—		%	3.6		%	—		%	—		%	—		%
Impact of merger related provision	—		%	1.3		%	—		%	—		%	—		%
Return on tangible equity, excluding merger related expenses and provision	27.4		%	24.8		%	27.3		%	21.8		%	18.1		%

Return on assets ("GAAP")	2.12		%	1.63		%	2.08		%	1.83		%	1.51		%
Impact of merger related expenses	—		%	0.30		%	—		%	—		%	—		%
Impact of merger related provision	—		%	0.10		%	—		%	—		%	—		%
Return on assets, excluding merger related expenses and provision	2.12		%	2.04		%	2.08		%	1.83		%	1.51		%


Commercial Loan Information (period end)

Commercial Sector	Total		% of Total Loans		Average DSC	Average LTV

Natural Gas Extraction	$	21,842	0.56%		3.68	N/A
Natural Gas Distribution	15,798		0.40%		2.61	N/A
Masonry Contractors	25,917		0.66%		1.13	84%
Sheet Metal Work Manufacturing	24,039		0.61%		1.57	68%
Beer & Ale Merchant Wholesalers	26,239		0.67%		3.28	N/A
Gasoline Stations with Convenience Stores	52,045		1.33%		4.19	65%
Lessors of Residential Buildings & Dwellings	378,040		9.64%		1.89	66%
1-4 Family	118,752		3.03%		2.97	72%
Multi-Family	182,374		4.65%		1.84	66%
Lessors of Nonresidential Buildings	531,263		13.55%		1.70	65%
Office Buildings	44,593		1.14%		1.64	62%
Lessors of Mini-Warehouses & Self-Storage Units	48,563		1.24%		1.62	62%
Assisted Living Facilities	28,554		0.73%		1.38	57%
Hotels & Motels	312,639		7.98%		1.43	61%

	Average Balance		Median Balance
Commercial Loans	$	458	$	100
Commercial Real Estate Loans	497		121


CITY HOLDING COMPANY AND SUBSIDIARIES
Non-GAAP Reconciliations, continued
(Unaudited) ($ in 000s, except per share data)


Estimated Uninsured Deposits by Deposit Type
	June 30, 2023		March 31, 2023
Noninterest-Bearing Demand Deposits	17	%	19	%

Interest-Bearing Deposits
Demand Deposits	7	%	8	%
Savings Deposits	11	%	11	%
Time Deposits	14	%	14	%
Total Deposits	12	%	13	%

Retail Deposits
Noninterest-Bearing	3	%	4	%
Interest-Bearing	10	%	11	%
Total Retail Deposits	9	%	9	%

Commercial Deposits
Noninterest-Bearing Deposits	29	%	31	%
Interest-Bearing Deposits	11	%	13	%
Total Commercial Deposits	21	%	23	%


The amounts listed above represent management's best estimate as of the respective period shown.


CITY HOLDING COMPANY AND SUBSIDIARIES
Non-GAAP Reconciliations, continued
(Unaudited) ($ in 000s, except per share data)

Net Growth in DDA Accounts
Year	New DDA Accounts	Net Number of New Accounts	Percentage

2023 YTD*	16,226	2,989	1.2	%
2022	28,442	4,544	1.9	%
2021	32,800	8,860	3.8	%
2020	30,360	6,740	3.0	%
2019	32,040	3,717	1.7	%
2018*	30,400	4,310	2.2	%
2017	28,525	2,711	1.4	%
2016	28,650	2,820	1.5	%


* - amounts exclude accounts added in connection with the acquisitions of Poage Bankshares, Inc. (2018), Farmers Deposit Bancorp, Inc.(2018) and Citizens Commerce Bancshares, Inc. (2023).