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Published: 2023-10-24 14:44:44 ET

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EX-99.1 2 chco09-30x23exhibit991.htm EX-99.1 Document

NEWS RELEASE

For Immediate Release

October 24, 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 quarterly net income of $29.9 million and diluted earnings of $1.98 per share for the quarter ended September 30, 2023. For the third quarter of 2023, the Company achieved a return on assets of 1.94% and a return on tangible equity of 24.1%.

Net Interest Income

The Company’s net interest income increased approximately $0.1 million, or 0.2%, from $55.5 million during the second quarter of 2023 to $55.6 million during the third quarter of 2023. The Company’s tax equivalent net interest income increased $0.1 million, or 0.2%, from $55.8 million for the second quarter of 2023 to $55.9 million for the third quarter of 2023. Due to recent increases in the Federal Funds rate, net interest income increased by $2.6 million due to an increase in loan yields (net of loan fees and accretion) of 22 basis points and by $0.8 million due to an increase in the yield on investment securities of 19 basis points. In addition, net interest income increased $0.8 million due to an increase in balances of loans of $60.6 million from the quarter ended June 30, 2023. These increases were partially offset by an increase in the cost of interest bearing liabilities (26 basis points) which decreased net interest income by $2.4 million and lower balances of deposits in depository institutions of $133.1 million that lowered net interest income by $1.6 million. The Company’s reported net interest margin increased from 4.00% for the second quarter of 2023 to 4.03% for the third quarter of 2023.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned declined slightly from 0.17%, or $6.5 million, at June 30, 2023 to 0.15%, or $6.0 million, at September 30, 2023. Total past due loans increased from $7.4 million, or 0.19% of total loans outstanding, at June 30, 2023, to $10.1 million, or 0.25% of total loans outstanding at September 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 $0.2 million in the third quarter of 2023, compared to a provision for credit losses of $0.7 million for the comparable period in 2022, and a provision for credit

losses of $0.4 million for the second quarter of 2023. The provision for credit losses in the third quarter was primarily the result of the downgrade of a commercial loan and loan growth partially offset by net recoveries during the quarter.

Non-interest Income

Non-interest income was $17.4 million during the quarter ended September 30, 2023, as compared to $18.2 million during the quarter ended September 30, 2022. During the third quarter of 2023, the Company reported $0.7 million of realized security losses.

Exclusive of the realized security losses, non-interest income decreased $0.1 million, or 0.6%, from $18.2 million for the third quarter of 2022 to $18.1 million for the third quarter of 2023. This decrease was largely attributable to a decrease of $0.4 million, or 4.8%, in service fees that was partially offset by an increase of $0.3 million, or 11.6%, in trust and investment management fee income.

Non-interest Expenses

Non-interest expenses increased $3.5 million, or 11.2%, from $31.5 million in the third quarter of 2022 to $35.0 million in the third quarter of 2023. This increase was largely due to an increase in other expenses of $1.2 million and an increase in salaries and employee benefits of $0.9 million due to the acquisition of Citizens ($0.5 million) and salary adjustments. In addition, bankcard expenses increased $0.8 million and FDIC insurance expenses increased $0.5 million.

Balance Sheet Trends

Gross loans increased $85.3 million (2.2%) from June 30, 2023 to $4.01 billion at September 30, 2023. Commercial real estate loans increased $48.0 million (3.1%) and residential real estate loans increased $21.7 million (1.2%) during the quarter ended September 30, 2023. In addition, home equity loans increased $8.6 million (5.7%) and commercial and industrial loans increased $6.8 million (1.6%).

Period-end deposit balances decreased $69.9 million from June 30, 2023, to September 30, 2023. Total average depository balances decreased $116.8 million, or 2.3%, from the quarter ended June 30, 2023 to the quarter ended September 30, 2023. Average noninterest-bearing demand deposit balances decreased $60.5 million, average savings deposit balances decreased $51.4 million, and interest-bearing demand deposit balances decreased $27.6 million. These decreases were partially offset by an increase in average time balances of $22.7 million.

Income Tax Expense

The Company’s effective income tax rate for the third quarter of 2023 was 21.1% compared to 19.8% for the year ended December 31, 2022 and 21.3% for the quarter ended September 30, 2022.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 81.0% and its loan to asset ratio was 66.0% at September 30, 2023. The Company maintained investment securities totaling 22.8% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 64.8% of assets at September 30, 2023. Time deposits fund 16.6% of assets at September 30, 2023, with only 11.7% 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 September 30, 2023, City National had the capacity to borrow an additional $1.8 billion from these existing borrowing facilities. In addition, $764.7 million of City National’s investment securities were unpledged at September 30, 2023.

The Company continues to be strongly capitalized with tangible equity of $447 million at September 30, 2023. The Company’s tangible equity ratio decreased slightly from 8.0% at December 31, 2022 to 7.6% at September 30, 2023. At September 30, 2023, City National’s Leverage Ratio was 9.6%, its Common Equity Tier I ratio was 14.7%, its Tier I Capital ratio was 14.7%, and its Total Risk-Based Capital ratio was 15.3%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On September 27, 2023, the Board of Directors of the Company approved a quarterly cash dividend of $0.715 per share payable October 31, 2023, to shareholders of record as of October 13, 2023. This represents a 10.0% increase from the $0.65 per share dividend paid on July 31, 2023. During the quarter ended September 30, 2023, the Company repurchased 109,000 common shares at a weighted average price of $89.33 per share as part of a one million share repurchase plan authorized by the Board of Directors in May 2022. As of September 30, 2023, the Company could repurchase 220,000 additional shares under the current program.

City National operates 99 branches across West Virginia, Kentucky, Virginia, and Ohio. On October 20, 2023, City National closed one of the two branches located in Nicholasville, Kentucky due to the proximity (less than one mile) from an existing City National branch.

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) 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; (3) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (4) changes in the interest rate environment; (5) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (6) changes in technology and increased competition, including competition from non-bank financial institutions; (7) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers’ performance and creditworthiness; (8) difficulty growing loan and deposit balances; (9) our ability to effectively execute our business plan, including with respect to future acquisitions; (10) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries, including changes in deposit insurance premiums;; (11) 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; (12) regulatory enforcement actions and adverse legal actions; (13) difficulty attracting and retaining key employees; and (14) 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 September 30, 2023 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary September 30, 2023 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)


	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
	2023			2023			2023			2022			2022			2023			2022

Earnings
Net Interest Income (FTE)	$	55,855		$	55,757		$	53,767		$	52,381		$	49,108		$	165,379		$	128,961
Net Income available to common shareholders	29,839			32,733			24,341			30,672			27,374			86,913			71,408

Per Share Data
Earnings per share available to common shareholders:
Basic	$	1.98		$	2.16		$	1.63		$	2.06		$	1.84		$	5.78		$	4.75
Diluted	1.98			2.16			1.63			2.05			1.83			5.77			4.75
Weighted average number of shares (in thousands):
Basic	14,922			14,994			14,818			14,756			14,776			14,906			14,878
Diluted	14,945			15,012			14,844			14,785			14,800			14,928			14,901
Period-end number of shares (in thousands)	14,901			15,007			15,260			14,788			14,856			14,901			14,856
Cash dividends declared	$	0.72		$	0.65		$	0.65		$	0.65		$	0.65		$	2.02		$	1.85
Book value per share (period-end)	40.94			42.39			42.66			39.08			36.91			40.94			36.91
Tangible book value per share (period-end)	29.98			31.50			31.91			31.25			29.09			29.98			29.09
Market data:
High closing price	$	99.49		$	97.92		$	100.27		$	101.94		$	90.24		$	100.27		$	90.24
Low closing price	87.51			83.57			89.17			89.32			78.40			83.57			73.88
Period-end closing price	90.35			89.99			90.88			93.09			88.69			90.35			88.69
Average daily volume (in thousands)	62			80			84			75			58			76			68
Treasury share activity:
Treasury shares repurchased (in thousands)	109			269			218			69			9			597			255
Average treasury share repurchase price	$	89.33		$	88.93		$	92.10		$	93.12		$	80.24		$	90.16		$	78.36

Key Ratios (percent)
Return on average assets	1.94		%	2.12		%	1.63		%	2.08		%	1.83		%	1.91		%	1.59		%
Return on average tangible equity	24.1		%	27.4		%	19.9		%	27.3		%	21.8		%	23.9		%	18.3		%
Yield on interest earning assets	5.08		%	4.87		%	4.66		%	4.23		%	3.72		%	4.87		%	3.27		%
Cost of interest bearing liabilities	1.46		%	1.22		%	0.86		%	0.48		%	0.21		%	1.18		%	0.18		%
Net Interest Margin	4.03		%	4.00		%	4.05		%	3.89		%	3.57		%	4.02		%	3.14		%
Non-interest income as a percent of total revenue	24.6		%	27.1		%	24.7		%	26.5		%	27.2		%	25.5		%	29.5		%
Efficiency Ratio	46.4		%	44.6		%	45.7		%	45.3		%	46.3		%	45.6		%	49.2		%
Price/Earnings Ratio (a)	11.40			10.40			13.95			11.30			12.08			11.73			13.99


Capital (period-end)
Average Shareholders' Equity to Average Assets	10.73		%	10.38		%	10.31		%	9.57		%	10.32		%
Tangible equity to tangible assets	7.55		%	7.90		%	8.05		%	8.02		%	7.41		%
Consolidated City Holding Company risk based capital ratios (b):
CET I	15.36		%	15.47		%	15.64		%	16.23		%	15.82		%
Tier I	15.36		%	15.47		%	15.64		%	16.23		%	15.82		%
Total	15.89		%	16.01		%	16.18		%	16.62		%	16.22		%
Leverage	10.05		%	9.80		%	10.20		%	10.01		%	9.74		%
City National Bank risk based capital ratios (b):
CET I	14.73		%	14.82		%	14.08		%	13.88		%	14.68		%
Tier I	14.73		%	14.82		%	14.08		%	13.88		%	14.68		%
Total	15.27		%	15.36		%	14.63		%	14.28		%	15.07		%
Leverage	9.61		%	9.36		%	9.18		%	8.55		%	9.05		%

Other (period-end)
Branches	99			99			99			94			94
FTE	966			963			958			909			903

Assets per FTE (in thousands)	$	6,291		$	6,383		$	6,483		$	6,467		$	6,588
Deposits per FTE (in thousands)	5,120			5,208			5,362			5,357			5,492

(a) The price/earnings ratio is computed based on annualized quarterly earnings.
(b) September 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										Nine Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,		September 30,		September 30,
	2023		2023		2023		2022		2022		2023		2022
Interest Income
Interest and fees on loans	$	55,582	$	52,352	$	47,004	$	42,963	$	38,493	$	154,939	$	103,575
Interest on investment securities:
Taxable	12,432		11,794		11,773		11,119		9,556		35,999		23,327
Tax-exempt	910		950		1,162		1,262		1,228		3,022		3,650
Interest on deposits in depository institutions	1,265		2,585		1,591		1,244		1,530		5,440		2,549
Total Interest Income	70,189		67,681		61,530		56,588		50,807		199,400		133,101

Interest Expense
Interest on deposits	10,551		8,567		5,690		3,010		1,585		24,808		4,433
Interest on short-term borrowings	2,990		2,963		2,381		1,533		440		8,334		677
Interest on long-term debt	1,034		649		—		—		—		1,683		—
Total Interest Expense	14,575		12,179		8,071		4,543		2,025		34,825		5,110
Net Interest Income	55,614		55,502		53,459		52,045		48,782		164,575		127,991
Provision for (Recovery of) credit losses	200		425		2,918		500		730		3,543		(26)
Net Interest Income After Provision for (Recovery of) Credit Losses	55,414		55,077		50,541		51,545		48,052		161,032		128,017

Non-Interest Income
Net gains on sale of investment securities	(730)		—		773		4		—		43		—
Unrealized gains (losses) recognized on equity securities still held	—		(294)		361		(262)		1		67		(1,322)
Service charges	7,124		6,906		6,563		7,056		7,487		20,593		21,281
Bankcard revenue	7,058		7,190		6,603		6,791		7,052		20,851		20,558
Trust and investment management fee income	2,409		2,339		2,252		2,343		2,158		7,000		6,455
Bank owned life insurance	807		3,208		804		1,813		754		4,819		3,746
Other income	742		952		1,326		791		792		3,020		2,825
Total Non-Interest Income	17,410		20,301		18,682		18,536		18,244		56,393		53,543

Non-Interest Expense
Salaries and employee benefits	18,289		18,429		17,673		17,148		17,398		54,391		49,386
Occupancy related expense	2,950		2,811		2,640		2,725		2,664		8,401		7,993
Equipment and software related expense	2,830		2,883		3,092		3,341		2,949		8,805		8,452
FDIC insurance expense	919		690		445		413		416		2,054		1,259
Advertising	790		974		760		802		854		2,524		2,603
Bankcard expenses	2,188		1,736		1,509		1,356		1,405		5,433		4,676


Postage, delivery, and statement mailings	668		596		647		597		578		1,911		1,765
Office supplies	457		591		420		441		466		1,468		1,303
Legal and professional fees	529		558		470		610		532		1,557		1,584
Telecommunications	568		623		606		627		651		1,797		1,988
Repossessed asset losses (gains), net of expenses	40		22		16		54		(3)		78		4
Merger related expenses	2		—		5,645		268		—
Other expenses	4,798		4,848		4,700		4,203		3,591		14,346		10,701
Total Non-Interest Expense	35,028		34,761		38,623		32,585		31,501		108,412		91,714
Income Before Income Taxes	37,796		40,617		30,600		37,496		34,795		109,013		89,846
Income tax expense	7,957		7,884		6,259		6,824		7,421		22,100		18,438
Net Income Available to Common Shareholders	$	29,839	$	32,733	$	24,341	$	30,672	$	27,374	$	86,913	$	71,408

Distributed earnings allocated to common shareholders	$	10,554	$	9,668	$	9,833	$	9,521	$	9,564	$	29,744	$	27,220
Undistributed earnings allocated to common shareholders	19,004		22,774		14,294		20,857		17,555		56,356		43,509
Net earnings allocated to common shareholders	$	29,558	$	32,442	$	24,127	$	30,378	$	27,119	$	86,100	$	70,729


Average common shares outstanding	14,922		14,994		14,818		14,756		14,776		14,906		14,878
Shares for diluted earnings per share	14,945		15,012		14,844		14,785		14,800		14,928		14,901

Basic earnings per common share	1.98		2.16		1.63		2.06		1.84		5.78		4.75
Diluted earnings per common share	1.98		2.16		1.63		2.05		1.83		5.77		4.75

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

($ in 000s)


	(Unaudited)		(Unaudited)		(Unaudited)				(Unaudited)
	September 30,		June 30,		March 31,		December 31,		September 30,
	2023		2023		2023		2022		2022
Assets
Cash and due from banks	$	62,085	$	66,350	$	69,804	$	68,333	$	65,051
Interest-bearing deposits in depository institutions	48,631		164,931		233,006		131,667		233,302
Cash and cash equivalents	110,716		231,281		302,810		200,000		298,353

Investment securities available-for-sale, at fair value	1,358,219		1,419,933		1,456,259		1,505,520		1,489,392
Other securities	29,022		29,262		24,728		23,807		24,372
Total investment securities	1,387,241		1,449,195		1,480,987		1,529,327		1,513,764

Gross loans	4,007,482		3,922,142		3,894,686		3,646,258		3,628,752
Allowance for credit losses	(23,128)		(22,751)		(22,724)		(17,108)		(17,011)
Net loans	3,984,354		3,899,391		3,871,962		3,629,150		3,611,741

Bank owned life insurance	117,979		117,173		124,238		120,674		121,283
Premises and equipment, net	72,682		73,118		73,430		70,786		71,686
Accrued interest receivable	19,223		17,973		18,395		18,287		17,256
Net deferred tax assets	58,811		46,944		42,146		44,884		49,888
Intangible assets	163,461		163,426		164,099		115,735		116,081
Other assets	161,659		148,333		132,715		149,263		147,716
Total Assets	$	6,076,126	$	6,146,834	$	6,210,782	$	5,878,106	$	5,947,768

Liabilities
Deposits:
Noninterest-bearing	$	1,333,474	$	1,373,106	$	1,420,990	$	1,351,415	$	1,429,281
Interest-bearing:
Demand deposits	1,319,783		1,337,445		1,356,017		1,233,482		1,160,970
Savings deposits	1,282,642		1,343,571		1,397,523		1,396,869		1,427,785
Time deposits	1,009,235		960,941		962,235		888,100		939,769
Total deposits	4,945,134		5,015,063		5,136,765		4,869,866		4,957,805
Short-term borrowings
Customer repurchase agreements	278,671		271,714		293,256		290,964		304,807
FHLB long-term advances	100,000		100,000		—		—		—
Other liabilities	142,187		123,865		129,711		139,424		136,868
Total Liabilities	5,465,992		5,510,642		5,559,732		5,300,254		5,399,480

Stockholders' Equity
Preferred stock	—		—		—		—		—
Common stock	47,619		47,619		47,619		47,619		47,619
Capital surplus	177,113		176,746		177,529		170,980		170,138
Retained earnings	763,425		744,248		721,727		706,696		685,657


Cost of common stock in treasury	(211,430)		(201,973)		(179,436)		(215,955)		(209,644)
Accumulated other comprehensive (loss) income:
Unrealized (loss) gain on securities available-for-sale	(163,171)		(127,026)		(112,967)		(128,066)		(141,997)
Underfunded pension liability	(3,422)		(3,422)		(3,422)		(3,422)		(3,485)
Total Accumulated Other Comprehensive (Loss) Income	(166,593)		(130,448)		(116,389)		(131,488)		(145,482)
Total Stockholders' Equity	610,134		636,192		651,050		577,852		548,288
Total Liabilities and Stockholders' Equity	$	6,076,126	$	6,146,834	$	6,210,782	$	5,878,106	$	5,947,768

Regulatory Capital
Total CET 1 capital	$	615,798	$	605,661	$	606,675	$	598,068	$	582,213
Total tier 1 capital	615,798		605,661		606,675		598,068		582,213
Total risk-based capital	637,245		626,730		627,718		612,654		596,708
Total risk-weighted assets	4,009,798		3,913,870		3,878,994		3,685,207		3,679,511

CITY HOLDING COMPANY AND SUBSIDIARIES

Loan Portfolio

(Unaudited) ($ in 000s)


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

Commercial and industrial	$	424,647	$	417,847	$	390,861	$	373,890	$	375,735

1-4 Family	135,226		123,701		119,017		116,192		109,710
Hotels	321,236		324,745		327,554		340,404		355,001
Multi-family	192,329		191,483		195,042		174,786		186,440
Non Residential Non-Owner Occupied	713,353		673,921		679,782		585,964		569,369
Non Residential Owner Occupied	222,544		222,852		223,096		174,961		177,673
Commercial real estate (1)	1,584,688		1,536,702		1,544,491		1,392,307		1,398,193

Residential real estate (2)	1,768,358		1,746,618		1,737,604		1,693,523		1,678,770
Home equity	159,630		151,012		151,341		134,317		130,837
Consumer	65,586		65,201		66,994		48,806		41,902
DDA Overdrafts	4,573		4,762		3,395		3,415		3,315
Gross Loans	$	4,007,482	$	3,922,142	$	3,894,686	$	3,646,258	$	3,628,752

Construction loans included in:
(1) - Commercial real estate loans	$	2,533	$	3,361	$	4,715	$	4,130	$	4,125
(2) - Residential real estate loans	$	20,056	$	20,470	$	25,224	21,122		19,333

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information

(Unaudited) ($ in 000s)


	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
	2023			2023			2023			2022			2022			2023			2022
Allowance for Credit Losses
Balance at beginning of period	$	22,751		$	22,724		$	17,108		$	17,011		$	17,015		$	17,108		$	18,166

Charge-offs:
Commercial and industrial	—			(69)			—			(120)			(408)			(69)			(442)
Commercial real estate	(256)			(117)			(3)			(31)			—			(376)			(24)
Residential real estate	(88)			(20)			(32)			(66)			(93)			(140)			(199)
Home equity	(112)			(200)			(67)			(189)			(71)			(379)			(90)
Consumer	(10)			(109)			(62)			(15)			(16)			(181)			(48)
DDA overdrafts	(422)			(357)			(450)			(670)			(719)			(1,229)			(1,954)
Total charge-offs	(888)			(872)			(614)			(1,091)			(1,307)			(2,374)			(2,757)

Recoveries:
Commercial and industrial	597			86			83			94			149			766			240
Commercial real estate	74			28			158			120			9			260			87
Residential real estate	28			5			10			49			1			43			50
Home equity	18			12			4			34			2			34			22
Consumer	27			28			23			31			29			78			76
DDA overdrafts	321			315			398			360			383			1,034			1,153
Total recoveries	1,065			474			676			688			573			2,215			1,628

Net recoveries (charge-offs)	177			(398)			62			(403)			(734)			(159)			(1,129)
Provision for (recovery of) credit losses	200			425			2,918			500			730			3,543			(26)
PCD Loan Reserves	—			—			2,811			—			—
Adoption of ASU 2022-02	—			—			(175)			—			—
Balance at end of period	$	23,128		$	22,751		$	22,724		$	17,108		$	17,011		$	23,128		$	17,011

Loans outstanding	$	4,007,482		$	3,922,142		$	3,894,686		$	3,646,258		$	3,628,752
Allowance as a percent of loans outstanding	0.58		%	0.58		%	0.58		%	0.47		%	0.47		%
Allowance as a percent of non-performing loans	440.1		%	405.5		%	400.1		%	317.3		%	320.5		%

Average loans outstanding	$	3,956,871		$	3,896,284		$	3,700,194		$	3,648,996		$	3,596,523		$	3,852,057		$	3,561,463
Net charge-offs (annualized) as a percent of average loans outstanding	(0.02)		%	0.04		%	(0.01)		%	0.04		%	0.08		%	0.01		%	0.04		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information, Continued

(Unaudited) ($ in 000s)


	September 30,			June 30,			March 31,			December 31,			September 30,
	2023			2023			2023			2022			2022
Nonaccrual Loans
Residential real estate	$	2,839		$	2,774		$	2,700		$	1,969		$	2,089
Home equity	75			24			35			55			140
Commercial and industrial	716			741			994			1,015			785
Commercial real estate	1,355			1,821			1,931			2,166			2,293
Consumer	1			36			19			—			—
Total nonaccrual loans	4,986			5,396			5,679			5,205			5,307
Accruing loans past due 90 days or more	269			215			—			187			—
Total non-performing loans	5,255			5,611			5,679			5,392			5,307
Other real estate owned	720			874			843			909			1,071
Total non-performing assets	$	5,975		$	6,485		$	6,522		$	6,301		$	6,378

Non-performing assets as a percent of loans and other real estate owned	0.15		%	0.17		%	0.17		%	0.17		%	0.18		%

Past Due Loans
Residential real estate	$	6,247		$	5,884		$	4,783		$	7,091		$	3,452
Home equity	1,278			784			551			650			521
Commercial and industrial	568			142			98			234			221
Commercial real estate	1,478			238			148			710			221
Consumer	84			57			3			100			27
DDA overdrafts	398			341			276			391			561
Total past due loans	$	10,053		$	7,446		$	5,859		$	9,176		$	5,003

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

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)


	Three Months Ended
	September 30, 2023						June 30, 2023						September 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)	$	1,910,876	$	22,702	4.71	%	$	1,894,269	$	21,702	4.60	%	$	1,792,365	$	17,718	3.92	%
Commercial, financial, and agriculture (2)	1,975,463		31,743		6.38	%	1,933,238		29,754		6.17	%	1,759,567		20,092		4.53	%
Installment loans to individuals (2), (3)
Total loans	3,956,871		55,583		5.57	%	3,896,284		52,354		5.39	%	3,596,523		38,493		4.25	%
Securities:
Taxable	1,277,265		12,432		3.86	%	1,301,063		11,794		3.64	%	1,359,207		9,557		2.79	%
Tax-exempt (4)	170,806		1,152		2.68	%	174,410		1,203		2.77	%	215,219		1,555		2.87	%
Total securities	1,448,071		13,584		3.72	%	1,475,473		12,997		3.53	%	1,574,426		11,112		2.80	%
Deposits in depository institutions	90,994		1,265		5.52	%	224,064		2,585		4.63	%	289,460		1,529		2.10	%
Total interest-earning assets	5,495,936		70,432		5.08	%	5,595,821		67,936		4.87	%	5,460,409		51,134		3.72	%
Cash and due from banks	69,348						71,949						81,202
Premises and equipment, net	73,004						73,450						72,196
Goodwill and intangible assets	163,602						163,847						116,297
Other assets	332,551						313,925						278,527
Less: Allowance for credit losses	(23,558)						(23,046)						(17,224)
Total assets	$	6,110,883					$	6,195,946					$	5,991,407

Liabilities:
Interest-bearing demand deposits	$	1,300,936	$	3,068	0.94	%	$	1,328,520	$	2,773	0.84	%	$	1,151,122	$	272	0.09	%
Savings deposits	1,314,484		2,319		0.70	%	1,365,894		1,942		0.57	%	1,431,591		358		0.10	%
Time deposits (2)	985,038		5,163		2.08	%	962,299		3,852		1.61	%	964,447		956		0.39	%
Customer repurchase agreements	272,558		2,990		4.35	%	294,255		2,963		4.04	%	270,310		440		0.65	%
FHLB long-term advances	100,000		1,035		4.11	%	65,934		649		3.95	%	—		—		—	%
Total interest-bearing liabilities	3,973,016		14,575		1.46	%	4,016,902		12,179		1.22	%	3,817,470		2,026		0.21	%
Noninterest-bearing demand deposits	1,359,268						1,419,771						1,455,123
Other liabilities	123,137						116,083						100,303
Stockholders' equity	655,462						643,190						618,511
Total liabilities and
stockholders' equity	$	6,110,883					$	6,195,946					$	5,991,407
Net interest income			$	55,857					$	55,757					$	49,108
Net yield on earning assets					4.03	%					4.00	%					3.57	%

(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			$	254					$	393					$	308



(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	$	47	$	78	$	64
Commercial, financial, and agriculture	720		709		103
Installment loans to individuals	4		8		7
Time deposits	240		154		21
	$	1,011	$	949	$	195

(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)


	Nine Months Ended
	September 30, 2023						September 30, 2022
	Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,882,397	$	64,410	4.57	%	$	1,728,557	$	49,610	3.84	%
Commercial, financial, and agriculture (2)	1,904,001		87,745		6.16	%	1,788,784		52,044		3.89	%
Installment loans to individuals (2), (3)	65,659		2,784		5.67	%	44,122		1,921		5.82	%
Total loans	3,852,057		154,939		5.38	%	3,561,463		103,575		3.89	%
Securities:
Taxable	1,300,373		35,999		3.70	%	1,279,086		23,327		2.44	%
Tax-exempt (5)	182,858		3,826		2.80	%	221,035		4,620		2.79	%
Total securities	1,483,231		39,825		3.59	%	1,500,121		27,947		2.49	%
Deposits in depository institutions	166,379		5,440		4.37	%	422,714		2,549		0.81	%
Total interest-earning assets	5,501,667		200,204		4.87	%	5,484,298		134,071		3.27	%
Cash and due from banks	69,735						95,105
Premises and equipment, net	72,631						72,964
Goodwill and intangible assets	150,808						116,643
Other assets	324,658						251,071
Less: Allowance for loan losses	(21,602)						(17,807)
Total assets	$	6,097,897					$	6,002,274

Liabilities:
Interest-bearing demand deposits	$	1,288,387	$	7,582	0.79	%	$	1,149,899	$	550	0.06	%
Savings deposits	1,352,005		5,610		0.55	%	1,415,563		715		0.07	%
Time deposits (2)	950,276		11,616		1.63	%	1,005,356		3,168		0.42	%
Customer repurchase agreements	282,857		8,334		3.94	%	278,211		677		0.33	%
FHLB long-term advances	55,678		1,683		4.04	%	—		—		—	%
Total interest-bearing liabilities	3,929,203		34,825		1.18	%	3,849,029		5,110		0.18	%
Noninterest-bearing demand deposits	1,407,922						1,429,887
Other liabilities	122,854						86,585
Stockholders' equity	637,918						636,773
Total liabilities and
stockholders' equity	$	6,097,897					$	6,002,274
Net interest income			$	165,379					$	128,961
Net yield on earning assets					4.02	%					3.14	%

(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			$	1,165					$	609


(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	$	165	$	231
Commercial, financial, and agriculture	1,575		507
Installment loans to individuals	15		41
Time deposits	403		62
	2,158		841

(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

Non-GAAP Reconciliations

(Unaudited) ($ in 000s, except per share data)


	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
	2023			2023			2023			2022			2022			2023			2022
Net Interest Income/Margin
Net interest income ("GAAP")	$	55,614		$	55,502		$	53,459		$	52,045		$	48,782		$	164,575		$	127,991
Taxable equivalent adjustment	243			255			308			336			326			804			970
Net interest income, fully taxable equivalent	$	55,857		$	55,757		$	53,767		$	52,381		$	49,108		$	165,379		$	128,961

Average interest earning assets	$	5,495,936		$	5,595,821		$	5,387,326		$	5,338,507		$	5,460,409		$	5,501,667		$	5,484,298

Net Interest Margin	4.03		%	4.00		%	4.05		%	3.89		%	3.57		%	4.02		%	3.14		%
Accretion related to fair value adjustments	(0.07)		%	(0.07)		%	(0.02)		%	(0.02)		%	(0.01)		%	(0.05)		%	(0.02)		%
Net Interest Margin (excluding accretion)	3.96		%	3.93		%	4.03		%	3.87		%	3.56		%	3.97		%	3.12		%

Tangible Equity Ratio (period end)
Equity to assets ("GAAP")	10.04		%	10.35		%	10.48		%	9.83		%	9.22		%
Effect of goodwill and other intangibles, net	(2.49)		%	(2.45)		%	(2.43)		%	(1.81)		%	(1.81)		%
Tangible common equity to tangible assets	7.55		%	7.90		%	8.05		%	8.02		%	7.41		%

Return on average tangible equity ("GAAP")	24.1		%	27.4		%	19.9		%	27.3		%	21.8		%	23.9		%	18.3		%
Impact of merger related expenses	—		%	—		%	3.6		%	—		%	—		%	1.2		%	—		%
Impact of merger related provision	—		%	—		%	1.3		%	—		%	—		%	0.4		%	—		%
Return on tangible equity, excluding merger related expenses and provision	24.1		%	27.4		%	24.8		%	27.3		%	21.8		%	25.5		%	18.3		%

Return on assets ("GAAP")	1.94		%	2.12		%	1.63		%	2.08		%	1.83		%	1.91		%	1.59		%
Impact of merger related expenses	—		%	—		%	0.30		%	—		%	—		%	0.10		%	—		%
Impact of merger related provision	—		%	—		%	0.10		%	—		%	—		%	0.03		%	—		%
Return on assets, excluding merger related expenses and provision	1.94		%	2.12		%	2.04		%	2.08		%	1.83		%	2.04		%	1.59		%


Commercial Loan Information (period end)

Commercial Sector	Total		% of Total Loans		Average DSC	Average LTV

Natural Gas Extraction	$	22,768	0.57%		3.68	N/A
Natural Gas Distribution	22,048		0.55%		2.61	N/A
Masonry Contractors	27,675		0.69%		1.13	84%
Sheet Metal Work Manufacturing	24,974		0.62%		1.57	68%
Beer & Ale Merchant Wholesalers	25,981		0.65%		3.28	N/A
Gasoline Stations with Convenience Stores	47,215		1.18%		4.19	66%
Lessors of Residential Builidings & Dwellings	436,789		10.92%		1.89	66%
1-4 Family	125,929		3.15%		2.97	68%
Multi-Family	182,785		4.57%		1.84	66%
Lessors of Nonresidential Buildings	567,746		14.20%		1.70	65%
Office Buildings	44,129		1.10%		1.64	63%
Lessors of Mini-Warehouses & Self-Storage Units	40,769		1.02%		1.62	61%
Assisted Living Facilities	27,955		0.70%		1.38	57%
Hotels & Motels	321,623		8.04%		1.43	62%

	Average Balance		Median Balance
Commercial Loans	$	439	$	92
Commercial Real Estate Loans	493		118


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


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

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


The amounts listed above represent management's best estimate as of the respective period shown of uninsured deposits (either with balances above $250,000 or not collateralized by investment securities).


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*	24,518	4,450	1.8	%
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).