City Holding Company Announces Record Quarterly Results

CHARLESTON, W.Va.--(BUSINESS WIRE)-- 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, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022				June 30, 2023			June 30, 2022
Earnings
Net Interest Income (fully taxable equivalent)	$	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		$	1.20
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, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022				June 30, 2023			June 30, 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			-			-				5,645			-
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, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 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
Goodwill and 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, 2023		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 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, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022				June 30, 2023			June 30, 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			-			-			-				2,811			-
Adoption of ASU 2022-02		-			(175	)		-			-			-				(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, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 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				$	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	%
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 (4)		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 credit 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 net loan fees have been included in interest income:
Loan fees, net				$	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) 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, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022				June 30, 2023			June 30, 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	%			23.7	%		16.6	%
Impact of merger related expenses		-			3.6	%		-			-			-				1.8	%		-
Impact of merger related provision		-			1.3	%		-			-			-				0.6	%		-
Return on tangible equity, excluding merger related expenses and provision		27.4	%		24.8	%		27.3	%		21.8	%		18.1	%			26.2	%		16.6	%
Return on assets ("GAAP")		2.12	%		1.63	%		1.63	%		2.08	%		1.83	%			1.89	%		1.47	%
Impact of merger related expenses		-			0.30	%		-			-			-				0.15	%		-
Impact of merger related provision		-			0.10	%		-			-			-				0.05	%		-
Return on assets, excluding merger related expenses and provision		2.12	%		2.04	%		2.08	%		1.83	%		1.51	%			2.09	%		1.47	%
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			December 31, 2022
Noninterest-Bearing Demand Deposits		17	%		19	%		20	%
Interest-Bearing Deposits
Demand Deposits		7	%		8	%		10	%
Savings Deposits		11	%		11	%		14	%
Time Deposits		14	%		14	%		13	%
Total Deposits		12	%		13	%		14	%
Retail Deposits
Noninterest-Bearing		3	%		4	%		5	%
Interest-Bearing		10	%		11	%		11	%
Total Retail Deposits		9	%		9	%		10	%
Commercial Deposits
Noninterest-Bearing Deposits		29	%		31	%		32	%
Interest-Bearing Deposits		11	%		13	%		16	%
Total Commercial Deposits		21	%		23	%		26	%
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).

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230721005652/en/

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

(304) 769-1169

Source: City Holding Company