Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries City Holding Company Announces Quarterly Results By: City Holding Company via Business Wire April 25, 2023 at 07:30 AM EDT City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $6.2 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $24.3 million and diluted earnings of $1.63 per share for the quarter ended March 31, 2023. During the first quarter of 2023, the Company completed its acquisition of Citizens Commerce Bancshares, Inc. (“Citizens”) and its principal banking subsidiary, Citizens Commerce Bank of Versailles, Kentucky, on March 10, 2023. The results for the quarter ended March 31, 2023, include $2.0 million of credit loss expense associated with loans acquired from Citizens in its total provision for credit losses and $5.6 million of acquisition and integration expenses related to the acquisition. These expenses reduced diluted earnings per share on an after-tax-basis by $0.40. Net Interest Income The Company’s net interest income increased approximately $1.4 million, or 2.7%, from $52.0 million during the fourth quarter of 2022 to $53.5 million during the first quarter of 2023. The Company’s tax equivalent net interest income increased $1.4 million, or 2.6%, from $52.4 million for the fourth quarter of 2022 to $53.8 million for the first quarter of 2023. The acquisition of Citizens added $0.5 million of net interest income during the quarter ended March 31, 2023. Due to recent increases in the Federal Funds rate, net interest income increased by $3.0 million due to an increase in loan yields (net of loan fees and accretion) of 43 basis points and by $0.5 million due to an increase in investment yields of 21 basis points. In addition, loan fees increased $0.6 million and an increase of 99 basis points in the yield on deposits in depository institutions increased net interest income by $0.4 million from the quarter ended December 31, 2022. These increases were partially offset by an increase in the cost of interest bearing liabilities (38 basis points) which decreased net interest income by $3.5 million. The Company’s reported net interest margin increased from 3.89% for the fourth quarter of 2022 to 4.05% for the first 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 $6.3 million, at December 31, 2022 and 0.17%, or $6.5 million, at March 31, 2023. Total past due loans decreased from $9.2 million, or 0.25% of total loans outstanding, at December 31, 2022, to $5.9 million, or 0.15% of total loans outstanding at March 31, 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 $2.9 million in the first quarter of 2023, compared to a recovery of credit losses of $0.8 million for the comparable period in 2022, and a provision for credit losses of $0.5 million for the fourth quarter of 2022. In connection with the completion of our acquisition of Citizens during the quarter ended March 31, 2023, the Company recorded $2.0 million of credit loss expense associated with loans acquired from Citizens in its total provision for credit losses. In addition, the provision for credit losses included $0.9 million that was primarily related to the downgrade of two commercial loans. Non-interest Income Non-interest income was $18.7 million during the quarter ended March 31, 2023, as compared to $17.5 million during the quarter ended March 31, 2022. During the first quarter of 2023, the Company reported $0.8 million of realized gains from the sale of investment securities and $0.4 million of unrealized fair value gains on the Company’s equity securities compared to $0.7 million of unrealized fair value losses on the Company’s equity securities during the first quarter of 2022. The gain from the sale of securities in the first quarter of 2023 was primarily due to the sale of Citizens investment portfolio of approximately $41 million shortly after the acquisition date. These securities were marked to market in accordance with purchase accounting rules and due to a change in market conditions and an opportunity to increase the yield on the portfolio, the Company elected to liquidate those securities. The proceeds also enabled the Company an opportunity to enhance its liquidity position. Exclusive of these items, non-interest income decreased $0.6 million, or 3.4%, from $18.2 million for the first quarter of 2022 to $17.5 million for the first quarter of 2023. This decrease was largely attributable to a decrease of $1.2 million in bank owned life insurance due to a decrease in death benefit proceeds and a decrease of $0.2 million, or 2.4%, in service charges. These decreases were partially offset by an increase in other income of $0.5 million. Citizens’ contribution to noninterest income for the quarter ended March 31, 2023, was less than $0.1 million. Non-interest Expenses Non-interest expenses increased $9.1 million, or 30.8%, from $29.5 million in the first quarter of 2022 to $38.6 million in the first quarter of 2023. During the quarter ended March 31, 2023, the Company recognized $5.6 million of acquisition and integration expenses associated with the completed acquisition of Citizens. Excluding these expenses, non-interest expenses increased $3.5 million from $29.5 million in the quarter ended March 31, 2022 to $33.0 million in the quarter ended March 31, 2023. This increase was largely due to an increase in salaries and employee benefits of $2.1 million due to higher salary adjustments, increased incentive compensation, and increased health insurance cost. In addition, other expenses increased $1.3 million and equipment and software-related expenses increased $0.3 million. The acquisition of Citizens increased noninterest expenses by approximately $0.2 million during the quarter ended March 31, 2023. Balance Sheet Trends Loans increased $248.4 million (6.8%) from December 31, 2022 to $3.89 billion at March 31, 2023, primarily due to the Company’s acquisition of Citizens ($254.7 million). Excluding the acquisition, total loans decreased $6.3 million (0.2%), from December 31, 2022 to $3.64 billion at March 31, 2023. Commercial real estate loans decreased $27.6 million during the quarter ended March 31, 2023. This decrease was partially offset by increases in consumer loans of $15.1 million (31.0%), home equity loans of $3.3 million (2.4%), and commercial and industrial loans of $2.3 million (0.6%). Period-end deposit balances increased $266.9 million from December 31, 2022, to March 31, 2023, due to the Company’s acquisition of Citizens ($298.7 million). Total average depository balances increased $27.1 million, or 0.6%, from the quarter ended December 31, 2022 to the quarter ended March 31, 2023. This growth was primarily attributable to deposits acquired from Citizens ($73.0 million). Exclusive of these contributions, average depository balances declined $45.9 million, or 0.9%, from the quarter ended December 31, 2022. Average savings deposit balances decreased $53.2 million, average time deposit balances decreased $30.7 million, and average noninterest-bearing demand deposit balances decreased $21.5 million. These decreases were partially offset by an increase in average interest-bearing demand deposit balances of $59.5 million. Income Tax Expense The Company’s effective income tax rate for the first quarter of 2023 was 20.5% compared to 19.8% for the year ended December 31, 2022, and 19.7%, for the quarter ended March 31, 2022. Capitalization and Liquidity The Company’s loan to deposit ratio was 75.8% and the loan to asset ratio was 62.7% at March 31, 2023. The Company maintained investment securities totaling 23.8% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 67.2% of assets at March 31, 2023. Time deposits fund 15.5% of assets at March 31, 2023, with only 10.9% 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 Board and the Federal Home Loan Bank that can be accessed as necessary to fund operations and to provide contingency funding. As of March 31, 2023, City National had the capacity to borrow an additional $1.6 billion from these existing borrowing facilities. In addition, $803.2 million of City National’s investment securities were unpledged at March 31, 2023. The Company continues to be strongly capitalized with tangible equity of $487 million at March 31, 2023. The Company’s tangible equity ratio increased slightly from 8.0% at December 31, 2022 to 8.1% at March 31, 2023. At March 31, 2023, City National’s Leverage Ratio was 9.18%, its Common Equity Tier I ratio was 14.08%, its Tier I Capital ratio was 14.08%, and its Total Risk-Based Capital ratio was 14.63%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation. On March 29, 2023, the Board of Directors of the Company approved a quarterly cash dividend of $0.65 per share payable April 28, 2023, to shareholders of record as of April 14, 2023. During the quarter ended March 31, 2023, the Company repurchased 218,000 common shares at a weighted average price of $92.10 per share as part of a one million share repurchase plan authorized by the Board of Directors in May 2022. As of March 31, 2023, the Company could repurchase 599,000 additional shares under the current program. In connection with the acquisition of Citizens, the Company issued 667,000 shares of common stock on March 10, 2023. 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 March 31, 2023 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2023 results and will adjust the amounts if necessary. CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights (Unaudited) Three Months Ended March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Earnings Net Interest Income (fully taxable equivalent) $ 53,767 $ 52,381 $ 49,108 $ 41,611 $ 38,239 Net Income available to common shareholders 24,341 30,672 27,374 22,683 21,342 Per Share Data Earnings per share available to common shareholders: Basic $ 1.63 $ 2.06 $ 1.84 $ 1.51 $ 1.41 Diluted 1.63 2.05 1.83 1.51 1.41 Weighted average number of shares (in thousands): Basic 14,818 14,756 14,776 14,888 14,974 Diluted 14,844 14,785 14,800 14,909 15,002 Period-end number of shares (in thousands) 15,260 14,788 14,856 14,864 15,045 Cash dividends declared $ 0.65 $ 0.65 $ 0.65 $ 0.60 $ 0.60 Book value per share (period-end) $ 42.66 $ 39.08 $ 36.91 $ 39.83 $ 42.03 Tangible book value per share (period-end) 31.91 31.25 29.09 31.99 34.27 Market data: High closing price $ 100.27 $ 101.94 $ 90.24 $ 83.07 $ 85.99 Low closing price 89.17 89.32 78.40 73.88 76.82 Period-end closing price 90.88 93.09 88.69 79.88 78.70 Average daily volume (in thousands) 84 75 58 87 59 Treasury share activity: Treasury shares repurchased (in thousands) 218 69 9 208 38 Average treasury share repurchase price $ 92.10 $ 93.12 $ 80.24 $ 78.33 $ 78.09 Key Ratios (percent) Return on average assets 1.63 % 2.08 % 1.83 % 1.51 % 1.42 % Return on average tangible equity 19.9 % 27.3 % 21.8 % 18.1 % 15.3 % Yield on interest earning assets 4.66 % 4.23 % 3.72 % 3.15 % 2.94 % Cost of interest bearing liabilities 0.86 % 0.48 % 0.21 % 0.15 % 0.17 % Net Interest Margin 4.05 % 3.89 % 3.57 % 3.04 % 2.82 % Non-interest income as a percent of total revenue 24.7 % 26.5 % 27.2 % 30.9 % 32.4 % Efficiency Ratio 45.7 % 45.3 % 46.3 % 50.5 % 51.7 % Price/Earnings Ratio (a) 13.95 11.30 12.08 13.23 13.93 Capital (period-end) Average Shareholders' Equity to Average Assets 10.31 % 9.57 % 10.32 % 10.26 % 11.25 % Tangible equity to tangible assets 8.05 % 8.02 % 7.41 % 7.76 % 8.75 % Consolidated City Holding Company risk based capital ratios (b): CET I 15.64 % 16.23 % 15.82 % 15.85 % 16.18 % Tier I 15.64 % 16.23 % 15.82 % 15.85 % 16.18 % Total 16.18 % 16.62 % 16.22 % 16.26 % 16.60 % Leverage 10.20 % 10.01 % 9.74 % 9.42 % 9.58 % City National Bank risk based capital ratios (b): CET I 14.08 % 13.88 % 14.68 % 14.80 % 14.82 % Tier I 14.08 % 13.88 % 14.68 % 14.80 % 14.82 % Total 14.63 % 14.28 % 15.07 % 15.21 % 15.24 % Leverage 9.18 % 8.55 % 9.05 % 8.81 % 8.80 % Other (period-end) Branches 99 94 94 94 94 FTE 958 909 903 915 897 Assets per FTE (in thousands) $ 6,483 $ 6,467 $ 6,588 $ 6,825 $ 6,703 Deposits per FTE (in thousands) 5,362 5,357 5,492 5,621 5,574 (a) The price/earnings ratio is computed based on annualized quarterly earnings. (b) March 31, 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 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Interest Income Interest and fees on loans $ 47,004 $ 42,963 $ 38,493 $ 33,208 $ 31,874 Interest on investment securities: Taxable 11,773 11,119 9,556 7,547 6,223 Tax-exempt 1,162 1,262 1,228 1,205 1,216 Interest on deposits in depository institutions 1,591 1,244 1,530 782 238 Total Interest Income 61,530 56,588 50,807 42,742 39,551 Interest Expense Interest on deposits 5,690 3,010 1,585 1,328 1,521 Interest on short-term borrowings 2,381 1,533 440 124 114 Total Interest Expense 8,071 4,543 2,025 1,452 1,635 Net Interest Income 53,459 52,045 48,782 41,290 37,916 Provision for (Recovery of) credit losses 2,918 500 730 - (756 ) Net Interest Income After Provision for (Recovery of) Credit Losses 50,541 51,545 48,052 41,290 38,672 Non-Interest Income Net gains on sale of investment securities 773 4 - - - Unrealized gains (losses) recognized on equity securities still held 361 (262 ) 1 (601 ) (723 ) Service charges 6,563 7,056 7,487 7,067 6,725 Bankcard revenue 6,603 6,791 7,052 7,062 6,444 Trust and investment management fee income 2,252 2,343 2,158 2,100 2,197 Bank owned life insurance 804 1,813 754 978 2,014 Other income 1,326 791 792 1,243 791 Total Non-Interest Income 18,682 18,536 18,244 17,849 17,448 Non-Interest Expense Salaries and employee benefits 17,673 17,148 17,398 16,413 15,577 Occupancy related expense 2,640 2,725 2,664 2,620 2,709 Equipment and software related expense 3,092 3,341 2,949 2,732 2,769 FDIC insurance expense 445 413 416 409 435 Advertising 760 802 854 951 798 Bankcard expenses 1,509 1,356 1,405 1,665 1,606 Postage, delivery, and statement mailings 647 597 578 551 636 Office supplies 420 441 466 427 410 Legal and professional fees 470 610 532 525 527 Telecommunications 606 627 651 754 584 Repossessed asset losses (gains), net of expenses 16 54 (3 ) (32 ) 40 Merger related expenses 5,645 268 - - - Other expenses 4,700 4,203 3,591 3,674 3,436 Total Non-Interest Expense 38,623 32,585 31,501 30,689 29,527 Income Before Income Taxes 30,600 37,496 34,795 28,450 26,593 Income tax expense 6,259 6,824 7,421 5,767 5,251 Net Income Available to Common Shareholders $ 24,341 $ 30,672 $ 27,374 $ 22,683 $ 21,342 Distributed earnings allocated to common shareholders $ 9,833 $ 9,521 $ 9,564 $ 8,837 $ 8,943 Undistributed earnings allocated to common shareholders 14,294 20,857 17,555 13,643 12,199 Net earnings allocated to common shareholders $ 24,127 $ 30,378 $ 27,119 $ 22,480 $ 21,142 Average common shares outstanding 14,818 14,756 14,776 14,888 14,974 Shares for diluted earnings per share 14,844 14,785 14,800 14,909 15,002 Basic earnings per common share $ 1.63 $ 2.06 $ 1.84 $ 1.51 $ 1.41 Diluted earnings per common share $ 1.63 $ 2.05 $ 1.83 $ 1.51 $ 1.41 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000s) (Unaudited) (Unaudited) (Unaudited) (Unaudited) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Assets Cash and due from banks $ 69,804 $ 68,333 $ 65,051 $ 90,449 $ 100,877 Interest-bearing deposits in depository institutions 233,006 131,667 233,302 606,530 497,171 Cash and cash equivalents 302,810 200,000 298,353 696,979 598,048 Investment securities available-for-sale, at fair value 1,456,259 1,505,520 1,489,392 1,497,227 1,409,513 Other securities 24,728 23,807 24,372 24,383 24,785 Total investment securities 1,480,987 1,529,327 1,513,764 1,521,610 1,434,298 Gross loans 3,894,686 3,646,258 3,628,752 3,566,758 3,559,905 Allowance for credit losses (22,724 ) (17,108 ) (17,011 ) (17,015 ) (17,280 ) Net loans 3,871,962 3,629,150 3,611,741 3,549,743 3,542,625 Bank owned life insurance 124,238 120,674 121,283 120,528 120,522 Premises and equipment, net 73,430 70,786 71,686 72,388 73,067 Accrued interest receivable 18,395 18,287 17,256 16,342 16,101 Net deferred tax assets 42,146 44,884 49,888 30,802 18,001 Goodwill and intangible assets 164,099 115,735 116,081 116,428 116,774 Other assets 132,715 149,263 147,716 118,375 92,331 Total Assets $ 6,210,782 $ 5,878,106 $ 5,947,768 $ 6,243,195 $ 6,011,767 Liabilities Deposits: Noninterest-bearing $ 1,420,990 $ 1,351,415 $ 1,429,281 $ 1,531,660 $ 1,357,266 Interest-bearing: Demand deposits 1,356,017 1,233,482 1,160,970 1,189,056 1,191,492 Savings deposits 1,397,523 1,396,869 1,427,785 1,435,645 1,425,528 Time deposits 962,235 888,100 939,769 985,567 1,024,559 Total deposits 5,136,765 4,869,866 4,957,805 5,141,928 4,998,845 Short-term borrowings Customer repurchase agreements 293,256 290,964 304,807 402,368 288,483 Other liabilities 129,711 139,424 136,868 106,906 92,009 Total Liabilities 5,559,732 5,300,254 5,399,480 5,651,202 5,379,337 Stockholders' Equity Preferred stock - - - - - Common stock 47,619 47,619 47,619 47,619 47,619 Capital surplus 177,529 170,980 170,138 169,557 170,206 Retained earnings 721,727 706,696 685,657 667,933 654,138 Cost of common stock in treasury (179,436 ) (215,955 ) (209,644 ) (209,133 ) (194,819 ) Accumulated other comprehensive (loss) income: Unrealized (loss) gain on securities available-for-sale (112,967 ) (128,066 ) (141,997 ) (80,498 ) (41,229 ) Underfunded pension liability (3,422 ) (3,422 ) (3,485 ) (3,485 ) (3,485 ) Total Accumulated Other Comprehensive (Loss) Income (116,389 ) (131,488 ) (145,482 ) (83,983 ) (44,714 ) Total Stockholders' Equity 651,050 577,852 548,288 591,993 632,430 Total Liabilities and Stockholders' Equity $ 6,210,782 $ 5,878,106 $ 5,947,768 $ 6,243,195 $ 6,011,767 Regulatory Capital Total CET 1 capital $ 606,675 $ 598,068 $ 582,213 $ 564,158 $ 565,048 Total tier 1 capital 606,675 598,068 582,213 564,158 565,048 Total risk-based capital 627,718 612,654 596,708 578,657 579,807 Total risk-weighted assets 3,878,994 3,685,207 3,679,511 3,558,249 3,492,920 CITY HOLDING COMPANY AND SUBSIDIARIES Loan Portfolio (Unaudited) ($ in 000s) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Commercial and industrial $ 390,861 $ 373,890 $ 375,735 $ 360,481 $ 337,384 1-4 Family 119,017 116,192 109,710 108,765 108,424 Hotels 327,554 340,404 355,001 337,910 314,902 Multi-family 195,042 174,786 186,440 203,856 209,359 Non Residential Non-Owner Occupied 679,782 585,964 569,369 551,240 637,092 Non Residential Owner Occupied 223,096 174,961 177,673 180,188 200,180 Commercial real estate (1) 1,544,491 1,392,307 1,398,193 1,381,959 1,469,957 Residential real estate (2) 1,737,604 1,693,523 1,678,770 1,651,005 1,588,860 Home equity 151,341 134,317 130,837 125,742 121,460 Consumer 66,994 48,806 41,902 44,580 39,778 DDA overdrafts 3,395 3,415 3,315 2,991 2,466 Gross Loans $ 3,894,686 $ 3,646,258 $ 3,628,752 $ 3,566,758 $ 3,559,905 Construction loans included in: (1) - Commercial real estate loans $ 4,715 $ 4,130 $ 4,125 $ 6,767 $ 14,877 (2) - Residential real estate loans 25,224 21,122 19,333 18,751 16,253 CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information (Unaudited) ($ in 000s) Three Months Ended March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Allowance for Credit Losses Balance at beginning of period $ 17,108 $ 17,011 $ 17,015 $ 17,280 $ 18,166 Charge-offs: Commercial and industrial - (120 ) (408 ) - (34 ) Commercial real estate (3 ) (31 ) - (24 ) - Residential real estate (32 ) (66 ) (93 ) (56 ) (50 ) Home equity (67 ) (189 ) (71 ) (19 ) - Consumer (62 ) (15 ) (16 ) (9 ) (23 ) DDA overdrafts (450 ) (670 ) (719 ) (604 ) (631 ) Total charge-offs (614 ) (1,091 ) (1,307 ) (712 ) (738 ) Recoveries: Commercial and industrial 83 94 149 32 59 Commercial real estate 158 120 9 25 53 Residential real estate 10 49 1 4 45 Home equity 4 34 2 3 17 Consumer 23 31 29 19 28 DDA overdrafts 398 360 383 364 406 Total recoveries 676 688 573 447 608 Net recoveries (charge-offs) 62 (403 ) (734 ) (265 ) (130 ) Provision for (recovery of) credit losses 2,918 500 730 - (756 ) PCD Loan Reserves 2,811 - - - - Adoption of ASU 2022-02 (175 ) - - - - Balance at end of period $ 22,724 $ 17,108 $ 17,011 $ 17,015 $ 17,280 Loans outstanding $ 3,894,686 $ 3,646,258 $ 3,628,752 $ 3,566,758 $ 3,559,905 Allowance as a percent of loans outstanding 0.58 % 0.47 % 0.47 % 0.48 % 0.49 % Allowance as a percent of non-performing loans 400.1 % 317.3 % 320.5 % 292.6 % 331.3 % Average loans outstanding $ 3,700,194 $ 3,648,996 $ 3,596,523 $ 3,559,713 $ 3,527,393 Net charge-offs (annualized) as a percent of average loans outstanding -0.01 % 0.04 % 0.08 % 0.03 % 0.01 % CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information, continued (Unaudited) ($ in 000s) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Nonaccrual Loans Residential real estate $ 2,700 $ 1,969 $ 2,089 $ 1,561 $ 1,786 Home equity 35 55 140 54 99 Commercial and industrial 994 1,015 785 1,360 1,069 Commercial real estate 1,931 2,166 2,293 2,783 2,241 Consumer 19 - - - - Total nonaccrual loans 5,679 5,205 5,307 5,758 5,195 Accruing loans past due 90 days or more - 187 - 58 21 Total non-performing loans 5,679 5,392 5,307 5,816 5,216 Other real estate owned 843 909 1,071 946 1,099 Total non-performing assets $ 6,522 $ 6,301 $ 6,378 $ 6,762 $ 6,315 Non-performing assets as a percent of loans and other real estate owned 0.17 % 0.17 % 0.18 % 0.19 % 0.18 % Past Due Loans Residential real estate $ 4,783 $ 7,091 $ 3,452 $ 5,298 $ 4,976 Home equity 551 650 521 282 505 Commercial and industrial 98 234 221 130 56 Commercial real estate 148 710 221 46 744 Consumer 3 100 27 49 32 DDA overdrafts 276 391 561 430 392 Total past due loans $ 5,859 $ 9,176 $ 5,003 $ 6,235 $ 6,705 Total past due loans as a percent of loans outstanding 0.15 % 0.25 % 0.14 % 0.17 % 0.19 % CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Three Months Ended March 31, 2023 December 31, 2022 March 31, 2022 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,840,828 $ 20,007 4.41 % $ 1,824,327 $ 18,973 4.11 % $ 1,667,683 $ 15,735 3.83 % Commercial, financial, and agriculture (2) 1,795,309 26,248 5.93 % 1,773,937 23,346 5.22 % 1,815,549 15,532 3.47 % Installment loans to individuals (2), (3) 64,057 749 4.74 % 50,732 646 5.05 % 44,161 607 5.57 % Total loans 3,700,194 47,004 5.15 % 3,648,996 42,965 4.67 % 3,527,393 31,874 3.66 % Securities: Taxable 1,322,060 11,773 3.61 % 1,315,453 11,118 3.35 % 1,207,333 6,223 2.09 % Tax-exempt (4) 204,957 1,471 2.91 % 211,326 1,597 3.00 % 232,474 1,539 2.68 % Total securities 1,527,017 13,244 3.52 % 1,526,779 12,715 3.30 % 1,439,807 7,762 2.19 % Deposits in depository institutions 160,115 1,590 4.03 % 162,732 1,245 3.04 % 540,197 238 0.18 % Total interest-earning assets 5,387,326 61,838 4.66 % 5,338,507 56,925 4.23 % 5,507,397 39,874 2.94 % Cash and due from banks 67,891 69,223 101,806 Premises and equipment, net 71,422 71,482 73,827 Goodwill and intangible assets 124,546 115,952 116,994 Other assets 327,442 332,855 217,662 Less: Allowance for credit losses (18,143 ) (17,332 ) (18,454 ) Total assets $ 5,960,484 $ 5,910,687 $ 5,999,232 Liabilities: Interest-bearing demand deposits $ 1,234,981 $ 1,741 0.57 % $ 1,150,327 $ 684 0.24 % $ 1,142,278 $ 130 0.05 % Savings deposits 1,376,317 1,348 0.40 % 1,412,246 829 0.23 % 1,384,460 175 0.05 % Time deposits (2) 902,583 2,601 1.17 % 916,845 1,497 0.65 % 1,048,185 1,216 0.47 % Customer repurchase agreements 281,861 2,381 3.43 % 303,599 1,534 2.00 % 276,360 114 0.17 % Total interest-bearing liabilities 3,795,742 8,071 0.86 % 3,783,017 4,544 0.48 % 3,851,283 1,635 0.17 % Noninterest-bearing demand deposits 1,420,676 1,428,013 1,398,663 Other liabilities 129,411 134,075 74,084 Stockholders' equity 614,655 565,582 675,202 Total liabilities and stockholders' equity $ 5,960,484 $ 5,910,687 $ 5,999,232 Net interest income $ 53,767 $ 52,381 $ 38,239 Net yield on earning assets 4.05 % 3.89 % 2.82 % (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) $ 518 $ (41 ) $ 298 (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 $ 76 $ 67 $ 90 Commercial, financial, and agriculture 177 135 286 Installment loans to individuals 4 4 19 Time deposits 9 21 21 $ 266 $ 227 $ 416 (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 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Net Interest Income/Margin Net interest income ("GAAP") $ 53,459 $ 52,045 $ 48,782 $ 41,290 $ 37,916 Taxable equivalent adjustment 308 336 326 321 323 Net interest income, fully taxable equivalent $ 53,767 $ 52,381 $ 49,108 $ 41,611 $ 38,239 Average interest earning assets $ 5,387,326 $ 5,338,507 $ 5,460,409 $ 5,485,604 $ 5,507,397 Net Interest Margin 4.05 % 3.89 % 3.57 % 3.04 % 2.82 % Accretion related to fair value adjustments -0.02 % -0.02 % -0.01 % -0.02 % -0.03 % Net Interest Margin (excluding accretion) 4.03 % 3.87 % 3.56 % 3.02 % 2.79 % Tangible Equity Ratio (period end) Equity to assets ("GAAP") 10.48 % 9.83 % 9.22 % 9.48 % 10.52 % Effect of goodwill and other intangibles, net -2.43 % -1.81 % -1.81 % -1.72 % -1.77 % Tangible common equity to tangible assets 8.05 % 8.02 % 7.41 % 7.76 % 8.75 % Return on average tangible equity ("GAAP") 19.9 % 27.3 % 21.8 % 18.1 % 15.3 % Impact of merger related expenses 3.6 % - - - - Impact of merger related provision 1.3 % - - - - Return on tangible equity, excluding merger related expenses and provision 24.8 % 27.3 % 21.8 % 18.1 % 15.3 % Return on assets ("GAAP") 1.63 % 2.08 % 1.83 % 1.51 % 1.42 % Impact of merger related expenses 0.31 % - - - - Impact of merger related provision 0.10 % - - - - Return on assets, excluding merger related expenses and provision 2.04 % 2.08 % 1.83 % 1.51 % 1.42 % Commercial Loan Information (period end) Commercial Sector Total % of Total Loans Average DSC Average LTV Natural Gas Extraction $ 25,179 0.65 % 3.68 64 % Natural Gas Distribution 23,711 0.61 % 2.61 N/A Masonry Contractors 23,017 0.59 % 1.13 84 % Sheet Metal Work Manufacturing 23,491 0.60 % 1.57 68 % Beer & Ale Merchant Wholesalers 26,766 0.69 % 3.28 N/A Gasoline Stations with Convenience Stores 53,556 1.38 % 4.19 65 % Lessors of Residential Buildings & Dwellings 303,311 7.79 % 1.89 66 % 1-4 Family 114,768 2.95 % 2.97 68 % Multi-Family 160,664 4.13 % 1.84 66 % Lessors of Nonresidential Buildings 468,836 12.05 % 1.70 65 % Office Buildings 44,926 1.15 % 1.64 64 % Lessors of Mini-Warehouses & Self-Storage Units 44,510 1.15 % 1.62 62 % Assisted Living Facilities 28,944 0.74 % 1.38 57 % Hotels & Motels 335,086 8.61 % 1.43 52 % Average Balance Median Balance Commercial Loans $ 453 $ 92 Commercial Real Estate Loans 498 119 CITY HOLDING COMPANY AND SUBSIDIARIES Non-GAAP Reconciliations, continued (Unaudited) ($ in 000s, except per share data) Estimated Uninsured Deposits by Deposit Type March 31, 2023 December 31, 2022 Noninterest-Bearing Demand Deposits 19 % 20 % Interest-Bearing Deposits Demand Deposits 8 % 10 % Savings Deposits 11 % 14 % Time Deposits 14 % 13 % Total Deposits 13 % 14 % Retail Deposits Noninterest-Bearing 4 % 5 % Interest-Bearing 11 % 11 % Total Retail Deposits 9 % 10 % Commercial Deposits Noninterest-Bearing Deposits 31 % 32 % Interest-Bearing Deposits 13 % 16 % Total Commercial Deposits 23 % 26 % The amounts listed above represent management's best estimate as of the respective period shown. Average Deposits by Category March 31, 2023 December 31, 2022 Retail Deposits Noninterest-Bearing $ 619,889 $ 637,368 Interest-Bearing 3,125,132 3,012,999 Total Average Retail Deposits $ 3,745,021 $ 3,650,367 Commercial Deposits Noninterest-Bearing Deposits $ 800,787 $ 790,645 Interest-Bearing Deposits 388,749 466,419 Total Average Commercial Deposits $ 1,189,536 $ 1,257,064 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* 8,467 1,644 0.7 % 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 % * - 2023 YTD amounts exclude accounts added in connection with the acquisitions of Citizens Commerce Bancshares, Inc., Poage Bankshares, Inc. and Farmers Deposit Bancorp, Inc. View source version on businesswire.com: https://www.businesswire.com/news/home/20230424005615/en/Contacts David L. Bumgarner, Executive Vice President and Chief Financial Officer (304) 769-1169 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
City Holding Company Announces Quarterly Results By: City Holding Company via Business Wire April 25, 2023 at 07:30 AM EDT City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $6.2 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $24.3 million and diluted earnings of $1.63 per share for the quarter ended March 31, 2023. During the first quarter of 2023, the Company completed its acquisition of Citizens Commerce Bancshares, Inc. (“Citizens”) and its principal banking subsidiary, Citizens Commerce Bank of Versailles, Kentucky, on March 10, 2023. The results for the quarter ended March 31, 2023, include $2.0 million of credit loss expense associated with loans acquired from Citizens in its total provision for credit losses and $5.6 million of acquisition and integration expenses related to the acquisition. These expenses reduced diluted earnings per share on an after-tax-basis by $0.40. Net Interest Income The Company’s net interest income increased approximately $1.4 million, or 2.7%, from $52.0 million during the fourth quarter of 2022 to $53.5 million during the first quarter of 2023. The Company’s tax equivalent net interest income increased $1.4 million, or 2.6%, from $52.4 million for the fourth quarter of 2022 to $53.8 million for the first quarter of 2023. The acquisition of Citizens added $0.5 million of net interest income during the quarter ended March 31, 2023. Due to recent increases in the Federal Funds rate, net interest income increased by $3.0 million due to an increase in loan yields (net of loan fees and accretion) of 43 basis points and by $0.5 million due to an increase in investment yields of 21 basis points. In addition, loan fees increased $0.6 million and an increase of 99 basis points in the yield on deposits in depository institutions increased net interest income by $0.4 million from the quarter ended December 31, 2022. These increases were partially offset by an increase in the cost of interest bearing liabilities (38 basis points) which decreased net interest income by $3.5 million. The Company’s reported net interest margin increased from 3.89% for the fourth quarter of 2022 to 4.05% for the first 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 $6.3 million, at December 31, 2022 and 0.17%, or $6.5 million, at March 31, 2023. Total past due loans decreased from $9.2 million, or 0.25% of total loans outstanding, at December 31, 2022, to $5.9 million, or 0.15% of total loans outstanding at March 31, 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 $2.9 million in the first quarter of 2023, compared to a recovery of credit losses of $0.8 million for the comparable period in 2022, and a provision for credit losses of $0.5 million for the fourth quarter of 2022. In connection with the completion of our acquisition of Citizens during the quarter ended March 31, 2023, the Company recorded $2.0 million of credit loss expense associated with loans acquired from Citizens in its total provision for credit losses. In addition, the provision for credit losses included $0.9 million that was primarily related to the downgrade of two commercial loans. Non-interest Income Non-interest income was $18.7 million during the quarter ended March 31, 2023, as compared to $17.5 million during the quarter ended March 31, 2022. During the first quarter of 2023, the Company reported $0.8 million of realized gains from the sale of investment securities and $0.4 million of unrealized fair value gains on the Company’s equity securities compared to $0.7 million of unrealized fair value losses on the Company’s equity securities during the first quarter of 2022. The gain from the sale of securities in the first quarter of 2023 was primarily due to the sale of Citizens investment portfolio of approximately $41 million shortly after the acquisition date. These securities were marked to market in accordance with purchase accounting rules and due to a change in market conditions and an opportunity to increase the yield on the portfolio, the Company elected to liquidate those securities. The proceeds also enabled the Company an opportunity to enhance its liquidity position. Exclusive of these items, non-interest income decreased $0.6 million, or 3.4%, from $18.2 million for the first quarter of 2022 to $17.5 million for the first quarter of 2023. This decrease was largely attributable to a decrease of $1.2 million in bank owned life insurance due to a decrease in death benefit proceeds and a decrease of $0.2 million, or 2.4%, in service charges. These decreases were partially offset by an increase in other income of $0.5 million. Citizens’ contribution to noninterest income for the quarter ended March 31, 2023, was less than $0.1 million. Non-interest Expenses Non-interest expenses increased $9.1 million, or 30.8%, from $29.5 million in the first quarter of 2022 to $38.6 million in the first quarter of 2023. During the quarter ended March 31, 2023, the Company recognized $5.6 million of acquisition and integration expenses associated with the completed acquisition of Citizens. Excluding these expenses, non-interest expenses increased $3.5 million from $29.5 million in the quarter ended March 31, 2022 to $33.0 million in the quarter ended March 31, 2023. This increase was largely due to an increase in salaries and employee benefits of $2.1 million due to higher salary adjustments, increased incentive compensation, and increased health insurance cost. In addition, other expenses increased $1.3 million and equipment and software-related expenses increased $0.3 million. The acquisition of Citizens increased noninterest expenses by approximately $0.2 million during the quarter ended March 31, 2023. Balance Sheet Trends Loans increased $248.4 million (6.8%) from December 31, 2022 to $3.89 billion at March 31, 2023, primarily due to the Company’s acquisition of Citizens ($254.7 million). Excluding the acquisition, total loans decreased $6.3 million (0.2%), from December 31, 2022 to $3.64 billion at March 31, 2023. Commercial real estate loans decreased $27.6 million during the quarter ended March 31, 2023. This decrease was partially offset by increases in consumer loans of $15.1 million (31.0%), home equity loans of $3.3 million (2.4%), and commercial and industrial loans of $2.3 million (0.6%). Period-end deposit balances increased $266.9 million from December 31, 2022, to March 31, 2023, due to the Company’s acquisition of Citizens ($298.7 million). Total average depository balances increased $27.1 million, or 0.6%, from the quarter ended December 31, 2022 to the quarter ended March 31, 2023. This growth was primarily attributable to deposits acquired from Citizens ($73.0 million). Exclusive of these contributions, average depository balances declined $45.9 million, or 0.9%, from the quarter ended December 31, 2022. Average savings deposit balances decreased $53.2 million, average time deposit balances decreased $30.7 million, and average noninterest-bearing demand deposit balances decreased $21.5 million. These decreases were partially offset by an increase in average interest-bearing demand deposit balances of $59.5 million. Income Tax Expense The Company’s effective income tax rate for the first quarter of 2023 was 20.5% compared to 19.8% for the year ended December 31, 2022, and 19.7%, for the quarter ended March 31, 2022. Capitalization and Liquidity The Company’s loan to deposit ratio was 75.8% and the loan to asset ratio was 62.7% at March 31, 2023. The Company maintained investment securities totaling 23.8% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 67.2% of assets at March 31, 2023. Time deposits fund 15.5% of assets at March 31, 2023, with only 10.9% 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 Board and the Federal Home Loan Bank that can be accessed as necessary to fund operations and to provide contingency funding. As of March 31, 2023, City National had the capacity to borrow an additional $1.6 billion from these existing borrowing facilities. In addition, $803.2 million of City National’s investment securities were unpledged at March 31, 2023. The Company continues to be strongly capitalized with tangible equity of $487 million at March 31, 2023. The Company’s tangible equity ratio increased slightly from 8.0% at December 31, 2022 to 8.1% at March 31, 2023. At March 31, 2023, City National’s Leverage Ratio was 9.18%, its Common Equity Tier I ratio was 14.08%, its Tier I Capital ratio was 14.08%, and its Total Risk-Based Capital ratio was 14.63%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation. On March 29, 2023, the Board of Directors of the Company approved a quarterly cash dividend of $0.65 per share payable April 28, 2023, to shareholders of record as of April 14, 2023. During the quarter ended March 31, 2023, the Company repurchased 218,000 common shares at a weighted average price of $92.10 per share as part of a one million share repurchase plan authorized by the Board of Directors in May 2022. As of March 31, 2023, the Company could repurchase 599,000 additional shares under the current program. In connection with the acquisition of Citizens, the Company issued 667,000 shares of common stock on March 10, 2023. 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 March 31, 2023 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2023 results and will adjust the amounts if necessary. CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights (Unaudited) Three Months Ended March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Earnings Net Interest Income (fully taxable equivalent) $ 53,767 $ 52,381 $ 49,108 $ 41,611 $ 38,239 Net Income available to common shareholders 24,341 30,672 27,374 22,683 21,342 Per Share Data Earnings per share available to common shareholders: Basic $ 1.63 $ 2.06 $ 1.84 $ 1.51 $ 1.41 Diluted 1.63 2.05 1.83 1.51 1.41 Weighted average number of shares (in thousands): Basic 14,818 14,756 14,776 14,888 14,974 Diluted 14,844 14,785 14,800 14,909 15,002 Period-end number of shares (in thousands) 15,260 14,788 14,856 14,864 15,045 Cash dividends declared $ 0.65 $ 0.65 $ 0.65 $ 0.60 $ 0.60 Book value per share (period-end) $ 42.66 $ 39.08 $ 36.91 $ 39.83 $ 42.03 Tangible book value per share (period-end) 31.91 31.25 29.09 31.99 34.27 Market data: High closing price $ 100.27 $ 101.94 $ 90.24 $ 83.07 $ 85.99 Low closing price 89.17 89.32 78.40 73.88 76.82 Period-end closing price 90.88 93.09 88.69 79.88 78.70 Average daily volume (in thousands) 84 75 58 87 59 Treasury share activity: Treasury shares repurchased (in thousands) 218 69 9 208 38 Average treasury share repurchase price $ 92.10 $ 93.12 $ 80.24 $ 78.33 $ 78.09 Key Ratios (percent) Return on average assets 1.63 % 2.08 % 1.83 % 1.51 % 1.42 % Return on average tangible equity 19.9 % 27.3 % 21.8 % 18.1 % 15.3 % Yield on interest earning assets 4.66 % 4.23 % 3.72 % 3.15 % 2.94 % Cost of interest bearing liabilities 0.86 % 0.48 % 0.21 % 0.15 % 0.17 % Net Interest Margin 4.05 % 3.89 % 3.57 % 3.04 % 2.82 % Non-interest income as a percent of total revenue 24.7 % 26.5 % 27.2 % 30.9 % 32.4 % Efficiency Ratio 45.7 % 45.3 % 46.3 % 50.5 % 51.7 % Price/Earnings Ratio (a) 13.95 11.30 12.08 13.23 13.93 Capital (period-end) Average Shareholders' Equity to Average Assets 10.31 % 9.57 % 10.32 % 10.26 % 11.25 % Tangible equity to tangible assets 8.05 % 8.02 % 7.41 % 7.76 % 8.75 % Consolidated City Holding Company risk based capital ratios (b): CET I 15.64 % 16.23 % 15.82 % 15.85 % 16.18 % Tier I 15.64 % 16.23 % 15.82 % 15.85 % 16.18 % Total 16.18 % 16.62 % 16.22 % 16.26 % 16.60 % Leverage 10.20 % 10.01 % 9.74 % 9.42 % 9.58 % City National Bank risk based capital ratios (b): CET I 14.08 % 13.88 % 14.68 % 14.80 % 14.82 % Tier I 14.08 % 13.88 % 14.68 % 14.80 % 14.82 % Total 14.63 % 14.28 % 15.07 % 15.21 % 15.24 % Leverage 9.18 % 8.55 % 9.05 % 8.81 % 8.80 % Other (period-end) Branches 99 94 94 94 94 FTE 958 909 903 915 897 Assets per FTE (in thousands) $ 6,483 $ 6,467 $ 6,588 $ 6,825 $ 6,703 Deposits per FTE (in thousands) 5,362 5,357 5,492 5,621 5,574 (a) The price/earnings ratio is computed based on annualized quarterly earnings. (b) March 31, 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 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Interest Income Interest and fees on loans $ 47,004 $ 42,963 $ 38,493 $ 33,208 $ 31,874 Interest on investment securities: Taxable 11,773 11,119 9,556 7,547 6,223 Tax-exempt 1,162 1,262 1,228 1,205 1,216 Interest on deposits in depository institutions 1,591 1,244 1,530 782 238 Total Interest Income 61,530 56,588 50,807 42,742 39,551 Interest Expense Interest on deposits 5,690 3,010 1,585 1,328 1,521 Interest on short-term borrowings 2,381 1,533 440 124 114 Total Interest Expense 8,071 4,543 2,025 1,452 1,635 Net Interest Income 53,459 52,045 48,782 41,290 37,916 Provision for (Recovery of) credit losses 2,918 500 730 - (756 ) Net Interest Income After Provision for (Recovery of) Credit Losses 50,541 51,545 48,052 41,290 38,672 Non-Interest Income Net gains on sale of investment securities 773 4 - - - Unrealized gains (losses) recognized on equity securities still held 361 (262 ) 1 (601 ) (723 ) Service charges 6,563 7,056 7,487 7,067 6,725 Bankcard revenue 6,603 6,791 7,052 7,062 6,444 Trust and investment management fee income 2,252 2,343 2,158 2,100 2,197 Bank owned life insurance 804 1,813 754 978 2,014 Other income 1,326 791 792 1,243 791 Total Non-Interest Income 18,682 18,536 18,244 17,849 17,448 Non-Interest Expense Salaries and employee benefits 17,673 17,148 17,398 16,413 15,577 Occupancy related expense 2,640 2,725 2,664 2,620 2,709 Equipment and software related expense 3,092 3,341 2,949 2,732 2,769 FDIC insurance expense 445 413 416 409 435 Advertising 760 802 854 951 798 Bankcard expenses 1,509 1,356 1,405 1,665 1,606 Postage, delivery, and statement mailings 647 597 578 551 636 Office supplies 420 441 466 427 410 Legal and professional fees 470 610 532 525 527 Telecommunications 606 627 651 754 584 Repossessed asset losses (gains), net of expenses 16 54 (3 ) (32 ) 40 Merger related expenses 5,645 268 - - - Other expenses 4,700 4,203 3,591 3,674 3,436 Total Non-Interest Expense 38,623 32,585 31,501 30,689 29,527 Income Before Income Taxes 30,600 37,496 34,795 28,450 26,593 Income tax expense 6,259 6,824 7,421 5,767 5,251 Net Income Available to Common Shareholders $ 24,341 $ 30,672 $ 27,374 $ 22,683 $ 21,342 Distributed earnings allocated to common shareholders $ 9,833 $ 9,521 $ 9,564 $ 8,837 $ 8,943 Undistributed earnings allocated to common shareholders 14,294 20,857 17,555 13,643 12,199 Net earnings allocated to common shareholders $ 24,127 $ 30,378 $ 27,119 $ 22,480 $ 21,142 Average common shares outstanding 14,818 14,756 14,776 14,888 14,974 Shares for diluted earnings per share 14,844 14,785 14,800 14,909 15,002 Basic earnings per common share $ 1.63 $ 2.06 $ 1.84 $ 1.51 $ 1.41 Diluted earnings per common share $ 1.63 $ 2.05 $ 1.83 $ 1.51 $ 1.41 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000s) (Unaudited) (Unaudited) (Unaudited) (Unaudited) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Assets Cash and due from banks $ 69,804 $ 68,333 $ 65,051 $ 90,449 $ 100,877 Interest-bearing deposits in depository institutions 233,006 131,667 233,302 606,530 497,171 Cash and cash equivalents 302,810 200,000 298,353 696,979 598,048 Investment securities available-for-sale, at fair value 1,456,259 1,505,520 1,489,392 1,497,227 1,409,513 Other securities 24,728 23,807 24,372 24,383 24,785 Total investment securities 1,480,987 1,529,327 1,513,764 1,521,610 1,434,298 Gross loans 3,894,686 3,646,258 3,628,752 3,566,758 3,559,905 Allowance for credit losses (22,724 ) (17,108 ) (17,011 ) (17,015 ) (17,280 ) Net loans 3,871,962 3,629,150 3,611,741 3,549,743 3,542,625 Bank owned life insurance 124,238 120,674 121,283 120,528 120,522 Premises and equipment, net 73,430 70,786 71,686 72,388 73,067 Accrued interest receivable 18,395 18,287 17,256 16,342 16,101 Net deferred tax assets 42,146 44,884 49,888 30,802 18,001 Goodwill and intangible assets 164,099 115,735 116,081 116,428 116,774 Other assets 132,715 149,263 147,716 118,375 92,331 Total Assets $ 6,210,782 $ 5,878,106 $ 5,947,768 $ 6,243,195 $ 6,011,767 Liabilities Deposits: Noninterest-bearing $ 1,420,990 $ 1,351,415 $ 1,429,281 $ 1,531,660 $ 1,357,266 Interest-bearing: Demand deposits 1,356,017 1,233,482 1,160,970 1,189,056 1,191,492 Savings deposits 1,397,523 1,396,869 1,427,785 1,435,645 1,425,528 Time deposits 962,235 888,100 939,769 985,567 1,024,559 Total deposits 5,136,765 4,869,866 4,957,805 5,141,928 4,998,845 Short-term borrowings Customer repurchase agreements 293,256 290,964 304,807 402,368 288,483 Other liabilities 129,711 139,424 136,868 106,906 92,009 Total Liabilities 5,559,732 5,300,254 5,399,480 5,651,202 5,379,337 Stockholders' Equity Preferred stock - - - - - Common stock 47,619 47,619 47,619 47,619 47,619 Capital surplus 177,529 170,980 170,138 169,557 170,206 Retained earnings 721,727 706,696 685,657 667,933 654,138 Cost of common stock in treasury (179,436 ) (215,955 ) (209,644 ) (209,133 ) (194,819 ) Accumulated other comprehensive (loss) income: Unrealized (loss) gain on securities available-for-sale (112,967 ) (128,066 ) (141,997 ) (80,498 ) (41,229 ) Underfunded pension liability (3,422 ) (3,422 ) (3,485 ) (3,485 ) (3,485 ) Total Accumulated Other Comprehensive (Loss) Income (116,389 ) (131,488 ) (145,482 ) (83,983 ) (44,714 ) Total Stockholders' Equity 651,050 577,852 548,288 591,993 632,430 Total Liabilities and Stockholders' Equity $ 6,210,782 $ 5,878,106 $ 5,947,768 $ 6,243,195 $ 6,011,767 Regulatory Capital Total CET 1 capital $ 606,675 $ 598,068 $ 582,213 $ 564,158 $ 565,048 Total tier 1 capital 606,675 598,068 582,213 564,158 565,048 Total risk-based capital 627,718 612,654 596,708 578,657 579,807 Total risk-weighted assets 3,878,994 3,685,207 3,679,511 3,558,249 3,492,920 CITY HOLDING COMPANY AND SUBSIDIARIES Loan Portfolio (Unaudited) ($ in 000s) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Commercial and industrial $ 390,861 $ 373,890 $ 375,735 $ 360,481 $ 337,384 1-4 Family 119,017 116,192 109,710 108,765 108,424 Hotels 327,554 340,404 355,001 337,910 314,902 Multi-family 195,042 174,786 186,440 203,856 209,359 Non Residential Non-Owner Occupied 679,782 585,964 569,369 551,240 637,092 Non Residential Owner Occupied 223,096 174,961 177,673 180,188 200,180 Commercial real estate (1) 1,544,491 1,392,307 1,398,193 1,381,959 1,469,957 Residential real estate (2) 1,737,604 1,693,523 1,678,770 1,651,005 1,588,860 Home equity 151,341 134,317 130,837 125,742 121,460 Consumer 66,994 48,806 41,902 44,580 39,778 DDA overdrafts 3,395 3,415 3,315 2,991 2,466 Gross Loans $ 3,894,686 $ 3,646,258 $ 3,628,752 $ 3,566,758 $ 3,559,905 Construction loans included in: (1) - Commercial real estate loans $ 4,715 $ 4,130 $ 4,125 $ 6,767 $ 14,877 (2) - Residential real estate loans 25,224 21,122 19,333 18,751 16,253 CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information (Unaudited) ($ in 000s) Three Months Ended March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Allowance for Credit Losses Balance at beginning of period $ 17,108 $ 17,011 $ 17,015 $ 17,280 $ 18,166 Charge-offs: Commercial and industrial - (120 ) (408 ) - (34 ) Commercial real estate (3 ) (31 ) - (24 ) - Residential real estate (32 ) (66 ) (93 ) (56 ) (50 ) Home equity (67 ) (189 ) (71 ) (19 ) - Consumer (62 ) (15 ) (16 ) (9 ) (23 ) DDA overdrafts (450 ) (670 ) (719 ) (604 ) (631 ) Total charge-offs (614 ) (1,091 ) (1,307 ) (712 ) (738 ) Recoveries: Commercial and industrial 83 94 149 32 59 Commercial real estate 158 120 9 25 53 Residential real estate 10 49 1 4 45 Home equity 4 34 2 3 17 Consumer 23 31 29 19 28 DDA overdrafts 398 360 383 364 406 Total recoveries 676 688 573 447 608 Net recoveries (charge-offs) 62 (403 ) (734 ) (265 ) (130 ) Provision for (recovery of) credit losses 2,918 500 730 - (756 ) PCD Loan Reserves 2,811 - - - - Adoption of ASU 2022-02 (175 ) - - - - Balance at end of period $ 22,724 $ 17,108 $ 17,011 $ 17,015 $ 17,280 Loans outstanding $ 3,894,686 $ 3,646,258 $ 3,628,752 $ 3,566,758 $ 3,559,905 Allowance as a percent of loans outstanding 0.58 % 0.47 % 0.47 % 0.48 % 0.49 % Allowance as a percent of non-performing loans 400.1 % 317.3 % 320.5 % 292.6 % 331.3 % Average loans outstanding $ 3,700,194 $ 3,648,996 $ 3,596,523 $ 3,559,713 $ 3,527,393 Net charge-offs (annualized) as a percent of average loans outstanding -0.01 % 0.04 % 0.08 % 0.03 % 0.01 % CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information, continued (Unaudited) ($ in 000s) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Nonaccrual Loans Residential real estate $ 2,700 $ 1,969 $ 2,089 $ 1,561 $ 1,786 Home equity 35 55 140 54 99 Commercial and industrial 994 1,015 785 1,360 1,069 Commercial real estate 1,931 2,166 2,293 2,783 2,241 Consumer 19 - - - - Total nonaccrual loans 5,679 5,205 5,307 5,758 5,195 Accruing loans past due 90 days or more - 187 - 58 21 Total non-performing loans 5,679 5,392 5,307 5,816 5,216 Other real estate owned 843 909 1,071 946 1,099 Total non-performing assets $ 6,522 $ 6,301 $ 6,378 $ 6,762 $ 6,315 Non-performing assets as a percent of loans and other real estate owned 0.17 % 0.17 % 0.18 % 0.19 % 0.18 % Past Due Loans Residential real estate $ 4,783 $ 7,091 $ 3,452 $ 5,298 $ 4,976 Home equity 551 650 521 282 505 Commercial and industrial 98 234 221 130 56 Commercial real estate 148 710 221 46 744 Consumer 3 100 27 49 32 DDA overdrafts 276 391 561 430 392 Total past due loans $ 5,859 $ 9,176 $ 5,003 $ 6,235 $ 6,705 Total past due loans as a percent of loans outstanding 0.15 % 0.25 % 0.14 % 0.17 % 0.19 % CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Three Months Ended March 31, 2023 December 31, 2022 March 31, 2022 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,840,828 $ 20,007 4.41 % $ 1,824,327 $ 18,973 4.11 % $ 1,667,683 $ 15,735 3.83 % Commercial, financial, and agriculture (2) 1,795,309 26,248 5.93 % 1,773,937 23,346 5.22 % 1,815,549 15,532 3.47 % Installment loans to individuals (2), (3) 64,057 749 4.74 % 50,732 646 5.05 % 44,161 607 5.57 % Total loans 3,700,194 47,004 5.15 % 3,648,996 42,965 4.67 % 3,527,393 31,874 3.66 % Securities: Taxable 1,322,060 11,773 3.61 % 1,315,453 11,118 3.35 % 1,207,333 6,223 2.09 % Tax-exempt (4) 204,957 1,471 2.91 % 211,326 1,597 3.00 % 232,474 1,539 2.68 % Total securities 1,527,017 13,244 3.52 % 1,526,779 12,715 3.30 % 1,439,807 7,762 2.19 % Deposits in depository institutions 160,115 1,590 4.03 % 162,732 1,245 3.04 % 540,197 238 0.18 % Total interest-earning assets 5,387,326 61,838 4.66 % 5,338,507 56,925 4.23 % 5,507,397 39,874 2.94 % Cash and due from banks 67,891 69,223 101,806 Premises and equipment, net 71,422 71,482 73,827 Goodwill and intangible assets 124,546 115,952 116,994 Other assets 327,442 332,855 217,662 Less: Allowance for credit losses (18,143 ) (17,332 ) (18,454 ) Total assets $ 5,960,484 $ 5,910,687 $ 5,999,232 Liabilities: Interest-bearing demand deposits $ 1,234,981 $ 1,741 0.57 % $ 1,150,327 $ 684 0.24 % $ 1,142,278 $ 130 0.05 % Savings deposits 1,376,317 1,348 0.40 % 1,412,246 829 0.23 % 1,384,460 175 0.05 % Time deposits (2) 902,583 2,601 1.17 % 916,845 1,497 0.65 % 1,048,185 1,216 0.47 % Customer repurchase agreements 281,861 2,381 3.43 % 303,599 1,534 2.00 % 276,360 114 0.17 % Total interest-bearing liabilities 3,795,742 8,071 0.86 % 3,783,017 4,544 0.48 % 3,851,283 1,635 0.17 % Noninterest-bearing demand deposits 1,420,676 1,428,013 1,398,663 Other liabilities 129,411 134,075 74,084 Stockholders' equity 614,655 565,582 675,202 Total liabilities and stockholders' equity $ 5,960,484 $ 5,910,687 $ 5,999,232 Net interest income $ 53,767 $ 52,381 $ 38,239 Net yield on earning assets 4.05 % 3.89 % 2.82 % (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) $ 518 $ (41 ) $ 298 (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 $ 76 $ 67 $ 90 Commercial, financial, and agriculture 177 135 286 Installment loans to individuals 4 4 19 Time deposits 9 21 21 $ 266 $ 227 $ 416 (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 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Net Interest Income/Margin Net interest income ("GAAP") $ 53,459 $ 52,045 $ 48,782 $ 41,290 $ 37,916 Taxable equivalent adjustment 308 336 326 321 323 Net interest income, fully taxable equivalent $ 53,767 $ 52,381 $ 49,108 $ 41,611 $ 38,239 Average interest earning assets $ 5,387,326 $ 5,338,507 $ 5,460,409 $ 5,485,604 $ 5,507,397 Net Interest Margin 4.05 % 3.89 % 3.57 % 3.04 % 2.82 % Accretion related to fair value adjustments -0.02 % -0.02 % -0.01 % -0.02 % -0.03 % Net Interest Margin (excluding accretion) 4.03 % 3.87 % 3.56 % 3.02 % 2.79 % Tangible Equity Ratio (period end) Equity to assets ("GAAP") 10.48 % 9.83 % 9.22 % 9.48 % 10.52 % Effect of goodwill and other intangibles, net -2.43 % -1.81 % -1.81 % -1.72 % -1.77 % Tangible common equity to tangible assets 8.05 % 8.02 % 7.41 % 7.76 % 8.75 % Return on average tangible equity ("GAAP") 19.9 % 27.3 % 21.8 % 18.1 % 15.3 % Impact of merger related expenses 3.6 % - - - - Impact of merger related provision 1.3 % - - - - Return on tangible equity, excluding merger related expenses and provision 24.8 % 27.3 % 21.8 % 18.1 % 15.3 % Return on assets ("GAAP") 1.63 % 2.08 % 1.83 % 1.51 % 1.42 % Impact of merger related expenses 0.31 % - - - - Impact of merger related provision 0.10 % - - - - Return on assets, excluding merger related expenses and provision 2.04 % 2.08 % 1.83 % 1.51 % 1.42 % Commercial Loan Information (period end) Commercial Sector Total % of Total Loans Average DSC Average LTV Natural Gas Extraction $ 25,179 0.65 % 3.68 64 % Natural Gas Distribution 23,711 0.61 % 2.61 N/A Masonry Contractors 23,017 0.59 % 1.13 84 % Sheet Metal Work Manufacturing 23,491 0.60 % 1.57 68 % Beer & Ale Merchant Wholesalers 26,766 0.69 % 3.28 N/A Gasoline Stations with Convenience Stores 53,556 1.38 % 4.19 65 % Lessors of Residential Buildings & Dwellings 303,311 7.79 % 1.89 66 % 1-4 Family 114,768 2.95 % 2.97 68 % Multi-Family 160,664 4.13 % 1.84 66 % Lessors of Nonresidential Buildings 468,836 12.05 % 1.70 65 % Office Buildings 44,926 1.15 % 1.64 64 % Lessors of Mini-Warehouses & Self-Storage Units 44,510 1.15 % 1.62 62 % Assisted Living Facilities 28,944 0.74 % 1.38 57 % Hotels & Motels 335,086 8.61 % 1.43 52 % Average Balance Median Balance Commercial Loans $ 453 $ 92 Commercial Real Estate Loans 498 119 CITY HOLDING COMPANY AND SUBSIDIARIES Non-GAAP Reconciliations, continued (Unaudited) ($ in 000s, except per share data) Estimated Uninsured Deposits by Deposit Type March 31, 2023 December 31, 2022 Noninterest-Bearing Demand Deposits 19 % 20 % Interest-Bearing Deposits Demand Deposits 8 % 10 % Savings Deposits 11 % 14 % Time Deposits 14 % 13 % Total Deposits 13 % 14 % Retail Deposits Noninterest-Bearing 4 % 5 % Interest-Bearing 11 % 11 % Total Retail Deposits 9 % 10 % Commercial Deposits Noninterest-Bearing Deposits 31 % 32 % Interest-Bearing Deposits 13 % 16 % Total Commercial Deposits 23 % 26 % The amounts listed above represent management's best estimate as of the respective period shown. Average Deposits by Category March 31, 2023 December 31, 2022 Retail Deposits Noninterest-Bearing $ 619,889 $ 637,368 Interest-Bearing 3,125,132 3,012,999 Total Average Retail Deposits $ 3,745,021 $ 3,650,367 Commercial Deposits Noninterest-Bearing Deposits $ 800,787 $ 790,645 Interest-Bearing Deposits 388,749 466,419 Total Average Commercial Deposits $ 1,189,536 $ 1,257,064 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* 8,467 1,644 0.7 % 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 % * - 2023 YTD amounts exclude accounts added in connection with the acquisitions of Citizens Commerce Bancshares, Inc., Poage Bankshares, Inc. and Farmers Deposit Bancorp, Inc. View source version on businesswire.com: https://www.businesswire.com/news/home/20230424005615/en/Contacts David L. Bumgarner, Executive Vice President and Chief Financial Officer (304) 769-1169
City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $6.2 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $24.3 million and diluted earnings of $1.63 per share for the quarter ended March 31, 2023. During the first quarter of 2023, the Company completed its acquisition of Citizens Commerce Bancshares, Inc. (“Citizens”) and its principal banking subsidiary, Citizens Commerce Bank of Versailles, Kentucky, on March 10, 2023. The results for the quarter ended March 31, 2023, include $2.0 million of credit loss expense associated with loans acquired from Citizens in its total provision for credit losses and $5.6 million of acquisition and integration expenses related to the acquisition. These expenses reduced diluted earnings per share on an after-tax-basis by $0.40. Net Interest Income The Company’s net interest income increased approximately $1.4 million, or 2.7%, from $52.0 million during the fourth quarter of 2022 to $53.5 million during the first quarter of 2023. The Company’s tax equivalent net interest income increased $1.4 million, or 2.6%, from $52.4 million for the fourth quarter of 2022 to $53.8 million for the first quarter of 2023. The acquisition of Citizens added $0.5 million of net interest income during the quarter ended March 31, 2023. Due to recent increases in the Federal Funds rate, net interest income increased by $3.0 million due to an increase in loan yields (net of loan fees and accretion) of 43 basis points and by $0.5 million due to an increase in investment yields of 21 basis points. In addition, loan fees increased $0.6 million and an increase of 99 basis points in the yield on deposits in depository institutions increased net interest income by $0.4 million from the quarter ended December 31, 2022. These increases were partially offset by an increase in the cost of interest bearing liabilities (38 basis points) which decreased net interest income by $3.5 million. The Company’s reported net interest margin increased from 3.89% for the fourth quarter of 2022 to 4.05% for the first 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 $6.3 million, at December 31, 2022 and 0.17%, or $6.5 million, at March 31, 2023. Total past due loans decreased from $9.2 million, or 0.25% of total loans outstanding, at December 31, 2022, to $5.9 million, or 0.15% of total loans outstanding at March 31, 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 $2.9 million in the first quarter of 2023, compared to a recovery of credit losses of $0.8 million for the comparable period in 2022, and a provision for credit losses of $0.5 million for the fourth quarter of 2022. In connection with the completion of our acquisition of Citizens during the quarter ended March 31, 2023, the Company recorded $2.0 million of credit loss expense associated with loans acquired from Citizens in its total provision for credit losses. In addition, the provision for credit losses included $0.9 million that was primarily related to the downgrade of two commercial loans. Non-interest Income Non-interest income was $18.7 million during the quarter ended March 31, 2023, as compared to $17.5 million during the quarter ended March 31, 2022. During the first quarter of 2023, the Company reported $0.8 million of realized gains from the sale of investment securities and $0.4 million of unrealized fair value gains on the Company’s equity securities compared to $0.7 million of unrealized fair value losses on the Company’s equity securities during the first quarter of 2022. The gain from the sale of securities in the first quarter of 2023 was primarily due to the sale of Citizens investment portfolio of approximately $41 million shortly after the acquisition date. These securities were marked to market in accordance with purchase accounting rules and due to a change in market conditions and an opportunity to increase the yield on the portfolio, the Company elected to liquidate those securities. The proceeds also enabled the Company an opportunity to enhance its liquidity position. Exclusive of these items, non-interest income decreased $0.6 million, or 3.4%, from $18.2 million for the first quarter of 2022 to $17.5 million for the first quarter of 2023. This decrease was largely attributable to a decrease of $1.2 million in bank owned life insurance due to a decrease in death benefit proceeds and a decrease of $0.2 million, or 2.4%, in service charges. These decreases were partially offset by an increase in other income of $0.5 million. Citizens’ contribution to noninterest income for the quarter ended March 31, 2023, was less than $0.1 million. Non-interest Expenses Non-interest expenses increased $9.1 million, or 30.8%, from $29.5 million in the first quarter of 2022 to $38.6 million in the first quarter of 2023. During the quarter ended March 31, 2023, the Company recognized $5.6 million of acquisition and integration expenses associated with the completed acquisition of Citizens. Excluding these expenses, non-interest expenses increased $3.5 million from $29.5 million in the quarter ended March 31, 2022 to $33.0 million in the quarter ended March 31, 2023. This increase was largely due to an increase in salaries and employee benefits of $2.1 million due to higher salary adjustments, increased incentive compensation, and increased health insurance cost. In addition, other expenses increased $1.3 million and equipment and software-related expenses increased $0.3 million. The acquisition of Citizens increased noninterest expenses by approximately $0.2 million during the quarter ended March 31, 2023. Balance Sheet Trends Loans increased $248.4 million (6.8%) from December 31, 2022 to $3.89 billion at March 31, 2023, primarily due to the Company’s acquisition of Citizens ($254.7 million). Excluding the acquisition, total loans decreased $6.3 million (0.2%), from December 31, 2022 to $3.64 billion at March 31, 2023. Commercial real estate loans decreased $27.6 million during the quarter ended March 31, 2023. This decrease was partially offset by increases in consumer loans of $15.1 million (31.0%), home equity loans of $3.3 million (2.4%), and commercial and industrial loans of $2.3 million (0.6%). Period-end deposit balances increased $266.9 million from December 31, 2022, to March 31, 2023, due to the Company’s acquisition of Citizens ($298.7 million). Total average depository balances increased $27.1 million, or 0.6%, from the quarter ended December 31, 2022 to the quarter ended March 31, 2023. This growth was primarily attributable to deposits acquired from Citizens ($73.0 million). Exclusive of these contributions, average depository balances declined $45.9 million, or 0.9%, from the quarter ended December 31, 2022. Average savings deposit balances decreased $53.2 million, average time deposit balances decreased $30.7 million, and average noninterest-bearing demand deposit balances decreased $21.5 million. These decreases were partially offset by an increase in average interest-bearing demand deposit balances of $59.5 million. Income Tax Expense The Company’s effective income tax rate for the first quarter of 2023 was 20.5% compared to 19.8% for the year ended December 31, 2022, and 19.7%, for the quarter ended March 31, 2022. Capitalization and Liquidity The Company’s loan to deposit ratio was 75.8% and the loan to asset ratio was 62.7% at March 31, 2023. The Company maintained investment securities totaling 23.8% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 67.2% of assets at March 31, 2023. Time deposits fund 15.5% of assets at March 31, 2023, with only 10.9% 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 Board and the Federal Home Loan Bank that can be accessed as necessary to fund operations and to provide contingency funding. As of March 31, 2023, City National had the capacity to borrow an additional $1.6 billion from these existing borrowing facilities. In addition, $803.2 million of City National’s investment securities were unpledged at March 31, 2023. The Company continues to be strongly capitalized with tangible equity of $487 million at March 31, 2023. The Company’s tangible equity ratio increased slightly from 8.0% at December 31, 2022 to 8.1% at March 31, 2023. At March 31, 2023, City National’s Leverage Ratio was 9.18%, its Common Equity Tier I ratio was 14.08%, its Tier I Capital ratio was 14.08%, and its Total Risk-Based Capital ratio was 14.63%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation. On March 29, 2023, the Board of Directors of the Company approved a quarterly cash dividend of $0.65 per share payable April 28, 2023, to shareholders of record as of April 14, 2023. During the quarter ended March 31, 2023, the Company repurchased 218,000 common shares at a weighted average price of $92.10 per share as part of a one million share repurchase plan authorized by the Board of Directors in May 2022. As of March 31, 2023, the Company could repurchase 599,000 additional shares under the current program. In connection with the acquisition of Citizens, the Company issued 667,000 shares of common stock on March 10, 2023. 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 March 31, 2023 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2023 results and will adjust the amounts if necessary. CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights (Unaudited) Three Months Ended March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Earnings Net Interest Income (fully taxable equivalent) $ 53,767 $ 52,381 $ 49,108 $ 41,611 $ 38,239 Net Income available to common shareholders 24,341 30,672 27,374 22,683 21,342 Per Share Data Earnings per share available to common shareholders: Basic $ 1.63 $ 2.06 $ 1.84 $ 1.51 $ 1.41 Diluted 1.63 2.05 1.83 1.51 1.41 Weighted average number of shares (in thousands): Basic 14,818 14,756 14,776 14,888 14,974 Diluted 14,844 14,785 14,800 14,909 15,002 Period-end number of shares (in thousands) 15,260 14,788 14,856 14,864 15,045 Cash dividends declared $ 0.65 $ 0.65 $ 0.65 $ 0.60 $ 0.60 Book value per share (period-end) $ 42.66 $ 39.08 $ 36.91 $ 39.83 $ 42.03 Tangible book value per share (period-end) 31.91 31.25 29.09 31.99 34.27 Market data: High closing price $ 100.27 $ 101.94 $ 90.24 $ 83.07 $ 85.99 Low closing price 89.17 89.32 78.40 73.88 76.82 Period-end closing price 90.88 93.09 88.69 79.88 78.70 Average daily volume (in thousands) 84 75 58 87 59 Treasury share activity: Treasury shares repurchased (in thousands) 218 69 9 208 38 Average treasury share repurchase price $ 92.10 $ 93.12 $ 80.24 $ 78.33 $ 78.09 Key Ratios (percent) Return on average assets 1.63 % 2.08 % 1.83 % 1.51 % 1.42 % Return on average tangible equity 19.9 % 27.3 % 21.8 % 18.1 % 15.3 % Yield on interest earning assets 4.66 % 4.23 % 3.72 % 3.15 % 2.94 % Cost of interest bearing liabilities 0.86 % 0.48 % 0.21 % 0.15 % 0.17 % Net Interest Margin 4.05 % 3.89 % 3.57 % 3.04 % 2.82 % Non-interest income as a percent of total revenue 24.7 % 26.5 % 27.2 % 30.9 % 32.4 % Efficiency Ratio 45.7 % 45.3 % 46.3 % 50.5 % 51.7 % Price/Earnings Ratio (a) 13.95 11.30 12.08 13.23 13.93 Capital (period-end) Average Shareholders' Equity to Average Assets 10.31 % 9.57 % 10.32 % 10.26 % 11.25 % Tangible equity to tangible assets 8.05 % 8.02 % 7.41 % 7.76 % 8.75 % Consolidated City Holding Company risk based capital ratios (b): CET I 15.64 % 16.23 % 15.82 % 15.85 % 16.18 % Tier I 15.64 % 16.23 % 15.82 % 15.85 % 16.18 % Total 16.18 % 16.62 % 16.22 % 16.26 % 16.60 % Leverage 10.20 % 10.01 % 9.74 % 9.42 % 9.58 % City National Bank risk based capital ratios (b): CET I 14.08 % 13.88 % 14.68 % 14.80 % 14.82 % Tier I 14.08 % 13.88 % 14.68 % 14.80 % 14.82 % Total 14.63 % 14.28 % 15.07 % 15.21 % 15.24 % Leverage 9.18 % 8.55 % 9.05 % 8.81 % 8.80 % Other (period-end) Branches 99 94 94 94 94 FTE 958 909 903 915 897 Assets per FTE (in thousands) $ 6,483 $ 6,467 $ 6,588 $ 6,825 $ 6,703 Deposits per FTE (in thousands) 5,362 5,357 5,492 5,621 5,574 (a) The price/earnings ratio is computed based on annualized quarterly earnings. (b) March 31, 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 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Interest Income Interest and fees on loans $ 47,004 $ 42,963 $ 38,493 $ 33,208 $ 31,874 Interest on investment securities: Taxable 11,773 11,119 9,556 7,547 6,223 Tax-exempt 1,162 1,262 1,228 1,205 1,216 Interest on deposits in depository institutions 1,591 1,244 1,530 782 238 Total Interest Income 61,530 56,588 50,807 42,742 39,551 Interest Expense Interest on deposits 5,690 3,010 1,585 1,328 1,521 Interest on short-term borrowings 2,381 1,533 440 124 114 Total Interest Expense 8,071 4,543 2,025 1,452 1,635 Net Interest Income 53,459 52,045 48,782 41,290 37,916 Provision for (Recovery of) credit losses 2,918 500 730 - (756 ) Net Interest Income After Provision for (Recovery of) Credit Losses 50,541 51,545 48,052 41,290 38,672 Non-Interest Income Net gains on sale of investment securities 773 4 - - - Unrealized gains (losses) recognized on equity securities still held 361 (262 ) 1 (601 ) (723 ) Service charges 6,563 7,056 7,487 7,067 6,725 Bankcard revenue 6,603 6,791 7,052 7,062 6,444 Trust and investment management fee income 2,252 2,343 2,158 2,100 2,197 Bank owned life insurance 804 1,813 754 978 2,014 Other income 1,326 791 792 1,243 791 Total Non-Interest Income 18,682 18,536 18,244 17,849 17,448 Non-Interest Expense Salaries and employee benefits 17,673 17,148 17,398 16,413 15,577 Occupancy related expense 2,640 2,725 2,664 2,620 2,709 Equipment and software related expense 3,092 3,341 2,949 2,732 2,769 FDIC insurance expense 445 413 416 409 435 Advertising 760 802 854 951 798 Bankcard expenses 1,509 1,356 1,405 1,665 1,606 Postage, delivery, and statement mailings 647 597 578 551 636 Office supplies 420 441 466 427 410 Legal and professional fees 470 610 532 525 527 Telecommunications 606 627 651 754 584 Repossessed asset losses (gains), net of expenses 16 54 (3 ) (32 ) 40 Merger related expenses 5,645 268 - - - Other expenses 4,700 4,203 3,591 3,674 3,436 Total Non-Interest Expense 38,623 32,585 31,501 30,689 29,527 Income Before Income Taxes 30,600 37,496 34,795 28,450 26,593 Income tax expense 6,259 6,824 7,421 5,767 5,251 Net Income Available to Common Shareholders $ 24,341 $ 30,672 $ 27,374 $ 22,683 $ 21,342 Distributed earnings allocated to common shareholders $ 9,833 $ 9,521 $ 9,564 $ 8,837 $ 8,943 Undistributed earnings allocated to common shareholders 14,294 20,857 17,555 13,643 12,199 Net earnings allocated to common shareholders $ 24,127 $ 30,378 $ 27,119 $ 22,480 $ 21,142 Average common shares outstanding 14,818 14,756 14,776 14,888 14,974 Shares for diluted earnings per share 14,844 14,785 14,800 14,909 15,002 Basic earnings per common share $ 1.63 $ 2.06 $ 1.84 $ 1.51 $ 1.41 Diluted earnings per common share $ 1.63 $ 2.05 $ 1.83 $ 1.51 $ 1.41 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000s) (Unaudited) (Unaudited) (Unaudited) (Unaudited) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Assets Cash and due from banks $ 69,804 $ 68,333 $ 65,051 $ 90,449 $ 100,877 Interest-bearing deposits in depository institutions 233,006 131,667 233,302 606,530 497,171 Cash and cash equivalents 302,810 200,000 298,353 696,979 598,048 Investment securities available-for-sale, at fair value 1,456,259 1,505,520 1,489,392 1,497,227 1,409,513 Other securities 24,728 23,807 24,372 24,383 24,785 Total investment securities 1,480,987 1,529,327 1,513,764 1,521,610 1,434,298 Gross loans 3,894,686 3,646,258 3,628,752 3,566,758 3,559,905 Allowance for credit losses (22,724 ) (17,108 ) (17,011 ) (17,015 ) (17,280 ) Net loans 3,871,962 3,629,150 3,611,741 3,549,743 3,542,625 Bank owned life insurance 124,238 120,674 121,283 120,528 120,522 Premises and equipment, net 73,430 70,786 71,686 72,388 73,067 Accrued interest receivable 18,395 18,287 17,256 16,342 16,101 Net deferred tax assets 42,146 44,884 49,888 30,802 18,001 Goodwill and intangible assets 164,099 115,735 116,081 116,428 116,774 Other assets 132,715 149,263 147,716 118,375 92,331 Total Assets $ 6,210,782 $ 5,878,106 $ 5,947,768 $ 6,243,195 $ 6,011,767 Liabilities Deposits: Noninterest-bearing $ 1,420,990 $ 1,351,415 $ 1,429,281 $ 1,531,660 $ 1,357,266 Interest-bearing: Demand deposits 1,356,017 1,233,482 1,160,970 1,189,056 1,191,492 Savings deposits 1,397,523 1,396,869 1,427,785 1,435,645 1,425,528 Time deposits 962,235 888,100 939,769 985,567 1,024,559 Total deposits 5,136,765 4,869,866 4,957,805 5,141,928 4,998,845 Short-term borrowings Customer repurchase agreements 293,256 290,964 304,807 402,368 288,483 Other liabilities 129,711 139,424 136,868 106,906 92,009 Total Liabilities 5,559,732 5,300,254 5,399,480 5,651,202 5,379,337 Stockholders' Equity Preferred stock - - - - - Common stock 47,619 47,619 47,619 47,619 47,619 Capital surplus 177,529 170,980 170,138 169,557 170,206 Retained earnings 721,727 706,696 685,657 667,933 654,138 Cost of common stock in treasury (179,436 ) (215,955 ) (209,644 ) (209,133 ) (194,819 ) Accumulated other comprehensive (loss) income: Unrealized (loss) gain on securities available-for-sale (112,967 ) (128,066 ) (141,997 ) (80,498 ) (41,229 ) Underfunded pension liability (3,422 ) (3,422 ) (3,485 ) (3,485 ) (3,485 ) Total Accumulated Other Comprehensive (Loss) Income (116,389 ) (131,488 ) (145,482 ) (83,983 ) (44,714 ) Total Stockholders' Equity 651,050 577,852 548,288 591,993 632,430 Total Liabilities and Stockholders' Equity $ 6,210,782 $ 5,878,106 $ 5,947,768 $ 6,243,195 $ 6,011,767 Regulatory Capital Total CET 1 capital $ 606,675 $ 598,068 $ 582,213 $ 564,158 $ 565,048 Total tier 1 capital 606,675 598,068 582,213 564,158 565,048 Total risk-based capital 627,718 612,654 596,708 578,657 579,807 Total risk-weighted assets 3,878,994 3,685,207 3,679,511 3,558,249 3,492,920 CITY HOLDING COMPANY AND SUBSIDIARIES Loan Portfolio (Unaudited) ($ in 000s) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Commercial and industrial $ 390,861 $ 373,890 $ 375,735 $ 360,481 $ 337,384 1-4 Family 119,017 116,192 109,710 108,765 108,424 Hotels 327,554 340,404 355,001 337,910 314,902 Multi-family 195,042 174,786 186,440 203,856 209,359 Non Residential Non-Owner Occupied 679,782 585,964 569,369 551,240 637,092 Non Residential Owner Occupied 223,096 174,961 177,673 180,188 200,180 Commercial real estate (1) 1,544,491 1,392,307 1,398,193 1,381,959 1,469,957 Residential real estate (2) 1,737,604 1,693,523 1,678,770 1,651,005 1,588,860 Home equity 151,341 134,317 130,837 125,742 121,460 Consumer 66,994 48,806 41,902 44,580 39,778 DDA overdrafts 3,395 3,415 3,315 2,991 2,466 Gross Loans $ 3,894,686 $ 3,646,258 $ 3,628,752 $ 3,566,758 $ 3,559,905 Construction loans included in: (1) - Commercial real estate loans $ 4,715 $ 4,130 $ 4,125 $ 6,767 $ 14,877 (2) - Residential real estate loans 25,224 21,122 19,333 18,751 16,253 CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information (Unaudited) ($ in 000s) Three Months Ended March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Allowance for Credit Losses Balance at beginning of period $ 17,108 $ 17,011 $ 17,015 $ 17,280 $ 18,166 Charge-offs: Commercial and industrial - (120 ) (408 ) - (34 ) Commercial real estate (3 ) (31 ) - (24 ) - Residential real estate (32 ) (66 ) (93 ) (56 ) (50 ) Home equity (67 ) (189 ) (71 ) (19 ) - Consumer (62 ) (15 ) (16 ) (9 ) (23 ) DDA overdrafts (450 ) (670 ) (719 ) (604 ) (631 ) Total charge-offs (614 ) (1,091 ) (1,307 ) (712 ) (738 ) Recoveries: Commercial and industrial 83 94 149 32 59 Commercial real estate 158 120 9 25 53 Residential real estate 10 49 1 4 45 Home equity 4 34 2 3 17 Consumer 23 31 29 19 28 DDA overdrafts 398 360 383 364 406 Total recoveries 676 688 573 447 608 Net recoveries (charge-offs) 62 (403 ) (734 ) (265 ) (130 ) Provision for (recovery of) credit losses 2,918 500 730 - (756 ) PCD Loan Reserves 2,811 - - - - Adoption of ASU 2022-02 (175 ) - - - - Balance at end of period $ 22,724 $ 17,108 $ 17,011 $ 17,015 $ 17,280 Loans outstanding $ 3,894,686 $ 3,646,258 $ 3,628,752 $ 3,566,758 $ 3,559,905 Allowance as a percent of loans outstanding 0.58 % 0.47 % 0.47 % 0.48 % 0.49 % Allowance as a percent of non-performing loans 400.1 % 317.3 % 320.5 % 292.6 % 331.3 % Average loans outstanding $ 3,700,194 $ 3,648,996 $ 3,596,523 $ 3,559,713 $ 3,527,393 Net charge-offs (annualized) as a percent of average loans outstanding -0.01 % 0.04 % 0.08 % 0.03 % 0.01 % CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information, continued (Unaudited) ($ in 000s) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Nonaccrual Loans Residential real estate $ 2,700 $ 1,969 $ 2,089 $ 1,561 $ 1,786 Home equity 35 55 140 54 99 Commercial and industrial 994 1,015 785 1,360 1,069 Commercial real estate 1,931 2,166 2,293 2,783 2,241 Consumer 19 - - - - Total nonaccrual loans 5,679 5,205 5,307 5,758 5,195 Accruing loans past due 90 days or more - 187 - 58 21 Total non-performing loans 5,679 5,392 5,307 5,816 5,216 Other real estate owned 843 909 1,071 946 1,099 Total non-performing assets $ 6,522 $ 6,301 $ 6,378 $ 6,762 $ 6,315 Non-performing assets as a percent of loans and other real estate owned 0.17 % 0.17 % 0.18 % 0.19 % 0.18 % Past Due Loans Residential real estate $ 4,783 $ 7,091 $ 3,452 $ 5,298 $ 4,976 Home equity 551 650 521 282 505 Commercial and industrial 98 234 221 130 56 Commercial real estate 148 710 221 46 744 Consumer 3 100 27 49 32 DDA overdrafts 276 391 561 430 392 Total past due loans $ 5,859 $ 9,176 $ 5,003 $ 6,235 $ 6,705 Total past due loans as a percent of loans outstanding 0.15 % 0.25 % 0.14 % 0.17 % 0.19 % CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Three Months Ended March 31, 2023 December 31, 2022 March 31, 2022 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,840,828 $ 20,007 4.41 % $ 1,824,327 $ 18,973 4.11 % $ 1,667,683 $ 15,735 3.83 % Commercial, financial, and agriculture (2) 1,795,309 26,248 5.93 % 1,773,937 23,346 5.22 % 1,815,549 15,532 3.47 % Installment loans to individuals (2), (3) 64,057 749 4.74 % 50,732 646 5.05 % 44,161 607 5.57 % Total loans 3,700,194 47,004 5.15 % 3,648,996 42,965 4.67 % 3,527,393 31,874 3.66 % Securities: Taxable 1,322,060 11,773 3.61 % 1,315,453 11,118 3.35 % 1,207,333 6,223 2.09 % Tax-exempt (4) 204,957 1,471 2.91 % 211,326 1,597 3.00 % 232,474 1,539 2.68 % Total securities 1,527,017 13,244 3.52 % 1,526,779 12,715 3.30 % 1,439,807 7,762 2.19 % Deposits in depository institutions 160,115 1,590 4.03 % 162,732 1,245 3.04 % 540,197 238 0.18 % Total interest-earning assets 5,387,326 61,838 4.66 % 5,338,507 56,925 4.23 % 5,507,397 39,874 2.94 % Cash and due from banks 67,891 69,223 101,806 Premises and equipment, net 71,422 71,482 73,827 Goodwill and intangible assets 124,546 115,952 116,994 Other assets 327,442 332,855 217,662 Less: Allowance for credit losses (18,143 ) (17,332 ) (18,454 ) Total assets $ 5,960,484 $ 5,910,687 $ 5,999,232 Liabilities: Interest-bearing demand deposits $ 1,234,981 $ 1,741 0.57 % $ 1,150,327 $ 684 0.24 % $ 1,142,278 $ 130 0.05 % Savings deposits 1,376,317 1,348 0.40 % 1,412,246 829 0.23 % 1,384,460 175 0.05 % Time deposits (2) 902,583 2,601 1.17 % 916,845 1,497 0.65 % 1,048,185 1,216 0.47 % Customer repurchase agreements 281,861 2,381 3.43 % 303,599 1,534 2.00 % 276,360 114 0.17 % Total interest-bearing liabilities 3,795,742 8,071 0.86 % 3,783,017 4,544 0.48 % 3,851,283 1,635 0.17 % Noninterest-bearing demand deposits 1,420,676 1,428,013 1,398,663 Other liabilities 129,411 134,075 74,084 Stockholders' equity 614,655 565,582 675,202 Total liabilities and stockholders' equity $ 5,960,484 $ 5,910,687 $ 5,999,232 Net interest income $ 53,767 $ 52,381 $ 38,239 Net yield on earning assets 4.05 % 3.89 % 2.82 % (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) $ 518 $ (41 ) $ 298 (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 $ 76 $ 67 $ 90 Commercial, financial, and agriculture 177 135 286 Installment loans to individuals 4 4 19 Time deposits 9 21 21 $ 266 $ 227 $ 416 (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 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Net Interest Income/Margin Net interest income ("GAAP") $ 53,459 $ 52,045 $ 48,782 $ 41,290 $ 37,916 Taxable equivalent adjustment 308 336 326 321 323 Net interest income, fully taxable equivalent $ 53,767 $ 52,381 $ 49,108 $ 41,611 $ 38,239 Average interest earning assets $ 5,387,326 $ 5,338,507 $ 5,460,409 $ 5,485,604 $ 5,507,397 Net Interest Margin 4.05 % 3.89 % 3.57 % 3.04 % 2.82 % Accretion related to fair value adjustments -0.02 % -0.02 % -0.01 % -0.02 % -0.03 % Net Interest Margin (excluding accretion) 4.03 % 3.87 % 3.56 % 3.02 % 2.79 % Tangible Equity Ratio (period end) Equity to assets ("GAAP") 10.48 % 9.83 % 9.22 % 9.48 % 10.52 % Effect of goodwill and other intangibles, net -2.43 % -1.81 % -1.81 % -1.72 % -1.77 % Tangible common equity to tangible assets 8.05 % 8.02 % 7.41 % 7.76 % 8.75 % Return on average tangible equity ("GAAP") 19.9 % 27.3 % 21.8 % 18.1 % 15.3 % Impact of merger related expenses 3.6 % - - - - Impact of merger related provision 1.3 % - - - - Return on tangible equity, excluding merger related expenses and provision 24.8 % 27.3 % 21.8 % 18.1 % 15.3 % Return on assets ("GAAP") 1.63 % 2.08 % 1.83 % 1.51 % 1.42 % Impact of merger related expenses 0.31 % - - - - Impact of merger related provision 0.10 % - - - - Return on assets, excluding merger related expenses and provision 2.04 % 2.08 % 1.83 % 1.51 % 1.42 % Commercial Loan Information (period end) Commercial Sector Total % of Total Loans Average DSC Average LTV Natural Gas Extraction $ 25,179 0.65 % 3.68 64 % Natural Gas Distribution 23,711 0.61 % 2.61 N/A Masonry Contractors 23,017 0.59 % 1.13 84 % Sheet Metal Work Manufacturing 23,491 0.60 % 1.57 68 % Beer & Ale Merchant Wholesalers 26,766 0.69 % 3.28 N/A Gasoline Stations with Convenience Stores 53,556 1.38 % 4.19 65 % Lessors of Residential Buildings & Dwellings 303,311 7.79 % 1.89 66 % 1-4 Family 114,768 2.95 % 2.97 68 % Multi-Family 160,664 4.13 % 1.84 66 % Lessors of Nonresidential Buildings 468,836 12.05 % 1.70 65 % Office Buildings 44,926 1.15 % 1.64 64 % Lessors of Mini-Warehouses & Self-Storage Units 44,510 1.15 % 1.62 62 % Assisted Living Facilities 28,944 0.74 % 1.38 57 % Hotels & Motels 335,086 8.61 % 1.43 52 % Average Balance Median Balance Commercial Loans $ 453 $ 92 Commercial Real Estate Loans 498 119 CITY HOLDING COMPANY AND SUBSIDIARIES Non-GAAP Reconciliations, continued (Unaudited) ($ in 000s, except per share data) Estimated Uninsured Deposits by Deposit Type March 31, 2023 December 31, 2022 Noninterest-Bearing Demand Deposits 19 % 20 % Interest-Bearing Deposits Demand Deposits 8 % 10 % Savings Deposits 11 % 14 % Time Deposits 14 % 13 % Total Deposits 13 % 14 % Retail Deposits Noninterest-Bearing 4 % 5 % Interest-Bearing 11 % 11 % Total Retail Deposits 9 % 10 % Commercial Deposits Noninterest-Bearing Deposits 31 % 32 % Interest-Bearing Deposits 13 % 16 % Total Commercial Deposits 23 % 26 % The amounts listed above represent management's best estimate as of the respective period shown. Average Deposits by Category March 31, 2023 December 31, 2022 Retail Deposits Noninterest-Bearing $ 619,889 $ 637,368 Interest-Bearing 3,125,132 3,012,999 Total Average Retail Deposits $ 3,745,021 $ 3,650,367 Commercial Deposits Noninterest-Bearing Deposits $ 800,787 $ 790,645 Interest-Bearing Deposits 388,749 466,419 Total Average Commercial Deposits $ 1,189,536 $ 1,257,064 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* 8,467 1,644 0.7 % 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 % * - 2023 YTD amounts exclude accounts added in connection with the acquisitions of Citizens Commerce Bancshares, Inc., Poage Bankshares, Inc. and Farmers Deposit Bancorp, Inc. 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