Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries City Holding Company Announces Second Quarter Results By: City Holding Company via Business Wire July 21, 2022 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 $22.7 million and diluted earnings of $1.51 per share for the quarter ended June 30, 2022. For the second quarter of 2022, the Company achieved a return on assets of 1.51% and a return on tangible equity of 18.1%. Net Interest Income The Company’s net interest income increased from $37.9 million during the first quarter of 2022 to $41.3 million during the second quarter of 2022. During the second quarter of 2022, the Company’s tax equivalent net interest income increased $3.4 million, or 8.8%, from $38.2 million for the first quarter of 2022 to $41.6 million for the second quarter of 2022. Higher yields from both loans (14 basis points) and investments (26 basis points) increased net interest income by $1.5 million and $1.1 million, respectively. In addition, the yield on deposits in depository institutions also increased by 53 basis points which increased net interest income by $0.6 million. The Company’s reported net interest margin increased from 2.82% for the first quarter of 2022 to 3.04% for the second quarter of 2022. Credit Quality The Company’s ratio of nonperforming assets to total loans and other real estate owned increased modestly from 0.18%, or $6.3 million, at March 31, 2022 to 0.19%, or $6.8 million, at June 30, 2022. Total past due loans decreased from $6.7 million, or 0.19% of total loans outstanding, at March 31, 2022 to $6.2 million, or 0.17% of total loans outstanding, at June 30, 2022. As a result of the Company’s quarterly analysis of the adequacy of the allowance for credit losses (“ACL”), the Company did not record a provision for credit losses in the second quarter of 2022, compared to a recovery of credit losses of $2.0 million for the comparable period in 2021 and a recovery of credit losses of $0.8 million for the first quarter of 2022. The Company did not record a provision for credit losses in the second quarter of 2022 primarily because net charge-offs and revisions to qualitative factors were essentially offset by improved loss factors and loan upgrades. Non-interest Income Non-interest income was $17.9 million for the second quarter of 2022 as compared to $17.4 million for the second quarter of 2021. During the second quarter of 2022, the Company reported $0.6 million of unrealized fair value losses on the Company’s equity securities as compared to $0.4 million of unrealized fair value gains on the Company’s equity securities in the second quarter of 2021. As of June 30, 2022, the fair value of these equity securities was approximately $7.9 million. Exclusive of these gains and losses, non-interest income increased from $17.0 million for the second quarter of 2021 to $18.5 million for the second quarter of 2022. This increase was primarily due to increases in service charges ($1.2 million, or 19.9%) and other revenue ($0.3 million, or 32.1%). Non-interest Expenses Non-interest expenses increased $1.1 million (3.8%), from $29.6 million in the second quarter of 2021 to $30.7 million in the second quarter of 2022. This increase was largely due to increased salary and employee benefits of $0.9 million. As anticipated, salary increases (4.7%) from the quarter ended June 30, 2021, were higher than the Company has typically experienced. Balance Sheet Trends Loans increased $6.9 million from March 31, 2022 to June 30, 2022, to $3.57 billion. PPP loans decreased $0.5 million from March 31, 2022 to $0.1 million at June 30, 2022. Excluding outstanding PPP loans (included in the commercial and industrial loan category), total loans increased $7.3 million, or 0.2%, from March 31, 2022 to $3.57 billion at June 30, 2022. Residential real estate loans increased $62.1 million (3.9%); commercial and industrial loans, excluding PPP loans, increased $23.5 million (7.0%); consumer loans increased $4.8 million (12.1%); and home equity loans increased $4.3 million (3.5%). These increases were partially offset by a decrease in commercial real estate loans of $88.0 million (6.0%). Despite solid originations during the second quarter of 2022, loan payoffs were unusually high due to the sale of one of City’s largest customers. The Company has a robust pipeline of new commercial loans that have been approved and scheduled to close in the next several months, and although we anticipate normal payoffs as well, we expect that aggregate commercial loan balances will grow in the third quarter. Total average depository balances increased $52.3 million, or 1.1%, from the quarter ended March 31, 2022 to the quarter ended June 30, 2022. Average savings deposit balances increased $45.7 million, average noninterest-bearing demand deposit balances increased $36.6 million, and average interest-bearing demand deposit balances increased $13.9 million. These increases were partially offset by a decrease in time deposit balances of $43.8 million. While average deposits increased modestly during the quarter ended June 30, 2022, point-to-point noninterest bearing deposits and customer repurchase agreements both increased significantly from March 31, 2022. At the end of June 2022, the Company received a large, short-term inflow of funds from a customer. These funds exited the Company’s balance sheet in early July. Exclusive of this deposit, total deposits and customer repurchase agreements (combined) would have decreased approximately $85 million from March 31, 2022. Income Tax Expense The Company’s effective income tax rate for the second quarter of 2022 was 20.3% compared to 20.8% for the year ended December 31, 2021, and 20.3% for the quarter ended June 30, 2021. Capitalization and Liquidity The Company’s loan to deposit ratio was 69.4% and the loan to asset ratio was 57.1% at June 30, 2022. The Company maintained investment securities totaling 24.4% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 66.6% of assets at June 30, 2022. Time deposits fund 15.8% of assets at June 30, 2022, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company. The Company continues to be strongly capitalized with tangible equity of $476 million at June 30, 2022. Due primarily to unrealized security losses during the six months ended June 30, 2022, the Company’s tangible equity ratio decreased from 9.6% at December 31, 2021 to 7.8% at June 30, 2022. However, unrealized security losses are not incorporated into measures of regulatory capital. As a result, at June 30, 2022, City National Bank’s Leverage Ratio was 8.81%, its Common Equity Tier I ratio was 14.80%, its Tier I Capital ratio was 14.80%, and its Total Risk-Based Capital ratio was 15.21%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation. On May 25, 2022, the Board of Directors of the Company approved a quarterly cash dividend of $0.60 per share payable July 29, 2022, to shareholders of record as of July 15, 2022. On May 25, 2022, the Company announced that the Board of Directors authorized the Company to buy back up to 1,000,000 shares of its common stock (approximately 7% of outstanding shares) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders. No time limit was placed on the duration of the share repurchase program. As part of this authorization, the Company terminated its previous repurchase program that was approved in March 2021. The Company had repurchased 826,330 shares under the 2021 program. During the quarter ended June 30, 2022, the Company repurchased 208,000 common shares at a weighted average price of $78.33 per share. As of June 30, 2022, the Company could repurchase 895,000 additional shares under the current program. City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 94 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, 2021 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) the uncertainties on the Company’s business, results of operations and financial condition, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its continued influence on financial markets, the effectiveness of the Company’s work from home arrangements and staffing levels in operational facilities, the impact of market participants on which the Company relies and actions taken by governmental authorities and other third parties in response to the pandemic; (3) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for loan 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; (15) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its June 30, 2022 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2022 results and will adjust the amounts if necessary. CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights (Unaudited) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Earnings Net Interest Income (fully taxable equivalent) $ 41,611 $ 38,239 $ 40,956 $ 39,822 $ 38,257 $ 79,850 $ 76,128 Net Income available to common shareholders 22,683 21,342 23,386 22,732 22,148 44,025 41,962 Per Share Data Earnings per share available to common shareholders: Basic $ 1.51 $ 1.41 $ 1.54 $ 1.47 $ 1.41 $ 2.92 $ 2.66 Diluted 1.51 1.41 1.54 1.47 1.41 2.92 2.66 Weighted average number of shares (in thousands): Basic 14,888 14,974 15,026 15,279 15,573 14,930 15,614 Diluted 14,909 15,002 15,056 15,302 15,594 14,954 15,640 Period-end number of shares (in thousands) 14,864 15,045 15,062 15,192 15,527 14,864 15,527 Cash dividends declared $ 0.60 $ 0.60 $ 0.60 $ 0.58 $ 0.58 $ 1.20 $ 1.16 Book value per share (period-end) $ 39.83 $ 42.03 $ 45.22 $ 44.58 $ 44.79 $ 39.83 $ 44.79 Tangible book value per share (period-end) 31.99 34.27 37.44 36.85 37.20 31.99 37.20 Market data: High closing price $ 83.07 $ 85.99 $ 83.14 $ 79.99 $ 83.85 $ 85.99 $ 87.41 Low closing price 73.88 76.82 76.52 72.29 74.44 73.88 69.05 Period-end closing price 79.88 78.70 81.79 77.91 75.24 79.88 75.24 Average daily volume (in thousands) 87 59 52 53 61 73 62 Treasury share activity: Treasury shares repurchased (in thousands) 208 38 131 337 217 246 292 Average treasury share repurchase price $ 78.33 $ 78.09 $ 78.93 $ 75.65 $ 78.75 $ 78.29 $ 78.22 Key Ratios (percent) Return on average assets 1.51 % 1.42 % 1.56 % 1.53 % 1.49 % 1.47 % 1.44 % Return on average tangible equity 18.1 % 15.3 % 16.7 % 15.7 % 15.2 % 16.6 % 14.3 % Yield on interest earning assets 3.15 % 2.94 % 3.08 % 3.04 % 3.00 % 3.04 % 3.08 % Cost of interest bearing liabilities 0.15 % 0.17 % 0.19 % 0.22 % 0.27 % 0.16 % 0.32 % Net Interest Margin 3.04 % 2.82 % 2.94 % 2.89 % 2.81 % 2.93 % 2.86 % Non-interest income as a percent of total revenue 30.9 % 32.4 % 30.2 % 31.1 % 31.0 % 30.8 % 30.9 % Efficiency Ratio 50.5 % 51.7 % 48.3 % 50.0 % 52.8 % 51.1 % 53.5 % Price/Earnings Ratio (a) 13.23 13.93 13.27 13.22 13.35 13.67 14.13 Capital (period-end) Average Shareholders' Equity to Average Assets 10.26 % 11.25 % 11.25 % 11.69 % 11.81 % Tangible equity to tangible assets 7.76 % 8.75 % 9.58 % 9.59 % 9.98 % Consolidated City Holding Company risk based capital ratios (b): CET I 15.85 % 16.18 % 16.08 % 16.11 % 16.40 % Tier I 15.85 % 16.18 % 16.08 % 16.11 % 16.40 % Total 16.26 % 16.60 % 16.51 % 16.56 % 16.88 % Leverage 9.42 % 9.58 % 9.44 % 9.46 % 9.70 % City National Bank risk based capital ratios (b): CET I 14.80 % 14.82 % 14.35 % 14.76 % 14.82 % Tier I 14.80 % 14.82 % 14.35 % 14.76 % 14.82 % Total 15.21 % 15.24 % 14.78 % 15.21 % 15.30 % Leverage 8.81 % 8.80 % 8.45 % 8.73 % 8.80 % Other (period-end) Branches 94 94 94 94 94 FTE 915 897 905 921 912 Assets per FTE (in thousands) $ 6,825 $ 6,703 $ 6,637 $ 6,463 $ 6,477 Deposits per FTE (in thousands) 5,621 5,574 5,445 5,308 5,271 (a) The price/earnings ratio is computed based on annualized quarterly earnings. (b) June 30, 2022 risk-based capital ratios are estimated. CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) ($ in 000s, except per share data) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Interest Income Interest and fees on loans $ 33,208 $ 31,874 $ 35,277 $ 33,961 $ 33,114 $ 65,082 $ 67,438 Interest on investment securities: Taxable 7,547 6,223 5,753 6,144 5,932 13,770 11,174 Tax-exempt 1,205 1,216 1,226 1,257 1,291 2,421 2,544 Interest on deposits in depository institutions 782 238 217 196 162 1,020 280 Total Interest Income 42,742 39,551 42,473 41,558 40,499 82,293 81,436 Interest Expense Interest on deposits 1,328 1,521 1,710 1,955 2,460 2,849 5,740 Interest on short-term borrowings 124 114 132 115 125 238 242 Total Interest Expense 1,452 1,635 1,842 2,070 2,585 3,087 5,982 Net Interest Income 41,290 37,916 40,631 39,488 37,914 79,206 75,454 (Recovery of) provision for credit losses - (756 ) - (725 ) (2,000 ) (756 ) (2,440 ) Net Interest Income After (Recovery of) Provision for Credit Losses 41,290 38,672 40,631 40,213 39,914 79,962 77,894 Non-Interest Income Net gains on sale of investment securities - - - - 29 - 312 Unrealized (losses) gains recognized on equity securities still held (601 ) (723 ) 52 93 410 (1,324 ) 359 Service charges 7,067 6,725 7,057 6,706 5,895 13,792 11,776 Bankcard revenue 7,062 6,444 6,762 6,791 7,221 13,506 13,434 Trust and investment management fee income 2,100 2,197 2,198 2,172 2,012 4,297 4,045 Bank owned life insurance 978 2,014 748 747 940 2,992 2,400 Other income 1,243 791 799 1,438 941 2,034 1,752 Total Non-Interest Income 17,849 17,448 17,616 17,947 17,448 35,297 34,078 Non-Interest Expense Salaries and employee benefits 16,413 15,577 15,299 15,321 15,559 31,990 31,230 Occupancy related expense 2,620 2,709 2,429 2,507 2,525 5,329 5,147 Equipment and software related expense 2,732 2,769 2,733 2,554 2,655 5,501 5,199 FDIC insurance expense 409 435 400 396 382 844 787 Advertising 951 798 582 804 824 1,749 1,705 Bankcard expenses 1,665 1,606 1,576 1,549 1,746 3,271 3,330 Postage, delivery, and statement mailings 551 636 590 573 568 1,187 1,160 Office supplies 427 410 378 406 371 837 763 Legal and professional fees 525 527 405 610 589 1,052 1,264 Telecommunications 754 584 702 790 676 1,338 1,366 Repossessed asset (gains) losses, net of expenses (32 ) 40 (29 ) (108 ) 1 8 80 Other expenses 3,674 3,436 3,559 3,776 3,678 7,110 7,352 Total Non-Interest Expense 30,689 29,527 28,624 29,178 29,574 60,216 59,383 Income Before Income Taxes 28,450 26,593 29,623 28,982 27,788 55,043 52,589 Income tax expense 5,767 5,251 6,237 6,250 5,640 11,018 10,627 Net Income Available to Common Shareholders $ 22,683 $ 21,342 $ 23,386 $ 22,732 $ 22,148 $ 44,025 $ 41,962 Distributed earnings allocated to common shareholders $ 8,837 $ 8,943 $ 8,949 $ 8,726 $ 8,921 $ 17,671 $ 17,845 Undistributed earnings allocated to common shareholders 13,643 12,199 14,211 13,786 13,021 25,951 23,732 Net earnings allocated to common shareholders $ 22,480 $ 21,142 $ 23,160 $ 22,512 $ 21,942 $ 43,622 $ 41,577 Average common shares outstanding 14,888 14,974 15,026 15,279 15,573 14,930 15,614 Shares for diluted earnings per share 14,909 15,002 15,056 15,302 15,594 14,954 15,640 Basic earnings per common share $ 1.51 $ 1.41 $ 1.54 $ 1.47 $ 1.41 $ 2.92 $ 2.66 Diluted earnings per common share $ 1.51 $ 1.41 $ 1.54 $ 1.47 $ 1.41 $ 2.92 $ 2.66 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000s) (Unaudited) (Unaudited) (Unaudited) (Unaudited) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Assets Cash and due from banks $ 90,449 $ 100,877 $ 101,804 $ 103,841 $ 97,523 Interest-bearing deposits in depository institutions 606,530 497,171 532,827 535,708 512,367 Cash and cash equivalents 696,979 598,048 634,631 639,549 609,890 Investment securities available-for-sale, at fair value 1,497,227 1,409,513 1,408,165 1,372,077 1,339,436 Other securities 24,383 24,785 25,531 25,497 25,793 Total investment securities 1,521,610 1,434,298 1,433,696 1,397,574 1,365,229 Gross loans 3,566,758 3,559,905 3,543,814 3,521,925 3,529,416 Allowance for credit losses (17,015 ) (17,280 ) (18,166 ) (18,751 ) (20,016 ) Net loans 3,549,743 3,542,625 3,525,648 3,503,174 3,509,400 Bank owned life insurance 120,528 120,522 120,978 120,238 119,491 Premises and equipment, net 72,388 73,067 74,071 75,156 76,263 Accrued interest receivable 16,342 16,101 15,627 16,224 15,967 Net deferred tax assets 30,802 18,001 63 90 - Intangible assets 116,428 116,774 117,121 117,489 117,857 Other assets 118,375 92,331 81,860 82,419 89,958 Total Assets $ 6,243,195 $ 6,011,767 $ 6,003,695 $ 5,951,913 $ 5,904,055 Liabilities Deposits: Noninterest-bearing $ 1,531,660 $ 1,357,266 $ 1,373,125 $ 1,311,464 $ 1,279,932 Interest-bearing: Demand deposits 1,189,056 1,191,492 1,135,848 1,139,033 1,070,004 Savings deposits 1,435,645 1,425,528 1,347,448 1,332,910 1,301,219 Time deposits 985,567 1,024,559 1,068,915 1,104,069 1,153,391 Total deposits 5,141,928 4,998,845 4,925,336 4,887,476 4,804,546 Short-term borrowings Customer repurchase agreements 402,368 288,483 312,458 296,642 311,316 Net deferred tax liabilities - - - - 2,310 Other liabilities 106,906 92,009 84,796 90,499 90,407 Total Liabilities 5,651,202 5,379,337 5,322,590 5,274,617 5,208,579 Stockholders' Equity Preferred stock - - - - - Common stock 47,619 47,619 47,619 47,619 47,619 Capital surplus 169,557 170,206 170,942 170,300 169,674 Retained earnings 667,933 654,138 641,826 627,463 613,553 Cost of common stock in treasury (209,133 ) (194,819 ) (193,542 ) (183,303 ) (157,936 ) Accumulated other comprehensive (loss) income: Unrealized (loss) gain on securities available-for-sale (80,498 ) (41,229 ) 17,745 20,878 28,227 Underfunded pension liability (3,485 ) (3,485 ) (3,485 ) (5,661 ) (5,661 ) Total Accumulated Other Comprehensive (Loss) Income (83,983 ) (44,714 ) 14,260 15,217 22,566 Total Stockholders' Equity 591,993 632,430 681,105 677,296 695,476 Total Liabilities and Stockholders' Equity $ 6,243,195 $ 6,011,767 $ 6,003,695 $ 5,951,913 $ 5,904,055 Regulatory Capital Total CET 1 capital $ 564,158 $ 565,048 $ 555,532 $ 550,426 $ 561,317 Total tier 1 capital 564,158 565,048 555,532 550,426 561,317 Total risk-based capital 578,657 579,807 570,336 565,712 577,543 Total risk-weighted assets 3,558,249 3,492,920 3,453,893 3,417,020 3,421,764 CITY HOLDING COMPANY AND SUBSIDIARIES Loan Portfolio (Unaudited) ($ in 000s) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Commercial and industrial $ 360,481 $ 337,384 $ 346,184 $ 353,046 $ 358,583 1-4 Family 108,765 108,424 107,873 108,913 108,079 Hotels 337,910 314,902 311,315 297,341 290,119 Multi-family 203,856 209,359 215,677 215,307 212,715 Non Residential Non-Owner Occupied 551,240 637,092 639,818 664,365 653,264 Non Residential Owner Occupied 180,188 200,180 204,233 205,579 209,100 Commercial real estate (1) 1,381,959 1,469,957 1,478,916 1,491,505 1,473,277 Residential real estate (2) 1,651,005 1,588,860 1,548,965 1,506,572 1,521,102 Home equity 125,742 121,460 122,345 124,806 127,608 Consumer 44,580 39,778 40,901 43,296 45,184 DDA overdrafts 2,991 2,466 6,503 2,700 3,662 Gross Loans $ 3,566,758 $ 3,559,905 $ 3,543,814 $ 3,521,925 $ 3,529,416 Construction loans included in: (1) - Commercial real estate loans $ 6,767 $ 14,877 $ 11,783 $ 19,360 $ 43,904 (2) - Residential real estate loans 18,751 16,253 17,252 19,059 20,838 CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information (Unaudited) ($ in 000s) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Allowance for Credit Losses Balance at beginning of period $ 17,280 $ 18,166 $ 18,751 $ 20,016 $ 24,076 $ 18,166 $ 24,549 Charge-offs: Commercial and industrial - (34 ) - - (211 ) (34 ) (245 ) Commercial real estate (24 ) - (276 ) (392 ) (1,718 ) (24 ) (1,719 ) Residential real estate (56 ) (50 ) (68 ) (18 ) (86 ) (106 ) (179 ) Home equity (19 ) - (58 ) (47 ) (8 ) (19 ) (72 ) Consumer (9 ) (23 ) (13 ) (3 ) (79 ) (32 ) (226 ) DDA overdrafts (604 ) (631 ) (635 ) (633 ) (430 ) (1,235 ) (883 ) Total charge-offs (712 ) (738 ) (1,050 ) (1,093 ) (2,532 ) (1,450 ) (3,324 ) Recoveries: Commercial and industrial 32 59 31 69 25 91 71 Commercial real estate 25 53 27 18 15 78 179 Residential real estate 4 45 7 29 17 49 91 Home equity 3 17 6 58 3 20 26 Consumer 19 28 40 72 104 47 143 DDA overdrafts 364 406 354 307 308 770 721 Total recoveries 447 608 465 553 472 1,055 1,231 Net charge-offs (265 ) (130 ) (585 ) (540 ) (2,060 ) (395 ) (2,093 ) (Recovery of) provision for credit losses - (756 ) - (725 ) (2,000 ) (756 ) (2,440 ) Balance at end of period $ 17,015 $ 17,280 $ 18,166 $ 18,751 $ 20,016 $ 17,015 $ 20,016 Loans outstanding $ 3,566,758 $ 3,559,905 $ 3,543,814 $ 3,521,925 $ 3,529,416 Allowance as a percent of loans outstanding 0.48 % 0.49 % 0.51 % 0.53 % 0.57 % Allowance as a percent of non-performing loans 292.6 % 331.3 % 290.1 % 243.1 % 199.3 % Average loans outstanding $ 3,559,713 $ 3,527,393 $ 3,522,272 $ 3,535,497 $ 3,541,165 $ 3,543,642 $ 3,563,356 Net charge-offs (annualized) as a percent of average loans outstanding 0.03 % 0.01 % 0.07 % 0.06 % 0.23 % 0.02 % 0.12 % CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information, continued (Unaudited) ($ in 000s) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Nonaccrual Loans Residential real estate $ 1,561 $ 1,786 $ 2,809 $ 3,634 $ 2,482 Home equity 54 99 40 67 81 Commercial and industrial 1,360 1,069 996 531 820 Commercial real estate 2,783 2,241 2,373 3,355 6,383 Consumer - - - - - Total nonaccrual loans 5,758 5,195 6,218 7,587 9,766 Accruing loans past due 90 days or more 58 21 43 127 278 Total non-performing loans 5,816 5,216 6,261 7,714 10,044 Other real estate owned 946 1,099 1,319 1,335 1,309 Total non-performing assets $ 6,762 $ 6,315 $ 7,580 $ 9,049 $ 11,353 Non-performing assets as a percent of loans and other real estate owned 0.19 % 0.18 % 0.21 % 0.26 % 0.32 % Past Due Loans Residential real estate $ 5,298 $ 4,976 $ 5,321 $ 5,258 $ 5,453 Home equity 282 505 618 688 523 Commercial and industrial 130 56 336 455 721 Commercial real estate 46 744 22 441 498 Consumer 49 32 60 35 12 DDA overdrafts 430 392 489 390 417 Total past due loans $ 6,235 $ 6,705 $ 6,846 $ 7,267 $ 7,624 Total past due loans as a percent of loans outstanding 0.17 % 0.19 % 0.19 % 0.21 % 0.22 % Troubled Debt Restructurings ("TDRs") Residential real estate $ 16,022 $ 16,182 $ 16,943 $ 16,910 $ 17,788 Home equity 1,649 1,694 1,784 1,822 1,920 Commercial and industrial 381 397 414 430 - Commercial real estate 107 1,890 1,914 1,937 3,076 Consumer 80 194 225 221 203 Total TDRs $ 18,239 $ 20,357 $ 21,280 $ 21,320 $ 22,987 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Three Months Ended June 30, 2022 March 31, 2022 June 30, 2021 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,730,617 $ 16,063 3.72 % $ 1,667,683 $ 15,596 3.79 % $ 1,652,165 $ 16,135 3.92 % Commercial, financial, and agriculture (2) 1,785,511 16,421 3.69 % 1,815,549 15,532 3.47 % 1,839,478 16,158 3.52 % Installment loans to individuals (2), (3) 43,585 631 5.81 % 44,161 607 5.57 % 49,522 713 5.77 % Previously securitized loans (4) *** 93 *** *** 139 *** *** 109 *** Total loans 3,559,713 33,208 3.74 % 3,527,393 31,874 3.66 % 3,541,165 33,115 3.75 % Securities: Taxable 1,269,049 7,548 2.39 % 1,207,333 6,223 2.09 % 1,046,008 5,932 2.27 % Tax-exempt (5) 215,603 1,526 2.84 % 232,474 1,539 2.68 % 244,233 1,633 2.68 % Total securities 1,484,652 9,074 2.45 % 1,439,807 7,762 2.19 % 1,290,241 7,565 2.35 % Deposits in depository institutions 441,239 781 0.71 % 540,197 238 0.18 % 628,158 162 0.10 % Total interest-earning assets 5,485,604 43,063 3.15 % 5,507,397 39,874 2.94 % 5,459,564 40,842 3.00 % Cash and due from banks 102,532 101,806 92,243 Premises and equipment, net 72,887 73,827 76,660 Goodwill and intangible assets 116,645 116,994 118,088 Other assets 256,354 217,662 206,709 Less: Allowance for credit losses (17,755 ) (18,454 ) (23,701 ) Total assets $ 6,016,267 $ 5,999,232 $ 5,929,563 Liabilities: Interest-bearing demand deposits $ 1,156,200 $ 148 0.05 % $ 1,142,278 $ 130 0.05 % $ 1,069,896 $ 122 0.05 % Savings deposits 1,430,121 182 0.05 % 1,384,460 175 0.05 % 1,287,966 163 0.05 % Time deposits (2) 1,004,356 999 0.40 % 1,048,185 1,216 0.47 % 1,181,953 2,175 0.74 % Short-term borrowings 288,031 123 0.17 % 276,360 114 0.17 % 305,134 125 0.16 % Total interest-bearing liabilities 3,878,708 1,452 0.15 % 3,851,283 1,635 0.17 % 3,844,949 2,585 0.27 % Noninterest-bearing demand deposits 1,435,256 1,398,663 1,311,340 Other liabilities 85,075 74,084 72,940 Stockholders' equity 617,228 675,202 700,334 Total liabilities and stockholders' equity $ 6,016,267 $ 5,999,232 $ 5,929,563 Net interest income $ 41,611 $ 38,239 $ 38,257 Net yield on earning assets 3.04 % 2.82 % 2.81 % (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) $ 3 $ 298 $ 488 (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 $ 77 $ 90 $ 211 Commercial, financial, and agriculture 118 286 365 Installment loans to individuals 15 19 23 Time deposits 21 21 48 $ 231 $ 416 $ 647 (3) Includes the Company’s consumer and DDA overdrafts loan categories. (4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Six Months Ended June 30, 2022 June 30, 2021 Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,697,727 $ 31,659 3.76 % $ 1,675,222 $ 32,987 3.97 % Commercial, financial, and agriculture (2) 1,801,999 31,952 3.58 % 1,837,947 32,701 3.59 % Installment loans to individuals (2), (3) 43,916 1,238 5.68 % 50,187 1,426 5.73 % Previously securitized loans (4) *** 233 *** *** 324 *** Total loans 3,543,642 65,082 3.70 % 3,563,356 67,438 3.82 % Securities: Taxable 1,238,361 13,770 2.24 % 995,871 11,174 2.26 % Tax-exempt (5) 223,992 3,065 2.76 % 241,924 3,220 2.68 % Total securities 1,462,353 16,835 2.32 % 1,237,795 14,394 2.35 % Deposits in depository institutions 490,445 1,020 0.42 % 571,130 280 0.10 % Total interest-earning assets 5,496,440 82,937 3.04 % 5,372,281 82,112 3.08 % Cash and due from banks 102,171 85,998 Premises and equipment, net 73,354 76,748 Goodwill and intangible assets 116,818 118,270 Other assets 237,115 212,051 Less: Allowance for credit losses (18,103 ) (24,302 ) Total assets $ 6,007,795 $ 5,841,046 Liabilities: Interest-bearing demand deposits $ 1,149,277 $ 278 0.05 % $ 1,039,260 $ 246 0.05 % Savings deposits 1,407,416 357 0.05 % 1,254,752 346 0.06 % Time deposits (2) 1,026,149 2,214 0.44 % 1,208,925 5,149 0.86 % Short-term borrowings 282,228 238 0.17 % 297,990 243 0.16 % Total interest-bearing liabilities 3,865,070 3,087 0.16 % 3,800,927 5,984 0.32 % Noninterest-bearing demand deposits 1,417,060 1,254,938 Other liabilities 79,610 81,273 Stockholders' equity 646,055 703,908 Total liabilities and stockholders' equity $ 6,007,795 $ 5,841,046 Net interest income $ 79,850 $ 76,128 Net yield on earning assets 2.93 % 2.86 % (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) $ 301 $ 1,323 (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 $ 167 $ 317 Commercial, financial, and agriculture 404 690 Installment loans to individuals 34 51 Time deposits 41 97 $ 646 $ 1,155 (3) Includes the Company’s consumer and DDA overdrafts loan categories. (4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. CITY HOLDING COMPANY AND SUBSIDIARIES Non-GAAP Reconciliations (Unaudited) ($ in 000s, except per share data) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Net Interest Income/Margin Net interest income ("GAAP") $ 41,290 $ 37,916 $ 40,631 $ 39,488 $ 37,914 $ 79,206 $ 75,454 Taxable equivalent adjustment 321 323 325 334 343 644 674 Net interest income, fully taxable equivalent $ 41,611 $ 38,239 $ 40,956 $ 39,822 $ 38,257 $ 79,850 $ 76,128 Average interest earning assets $ 5,485,604 $ 5,507,397 $ 5,521,386 $ 5,462,410 $ 5,459,564 $ 5,496,440 $ 5,372,281 Net Interest Margin 3.04 % 2.82 % 2.94 % 2.89 % 2.81 % 2.93 % 2.86 % Accretion related to fair value adjustments -0.02 % -0.03 % -0.03 % -0.04 % -0.05 % -0.02 % -0.04 % Net Interest Margin (excluding accretion) 3.02 % 2.79 % 2.91 % 2.85 % 2.76 % 2.91 % 2.81 % Tangible Equity Ratio (period end) Equity to assets ("GAAP") 9.48 % 10.52 % 11.34 % 11.37 % 11.78 % Effect of goodwill and other intangibles, net -1.72 % -1.77 % -1.76 % -1.78 % -1.80 % Tangible common equity to tangible assets 7.76 % 8.75 % 9.58 % 9.59 % 9.98 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220719005889/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 Second Quarter Results By: City Holding Company via Business Wire July 21, 2022 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 $22.7 million and diluted earnings of $1.51 per share for the quarter ended June 30, 2022. For the second quarter of 2022, the Company achieved a return on assets of 1.51% and a return on tangible equity of 18.1%. Net Interest Income The Company’s net interest income increased from $37.9 million during the first quarter of 2022 to $41.3 million during the second quarter of 2022. During the second quarter of 2022, the Company’s tax equivalent net interest income increased $3.4 million, or 8.8%, from $38.2 million for the first quarter of 2022 to $41.6 million for the second quarter of 2022. Higher yields from both loans (14 basis points) and investments (26 basis points) increased net interest income by $1.5 million and $1.1 million, respectively. In addition, the yield on deposits in depository institutions also increased by 53 basis points which increased net interest income by $0.6 million. The Company’s reported net interest margin increased from 2.82% for the first quarter of 2022 to 3.04% for the second quarter of 2022. Credit Quality The Company’s ratio of nonperforming assets to total loans and other real estate owned increased modestly from 0.18%, or $6.3 million, at March 31, 2022 to 0.19%, or $6.8 million, at June 30, 2022. Total past due loans decreased from $6.7 million, or 0.19% of total loans outstanding, at March 31, 2022 to $6.2 million, or 0.17% of total loans outstanding, at June 30, 2022. As a result of the Company’s quarterly analysis of the adequacy of the allowance for credit losses (“ACL”), the Company did not record a provision for credit losses in the second quarter of 2022, compared to a recovery of credit losses of $2.0 million for the comparable period in 2021 and a recovery of credit losses of $0.8 million for the first quarter of 2022. The Company did not record a provision for credit losses in the second quarter of 2022 primarily because net charge-offs and revisions to qualitative factors were essentially offset by improved loss factors and loan upgrades. Non-interest Income Non-interest income was $17.9 million for the second quarter of 2022 as compared to $17.4 million for the second quarter of 2021. During the second quarter of 2022, the Company reported $0.6 million of unrealized fair value losses on the Company’s equity securities as compared to $0.4 million of unrealized fair value gains on the Company’s equity securities in the second quarter of 2021. As of June 30, 2022, the fair value of these equity securities was approximately $7.9 million. Exclusive of these gains and losses, non-interest income increased from $17.0 million for the second quarter of 2021 to $18.5 million for the second quarter of 2022. This increase was primarily due to increases in service charges ($1.2 million, or 19.9%) and other revenue ($0.3 million, or 32.1%). Non-interest Expenses Non-interest expenses increased $1.1 million (3.8%), from $29.6 million in the second quarter of 2021 to $30.7 million in the second quarter of 2022. This increase was largely due to increased salary and employee benefits of $0.9 million. As anticipated, salary increases (4.7%) from the quarter ended June 30, 2021, were higher than the Company has typically experienced. Balance Sheet Trends Loans increased $6.9 million from March 31, 2022 to June 30, 2022, to $3.57 billion. PPP loans decreased $0.5 million from March 31, 2022 to $0.1 million at June 30, 2022. Excluding outstanding PPP loans (included in the commercial and industrial loan category), total loans increased $7.3 million, or 0.2%, from March 31, 2022 to $3.57 billion at June 30, 2022. Residential real estate loans increased $62.1 million (3.9%); commercial and industrial loans, excluding PPP loans, increased $23.5 million (7.0%); consumer loans increased $4.8 million (12.1%); and home equity loans increased $4.3 million (3.5%). These increases were partially offset by a decrease in commercial real estate loans of $88.0 million (6.0%). Despite solid originations during the second quarter of 2022, loan payoffs were unusually high due to the sale of one of City’s largest customers. The Company has a robust pipeline of new commercial loans that have been approved and scheduled to close in the next several months, and although we anticipate normal payoffs as well, we expect that aggregate commercial loan balances will grow in the third quarter. Total average depository balances increased $52.3 million, or 1.1%, from the quarter ended March 31, 2022 to the quarter ended June 30, 2022. Average savings deposit balances increased $45.7 million, average noninterest-bearing demand deposit balances increased $36.6 million, and average interest-bearing demand deposit balances increased $13.9 million. These increases were partially offset by a decrease in time deposit balances of $43.8 million. While average deposits increased modestly during the quarter ended June 30, 2022, point-to-point noninterest bearing deposits and customer repurchase agreements both increased significantly from March 31, 2022. At the end of June 2022, the Company received a large, short-term inflow of funds from a customer. These funds exited the Company’s balance sheet in early July. Exclusive of this deposit, total deposits and customer repurchase agreements (combined) would have decreased approximately $85 million from March 31, 2022. Income Tax Expense The Company’s effective income tax rate for the second quarter of 2022 was 20.3% compared to 20.8% for the year ended December 31, 2021, and 20.3% for the quarter ended June 30, 2021. Capitalization and Liquidity The Company’s loan to deposit ratio was 69.4% and the loan to asset ratio was 57.1% at June 30, 2022. The Company maintained investment securities totaling 24.4% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 66.6% of assets at June 30, 2022. Time deposits fund 15.8% of assets at June 30, 2022, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company. The Company continues to be strongly capitalized with tangible equity of $476 million at June 30, 2022. Due primarily to unrealized security losses during the six months ended June 30, 2022, the Company’s tangible equity ratio decreased from 9.6% at December 31, 2021 to 7.8% at June 30, 2022. However, unrealized security losses are not incorporated into measures of regulatory capital. As a result, at June 30, 2022, City National Bank’s Leverage Ratio was 8.81%, its Common Equity Tier I ratio was 14.80%, its Tier I Capital ratio was 14.80%, and its Total Risk-Based Capital ratio was 15.21%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation. On May 25, 2022, the Board of Directors of the Company approved a quarterly cash dividend of $0.60 per share payable July 29, 2022, to shareholders of record as of July 15, 2022. On May 25, 2022, the Company announced that the Board of Directors authorized the Company to buy back up to 1,000,000 shares of its common stock (approximately 7% of outstanding shares) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders. No time limit was placed on the duration of the share repurchase program. As part of this authorization, the Company terminated its previous repurchase program that was approved in March 2021. The Company had repurchased 826,330 shares under the 2021 program. During the quarter ended June 30, 2022, the Company repurchased 208,000 common shares at a weighted average price of $78.33 per share. As of June 30, 2022, the Company could repurchase 895,000 additional shares under the current program. City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 94 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, 2021 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) the uncertainties on the Company’s business, results of operations and financial condition, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its continued influence on financial markets, the effectiveness of the Company’s work from home arrangements and staffing levels in operational facilities, the impact of market participants on which the Company relies and actions taken by governmental authorities and other third parties in response to the pandemic; (3) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for loan 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; (15) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its June 30, 2022 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2022 results and will adjust the amounts if necessary. CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights (Unaudited) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Earnings Net Interest Income (fully taxable equivalent) $ 41,611 $ 38,239 $ 40,956 $ 39,822 $ 38,257 $ 79,850 $ 76,128 Net Income available to common shareholders 22,683 21,342 23,386 22,732 22,148 44,025 41,962 Per Share Data Earnings per share available to common shareholders: Basic $ 1.51 $ 1.41 $ 1.54 $ 1.47 $ 1.41 $ 2.92 $ 2.66 Diluted 1.51 1.41 1.54 1.47 1.41 2.92 2.66 Weighted average number of shares (in thousands): Basic 14,888 14,974 15,026 15,279 15,573 14,930 15,614 Diluted 14,909 15,002 15,056 15,302 15,594 14,954 15,640 Period-end number of shares (in thousands) 14,864 15,045 15,062 15,192 15,527 14,864 15,527 Cash dividends declared $ 0.60 $ 0.60 $ 0.60 $ 0.58 $ 0.58 $ 1.20 $ 1.16 Book value per share (period-end) $ 39.83 $ 42.03 $ 45.22 $ 44.58 $ 44.79 $ 39.83 $ 44.79 Tangible book value per share (period-end) 31.99 34.27 37.44 36.85 37.20 31.99 37.20 Market data: High closing price $ 83.07 $ 85.99 $ 83.14 $ 79.99 $ 83.85 $ 85.99 $ 87.41 Low closing price 73.88 76.82 76.52 72.29 74.44 73.88 69.05 Period-end closing price 79.88 78.70 81.79 77.91 75.24 79.88 75.24 Average daily volume (in thousands) 87 59 52 53 61 73 62 Treasury share activity: Treasury shares repurchased (in thousands) 208 38 131 337 217 246 292 Average treasury share repurchase price $ 78.33 $ 78.09 $ 78.93 $ 75.65 $ 78.75 $ 78.29 $ 78.22 Key Ratios (percent) Return on average assets 1.51 % 1.42 % 1.56 % 1.53 % 1.49 % 1.47 % 1.44 % Return on average tangible equity 18.1 % 15.3 % 16.7 % 15.7 % 15.2 % 16.6 % 14.3 % Yield on interest earning assets 3.15 % 2.94 % 3.08 % 3.04 % 3.00 % 3.04 % 3.08 % Cost of interest bearing liabilities 0.15 % 0.17 % 0.19 % 0.22 % 0.27 % 0.16 % 0.32 % Net Interest Margin 3.04 % 2.82 % 2.94 % 2.89 % 2.81 % 2.93 % 2.86 % Non-interest income as a percent of total revenue 30.9 % 32.4 % 30.2 % 31.1 % 31.0 % 30.8 % 30.9 % Efficiency Ratio 50.5 % 51.7 % 48.3 % 50.0 % 52.8 % 51.1 % 53.5 % Price/Earnings Ratio (a) 13.23 13.93 13.27 13.22 13.35 13.67 14.13 Capital (period-end) Average Shareholders' Equity to Average Assets 10.26 % 11.25 % 11.25 % 11.69 % 11.81 % Tangible equity to tangible assets 7.76 % 8.75 % 9.58 % 9.59 % 9.98 % Consolidated City Holding Company risk based capital ratios (b): CET I 15.85 % 16.18 % 16.08 % 16.11 % 16.40 % Tier I 15.85 % 16.18 % 16.08 % 16.11 % 16.40 % Total 16.26 % 16.60 % 16.51 % 16.56 % 16.88 % Leverage 9.42 % 9.58 % 9.44 % 9.46 % 9.70 % City National Bank risk based capital ratios (b): CET I 14.80 % 14.82 % 14.35 % 14.76 % 14.82 % Tier I 14.80 % 14.82 % 14.35 % 14.76 % 14.82 % Total 15.21 % 15.24 % 14.78 % 15.21 % 15.30 % Leverage 8.81 % 8.80 % 8.45 % 8.73 % 8.80 % Other (period-end) Branches 94 94 94 94 94 FTE 915 897 905 921 912 Assets per FTE (in thousands) $ 6,825 $ 6,703 $ 6,637 $ 6,463 $ 6,477 Deposits per FTE (in thousands) 5,621 5,574 5,445 5,308 5,271 (a) The price/earnings ratio is computed based on annualized quarterly earnings. (b) June 30, 2022 risk-based capital ratios are estimated. CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) ($ in 000s, except per share data) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Interest Income Interest and fees on loans $ 33,208 $ 31,874 $ 35,277 $ 33,961 $ 33,114 $ 65,082 $ 67,438 Interest on investment securities: Taxable 7,547 6,223 5,753 6,144 5,932 13,770 11,174 Tax-exempt 1,205 1,216 1,226 1,257 1,291 2,421 2,544 Interest on deposits in depository institutions 782 238 217 196 162 1,020 280 Total Interest Income 42,742 39,551 42,473 41,558 40,499 82,293 81,436 Interest Expense Interest on deposits 1,328 1,521 1,710 1,955 2,460 2,849 5,740 Interest on short-term borrowings 124 114 132 115 125 238 242 Total Interest Expense 1,452 1,635 1,842 2,070 2,585 3,087 5,982 Net Interest Income 41,290 37,916 40,631 39,488 37,914 79,206 75,454 (Recovery of) provision for credit losses - (756 ) - (725 ) (2,000 ) (756 ) (2,440 ) Net Interest Income After (Recovery of) Provision for Credit Losses 41,290 38,672 40,631 40,213 39,914 79,962 77,894 Non-Interest Income Net gains on sale of investment securities - - - - 29 - 312 Unrealized (losses) gains recognized on equity securities still held (601 ) (723 ) 52 93 410 (1,324 ) 359 Service charges 7,067 6,725 7,057 6,706 5,895 13,792 11,776 Bankcard revenue 7,062 6,444 6,762 6,791 7,221 13,506 13,434 Trust and investment management fee income 2,100 2,197 2,198 2,172 2,012 4,297 4,045 Bank owned life insurance 978 2,014 748 747 940 2,992 2,400 Other income 1,243 791 799 1,438 941 2,034 1,752 Total Non-Interest Income 17,849 17,448 17,616 17,947 17,448 35,297 34,078 Non-Interest Expense Salaries and employee benefits 16,413 15,577 15,299 15,321 15,559 31,990 31,230 Occupancy related expense 2,620 2,709 2,429 2,507 2,525 5,329 5,147 Equipment and software related expense 2,732 2,769 2,733 2,554 2,655 5,501 5,199 FDIC insurance expense 409 435 400 396 382 844 787 Advertising 951 798 582 804 824 1,749 1,705 Bankcard expenses 1,665 1,606 1,576 1,549 1,746 3,271 3,330 Postage, delivery, and statement mailings 551 636 590 573 568 1,187 1,160 Office supplies 427 410 378 406 371 837 763 Legal and professional fees 525 527 405 610 589 1,052 1,264 Telecommunications 754 584 702 790 676 1,338 1,366 Repossessed asset (gains) losses, net of expenses (32 ) 40 (29 ) (108 ) 1 8 80 Other expenses 3,674 3,436 3,559 3,776 3,678 7,110 7,352 Total Non-Interest Expense 30,689 29,527 28,624 29,178 29,574 60,216 59,383 Income Before Income Taxes 28,450 26,593 29,623 28,982 27,788 55,043 52,589 Income tax expense 5,767 5,251 6,237 6,250 5,640 11,018 10,627 Net Income Available to Common Shareholders $ 22,683 $ 21,342 $ 23,386 $ 22,732 $ 22,148 $ 44,025 $ 41,962 Distributed earnings allocated to common shareholders $ 8,837 $ 8,943 $ 8,949 $ 8,726 $ 8,921 $ 17,671 $ 17,845 Undistributed earnings allocated to common shareholders 13,643 12,199 14,211 13,786 13,021 25,951 23,732 Net earnings allocated to common shareholders $ 22,480 $ 21,142 $ 23,160 $ 22,512 $ 21,942 $ 43,622 $ 41,577 Average common shares outstanding 14,888 14,974 15,026 15,279 15,573 14,930 15,614 Shares for diluted earnings per share 14,909 15,002 15,056 15,302 15,594 14,954 15,640 Basic earnings per common share $ 1.51 $ 1.41 $ 1.54 $ 1.47 $ 1.41 $ 2.92 $ 2.66 Diluted earnings per common share $ 1.51 $ 1.41 $ 1.54 $ 1.47 $ 1.41 $ 2.92 $ 2.66 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000s) (Unaudited) (Unaudited) (Unaudited) (Unaudited) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Assets Cash and due from banks $ 90,449 $ 100,877 $ 101,804 $ 103,841 $ 97,523 Interest-bearing deposits in depository institutions 606,530 497,171 532,827 535,708 512,367 Cash and cash equivalents 696,979 598,048 634,631 639,549 609,890 Investment securities available-for-sale, at fair value 1,497,227 1,409,513 1,408,165 1,372,077 1,339,436 Other securities 24,383 24,785 25,531 25,497 25,793 Total investment securities 1,521,610 1,434,298 1,433,696 1,397,574 1,365,229 Gross loans 3,566,758 3,559,905 3,543,814 3,521,925 3,529,416 Allowance for credit losses (17,015 ) (17,280 ) (18,166 ) (18,751 ) (20,016 ) Net loans 3,549,743 3,542,625 3,525,648 3,503,174 3,509,400 Bank owned life insurance 120,528 120,522 120,978 120,238 119,491 Premises and equipment, net 72,388 73,067 74,071 75,156 76,263 Accrued interest receivable 16,342 16,101 15,627 16,224 15,967 Net deferred tax assets 30,802 18,001 63 90 - Intangible assets 116,428 116,774 117,121 117,489 117,857 Other assets 118,375 92,331 81,860 82,419 89,958 Total Assets $ 6,243,195 $ 6,011,767 $ 6,003,695 $ 5,951,913 $ 5,904,055 Liabilities Deposits: Noninterest-bearing $ 1,531,660 $ 1,357,266 $ 1,373,125 $ 1,311,464 $ 1,279,932 Interest-bearing: Demand deposits 1,189,056 1,191,492 1,135,848 1,139,033 1,070,004 Savings deposits 1,435,645 1,425,528 1,347,448 1,332,910 1,301,219 Time deposits 985,567 1,024,559 1,068,915 1,104,069 1,153,391 Total deposits 5,141,928 4,998,845 4,925,336 4,887,476 4,804,546 Short-term borrowings Customer repurchase agreements 402,368 288,483 312,458 296,642 311,316 Net deferred tax liabilities - - - - 2,310 Other liabilities 106,906 92,009 84,796 90,499 90,407 Total Liabilities 5,651,202 5,379,337 5,322,590 5,274,617 5,208,579 Stockholders' Equity Preferred stock - - - - - Common stock 47,619 47,619 47,619 47,619 47,619 Capital surplus 169,557 170,206 170,942 170,300 169,674 Retained earnings 667,933 654,138 641,826 627,463 613,553 Cost of common stock in treasury (209,133 ) (194,819 ) (193,542 ) (183,303 ) (157,936 ) Accumulated other comprehensive (loss) income: Unrealized (loss) gain on securities available-for-sale (80,498 ) (41,229 ) 17,745 20,878 28,227 Underfunded pension liability (3,485 ) (3,485 ) (3,485 ) (5,661 ) (5,661 ) Total Accumulated Other Comprehensive (Loss) Income (83,983 ) (44,714 ) 14,260 15,217 22,566 Total Stockholders' Equity 591,993 632,430 681,105 677,296 695,476 Total Liabilities and Stockholders' Equity $ 6,243,195 $ 6,011,767 $ 6,003,695 $ 5,951,913 $ 5,904,055 Regulatory Capital Total CET 1 capital $ 564,158 $ 565,048 $ 555,532 $ 550,426 $ 561,317 Total tier 1 capital 564,158 565,048 555,532 550,426 561,317 Total risk-based capital 578,657 579,807 570,336 565,712 577,543 Total risk-weighted assets 3,558,249 3,492,920 3,453,893 3,417,020 3,421,764 CITY HOLDING COMPANY AND SUBSIDIARIES Loan Portfolio (Unaudited) ($ in 000s) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Commercial and industrial $ 360,481 $ 337,384 $ 346,184 $ 353,046 $ 358,583 1-4 Family 108,765 108,424 107,873 108,913 108,079 Hotels 337,910 314,902 311,315 297,341 290,119 Multi-family 203,856 209,359 215,677 215,307 212,715 Non Residential Non-Owner Occupied 551,240 637,092 639,818 664,365 653,264 Non Residential Owner Occupied 180,188 200,180 204,233 205,579 209,100 Commercial real estate (1) 1,381,959 1,469,957 1,478,916 1,491,505 1,473,277 Residential real estate (2) 1,651,005 1,588,860 1,548,965 1,506,572 1,521,102 Home equity 125,742 121,460 122,345 124,806 127,608 Consumer 44,580 39,778 40,901 43,296 45,184 DDA overdrafts 2,991 2,466 6,503 2,700 3,662 Gross Loans $ 3,566,758 $ 3,559,905 $ 3,543,814 $ 3,521,925 $ 3,529,416 Construction loans included in: (1) - Commercial real estate loans $ 6,767 $ 14,877 $ 11,783 $ 19,360 $ 43,904 (2) - Residential real estate loans 18,751 16,253 17,252 19,059 20,838 CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information (Unaudited) ($ in 000s) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Allowance for Credit Losses Balance at beginning of period $ 17,280 $ 18,166 $ 18,751 $ 20,016 $ 24,076 $ 18,166 $ 24,549 Charge-offs: Commercial and industrial - (34 ) - - (211 ) (34 ) (245 ) Commercial real estate (24 ) - (276 ) (392 ) (1,718 ) (24 ) (1,719 ) Residential real estate (56 ) (50 ) (68 ) (18 ) (86 ) (106 ) (179 ) Home equity (19 ) - (58 ) (47 ) (8 ) (19 ) (72 ) Consumer (9 ) (23 ) (13 ) (3 ) (79 ) (32 ) (226 ) DDA overdrafts (604 ) (631 ) (635 ) (633 ) (430 ) (1,235 ) (883 ) Total charge-offs (712 ) (738 ) (1,050 ) (1,093 ) (2,532 ) (1,450 ) (3,324 ) Recoveries: Commercial and industrial 32 59 31 69 25 91 71 Commercial real estate 25 53 27 18 15 78 179 Residential real estate 4 45 7 29 17 49 91 Home equity 3 17 6 58 3 20 26 Consumer 19 28 40 72 104 47 143 DDA overdrafts 364 406 354 307 308 770 721 Total recoveries 447 608 465 553 472 1,055 1,231 Net charge-offs (265 ) (130 ) (585 ) (540 ) (2,060 ) (395 ) (2,093 ) (Recovery of) provision for credit losses - (756 ) - (725 ) (2,000 ) (756 ) (2,440 ) Balance at end of period $ 17,015 $ 17,280 $ 18,166 $ 18,751 $ 20,016 $ 17,015 $ 20,016 Loans outstanding $ 3,566,758 $ 3,559,905 $ 3,543,814 $ 3,521,925 $ 3,529,416 Allowance as a percent of loans outstanding 0.48 % 0.49 % 0.51 % 0.53 % 0.57 % Allowance as a percent of non-performing loans 292.6 % 331.3 % 290.1 % 243.1 % 199.3 % Average loans outstanding $ 3,559,713 $ 3,527,393 $ 3,522,272 $ 3,535,497 $ 3,541,165 $ 3,543,642 $ 3,563,356 Net charge-offs (annualized) as a percent of average loans outstanding 0.03 % 0.01 % 0.07 % 0.06 % 0.23 % 0.02 % 0.12 % CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information, continued (Unaudited) ($ in 000s) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Nonaccrual Loans Residential real estate $ 1,561 $ 1,786 $ 2,809 $ 3,634 $ 2,482 Home equity 54 99 40 67 81 Commercial and industrial 1,360 1,069 996 531 820 Commercial real estate 2,783 2,241 2,373 3,355 6,383 Consumer - - - - - Total nonaccrual loans 5,758 5,195 6,218 7,587 9,766 Accruing loans past due 90 days or more 58 21 43 127 278 Total non-performing loans 5,816 5,216 6,261 7,714 10,044 Other real estate owned 946 1,099 1,319 1,335 1,309 Total non-performing assets $ 6,762 $ 6,315 $ 7,580 $ 9,049 $ 11,353 Non-performing assets as a percent of loans and other real estate owned 0.19 % 0.18 % 0.21 % 0.26 % 0.32 % Past Due Loans Residential real estate $ 5,298 $ 4,976 $ 5,321 $ 5,258 $ 5,453 Home equity 282 505 618 688 523 Commercial and industrial 130 56 336 455 721 Commercial real estate 46 744 22 441 498 Consumer 49 32 60 35 12 DDA overdrafts 430 392 489 390 417 Total past due loans $ 6,235 $ 6,705 $ 6,846 $ 7,267 $ 7,624 Total past due loans as a percent of loans outstanding 0.17 % 0.19 % 0.19 % 0.21 % 0.22 % Troubled Debt Restructurings ("TDRs") Residential real estate $ 16,022 $ 16,182 $ 16,943 $ 16,910 $ 17,788 Home equity 1,649 1,694 1,784 1,822 1,920 Commercial and industrial 381 397 414 430 - Commercial real estate 107 1,890 1,914 1,937 3,076 Consumer 80 194 225 221 203 Total TDRs $ 18,239 $ 20,357 $ 21,280 $ 21,320 $ 22,987 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Three Months Ended June 30, 2022 March 31, 2022 June 30, 2021 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,730,617 $ 16,063 3.72 % $ 1,667,683 $ 15,596 3.79 % $ 1,652,165 $ 16,135 3.92 % Commercial, financial, and agriculture (2) 1,785,511 16,421 3.69 % 1,815,549 15,532 3.47 % 1,839,478 16,158 3.52 % Installment loans to individuals (2), (3) 43,585 631 5.81 % 44,161 607 5.57 % 49,522 713 5.77 % Previously securitized loans (4) *** 93 *** *** 139 *** *** 109 *** Total loans 3,559,713 33,208 3.74 % 3,527,393 31,874 3.66 % 3,541,165 33,115 3.75 % Securities: Taxable 1,269,049 7,548 2.39 % 1,207,333 6,223 2.09 % 1,046,008 5,932 2.27 % Tax-exempt (5) 215,603 1,526 2.84 % 232,474 1,539 2.68 % 244,233 1,633 2.68 % Total securities 1,484,652 9,074 2.45 % 1,439,807 7,762 2.19 % 1,290,241 7,565 2.35 % Deposits in depository institutions 441,239 781 0.71 % 540,197 238 0.18 % 628,158 162 0.10 % Total interest-earning assets 5,485,604 43,063 3.15 % 5,507,397 39,874 2.94 % 5,459,564 40,842 3.00 % Cash and due from banks 102,532 101,806 92,243 Premises and equipment, net 72,887 73,827 76,660 Goodwill and intangible assets 116,645 116,994 118,088 Other assets 256,354 217,662 206,709 Less: Allowance for credit losses (17,755 ) (18,454 ) (23,701 ) Total assets $ 6,016,267 $ 5,999,232 $ 5,929,563 Liabilities: Interest-bearing demand deposits $ 1,156,200 $ 148 0.05 % $ 1,142,278 $ 130 0.05 % $ 1,069,896 $ 122 0.05 % Savings deposits 1,430,121 182 0.05 % 1,384,460 175 0.05 % 1,287,966 163 0.05 % Time deposits (2) 1,004,356 999 0.40 % 1,048,185 1,216 0.47 % 1,181,953 2,175 0.74 % Short-term borrowings 288,031 123 0.17 % 276,360 114 0.17 % 305,134 125 0.16 % Total interest-bearing liabilities 3,878,708 1,452 0.15 % 3,851,283 1,635 0.17 % 3,844,949 2,585 0.27 % Noninterest-bearing demand deposits 1,435,256 1,398,663 1,311,340 Other liabilities 85,075 74,084 72,940 Stockholders' equity 617,228 675,202 700,334 Total liabilities and stockholders' equity $ 6,016,267 $ 5,999,232 $ 5,929,563 Net interest income $ 41,611 $ 38,239 $ 38,257 Net yield on earning assets 3.04 % 2.82 % 2.81 % (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) $ 3 $ 298 $ 488 (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 $ 77 $ 90 $ 211 Commercial, financial, and agriculture 118 286 365 Installment loans to individuals 15 19 23 Time deposits 21 21 48 $ 231 $ 416 $ 647 (3) Includes the Company’s consumer and DDA overdrafts loan categories. (4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Six Months Ended June 30, 2022 June 30, 2021 Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,697,727 $ 31,659 3.76 % $ 1,675,222 $ 32,987 3.97 % Commercial, financial, and agriculture (2) 1,801,999 31,952 3.58 % 1,837,947 32,701 3.59 % Installment loans to individuals (2), (3) 43,916 1,238 5.68 % 50,187 1,426 5.73 % Previously securitized loans (4) *** 233 *** *** 324 *** Total loans 3,543,642 65,082 3.70 % 3,563,356 67,438 3.82 % Securities: Taxable 1,238,361 13,770 2.24 % 995,871 11,174 2.26 % Tax-exempt (5) 223,992 3,065 2.76 % 241,924 3,220 2.68 % Total securities 1,462,353 16,835 2.32 % 1,237,795 14,394 2.35 % Deposits in depository institutions 490,445 1,020 0.42 % 571,130 280 0.10 % Total interest-earning assets 5,496,440 82,937 3.04 % 5,372,281 82,112 3.08 % Cash and due from banks 102,171 85,998 Premises and equipment, net 73,354 76,748 Goodwill and intangible assets 116,818 118,270 Other assets 237,115 212,051 Less: Allowance for credit losses (18,103 ) (24,302 ) Total assets $ 6,007,795 $ 5,841,046 Liabilities: Interest-bearing demand deposits $ 1,149,277 $ 278 0.05 % $ 1,039,260 $ 246 0.05 % Savings deposits 1,407,416 357 0.05 % 1,254,752 346 0.06 % Time deposits (2) 1,026,149 2,214 0.44 % 1,208,925 5,149 0.86 % Short-term borrowings 282,228 238 0.17 % 297,990 243 0.16 % Total interest-bearing liabilities 3,865,070 3,087 0.16 % 3,800,927 5,984 0.32 % Noninterest-bearing demand deposits 1,417,060 1,254,938 Other liabilities 79,610 81,273 Stockholders' equity 646,055 703,908 Total liabilities and stockholders' equity $ 6,007,795 $ 5,841,046 Net interest income $ 79,850 $ 76,128 Net yield on earning assets 2.93 % 2.86 % (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) $ 301 $ 1,323 (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 $ 167 $ 317 Commercial, financial, and agriculture 404 690 Installment loans to individuals 34 51 Time deposits 41 97 $ 646 $ 1,155 (3) Includes the Company’s consumer and DDA overdrafts loan categories. (4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. CITY HOLDING COMPANY AND SUBSIDIARIES Non-GAAP Reconciliations (Unaudited) ($ in 000s, except per share data) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Net Interest Income/Margin Net interest income ("GAAP") $ 41,290 $ 37,916 $ 40,631 $ 39,488 $ 37,914 $ 79,206 $ 75,454 Taxable equivalent adjustment 321 323 325 334 343 644 674 Net interest income, fully taxable equivalent $ 41,611 $ 38,239 $ 40,956 $ 39,822 $ 38,257 $ 79,850 $ 76,128 Average interest earning assets $ 5,485,604 $ 5,507,397 $ 5,521,386 $ 5,462,410 $ 5,459,564 $ 5,496,440 $ 5,372,281 Net Interest Margin 3.04 % 2.82 % 2.94 % 2.89 % 2.81 % 2.93 % 2.86 % Accretion related to fair value adjustments -0.02 % -0.03 % -0.03 % -0.04 % -0.05 % -0.02 % -0.04 % Net Interest Margin (excluding accretion) 3.02 % 2.79 % 2.91 % 2.85 % 2.76 % 2.91 % 2.81 % Tangible Equity Ratio (period end) Equity to assets ("GAAP") 9.48 % 10.52 % 11.34 % 11.37 % 11.78 % Effect of goodwill and other intangibles, net -1.72 % -1.77 % -1.76 % -1.78 % -1.80 % Tangible common equity to tangible assets 7.76 % 8.75 % 9.58 % 9.59 % 9.98 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220719005889/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 $22.7 million and diluted earnings of $1.51 per share for the quarter ended June 30, 2022. For the second quarter of 2022, the Company achieved a return on assets of 1.51% and a return on tangible equity of 18.1%. Net Interest Income The Company’s net interest income increased from $37.9 million during the first quarter of 2022 to $41.3 million during the second quarter of 2022. During the second quarter of 2022, the Company’s tax equivalent net interest income increased $3.4 million, or 8.8%, from $38.2 million for the first quarter of 2022 to $41.6 million for the second quarter of 2022. Higher yields from both loans (14 basis points) and investments (26 basis points) increased net interest income by $1.5 million and $1.1 million, respectively. In addition, the yield on deposits in depository institutions also increased by 53 basis points which increased net interest income by $0.6 million. The Company’s reported net interest margin increased from 2.82% for the first quarter of 2022 to 3.04% for the second quarter of 2022. Credit Quality The Company’s ratio of nonperforming assets to total loans and other real estate owned increased modestly from 0.18%, or $6.3 million, at March 31, 2022 to 0.19%, or $6.8 million, at June 30, 2022. Total past due loans decreased from $6.7 million, or 0.19% of total loans outstanding, at March 31, 2022 to $6.2 million, or 0.17% of total loans outstanding, at June 30, 2022. As a result of the Company’s quarterly analysis of the adequacy of the allowance for credit losses (“ACL”), the Company did not record a provision for credit losses in the second quarter of 2022, compared to a recovery of credit losses of $2.0 million for the comparable period in 2021 and a recovery of credit losses of $0.8 million for the first quarter of 2022. The Company did not record a provision for credit losses in the second quarter of 2022 primarily because net charge-offs and revisions to qualitative factors were essentially offset by improved loss factors and loan upgrades. Non-interest Income Non-interest income was $17.9 million for the second quarter of 2022 as compared to $17.4 million for the second quarter of 2021. During the second quarter of 2022, the Company reported $0.6 million of unrealized fair value losses on the Company’s equity securities as compared to $0.4 million of unrealized fair value gains on the Company’s equity securities in the second quarter of 2021. As of June 30, 2022, the fair value of these equity securities was approximately $7.9 million. Exclusive of these gains and losses, non-interest income increased from $17.0 million for the second quarter of 2021 to $18.5 million for the second quarter of 2022. This increase was primarily due to increases in service charges ($1.2 million, or 19.9%) and other revenue ($0.3 million, or 32.1%). Non-interest Expenses Non-interest expenses increased $1.1 million (3.8%), from $29.6 million in the second quarter of 2021 to $30.7 million in the second quarter of 2022. This increase was largely due to increased salary and employee benefits of $0.9 million. As anticipated, salary increases (4.7%) from the quarter ended June 30, 2021, were higher than the Company has typically experienced. Balance Sheet Trends Loans increased $6.9 million from March 31, 2022 to June 30, 2022, to $3.57 billion. PPP loans decreased $0.5 million from March 31, 2022 to $0.1 million at June 30, 2022. Excluding outstanding PPP loans (included in the commercial and industrial loan category), total loans increased $7.3 million, or 0.2%, from March 31, 2022 to $3.57 billion at June 30, 2022. Residential real estate loans increased $62.1 million (3.9%); commercial and industrial loans, excluding PPP loans, increased $23.5 million (7.0%); consumer loans increased $4.8 million (12.1%); and home equity loans increased $4.3 million (3.5%). These increases were partially offset by a decrease in commercial real estate loans of $88.0 million (6.0%). Despite solid originations during the second quarter of 2022, loan payoffs were unusually high due to the sale of one of City’s largest customers. The Company has a robust pipeline of new commercial loans that have been approved and scheduled to close in the next several months, and although we anticipate normal payoffs as well, we expect that aggregate commercial loan balances will grow in the third quarter. Total average depository balances increased $52.3 million, or 1.1%, from the quarter ended March 31, 2022 to the quarter ended June 30, 2022. Average savings deposit balances increased $45.7 million, average noninterest-bearing demand deposit balances increased $36.6 million, and average interest-bearing demand deposit balances increased $13.9 million. These increases were partially offset by a decrease in time deposit balances of $43.8 million. While average deposits increased modestly during the quarter ended June 30, 2022, point-to-point noninterest bearing deposits and customer repurchase agreements both increased significantly from March 31, 2022. At the end of June 2022, the Company received a large, short-term inflow of funds from a customer. These funds exited the Company’s balance sheet in early July. Exclusive of this deposit, total deposits and customer repurchase agreements (combined) would have decreased approximately $85 million from March 31, 2022. Income Tax Expense The Company’s effective income tax rate for the second quarter of 2022 was 20.3% compared to 20.8% for the year ended December 31, 2021, and 20.3% for the quarter ended June 30, 2021. Capitalization and Liquidity The Company’s loan to deposit ratio was 69.4% and the loan to asset ratio was 57.1% at June 30, 2022. The Company maintained investment securities totaling 24.4% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 66.6% of assets at June 30, 2022. Time deposits fund 15.8% of assets at June 30, 2022, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company. The Company continues to be strongly capitalized with tangible equity of $476 million at June 30, 2022. Due primarily to unrealized security losses during the six months ended June 30, 2022, the Company’s tangible equity ratio decreased from 9.6% at December 31, 2021 to 7.8% at June 30, 2022. However, unrealized security losses are not incorporated into measures of regulatory capital. As a result, at June 30, 2022, City National Bank’s Leverage Ratio was 8.81%, its Common Equity Tier I ratio was 14.80%, its Tier I Capital ratio was 14.80%, and its Total Risk-Based Capital ratio was 15.21%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation. On May 25, 2022, the Board of Directors of the Company approved a quarterly cash dividend of $0.60 per share payable July 29, 2022, to shareholders of record as of July 15, 2022. On May 25, 2022, the Company announced that the Board of Directors authorized the Company to buy back up to 1,000,000 shares of its common stock (approximately 7% of outstanding shares) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders. No time limit was placed on the duration of the share repurchase program. As part of this authorization, the Company terminated its previous repurchase program that was approved in March 2021. The Company had repurchased 826,330 shares under the 2021 program. During the quarter ended June 30, 2022, the Company repurchased 208,000 common shares at a weighted average price of $78.33 per share. As of June 30, 2022, the Company could repurchase 895,000 additional shares under the current program. City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 94 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, 2021 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) the uncertainties on the Company’s business, results of operations and financial condition, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its continued influence on financial markets, the effectiveness of the Company’s work from home arrangements and staffing levels in operational facilities, the impact of market participants on which the Company relies and actions taken by governmental authorities and other third parties in response to the pandemic; (3) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for loan 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; (15) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its June 30, 2022 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2022 results and will adjust the amounts if necessary. CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights (Unaudited) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Earnings Net Interest Income (fully taxable equivalent) $ 41,611 $ 38,239 $ 40,956 $ 39,822 $ 38,257 $ 79,850 $ 76,128 Net Income available to common shareholders 22,683 21,342 23,386 22,732 22,148 44,025 41,962 Per Share Data Earnings per share available to common shareholders: Basic $ 1.51 $ 1.41 $ 1.54 $ 1.47 $ 1.41 $ 2.92 $ 2.66 Diluted 1.51 1.41 1.54 1.47 1.41 2.92 2.66 Weighted average number of shares (in thousands): Basic 14,888 14,974 15,026 15,279 15,573 14,930 15,614 Diluted 14,909 15,002 15,056 15,302 15,594 14,954 15,640 Period-end number of shares (in thousands) 14,864 15,045 15,062 15,192 15,527 14,864 15,527 Cash dividends declared $ 0.60 $ 0.60 $ 0.60 $ 0.58 $ 0.58 $ 1.20 $ 1.16 Book value per share (period-end) $ 39.83 $ 42.03 $ 45.22 $ 44.58 $ 44.79 $ 39.83 $ 44.79 Tangible book value per share (period-end) 31.99 34.27 37.44 36.85 37.20 31.99 37.20 Market data: High closing price $ 83.07 $ 85.99 $ 83.14 $ 79.99 $ 83.85 $ 85.99 $ 87.41 Low closing price 73.88 76.82 76.52 72.29 74.44 73.88 69.05 Period-end closing price 79.88 78.70 81.79 77.91 75.24 79.88 75.24 Average daily volume (in thousands) 87 59 52 53 61 73 62 Treasury share activity: Treasury shares repurchased (in thousands) 208 38 131 337 217 246 292 Average treasury share repurchase price $ 78.33 $ 78.09 $ 78.93 $ 75.65 $ 78.75 $ 78.29 $ 78.22 Key Ratios (percent) Return on average assets 1.51 % 1.42 % 1.56 % 1.53 % 1.49 % 1.47 % 1.44 % Return on average tangible equity 18.1 % 15.3 % 16.7 % 15.7 % 15.2 % 16.6 % 14.3 % Yield on interest earning assets 3.15 % 2.94 % 3.08 % 3.04 % 3.00 % 3.04 % 3.08 % Cost of interest bearing liabilities 0.15 % 0.17 % 0.19 % 0.22 % 0.27 % 0.16 % 0.32 % Net Interest Margin 3.04 % 2.82 % 2.94 % 2.89 % 2.81 % 2.93 % 2.86 % Non-interest income as a percent of total revenue 30.9 % 32.4 % 30.2 % 31.1 % 31.0 % 30.8 % 30.9 % Efficiency Ratio 50.5 % 51.7 % 48.3 % 50.0 % 52.8 % 51.1 % 53.5 % Price/Earnings Ratio (a) 13.23 13.93 13.27 13.22 13.35 13.67 14.13 Capital (period-end) Average Shareholders' Equity to Average Assets 10.26 % 11.25 % 11.25 % 11.69 % 11.81 % Tangible equity to tangible assets 7.76 % 8.75 % 9.58 % 9.59 % 9.98 % Consolidated City Holding Company risk based capital ratios (b): CET I 15.85 % 16.18 % 16.08 % 16.11 % 16.40 % Tier I 15.85 % 16.18 % 16.08 % 16.11 % 16.40 % Total 16.26 % 16.60 % 16.51 % 16.56 % 16.88 % Leverage 9.42 % 9.58 % 9.44 % 9.46 % 9.70 % City National Bank risk based capital ratios (b): CET I 14.80 % 14.82 % 14.35 % 14.76 % 14.82 % Tier I 14.80 % 14.82 % 14.35 % 14.76 % 14.82 % Total 15.21 % 15.24 % 14.78 % 15.21 % 15.30 % Leverage 8.81 % 8.80 % 8.45 % 8.73 % 8.80 % Other (period-end) Branches 94 94 94 94 94 FTE 915 897 905 921 912 Assets per FTE (in thousands) $ 6,825 $ 6,703 $ 6,637 $ 6,463 $ 6,477 Deposits per FTE (in thousands) 5,621 5,574 5,445 5,308 5,271 (a) The price/earnings ratio is computed based on annualized quarterly earnings. (b) June 30, 2022 risk-based capital ratios are estimated. CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) ($ in 000s, except per share data) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Interest Income Interest and fees on loans $ 33,208 $ 31,874 $ 35,277 $ 33,961 $ 33,114 $ 65,082 $ 67,438 Interest on investment securities: Taxable 7,547 6,223 5,753 6,144 5,932 13,770 11,174 Tax-exempt 1,205 1,216 1,226 1,257 1,291 2,421 2,544 Interest on deposits in depository institutions 782 238 217 196 162 1,020 280 Total Interest Income 42,742 39,551 42,473 41,558 40,499 82,293 81,436 Interest Expense Interest on deposits 1,328 1,521 1,710 1,955 2,460 2,849 5,740 Interest on short-term borrowings 124 114 132 115 125 238 242 Total Interest Expense 1,452 1,635 1,842 2,070 2,585 3,087 5,982 Net Interest Income 41,290 37,916 40,631 39,488 37,914 79,206 75,454 (Recovery of) provision for credit losses - (756 ) - (725 ) (2,000 ) (756 ) (2,440 ) Net Interest Income After (Recovery of) Provision for Credit Losses 41,290 38,672 40,631 40,213 39,914 79,962 77,894 Non-Interest Income Net gains on sale of investment securities - - - - 29 - 312 Unrealized (losses) gains recognized on equity securities still held (601 ) (723 ) 52 93 410 (1,324 ) 359 Service charges 7,067 6,725 7,057 6,706 5,895 13,792 11,776 Bankcard revenue 7,062 6,444 6,762 6,791 7,221 13,506 13,434 Trust and investment management fee income 2,100 2,197 2,198 2,172 2,012 4,297 4,045 Bank owned life insurance 978 2,014 748 747 940 2,992 2,400 Other income 1,243 791 799 1,438 941 2,034 1,752 Total Non-Interest Income 17,849 17,448 17,616 17,947 17,448 35,297 34,078 Non-Interest Expense Salaries and employee benefits 16,413 15,577 15,299 15,321 15,559 31,990 31,230 Occupancy related expense 2,620 2,709 2,429 2,507 2,525 5,329 5,147 Equipment and software related expense 2,732 2,769 2,733 2,554 2,655 5,501 5,199 FDIC insurance expense 409 435 400 396 382 844 787 Advertising 951 798 582 804 824 1,749 1,705 Bankcard expenses 1,665 1,606 1,576 1,549 1,746 3,271 3,330 Postage, delivery, and statement mailings 551 636 590 573 568 1,187 1,160 Office supplies 427 410 378 406 371 837 763 Legal and professional fees 525 527 405 610 589 1,052 1,264 Telecommunications 754 584 702 790 676 1,338 1,366 Repossessed asset (gains) losses, net of expenses (32 ) 40 (29 ) (108 ) 1 8 80 Other expenses 3,674 3,436 3,559 3,776 3,678 7,110 7,352 Total Non-Interest Expense 30,689 29,527 28,624 29,178 29,574 60,216 59,383 Income Before Income Taxes 28,450 26,593 29,623 28,982 27,788 55,043 52,589 Income tax expense 5,767 5,251 6,237 6,250 5,640 11,018 10,627 Net Income Available to Common Shareholders $ 22,683 $ 21,342 $ 23,386 $ 22,732 $ 22,148 $ 44,025 $ 41,962 Distributed earnings allocated to common shareholders $ 8,837 $ 8,943 $ 8,949 $ 8,726 $ 8,921 $ 17,671 $ 17,845 Undistributed earnings allocated to common shareholders 13,643 12,199 14,211 13,786 13,021 25,951 23,732 Net earnings allocated to common shareholders $ 22,480 $ 21,142 $ 23,160 $ 22,512 $ 21,942 $ 43,622 $ 41,577 Average common shares outstanding 14,888 14,974 15,026 15,279 15,573 14,930 15,614 Shares for diluted earnings per share 14,909 15,002 15,056 15,302 15,594 14,954 15,640 Basic earnings per common share $ 1.51 $ 1.41 $ 1.54 $ 1.47 $ 1.41 $ 2.92 $ 2.66 Diluted earnings per common share $ 1.51 $ 1.41 $ 1.54 $ 1.47 $ 1.41 $ 2.92 $ 2.66 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000s) (Unaudited) (Unaudited) (Unaudited) (Unaudited) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Assets Cash and due from banks $ 90,449 $ 100,877 $ 101,804 $ 103,841 $ 97,523 Interest-bearing deposits in depository institutions 606,530 497,171 532,827 535,708 512,367 Cash and cash equivalents 696,979 598,048 634,631 639,549 609,890 Investment securities available-for-sale, at fair value 1,497,227 1,409,513 1,408,165 1,372,077 1,339,436 Other securities 24,383 24,785 25,531 25,497 25,793 Total investment securities 1,521,610 1,434,298 1,433,696 1,397,574 1,365,229 Gross loans 3,566,758 3,559,905 3,543,814 3,521,925 3,529,416 Allowance for credit losses (17,015 ) (17,280 ) (18,166 ) (18,751 ) (20,016 ) Net loans 3,549,743 3,542,625 3,525,648 3,503,174 3,509,400 Bank owned life insurance 120,528 120,522 120,978 120,238 119,491 Premises and equipment, net 72,388 73,067 74,071 75,156 76,263 Accrued interest receivable 16,342 16,101 15,627 16,224 15,967 Net deferred tax assets 30,802 18,001 63 90 - Intangible assets 116,428 116,774 117,121 117,489 117,857 Other assets 118,375 92,331 81,860 82,419 89,958 Total Assets $ 6,243,195 $ 6,011,767 $ 6,003,695 $ 5,951,913 $ 5,904,055 Liabilities Deposits: Noninterest-bearing $ 1,531,660 $ 1,357,266 $ 1,373,125 $ 1,311,464 $ 1,279,932 Interest-bearing: Demand deposits 1,189,056 1,191,492 1,135,848 1,139,033 1,070,004 Savings deposits 1,435,645 1,425,528 1,347,448 1,332,910 1,301,219 Time deposits 985,567 1,024,559 1,068,915 1,104,069 1,153,391 Total deposits 5,141,928 4,998,845 4,925,336 4,887,476 4,804,546 Short-term borrowings Customer repurchase agreements 402,368 288,483 312,458 296,642 311,316 Net deferred tax liabilities - - - - 2,310 Other liabilities 106,906 92,009 84,796 90,499 90,407 Total Liabilities 5,651,202 5,379,337 5,322,590 5,274,617 5,208,579 Stockholders' Equity Preferred stock - - - - - Common stock 47,619 47,619 47,619 47,619 47,619 Capital surplus 169,557 170,206 170,942 170,300 169,674 Retained earnings 667,933 654,138 641,826 627,463 613,553 Cost of common stock in treasury (209,133 ) (194,819 ) (193,542 ) (183,303 ) (157,936 ) Accumulated other comprehensive (loss) income: Unrealized (loss) gain on securities available-for-sale (80,498 ) (41,229 ) 17,745 20,878 28,227 Underfunded pension liability (3,485 ) (3,485 ) (3,485 ) (5,661 ) (5,661 ) Total Accumulated Other Comprehensive (Loss) Income (83,983 ) (44,714 ) 14,260 15,217 22,566 Total Stockholders' Equity 591,993 632,430 681,105 677,296 695,476 Total Liabilities and Stockholders' Equity $ 6,243,195 $ 6,011,767 $ 6,003,695 $ 5,951,913 $ 5,904,055 Regulatory Capital Total CET 1 capital $ 564,158 $ 565,048 $ 555,532 $ 550,426 $ 561,317 Total tier 1 capital 564,158 565,048 555,532 550,426 561,317 Total risk-based capital 578,657 579,807 570,336 565,712 577,543 Total risk-weighted assets 3,558,249 3,492,920 3,453,893 3,417,020 3,421,764 CITY HOLDING COMPANY AND SUBSIDIARIES Loan Portfolio (Unaudited) ($ in 000s) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Commercial and industrial $ 360,481 $ 337,384 $ 346,184 $ 353,046 $ 358,583 1-4 Family 108,765 108,424 107,873 108,913 108,079 Hotels 337,910 314,902 311,315 297,341 290,119 Multi-family 203,856 209,359 215,677 215,307 212,715 Non Residential Non-Owner Occupied 551,240 637,092 639,818 664,365 653,264 Non Residential Owner Occupied 180,188 200,180 204,233 205,579 209,100 Commercial real estate (1) 1,381,959 1,469,957 1,478,916 1,491,505 1,473,277 Residential real estate (2) 1,651,005 1,588,860 1,548,965 1,506,572 1,521,102 Home equity 125,742 121,460 122,345 124,806 127,608 Consumer 44,580 39,778 40,901 43,296 45,184 DDA overdrafts 2,991 2,466 6,503 2,700 3,662 Gross Loans $ 3,566,758 $ 3,559,905 $ 3,543,814 $ 3,521,925 $ 3,529,416 Construction loans included in: (1) - Commercial real estate loans $ 6,767 $ 14,877 $ 11,783 $ 19,360 $ 43,904 (2) - Residential real estate loans 18,751 16,253 17,252 19,059 20,838 CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information (Unaudited) ($ in 000s) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Allowance for Credit Losses Balance at beginning of period $ 17,280 $ 18,166 $ 18,751 $ 20,016 $ 24,076 $ 18,166 $ 24,549 Charge-offs: Commercial and industrial - (34 ) - - (211 ) (34 ) (245 ) Commercial real estate (24 ) - (276 ) (392 ) (1,718 ) (24 ) (1,719 ) Residential real estate (56 ) (50 ) (68 ) (18 ) (86 ) (106 ) (179 ) Home equity (19 ) - (58 ) (47 ) (8 ) (19 ) (72 ) Consumer (9 ) (23 ) (13 ) (3 ) (79 ) (32 ) (226 ) DDA overdrafts (604 ) (631 ) (635 ) (633 ) (430 ) (1,235 ) (883 ) Total charge-offs (712 ) (738 ) (1,050 ) (1,093 ) (2,532 ) (1,450 ) (3,324 ) Recoveries: Commercial and industrial 32 59 31 69 25 91 71 Commercial real estate 25 53 27 18 15 78 179 Residential real estate 4 45 7 29 17 49 91 Home equity 3 17 6 58 3 20 26 Consumer 19 28 40 72 104 47 143 DDA overdrafts 364 406 354 307 308 770 721 Total recoveries 447 608 465 553 472 1,055 1,231 Net charge-offs (265 ) (130 ) (585 ) (540 ) (2,060 ) (395 ) (2,093 ) (Recovery of) provision for credit losses - (756 ) - (725 ) (2,000 ) (756 ) (2,440 ) Balance at end of period $ 17,015 $ 17,280 $ 18,166 $ 18,751 $ 20,016 $ 17,015 $ 20,016 Loans outstanding $ 3,566,758 $ 3,559,905 $ 3,543,814 $ 3,521,925 $ 3,529,416 Allowance as a percent of loans outstanding 0.48 % 0.49 % 0.51 % 0.53 % 0.57 % Allowance as a percent of non-performing loans 292.6 % 331.3 % 290.1 % 243.1 % 199.3 % Average loans outstanding $ 3,559,713 $ 3,527,393 $ 3,522,272 $ 3,535,497 $ 3,541,165 $ 3,543,642 $ 3,563,356 Net charge-offs (annualized) as a percent of average loans outstanding 0.03 % 0.01 % 0.07 % 0.06 % 0.23 % 0.02 % 0.12 % CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information, continued (Unaudited) ($ in 000s) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Nonaccrual Loans Residential real estate $ 1,561 $ 1,786 $ 2,809 $ 3,634 $ 2,482 Home equity 54 99 40 67 81 Commercial and industrial 1,360 1,069 996 531 820 Commercial real estate 2,783 2,241 2,373 3,355 6,383 Consumer - - - - - Total nonaccrual loans 5,758 5,195 6,218 7,587 9,766 Accruing loans past due 90 days or more 58 21 43 127 278 Total non-performing loans 5,816 5,216 6,261 7,714 10,044 Other real estate owned 946 1,099 1,319 1,335 1,309 Total non-performing assets $ 6,762 $ 6,315 $ 7,580 $ 9,049 $ 11,353 Non-performing assets as a percent of loans and other real estate owned 0.19 % 0.18 % 0.21 % 0.26 % 0.32 % Past Due Loans Residential real estate $ 5,298 $ 4,976 $ 5,321 $ 5,258 $ 5,453 Home equity 282 505 618 688 523 Commercial and industrial 130 56 336 455 721 Commercial real estate 46 744 22 441 498 Consumer 49 32 60 35 12 DDA overdrafts 430 392 489 390 417 Total past due loans $ 6,235 $ 6,705 $ 6,846 $ 7,267 $ 7,624 Total past due loans as a percent of loans outstanding 0.17 % 0.19 % 0.19 % 0.21 % 0.22 % Troubled Debt Restructurings ("TDRs") Residential real estate $ 16,022 $ 16,182 $ 16,943 $ 16,910 $ 17,788 Home equity 1,649 1,694 1,784 1,822 1,920 Commercial and industrial 381 397 414 430 - Commercial real estate 107 1,890 1,914 1,937 3,076 Consumer 80 194 225 221 203 Total TDRs $ 18,239 $ 20,357 $ 21,280 $ 21,320 $ 22,987 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Three Months Ended June 30, 2022 March 31, 2022 June 30, 2021 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,730,617 $ 16,063 3.72 % $ 1,667,683 $ 15,596 3.79 % $ 1,652,165 $ 16,135 3.92 % Commercial, financial, and agriculture (2) 1,785,511 16,421 3.69 % 1,815,549 15,532 3.47 % 1,839,478 16,158 3.52 % Installment loans to individuals (2), (3) 43,585 631 5.81 % 44,161 607 5.57 % 49,522 713 5.77 % Previously securitized loans (4) *** 93 *** *** 139 *** *** 109 *** Total loans 3,559,713 33,208 3.74 % 3,527,393 31,874 3.66 % 3,541,165 33,115 3.75 % Securities: Taxable 1,269,049 7,548 2.39 % 1,207,333 6,223 2.09 % 1,046,008 5,932 2.27 % Tax-exempt (5) 215,603 1,526 2.84 % 232,474 1,539 2.68 % 244,233 1,633 2.68 % Total securities 1,484,652 9,074 2.45 % 1,439,807 7,762 2.19 % 1,290,241 7,565 2.35 % Deposits in depository institutions 441,239 781 0.71 % 540,197 238 0.18 % 628,158 162 0.10 % Total interest-earning assets 5,485,604 43,063 3.15 % 5,507,397 39,874 2.94 % 5,459,564 40,842 3.00 % Cash and due from banks 102,532 101,806 92,243 Premises and equipment, net 72,887 73,827 76,660 Goodwill and intangible assets 116,645 116,994 118,088 Other assets 256,354 217,662 206,709 Less: Allowance for credit losses (17,755 ) (18,454 ) (23,701 ) Total assets $ 6,016,267 $ 5,999,232 $ 5,929,563 Liabilities: Interest-bearing demand deposits $ 1,156,200 $ 148 0.05 % $ 1,142,278 $ 130 0.05 % $ 1,069,896 $ 122 0.05 % Savings deposits 1,430,121 182 0.05 % 1,384,460 175 0.05 % 1,287,966 163 0.05 % Time deposits (2) 1,004,356 999 0.40 % 1,048,185 1,216 0.47 % 1,181,953 2,175 0.74 % Short-term borrowings 288,031 123 0.17 % 276,360 114 0.17 % 305,134 125 0.16 % Total interest-bearing liabilities 3,878,708 1,452 0.15 % 3,851,283 1,635 0.17 % 3,844,949 2,585 0.27 % Noninterest-bearing demand deposits 1,435,256 1,398,663 1,311,340 Other liabilities 85,075 74,084 72,940 Stockholders' equity 617,228 675,202 700,334 Total liabilities and stockholders' equity $ 6,016,267 $ 5,999,232 $ 5,929,563 Net interest income $ 41,611 $ 38,239 $ 38,257 Net yield on earning assets 3.04 % 2.82 % 2.81 % (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) $ 3 $ 298 $ 488 (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 $ 77 $ 90 $ 211 Commercial, financial, and agriculture 118 286 365 Installment loans to individuals 15 19 23 Time deposits 21 21 48 $ 231 $ 416 $ 647 (3) Includes the Company’s consumer and DDA overdrafts loan categories. (4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Six Months Ended June 30, 2022 June 30, 2021 Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,697,727 $ 31,659 3.76 % $ 1,675,222 $ 32,987 3.97 % Commercial, financial, and agriculture (2) 1,801,999 31,952 3.58 % 1,837,947 32,701 3.59 % Installment loans to individuals (2), (3) 43,916 1,238 5.68 % 50,187 1,426 5.73 % Previously securitized loans (4) *** 233 *** *** 324 *** Total loans 3,543,642 65,082 3.70 % 3,563,356 67,438 3.82 % Securities: Taxable 1,238,361 13,770 2.24 % 995,871 11,174 2.26 % Tax-exempt (5) 223,992 3,065 2.76 % 241,924 3,220 2.68 % Total securities 1,462,353 16,835 2.32 % 1,237,795 14,394 2.35 % Deposits in depository institutions 490,445 1,020 0.42 % 571,130 280 0.10 % Total interest-earning assets 5,496,440 82,937 3.04 % 5,372,281 82,112 3.08 % Cash and due from banks 102,171 85,998 Premises and equipment, net 73,354 76,748 Goodwill and intangible assets 116,818 118,270 Other assets 237,115 212,051 Less: Allowance for credit losses (18,103 ) (24,302 ) Total assets $ 6,007,795 $ 5,841,046 Liabilities: Interest-bearing demand deposits $ 1,149,277 $ 278 0.05 % $ 1,039,260 $ 246 0.05 % Savings deposits 1,407,416 357 0.05 % 1,254,752 346 0.06 % Time deposits (2) 1,026,149 2,214 0.44 % 1,208,925 5,149 0.86 % Short-term borrowings 282,228 238 0.17 % 297,990 243 0.16 % Total interest-bearing liabilities 3,865,070 3,087 0.16 % 3,800,927 5,984 0.32 % Noninterest-bearing demand deposits 1,417,060 1,254,938 Other liabilities 79,610 81,273 Stockholders' equity 646,055 703,908 Total liabilities and stockholders' equity $ 6,007,795 $ 5,841,046 Net interest income $ 79,850 $ 76,128 Net yield on earning assets 2.93 % 2.86 % (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) $ 301 $ 1,323 (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 $ 167 $ 317 Commercial, financial, and agriculture 404 690 Installment loans to individuals 34 51 Time deposits 41 97 $ 646 $ 1,155 (3) Includes the Company’s consumer and DDA overdrafts loan categories. (4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. CITY HOLDING COMPANY AND SUBSIDIARIES Non-GAAP Reconciliations (Unaudited) ($ in 000s, except per share data) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021 Net Interest Income/Margin Net interest income ("GAAP") $ 41,290 $ 37,916 $ 40,631 $ 39,488 $ 37,914 $ 79,206 $ 75,454 Taxable equivalent adjustment 321 323 325 334 343 644 674 Net interest income, fully taxable equivalent $ 41,611 $ 38,239 $ 40,956 $ 39,822 $ 38,257 $ 79,850 $ 76,128 Average interest earning assets $ 5,485,604 $ 5,507,397 $ 5,521,386 $ 5,462,410 $ 5,459,564 $ 5,496,440 $ 5,372,281 Net Interest Margin 3.04 % 2.82 % 2.94 % 2.89 % 2.81 % 2.93 % 2.86 % Accretion related to fair value adjustments -0.02 % -0.03 % -0.03 % -0.04 % -0.05 % -0.02 % -0.04 % Net Interest Margin (excluding accretion) 3.02 % 2.79 % 2.91 % 2.85 % 2.76 % 2.91 % 2.81 % Tangible Equity Ratio (period end) Equity to assets ("GAAP") 9.48 % 10.52 % 11.34 % 11.37 % 11.78 % Effect of goodwill and other intangibles, net -1.72 % -1.77 % -1.76 % -1.78 % -1.80 % Tangible common equity to tangible assets 7.76 % 8.75 % 9.58 % 9.59 % 9.98 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220719005889/en/