City Holding (CHCO) 8-K City Holding Company Announces Second Quarter Results

NEWS RELEASE

For Immediate Release

July 21, 2022

For Further Information Contact:

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

(304) 769-1169

City Holding Company Announces Second Quarter Results

Charleston, West Virginia – 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 March 31, 2022 Form 10-Q.The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 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,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2022		2022		2021		2021		2021		2022		2021
Earnings
Net Interest Income (FTE)	$	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	$	0.6	$	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,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2022		2022		2021		2021		2021		2022		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,		March 31,		December 31,		September 30,		June 30,
	2022		2022		2021		2021		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,		March 31,		December 31,		September 30,		June 30,
	2022		2022		2021		2021		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,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2022			2022			2021			2021			2021			2022			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,			March 31,			December 31,			September 30,			June 30,
	2022			2022			2021			2021			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 loan 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 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,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2022			2022			2021			2021			2021			2022			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		%