City Holding (CHCO) 8-K Results of Operations and Financial Condition

Filed by City Holding Company

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

NEWS RELEASE

For Immediate Release

January 24, 2023

For Further Information Contact:

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

(304) 769-1169

City Holding Company Announces Record Annual Earnings

Charleston, West Virginia – City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $5.9 billion bank holding company headquartered in Charleston, West Virginia, today announced record net income of $102.1 million and record diluted earnings of $6.80 per share for the year ended December 31, 2022. For the year ended December 31, 2022, the Company achieved a return on assets of 1.71% and a return on tangible equity of 20.3%.

Net Interest Income

The Company’s net interest income increased from $155.6 million for the year ended December 31, 2021 to $180.0 million for the year ended December 31, 2022. The Company’s tax equivalent net interest income increased $24.4 million, or 15.6%, from $156.9 million for the year ended December 31, 2021 to $181.3 million for the year ended December 31, 2022. Net interest income increased by $12.0 million, $7.3 million and $3.4 million, respectively, due to increases in the yields on loans (net of loan fees and accretion), investments, and deposits in depository institutions, of 35 basis points, 47 basis points and 94 basis points, respectively, all due primarily to increases in the Federal Funds rate during 2022. In addition, higher average investment and loan balances ($189.2 million and $37.5 million, respectively) increased net interest income by $3.9 million and $1.8 million, respectively. These increases were partially offset by a decrease in loan fees associated with PPP loans of $3.5 million from 2021 and a decrease in accretion from fair value adjustments of $1.0 million. The Company’s reported net interest margin increased from 2.89% for the year ended December 31, 2021 to 3.33% for the year ended December 31, 2022.

The Company’s net interest income increased from $48.8 million during the third quarter of 2022 to $52.0 million during the fourth quarter of 2022. During the fourth quarter of 2022, the Company’s tax equivalent net interest income increased $3.3 million, or 6.7%, to $52.4 million from $49.1 million during the third quarter of 2022. Net interest income increased by $4.3 million and $1.9 million, respectively, due to an increase in loan (net of loan fees and accretion) and investment yields of 46 basis points and 50 basis points, respectively, due to recent increases in the Federal Funds rate. In addition, the yield on deposits in depository institutions also increased by 94 basis points which increased net interest income by

$0.4 million. These increases were partially offset by an increase in the cost of interest bearing liabilities (27 basis points) which decreased net interest income by $2.5 million and lower average deposits in depository institution balances ($126.7 million) which decreased net interest income by $0.7 million. The Company’s reported net interest margin increased from 3.57% for the third quarter of 2022 to 3.89% for the fourth quarter of 2022.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned decreased from 0.21%, or $7.6 million, at December 31, 2021 to 0.17%, or $6.3 million at December 31, 2022. Total past due loans increased from $6.8 million, or 0.19% of total loans outstanding, at December 31, 2021 to $9.2 million, or 0.25% of total loans outstanding, at December 31, 2022.

As a result of the Company’s quarterly analysis of the adequacy of the Allowance for Credit Losses, the Company recorded a provision for credit losses of $0.5 million in the fourth quarter of 2022 and $0.5 million for the year ended December 31, 2022, compared to no provision for credit losses for the fourth quarter of 2021 and a recovery of credit losses of $3.2 million for year ended December 31, 2021. The provision for the year ended December 31, 2022, was a result of net charge-offs for the year that were partially offset by the repayment of a loan from a previous acquisition and release of the associated credit mark.

Non-interest Income

Non-interest income was $72.1 million for 2022 as compared to $69.6 million for 2021. The Company reported $1.6 million of unrealized fair value losses on the Company’s equity securities during 2022 compared to $0.3 million of realized security gains on the sale of investments and $0.5 million of unrealized fair value gains on the Company’s equity securities during 2021. Exclusive of these realized and unrealized gains and losses, non-interest income increased from $68.8 million for the year ended December 31, 2021 to $73.7 million for the year ended December 31, 2022. This increase was largely attributable to an increase of $2.8 million, or 10.9%, in service charges and a $1.7 million, or 42.7%, increase in bank owned life insurance due to higher death benefit proceeds received in 2022 compared to 2021. In addition, trust and investment management fee income and bankcard revenues each increased $0.4 million from the year ended December 31, 2021. These increases were partially offset by a decrease of $0.4 million in other income.

Non-interest income was $18.5 million during the quarter ended December 31, 2022 as compared to $17.6 million during the quarter ended December 31, 2021. During the fourth quarter of 2022, the Company reported $0.3 million of unrealized fair value losses on the Company’s equity securities compared to $0.1 million of unrealized fair value gains on the Company’s equity securities during the fourth quarter of 2021. Exclusive of these unrealized fair value gains and losses, non-interest income increased from $17.6 million for the fourth quarter of 2021 to $18.8 million for the fourth quarter of 2022. This increase was largely attributable to higher bank owned life insurance due to higher death benefit proceeds received ($1.1 million).

Non-interest Expenses

Non-interest expenses increased from $117.2 million for 2021 to $124.3 million for 2022. This increase was primarily due to an increase in salaries and employee benefit expenses ($4.7 million, due to higher salary adjustments during 2022, increased incentive compensation, and increased health insurance) and equipment and software related expenses ($1.3 million). In addition, occupancy related expenses increased $0.6 million, advertising increased $0.3 million, and merger related expenses increased $0.3 million.

Non-interest expenses increased $4.0 million (13.8%), from $28.6 million in the fourth quarter of 2021 to $32.6 million in the fourth quarter of 2022. This increase was largely due to an increase in salaries and employee benefits of $1.9 million due to increased incentive compensation, increased health insurance, and higher salary adjustments during 2022. In addition, other expenses increased $0.6 million; equipment and software related expenses increased $0.6 million; occupancy related expenses increased $0.3 million; and merger related expenses increased $0.3 million.

Balance Sheet Trends

Loans increased $102.4 million (2.9%) from December 31, 2021 to $3.64 billion at December 31, 2022. PPP loans of $6.6 million at December 31, 2021 were fully repaid during 2022. Excluding outstanding PPP loans (included in the commercial and industrial loan category), total loans increased $109.0 million, (3.1%), from December 31, 2021 to $3.64 billion at December 31, 2022. Residential real estate loans increased $144.6 million (9.3%); commercial and industrial loans increased $34.3 million (10.1%) (excluding PPP loans); home equity loans increased $12.0 million (9.8%); and consumer loans increased $7.9 million (19.3%). These increases were partially offset by decreases in commercial real estate loans ($86.6 million, or 5.9%).

Total average depository balances for the year ended December 31, 2022 increased $141.0 million, or 2.9%, as compared to the year ended December 31, 2021. Average savings deposits increased $123.5 million, average noninterest bearing demand deposits increased $113.6 million, and average interest bearing demand deposits increased $78.4 million. These increases were partially offset by a decrease in average time deposits of $174.5 million.

Income Tax Expense

The Company’s effective income tax rate for the quarter and year ended December 31, 2022 was 18.2% and 19.8%, respectively, compared to 21.1% and 20.8% for the comparable periods in 2021.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 74.9% and the loan to asset ratio was 62.0% at December 31, 2022. The Company maintained investment securities totaling 26.0% of assets as of the same date. The Company’s deposit mix is weighted toward checking and saving accounts that fund 67.7% of assets at December 31, 2022. Time deposits fund 15.1% of assets at December 31, 2022, but very few of these deposits are in accounts that have balances of more than $250,000.

The Company continues to be strongly capitalized with tangible equity of $462 million at December 31, 2022. Due primarily to unrealized security losses during the year ended December 31, 2022, the Company’s tangible equity ratio decreased from 9.6% at December 31, 2021 to 8.0% at December 30, 2022. However, unrealized security losses are not incorporated into measures of regulatory capital. At December 31, 2022, City National Bank’s Leverage Ratio was 8.55%, its Common Equity Tier I ratio was 13.88%, its Tier I Capital ratio was 13.88%, and its Total Risk-Based Capital ratio was 14.28%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On November 15, 2022, the Board approved a quarterly cash dividend of $0.65 cents per share payable January 31, 2023, to shareholders of record as of January 13, 2022. During the year ended December 31, 2022, the Company repurchased 325,000 common shares at a weighted average price of $81.50 per share as part of a one million share repurchase plan authorized by the Board of Directors in May 2022. As of December 31, 2022, the Company could repurchase approximately 817,000 shares under the current plan.

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) theuncertainties 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 credit losses may not be sufficient to absorb actual losses in our loan portfolio, and risk from concentrations in our loan portfolio; (4) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (5) changes in the interest rate environment; (6) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (7) changes in technology and increased competition, including competition from non-bank financial institutions; (8) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers’ performance and creditworthiness; (9) difficulty growing loan and deposit balances; (10) our ability to effectively execute our business plan, including with respect to future acquisitions; (11) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries; (12) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions; (13) regulatory enforcement actions and adverse legal actions; (14) difficulty attracting and retaining key employees; (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 December 31, 2022 Form 10-K.The Company will continue to evaluate the impact of any subsequent events on the preliminary December 31, 2022 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)

	Three Months Ended															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2022			2022			2022			2022			2021			2022			2021
Earnings
Net Interest Income (fully taxable equivalent)	$	52,381		$	49,108		$	41,611		$	38,239		$	40,956		$	181,339		$	156,906
Net Income available to common shareholders	30,672			27,374			22,683			21,342			23,386			102,071			88,080
Per Share Data
Earnings per share available to common shareholders:
Basic	$	2.06		$	1.84		$	1.51		$	1.41		$	1.54		$	6.81		$	5.67
Diluted	2.05			1.83			1.51			1.41			1.54			6.80			5.66
Weighted average number of shares (in thousands):
Basic	14,756			14,776			14,888			14,974			15,026			14,847			15,381
Diluted	14,785			14,800			14,909			15,002			15,056			14,873			15,407
Period-end number of shares (in thousands)	14,788			14,856			14,864			15,045			15,062			14,788			15,062
Cash dividends declared	$	0.65		$	0.65		$	0.6		$	0.6		$	0.6		$	2.5		$	2.34
Book value per share (period-end)	39.08			36.91			39.83			42.03			45.22			39.08			45.22
Tangible book value per share (period-end)	31.25			29.09			31.99			34.27			37.44			31.25			37.44
Market data:
High closing price	$	101.94		$	90.24		$	83.07		$	85.99		$	83.14		$	101.94		$	87.41
Low closing price	89.32			78.4			73.88			76.82			76.52			73.88			69.05
Period-end closing price	93.09			88.69			79.88			78.7			81.79			93.09			81.79
Average daily volume (in    thousands)	75			58			87			59			52			70			57
Treasury share activity:
Treasury shares repurchased      (in thousands)	69			9			208			38			131			325			760
Average treasury share repurchase price	$	93.12		$	80.24		$	78.33		$	78.09		$	78.93		$	81.5		$	77.21
Key Ratios (percent)
Return on average assets	2.08		%	1.83		%	1.51		%	1.42		%	1.56		%	1.71		%	1.49		%
Return on average tangible equity	27.3		%	21.8		%	18.1		%	15.3		%	16.7		%	20.3		%	15.3		%
Yield on interest earning assets	4.23		%	3.72		%	3.15		%	2.94		%	3.08		%	3.51		%	3.07		%
Cost of interest bearing liabilities	0.48		%	0.21		%	0.15		%	0.17		%	0.19		%	0.25		%	0.26		%
Net Interest Margin	3.89		%	3.57		%	3.04		%	2.82		%	2.94		%	3.33		%	2.89		%
Non-interest income as a percent of total revenue	26.5		%	27.2		%	30.9		%	32.4		%	30.2		%	28.6		%	30.8		%
Efficiency Ratio	45.3		%	46.3		%	50.5		%	51.7		%	48.3		%	48.2		%	51.3		%
Price/Earnings Ratio (a)	11.30			12.08			13.23			13.93			13.27			13.67			14.42

Capital (period-end)
Average Shareholders' Equity to Average Assets	9.57		%	10.32		%	10.26		%	11.25		%	11.25		%
Tangible equity to tangible assets	8.02		%	7.41		%	7.76		%	8.75		%	9.58		%
Consolidated City Holding Company risk based capital ratios (b):
CET I	16.23		%	15.82		%	15.85		%	16.18		%	16.08		%
Tier I	16.23		%	15.82		%	15.85		%	16.18		%	16.08		%
Total	16.62		%	16.22		%	16.26		%	16.60		%	16.51		%
Leverage	10.01		%	9.74		%	9.42		%	9.58		%	9.44		%
City National Bank risk based capital ratios (b):
CET I	13.88		%	14.68		%	14.80		%	14.82		%	14.35		%
Tier I	13.88		%	14.68		%	14.80		%	14.82		%	14.35		%
Total	14.28		%	15.07		%	15.21		%	15.24		%	14.78		%
Leverage	8.55		%	9.05		%	8.81		%	8.80		%	8.45		%
Other (period-end)
Branches	94			94			94			94			94
FTE	909			903			915			897			905
Assets per FTE (in thousands)	$	6,467		$	6,588		$	6,825		$	6,703		$	6,637
Deposits per FTE (in thousands)	5,357			5,492			5,621			5,574			5,445
(a) The price/earnings ratio is computed based on annualized quarterly earnings.
(b) December 31, 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										Twelve Months Ended
	December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
	2022		2022		2022		2022		2021		2022		2021
Interest Income
Interest and fees on loans	$	42,963	$	38,493	$	33,208	$	31,874	$	35,277	$	146,538	$	136,676
Interest on investment securities:
Taxable	11,119		9,556		7,547		6,223		5,753		34,445		23,071
Tax-exempt	1,262		1,228		1,205		1,216		1,226		4,911		5,027
Interest on deposits in depository institutions	1,244		1,530		782		238		217		3,794		693
Total Interest Income	56,588		50,807		42,742		39,551		42,473		189,688		165,467
Interest Expense
Interest on deposits	3,010		1,585		1,328		1,521		1,710		7,444		9,405
Interest on short-term borrowings	1,533		440		124		114		132		2,211		489
Total Interest Expense	4,543		2,025		1,452		1,635		1,842		9,655		9,894
Net Interest Income	52,045		48,782		41,290		37,916		40,631		180,033		155,573
Provision for (recovery of) credit losses	500		730		—		(756)		—		474		(3,165)
Net Interest Income After Provision for (Recovery of) Credit Losses	51,545		48,052		41,290		38,672		40,631		179,559		158,738
Non-Interest Income
Net gains on sale of investment securities	4		—		—		—		—		4		312
Unrealized (losses) gains recognized on securities still held	(262)		1		(601)		(723)		52		(1,585)		504
Service charges	7,056		7,487		7,067		6,725		7,057		28,335		25,539
Bankcard revenue	6,791		7,052		7,062		6,444		6,762		27,349		26,987
Trust and investment management fee income	2,343		2,158		2,100		2,197		2,198		8,798		8,415
Bank owned life insurance	1,813		754		978		2,014		748		5,559		3,895
Other income	791		792		1,243		791		799		3,617		3,989
Total Non-Interest Income	18,536		18,244		17,849		17,448		17,616		72,077		69,641
Non-Interest Expense
Salaries and employee benefits	17,148		17,398		16,413		15,577		15,299		66,536		61,850
Occupancy related expense	2,725		2,664		2,620		2,709		2,429		10,718		10,083
Equipment and software related expense	3,341		2,949		2,732		2,769		2,733		11,791		10,486
FDIC insurance expense	413		416		409		435		400		1,673		1,583
Advertising	802		854		951		798		582		3,405		3,091
Bankcard expenses	1,356		1,405		1,665		1,606		1,576		6,032		6,455

Postage, delivery, and statement mailings	597		578		551		636		590		2,362		2,323
Office supplies	441		466		427		410		378		1,744		1,547
Legal and professional fees	610		532		525		527		405		2,194		2,279
Telecommunications	627		651		754		584		702		2,616		2,858
Repossessed asset losses (gains), net of expenses	54		(3)		(32)		40		(29)		59		(57)
Merger related expenses	268		—		—		—		—		268		—
Other expenses	4,203		3,591		3,674		3,436		3,559		14,904		14,687
Total Non-Interest Expense	32,585		31,501		30,689		29,527		28,624		124,302		117,185
Income Before Income Taxes	37,496		34,795		28,450		26,593		29,623		127,334		111,194
Income tax expense	6,824		7,421		5,767		5,251		6,237		25,263		23,114
Net Income Available to Common Shareholders	$	30,672	$	27,374	$	22,683	$	21,342	$	23,386	$	102,071	$	88,080
Distributed earnings allocated to common shareholders	$	9,521	$	9,564	$	8,837	$	8,943	$	8,949	$	36,619	$	34,901
Undistributed earnings allocated to common shareholders	20,857		17,555		13,643		12,199		14,211		64,494		52,336
Net earnings allocated to common shareholders	$	30,378	$	27,119	$	22,480	$	21,142	$	23,160	$	101,113	$	87,237
Average common shares outstanding	14,756		14,776		14,888		14,974		15,026		14,847		15,381
Shares for diluted earnings per share	14,785		14,800		14,909		15,002		15,056		14,873		15,407
Basic earnings per common share	$	2.06	$	1.84	$	1.51	$	1.41	$	1.54	$	6.81	$	5.67
Diluted earnings per common share	$	2.05	$	1.83	$	1.51	$	1.41	$	1.54	$	6.80	$	5.66

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

($ in 000s)

	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
	December 31,		September 30,		June 30,		March 31,		December 31,
	2022		2022		2022		2022		2021
Assets
Cash and due from banks	$	68,333	$	65,051	$	90,449	$	100,877	$	101,804
Interest-bearing deposits in depository institutions	131,667		233,302		606,530		497,171		532,827
Cash and cash equivalents	200,000		298,353		696,979		598,048		634,631
Investment securities available-for-sale, at fair value	1,505,520		1,489,392		1,497,227		1,409,513		1,408,165
Other securities	23,807		24,372		24,383		24,785		25,531
Total investment securities	1,529,327		1,513,764		1,521,610		1,434,298		1,433,696
Gross loans	3,646,258		3,628,752		3,566,758		3,559,905		3,543,814
Allowance for credit losses	(17,108)		(17,011)		(17,015)		(17,280)		(18,166)
Net loans	3,629,150		3,611,741		3,549,743		3,542,625		3,525,648
Bank owned life insurance	120,674		121,283		120,528		120,522		120,978
Premises and equipment, net	70,786		71,686		72,388		73,067		74,071
Accrued interest receivable	18,287		17,256		16,342		16,101		15,627
Net deferred tax assets	44,884		49,888		30,802		18,001		63
Intangible assets	115,735		116,081		116,428		116,774		117,121
Other assets	149,263		147,716		118,375		92,331		81,860
Total Assets	$	5,878,106	$	5,947,768	$	6,243,195	$	6,011,767	$	6,003,695
Liabilities
Deposits:
Noninterest-bearing	$	1,351,415	$	1,429,281	$	1,531,660	$	1,357,266	$	1,373,125
Interest-bearing:
Demand deposits	1,233,482		1,160,970		1,189,056		1,191,492		1,135,848
Savings deposits	1,396,869		1,427,785		1,435,645		1,425,528		1,347,448
Time deposits	888,100		939,769		985,567		1,024,559		1,068,915
Total deposits	4,869,866		4,957,805		5,141,928		4,998,845		4,925,336
Short-term borrowings
Customer repurchase agreements	290,964		304,807		402,368		288,483		312,458
Other liabilities	139,424		136,868		106,906		92,009		84,796
Total Liabilities	5,300,254		5,399,480		5,651,202		5,379,337		5,322,590

Stockholders' Equity
Preferred stock	—		—		—		—		—
Common stock	47,619		47,619		47,619		47,619		47,619
Capital surplus	170,980		170,138		169,557		170,206		170,942
Retained earnings	706,696		685,657		667,933		654,138		641,826
Cost of common stock in treasury	(215,955)		(209,644)		(209,133)		(194,819)		(193,542)
Accumulated other comprehensive income:
Unrealized gain on securities available-for-sale	(128,066)		(141,997)		(80,498)		(41,229)		17,745
Underfunded pension liability	(3,422)		(3,485)		(3,485)		(3,485)		(3,485)
Total Accumulated Other Comprehensive Income	(131,488)		(145,482)		(83,983)		(44,714)		14,260
Total Stockholders' Equity	577,852		548,288		591,993		632,430		681,105
Total Liabilities and Stockholders' Equity	$	5,878,106	$	5,947,768	$	6,243,195	$	6,011,767	$	6,003,695
Regulatory Capital
Total CET 1 capital	$	598,068	$	582,213	$	564,158	$	565,048	$	555,532
Total tier 1 capital	598,068		582,213		564,158		565,048		555,532
Total risk-based capital	612,654		596,708		578,657		579,807		570,336
Total risk-weighted assets	3,685,207		3,679,511		3,558,249		3,492,920		3,453,893

CITY HOLDING COMPANY AND SUBSIDIARIES

Loan Portfolio

(Unaudited) ($ in 000s)

	December 31,		September 30,		June 30,		March 31,		December 31,
	2022		2022		2022		2022		2021
Commercial and industrial	$	373,890	$	375,735	$	360,481	$	337,384	$	346,184
1-4 Family	116,192		109,710		108,765		108,424		107,873
Hotels	340,404		355,001		337,910		314,902		311,315
Multi-family	174,786		186,440		203,856		209,359		215,677
Non Residential Non-Owner Occupied	585,964		569,369		551,240		637,092		639,818
Non Residential Owner Occupied	174,961		177,673		180,188		200,180		204,233
Commercial real estate (1)	1,392,307		1,398,193		1,381,959		1,469,957		1,478,916
Residential real estate (2)	1,693,523		1,678,770		1,651,005		1,588,860		1,548,965
Home equity	134,317		130,837		125,742		121,460		122,345
Consumer	48,806		41,902		44,580		39,778		40,901
DDA overdrafts	3,415		3,315		2,991		2,466		6,503
Gross Loans	$	3,646,258	$	3,628,752	$	3,566,758	$	3,559,905	$	3,543,814
Construction loans included in:
(1) - Commercial real estate loans	$	4,130	$	4,125	$	6,767	$	14,877	$	11,783
(2) - Residential real estate loans	21,122		19,333		18,751		16,253		17,252

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information

(Unaudited) ($ in 000s)

	Three Months Ended															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2022			2022			2022			2022			2021			2022			2021
Allowance for Loan Losses
Balance at beginning of period	$	17,011		$	17,015		$	17,280		$	18,166		$	18,751		$	18,166		$	24,549
Charge-offs:
Commercial and industrial	(120)			(408)			—			(34)			—			(562)			(245)
Commercial real estate	(31)			—			(24)			—			(276)			(55)			(2,387)
Residential real estate	(66)			(93)			(56)			(50)			(68)			(265)			(265)
Home equity	(189)			(71)			(19)			—			(58)			(279)			(177)
Consumer	(15)			(16)			(9)			(23)			(13)			(63)			(242)
DDA overdrafts	(670)			(719)			(604)			(631)			(635)			(2,624)			(2,151)
Total charge-offs	(1,091)			(1,307)			(712)			(738)			(1,050)			(3,848)			(5,467)
Recoveries:
Commercial and industrial	94			149			32			59			31			334			171
Commercial real estate	120			9			25			53			27			207			224
Residential real estate	49			1			4			45			7			99			127
Home equity	34			2			3			17			6			56			90
Consumer	31			29			19			28			40			107			255
DDA overdrafts	360			383			364			406			354			1,513			1,382
Total recoveries	688			573			447			608			465			2,316			2,249
Net charge-offs	(403)			(734)			(265)			(130)			(585)			(1,532)			(3,218)
Provision for (recovery of) credit losses	500			730			—			(756)			—			474			(3,165)
Balance at end of period	$	17,108		$	17,011		$	17,015		$	17,280		$	18,166		$	17,108		$	18,166
Loans outstanding	$	3,646,258		$	3,628,752		$	3,566,758		$	3,559,905		$	3,543,814
Allowance as a percent of loans outstanding	0.47		%	0.47		%	0.48		%	0.49		%	0.51		%
Allowance as a percent of non-performing loans	317.3		%	320.5		%	292.6		%	331.3		%	290.1		%
Average loans outstanding	$	3,648,996		$	3,596,523		$	3,559,713		$	3,527,393		$	3,522,272		$	3,583,526		$	3,545,978
Net charge-offs (annualized) as a percent of average loans outstanding	0.04		%	0.08		%	0.03		%	0.01		%	0.07		%	0.04		%	0.09		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information, Continued

(Unaudited) ($ in 000s)

	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021
Nonaccrual Loans
Residential real estate	$	1,969		$	2,089		$	1,561		$	1,786		$	2,809
Home equity	55			140			54			99			40
Commercial and industrial	1,015			785			1,360			1,069			996
Commercial real estate	2,166			2,293			2,783			2,241			2,373
Consumer	—			—			—			—			—
Total nonaccrual loans	5,205			5,307			5,758			5,195			6,218
Accruing loans past due 90 days or more	187			—			58			21			43
Total non-performing loans	5,392			5,307			5,816			5,216			6,261
Other real estate owned	909			1,071			946			1,099			1,319
Total non-performing assets	$	6,301		$	6,378		$	6,762		$	6,315		$	7,580
Non-performing assets as a percent of loans and other real estate owned	0.17		%	0.18		%	0.19		%	0.18		%	0.21		%
Past Due Loans
Residential real estate	$	7,091		$	3,452		$	5,298		$	4,976		$	5,321
Home equity	650			521			282			505			618
Commercial and industrial	234			221			130			56			336
Commercial real estate	710			221			46			744			22
Consumer	100			27			49			32			60
DDA overdrafts	391			561			430			392			489
Total past due loans	$	9,176		$	5,003		$	6,235		$	6,705		$	6,846
Total past due loans as a percent of loans outstanding	0.25		%	0.14		%	0.17		%	0.19		%	0.19		%
Troubled Debt Restructurings ("TDRs")
Residential real estate	$	15,857		$	15,657		$	16,022		$	16,182		$	16,943
Home equity	1,286			1,614			1,649			1,694			1,784
Commercial and industrial	333			354			381			397			414
Commercial real estate	102			104			107			1,890			1,914
Consumer	64			68			80			194			225
Total TDRs	$	17,642		$	17,797		$	18,239		$	20,357		$	21,280

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)

	Three Months Ended
	December 31, 2022						September 30, 2022						December 31, 2021
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,824,327	$	18,910	4.11	%	$	1,792,365	$	17,640	3.90	%	$	1,645,167	$	15,692	3.78	%
Commercial, financial, and agriculture (2)	1,773,937		23,346		5.22	%	1,759,567		20,092		4.53	%	1,831,461		18,740		4.06	%
Installment loans to individuals (2), (3)	50,732		646		5.05	%	44,591		683		6.08	%	45,644		691		6.01	%
Previously securitized loans (4)	***		63		***		***		78		***		***		154		***
Total loans	3,648,996		42,965		4.67	%	3,596,523		38,493		4.25	%	3,522,272		35,277		3.97	%
Securities:
Taxable	1,315,453		11,118		3.35	%	1,359,207		9,557		2.79	%	1,171,340		5,753		1.95	%
Tax-exempt (5)	211,326		1,597		3.00	%	215,219		1,555		2.87	%	239,096		1,551		2.57	%
Total securities	1,526,779		12,715		3.30	%	1,574,426		11,112		2.80	%	1,410,436		7,304		2.05	%
Deposits in depository institutions	162,732		1,245		3.04	%	289,460		1,529		2.1	%	588,678		217		0.15	%
Total interest-earning assets	5,338,507		56,925		4.23	%	5,460,409		51,134		3.72	%	5,521,386		42,798		3.08	%
Cash and due from banks	69,223						81,202						98,111
Premises and equipment, net	71,482						72,196						74,847
Goodwill and intangible assets	115,952						116,297						117,349
Other assets	332,855						278,527						216,780
Less: Allowance for loan losses	(17,332)						(17,224)						(18,756)
Total assets	$	5,910,687					$	5,991,407					$	6,009,717
Liabilities:
Interest-bearing demand deposits	$	1,150,327	$	684	0.24	%	$	1,151,122	$	272	0.09	%	$	1,113,693	$	131	0.05	%
Savings deposits	1,412,246		829		0.23	%	1,431,591		358		0.10	%	1,338,747		173		0.05	%
Time deposits (2)	916,845		1,497		0.65	%	964,447		956		0.39	%	1,087,280		1,406		0.51	%
Short-term borrowings	303,599		1,534		2.00	%	270,310		440		0.65	%	314,937		132		0.17	%
Total interest-bearing liabilities	3,783,017		4,544		0.48	%	3,817,470		2,026		0.21	%	3,854,657		1,842		0.19	%
Noninterest-bearing demand deposits	1,428,013						1,455,123						1,394,599
Other liabilities	134,075						100,303						84,071
Stockholders' equity	565,582						618,511						676,390
Total liabilities and
stockholders' equity	$	5,910,687					$	5,991,407					$	6,009,717
Net interest income			$	52,381					$	49,108					$	40,956
Net yield on earning assets					3.89	%					3.57	%					2.94	%
(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)			$	(41)					$	308					$	1,106

(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	$	67	$	64	$	149
Commercial, financial, and agriculture	135		103		243
Installment loans to individuals	4		7		15
Time deposits	21		21		48
	$	227	$	195	$	455
(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)

	Twelve Months Ended
	December 31, 2022						December 31, 2021
	Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,755,772	$	68,208	3.88	%	$	1,658,710	$	64,492	3.89	%
Commercial, financial, and agriculture (2)	1,781,132		75,390		4.23	%	1,838,560		68,784		3.74	%
Installment loans to individuals (2), (3)	46,622		2,567		5.51	%	48,708		2,831		5.81	%
Previously securitized loans (4)	***		373		***		***		568		***
Total loans	3,583,526		146,538		4.09	%	3,545,978		136,675		3.85	%
Securities:
Taxable	1,288,252		34,445		2.67	%	1,075,550		23,071		2.15	%
Tax-exempt (5)	218,588		6,217		2.84	%	242,125		6,362		2.63	%
Total securities	1,506,840		40,662		2.7	%	1,317,675		29,433		2.23	%
Deposits in depository institutions	357,184		3,794		1.06	%	568,928		693		0.12	%
Total interest-earning assets	5,447,550		190,994		3.51	%	5,432,581		166,801		3.07	%
Cash and due from banks	88,581						92,847
Premises and equipment, net	72,590						76,069
Goodwill and intangible assets	116,469						117,899
Other assets	271,685						216,493
Less: Allowance for loan losses	(17,687)						(21,922)
Total assets	$	5,979,188					$	5,913,967
Liabilities:
Interest-bearing demand deposits	$	1,150,007	$	1,234	0.11	%	$	1,071,628	$	504	0.05	%
Savings deposits	1,414,727		1,544		0.11	%	1,291,225		689		0.05	%
Time deposits (2)	983,046		4,666		0.47	%	1,157,502		8,213		0.71	%
Short-term borrowings	284,611		2,211		0.78	%	298,413		489		0.16	%
Total interest-bearing liabilities	3,832,391		9,655		0.25	%	3,818,768		9,895		0.26	%
Noninterest-bearing demand deposits	1,429,415						1,315,801
Other liabilities	98,553						84,377
Stockholders' equity	618,829						695,021
Total liabilities and
Stockholders' equity	$	5,979,188					$	5,913,967
Net interest income			$	181,339					$	156,906
Net yield on earning assets					3.33	%					2.89	%
(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)			$	568					$	3,550

(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	$	298��	$	620
Commercial, financial, and agriculture	642		1,198
Installment loans to individuals	45		87
Time deposits	83		193
	$	1,068	$	2,098
(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															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2022			2022			2022			2022			2021			2022			2021
Net Interest Income/Margin
Net interest income ("GAAP")	$	52,045		$	48,782		$	41,290		$	37,916		$	40,631		$	180,033		$	155,573
Taxable equivalent adjustment	336			326			321			323			325			1,306			1,333
Net interest income, fully taxable equivalent	$	52,381		$	49,108		$	41,611		$	38,239		$	40,956		$	181,339		$	156,906
Average interest earning assets	$	5,338,507		$	5,460,409		$	5,485,604		$	5,507,397		$	5,521,386		$	5,447,550		$	5,432,581
Net Interest Margin	3.89		%	3.57		%	3.04		%	2.82		%	2.94		%	3.33		%	2.89		%
Accretion related to fair value adjustments	(0.02)		%	(0.01)		%	(0.02)		%	(0.03)		%	(0.03)		%	(0.02)		%	(0.04)		%
Net Interest Margin (excluding accretion)	3.87		%	3.56		%	3.02		%	2.79		%	2.91		%	3.31		%	2.85		%
Tangible Equity Ratio (period end)
Equity to assets ("GAAP")	9.83		%	9.22		%	9.48		%	10.52		%	11.34		%
Effect of goodwill and other intangibles, net	(1.81)		%	(1.81)		%	(1.72)		%	(1.77)		%	(1.76)		%
Tangible common equity to tangible assets	8.02		%	7.41		%	7.76		%	8.75		%	9.58		%