City Holding Company Announces Third Quarter Results

CHARLESTON, W.Va.--(BUSINESS WIRE)--City Holding Company ("Company" or "City") (NASDAQ:CHCO), a $5.9 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $27.4 million and diluted earnings of $1.83 per share for the quarter ended September 30, 2022. For the third quarter of 2022, the Company achieved a return on assets of 1.83% and a return on tangible equity of 21.8%.

Net Interest Income

The Company's net interest income increased from $41.3 million during the second quarter of 2022 to $48.8 million during the third quarter of 2022. The Company's tax equivalent net interest income increased from $41.6 million for the second quarter of 2022 to $49.1 million for the third quarter of 2022. Net interest income increased by $4.7 million and $1.5 million, respectively, due to an increase in loan (net of loan fees and accretion) and investment yields of 47 basis points and 35 basis points, respectively, due to recent increases in the Federal Funds rate. In addition, the yield on deposits in depository institutions also increased by 139 basis points which increased net interest income by $1.0 million. These increases were partially offset by an increase in the cost of interest bearing liabilities (6 basis points) which decreased net interest income by $0.6 million. The Company's reported net interest margin increased from 3.04% for the second quarter of 2022 to 3.57% for the third quarter of 2022.

Credit Quality

The Company's ratio of nonperforming assets to total loans and other real estate owned decreased modestly from 0.19%, or $6.8 million, at June 30, 2022 to 0.18%, or $6.4 million, at September 30, 2022. Total past due loans decreased from $6.2 million, or 0.17% of total loans outstanding, at June 30, 2022 to $5.0 million, or 0.14% of total loans outstanding, at September 30, 2022.

As a result of the Company's quarterly analysis of the adequacy of the allowance for credit losses ("ACL"), the Company recorded a provision for credit losses of $0.7 million in the third quarter of 2022, compared to a recovery of credit losses of $0.7 million for the comparable period in 2021 and no provision for credit losses for the second quarter of 2022. The provision for credit losses in the third quarter was a result of net charge-offs and loan growth.

Non-interest Income

Non-interest income was $18.2 million for the third quarter of 2022 as compared to $17.9 million for the third quarter of 2021. During the third quarter of 2021, the Company reported $0.1 million of unrealized fair value gains on the Company's equity securities. Exclusive of these gains, non-interest income increased from $17.8 million for the third quarter of 2021 to $18.2 million for the third quarter of 2022. This increase was largely attributable to higher service charges ($0.8 million, or 11.6%) and bankcard revenues ($0.3 million, or 3.8%). These increases were partially offset by a decrease in other income ($0.6 million).

Non-interest Expenses

Non-interest expenses increased $2.3 million (8.0%), from $29.2 million in the third quarter of 2021 to $31.5 million in the third quarter of 2022. This increase was primarily due to an increase in salaries and employee benefits of $2.1 million due to increased health insurance, increased incentive compensation and higher salary adjustments during 2022.

Balance Sheet Trends

Loans increased $62.0 million (1.7%) from June 30, 2022 to September 30, 2022, to $3.63 billion. Residential real estate loans increased $27.8 million (1.7%), commercial real estate loans increased $16.2 million (1.2%), commercial and industrial loans increased $15.3 million (4.2%), and home equity loans increased $5.1 million (4.1%). These increases were partially offset by a decrease in consumer loans of $2.7 million.

Total average depository balances decreased $23.7 million, or 0.5%, from the quarter ended June 30, 2022 to the quarter ended September 30, 2022. Average time deposit balances decreased $39.9 million and average interest-bearing demand deposit balances decreased $5.1 million. These increases were partially offset by an increase in noninterest-bearing demand deposit balances of $19.9 million.

Income Tax Expense

The Company's effective income tax rate for the third quarter of 2022 was 21.3% compared to 20.8% for the year ended December 31, 2021, and 21.6% for the quarter ended September 30, 2021.

Capitalization and Liquidity

The Company's loan to deposit ratio was 73.2% and the loan to asset ratio was 61.0% at September 30, 2022. The Company maintained investment securities totaling 25.5% of assets as of the same date. The Company's deposit mix is weighted heavily toward checking and saving accounts, which fund 67.6% of assets at September 30, 2022. Time deposits fund 15.8% of assets at September 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 $432 million at September 30, 2022. Due primarily to unrealized security losses during the nine months ended September 30, 2022, the Company's tangible equity ratio decreased from 9.6% at December 31, 2021 to 7.4% at September 30, 2022. However, unrealized security losses are not incorporated into measures of regulatory capital. At September 30, 2022, City National Bank's Leverage Ratio was 9.05%, its Common Equity Tier I ratio was 14.68%, its Tier I Capital ratio was 14.68%, and its Total Risk-Based Capital ratio was 15.07%. These regulatory capital ratios are significantly above levels required to be considered "well capitalized," which is the highest possible regulatory designation.

On September 28, 2022, the Board of Directors of the Company approved a quarterly cash dividend of $0.65 per share payable October 31, 2022, to shareholders of record as of October 14, 2022. This represents an 8.3% increase from the $0.60 per share dividend paid on July 29, 2022. During the quarter ended September 30, 2022, the Company repurchased 9,000 common shares at a weighted average price of $80.24 as part of a one million share repurchase plan authorized by the Board of Directors in May 2022. As of September 30, 2022, the Company could repurchase approximately 886,000 additional shares under the 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) 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 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 September 30, 2022 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary September 30, 2022 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
	Three Months Ended																Nine Months Ended
	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021				September 30, 2022			September 30, 2021
Earnings
Net Interest Income (fully taxable equivalent)	$	49,108		$	41,611		$	38,239		$	40,956		$	39,822			$	128,961		$	115,950
Net Income available to common shareholders		27,374			22,683			21,342			23,386			22,732				71,408			64,694
Per Share Data
Earnings per share available to common shareholders:
Basic	$	1.84		$	1.51		$	1.41		$	1.54		$	1.47			$	4.75		$	4.13
Diluted		1.83			1.51			1.41			1.54			1.47				4.75			4.13
Weighted average number of shares (in thousands):
Basic		14,776			14,888			14,974			15,026			15,279				14,878			15,501
Diluted		14,800			14,909			15,002			15,056			15,302				14,901			15,526
Period-end number of shares (in thousands)		14,856			14,864			15,045			15,062			15,192				14,856			15,192
Cash dividends declared	$	0.65		$	0.60		$	0.60		$	0.60		$	0.58			$	1.85		$	1.74
Book value per share (period-end)	$	36.91		$	39.83		$	42.03		$	45.22		$	44.58			$	36.91		$	44.58
Tangible book value per share (period-end)		29.09			31.99			34.27			37.44			36.85				29.09			36.85
Market data:
High closing price	$	90.24		$	83.07		$	85.99		$	83.14		$	79.99			$	90.24		$	87.41
Low closing price		78.40			73.88			76.82			76.52			72.29				73.88			69.05
Period-end closing price		88.69			79.88			78.70			81.79			77.91				88.69			77.91
Average daily volume (in thousands)		58			87			59			52			53				68			59
Treasury share activity:
Treasury shares repurchased (in thousands)		9			208			38			131			337				255			629
Average treasury share repurchase price	$	80.24		$	78.33		$	78.09		$	78.93		$	75.65			$	78.36		$	76.85
Key Ratios (percent)
Return on average assets		1.83	%		1.51	%		1.42	%		1.56	%		1.53	%			1.59	%		1.47	%
Return on average tangible equity		21.8	%		18.1	%		15.3	%		16.7	%		15.7	%			18.3	%		14.8	%
Yield on interest earning assets		3.72	%		3.15	%		2.94	%		3.08	%		3.04	%			3.27	%		3.07	%
Cost of interest bearing liabilities		0.21	%		0.15	%		0.17	%		0.19	%		0.22	%			0.18	%		0.28	%
Net Interest Margin		3.57	%		3.04	%		2.82	%		2.94	%		2.89	%			3.14	%		2.87	%
Non-interest income as a percent of total revenue		27.2	%		30.9	%		32.4	%		30.2	%		31.1	%			29.5	%		31.0	%
Efficiency Ratio		46.3	%		50.5	%		51.7	%		48.3	%		50.0	%			49.3	%		52.3	%
Price/Earnings Ratio (a)		12.08			13.23			13.93			13.27			13.22				13.99			14.14
Capital (period-end)
Average Shareholders' Equity to Average Assets		10.32	%		10.26	%		11.25	%		11.25	%		11.69	%
Tangible equity to tangible assets		7.41	%		7.76	%		8.75	%		9.58	%		9.59	%
Consolidated City Holding Company risk based capital ratios (b):
CET I		15.82	%		15.85	%		16.18	%		16.08	%		16.11	%
Tier I		15.82	%		15.85	%		16.18	%		16.08	%		16.11	%
Total		16.22	%		16.26	%		16.60	%		16.51	%		16.56	%
Leverage		9.74	%		9.42	%		9.58	%		9.44	%		9.46	%
City National Bank risk based capital ratios (b):
CET I		14.68	%		14.80	%		14.82	%		14.35	%		14.76	%
Tier I		14.68	%		14.80	%		14.82	%		14.35	%		14.76	%
Total		15.07	%		15.21	%		15.24	%		14.78	%		15.21	%
Leverage		9.05	%		8.81	%		8.80	%		8.45	%		8.73	%
Other (period-end)
Branches		94			94			94			94			94
FTE		903			915			897			905			921
Assets per FTE (in thousands)	$	6,588		$	6,825		$	6,703		$	6,637		$	6,463
Deposits per FTE (in thousands)		5,492			5,621			5,574			5,445			5,308
(a) The price/earnings ratio is computed based on annualized quarterly earnings.
(b) September 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																Nine Months Ended
	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021				September 30, 2022			September 30, 2021
Interest Income
Interest and fees on loans	$	38,493		$	33,208		$	31,874		$	35,277		$	33,961			$	103,575		$	101,399
Interest on investment securities:
Taxable		9,556			7,547			6,223			5,753			6,144				23,327			17,318
Tax-exempt		1,228			1,205			1,216			1,226			1,257				3,650			3,801
Interest on deposits in depository institutions		1,530			782			238			217			196				2,549			476
Total Interest Income		50,807			42,742			39,551			42,473			41,558				133,101			122,994
Interest Expense
Interest on deposits		1,585			1,328			1,521			1,710			1,955				4,433			7,695
Interest on short-term borrowings		440			124			114			132			115				677			357
Total Interest Expense		2,025			1,452			1,635			1,842			2,070				5,110			8,052
Net Interest Income		48,782			41,290			37,916			40,631			39,488				127,991			114,942
Provision for (Recovery of) credit losses		730			-			(756	)		-			(725	)			(26	)		(3,165	)
Net Interest Income After Provision for (Recovery of) Credit Losses		48,052			41,290			38,672			40,631			40,213				128,017			118,107
Non-Interest Income
Net gains on sale of investment securities		-			-			-			-			-				-			312
Unrealized gains (losses) recognized on equity securities still held		1			(601	)		(723	)		52			93				(1,322	)		452
Service charges		7,487			7,067			6,725			7,057			6,706				21,281			18,482
Bankcard revenue		7,052			7,062			6,444			6,762			6,791				20,558			20,225
Trust and investment management fee income		2,158			2,100			2,197			2,198			2,172				6,455			6,217
Bank owned life insurance		754			978			2,014			748			747				3,746			3,147
Other income		792			1,243			791			799			1,438				2,825			3,190
Total Non-Interest Income		18,244			17,849			17,448			17,616			17,947				53,543			52,025
Non-Interest Expense
Salaries and employee benefits		17,398			16,413			15,577			15,299			15,321				49,386			46,551
Occupancy related expense		2,664			2,620			2,709			2,429			2,507				7,993			7,654
Equipment and software related expense		2,949			2,732			2,769			2,733			2,554				8,452			7,753
FDIC insurance expense		416			409			435			400			396				1,259			1,183
Advertising		854			951			798			582			804				2,603			2,509
Bankcard expenses		1,405			1,665			1,606			1,576			1,549				4,676			4,879
Postage, delivery, and statement mailings		578			551			636			590			573				1,765			1,733
Office supplies		466			427			410			378			406				1,303			1,169
Legal and professional fees		532			525			527			405			610				1,584			1,874
Telecommunications		651			754			584			702			790				1,988			2,156
Repossessed asset (gains) losses, net of expenses		(3	)		(32	)		40			(29	)		(108	)			4			(28	)
Other expenses		3,591			3,674			3,436			3,559			3,776				10,701			11,128
Total Non-Interest Expense		31,501			30,689			29,527			28,624			29,178				91,714			88,561
Income Before Income Taxes		34,795			28,450			26,593			29,623			28,982				89,846			81,571
Income tax expense		7,421			5,767			5,251			6,237			6,250				18,438			16,877
Net Income Available to Common Shareholders	$	27,374		$	22,683		$	21,342		$	23,386		$	22,732			$	71,408		$	64,694
Distributed earnings allocated to common shareholders	$	9,564		$	8,837		$	8,943		$	8,949		$	8,726			$	27,220		$	26,177
Undistributed earnings allocated to common shareholders		17,555			13,643			12,199			14,211			13,786				43,509			37,899
Net earnings allocated to common shareholders	$	27,119		$	22,480		$	21,142		$	23,160		$	22,512			$	70,729		$	64,076
Average common shares outstanding		14,776			14,888			14,974			15,026			15,279				14,878			15,501
Shares for diluted earnings per share		14,800			14,909			15,002			15,056			15,302				14,901			15,526
Basic earnings per common share	$	1.84		$	1.51		$	1.41		$	1.54		$	1.47			$	4.75		$	4.13
Diluted earnings per common share	$	1.83		$	1.51		$	1.41		$	1.54		$	1.47			$	4.75		$	4.13

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
	(Unaudited)			(Unaudited)			(Unaudited)						(Unaudited)
	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Assets
Cash and due from banks	$	65,051		$	90,449		$	100,877		$	101,804		$	103,841
Interest-bearing deposits in depository institutions		233,302			606,530			497,171			532,827			535,708
Cash and cash equivalents		298,353			696,979			598,048			634,631			639,549
Investment securities available-for-sale, at fair value		1,489,392			1,497,227			1,409,513			1,408,165			1,372,077
Other securities		24,372			24,383			24,785			25,531			25,497
Total investment securities		1,513,764			1,521,610			1,434,298			1,433,696			1,397,574
Gross loans		3,628,752			3,566,758			3,559,905			3,543,814			3,521,925
Allowance for credit losses		(17,011	)		(17,015	)		(17,280	)		(18,166	)		(18,751	)
Net loans		3,611,741			3,549,743			3,542,625			3,525,648			3,503,174
Bank owned life insurance		121,283			120,528			120,522			120,978			120,238
Premises and equipment, net		71,686			72,388			73,067			74,071			75,156
Accrued interest receivable		17,256			16,342			16,101			15,627			16,224
Net deferred tax assets		49,888			30,802			18,001			63			90
Intangible assets		116,081			116,428			116,774			117,121			117,489
Other assets		147,716			118,375			92,331			81,860			82,419
Total Assets	$	5,947,768		$	6,243,195		$	6,011,767		$	6,003,695		$	5,951,913
Liabilities
Deposits:
Noninterest-bearing	$	1,429,281		$	1,531,660		$	1,357,266		$	1,373,125		$	1,311,464
Interest-bearing:
Demand deposits		1,160,970			1,189,056			1,191,492			1,135,848			1,139,033
Savings deposits		1,427,785			1,435,645			1,425,528			1,347,448			1,332,910
Time deposits		939,769			985,567			1,024,559			1,068,915			1,104,069
Total deposits		4,957,805			5,141,928			4,998,845			4,925,336			4,887,476
Short-term borrowings
Customer repurchase agreements		304,807			402,368			288,483			312,458			296,642
Net deferred tax liabilities		-			-			-			-			-
Other liabilities		136,868			106,906			92,009			84,796			90,499
Total Liabilities		5,399,480			5,651,202			5,379,337			5,322,590			5,274,617
Stockholders' Equity
Preferred stock		-			-			-			-			-
Common stock		47,619			47,619			47,619			47,619			47,619
Capital surplus		170,138			169,557			170,206			170,942			170,300
Retained earnings		685,657			667,933			654,138			641,826			627,463
Cost of common stock in treasury		(209,644	)		(209,133	)		(194,819	)		(193,542	)		(183,303	)
Accumulated other comprehensive (loss) income:
Unrealized (loss) gain on securities available-for-sale		(141,997	)		(80,498	)		(41,229	)		17,745			20,878
Underfunded pension liability		(3,485	)		(3,485	)		(3,485	)		(3,485	)		(5,661	)
Total Accumulated Other Comprehensive (Loss) Income		(145,482	)		(83,983	)		(44,714	)		14,260			15,217
Total Stockholders' Equity		548,288			591,993			632,430			681,105			677,296
Total Liabilities and Stockholders' Equity	$	5,947,768		$	6,243,195		$	6,011,767		$	6,003,695		$	5,951,913
Regulatory Capital
Total CET 1 capital	$	582,213		$	564,158		$	565,048		$	555,532		$	550,426
Total tier 1 capital		582,213			564,158			565,048			555,532			550,426
Total risk-based capital		596,708			578,657			579,807			570,336			565,712
Total risk-weighted assets		3,679,511			3,558,249			3,492,920			3,453,893			3,417,020

CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
Commercial and industrial	$	375,735	$	360,481	$	337,384	$	346,184	$	353,046
1-4 Family		109,710		108,765		108,424		107,873		108,913
Hotels		355,001		337,910		314,902		311,315		297,341
Multi-family		186,440		203,856		209,359		215,677		215,307
Non Residential Non-Owner Occupied		569,369		551,240		637,092		639,818		664,365
Non Residential Owner Occupied		177,673		180,188		200,180		204,233		205,579
Commercial real estate (1)		1,398,193		1,381,959		1,469,957		1,478,916		1,491,505
Residential real estate (2)		1,678,770		1,651,005		1,588,860		1,548,965		1,506,572
Home equity		130,837		125,742		121,460		122,345		124,806
Consumer		41,902		44,580		39,778		40,901		43,296
DDA overdrafts		3,315		2,991		2,466		6,503		2,700
Gross Loans	$	3,628,752	$	3,566,758	$	3,559,905	$	3,543,814	$	3,521,925
Construction loans included in:
(1) - Commercial real estate loans	$	4,125	$	6,767	$	14,877	$	11,783	$	19,360
(2) - Residential real estate loans		19,333		18,751		16,253		17,252		19,059

CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information
(Unaudited) ($ in 000s)
	Three Months Ended																Nine Months Ended
	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021				September 30, 2022			September 30, 2021
Allowance for Credit Losses
Balance at beginning of period	$	17,015		$	17,280		$	18,166		$	18,751		$	20,016			$	18,166		$	24,549
Charge-offs:
Commercial and industrial		(411	)		-			(34	)		-			-				(445	)		(245	)
Commercial real estate		-			(24	)		-			(276	)		(392	)			(24	)		(2,111	)
Residential real estate		(93	)		(56	)		(50	)		(68	)		(18	)			(199	)		(197	)
Home equity		(71	)		(19	)		-			(58	)		(47	)			(90	)		(119	)
Consumer		(16	)		(9	)		(23	)		(13	)		(3	)			(48	)		(229	)
DDA overdrafts		(719	)		(604	)		(631	)		(635	)		(633	)			(1,954	)		(1,516	)
Total charge-offs		(1,310	)		(712	)		(738	)		(1,050	)		(1,093	)			(2,760	)		(4,417	)
Recoveries:
Commercial and industrial		149			32			59			31			69				240			140
Commercial real estate		9			25			53			27			18				87			197
Residential real estate		1			4			45			7			29				50			120
Home equity		2			3			17			6			58				22			84
Consumer		29			19			28			40			72				76			215
DDA overdrafts		383			364			406			354			307				1,153			1,028
Total recoveries		573			447			608			465			553				1,628			1,784
Net charge-offs		(737	)		(265	)		(130	)		(585	)		(540	)			(1,132	)		(2,633	)
Provision for (recovery of) credit losses		730			-			(756	)		-			(725	)			(26	)		(3,165	)
Balance at end of period	$	17,008		$	17,015		$	17,280		$	18,166		$	18,751			$	17,008		$	18,751
Loans outstanding	$	3,628,752		$	3,566,758		$	3,559,905		$	3,543,814		$	3,521,925
Allowance as a percent of loans outstanding		0.47	%		0.48	%		0.49	%		0.51	%		0.53	%
Allowance as a percent of non-performing loans		320.5	%		292.6	%		331.3	%		290.1	%		243.1	%
Average loans outstanding	$	3,596,523		$	3,559,713		$	3,527,393		$	3,522,272		$	3,535,497			$	3,561,463		$	3,553,966
Net charge-offs (annualized) as a percent of average loans outstanding		0.08	%		0.03	%		0.01	%		0.07	%		0.06	%			0.04	%		0.10	%
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, continued
(Unaudited) ($ in 000s)
	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Nonaccrual Loans
Residential real estate	$	2,089		$	1,561		$	1,786		$	2,809		$	3,634
Home equity		140			54			99			40			67
Commercial and industrial		785			1,360			1,069			996			531
Commercial real estate		2,293			2,783			2,241			2,373			3,355
Consumer		-			-			-			-			-
Total nonaccrual loans		5,307			5,758			5,195			6,218			7,587
Accruing loans past due 90 days or more		-			58			21			43			127
Total non-performing loans		5,307			5,816			5,216			6,261			7,714
Other real estate owned		1,071			946			1,099			1,319			1,335
Total non-performing assets	$	6,378		$	6,762		$	6,315		$	7,580		$	9,049
Non-performing assets as a percent of loans and other real estate owned		0.18	%		0.19	%		0.18	%		0.21	%		0.26	%
Past Due Loans
Residential real estate	$	3,452		$	5,298		$	4,976		$	5,321		$	5,258
Home equity		521			282			505			618			688
Commercial and industrial		221			130			56			336			455
Commercial real estate		221			46			744			22			441
Consumer		27			49			32			60			35
DDA overdrafts		561			430			392			489			390
Total past due loans	$	5,003		$	6,235		$	6,705		$	6,846		$	7,267
Total past due loans as a percent of loans outstanding		0.14	%		0.17	%		0.19	%		0.19	%		0.21	%
Troubled Debt Restructurings ("TDRs")
Residential real estate	$	15,657		$	16,022		$	16,182		$	16,943		$	16,910
Home equity		1,614			1,649			1,694			1,784			1,822
Commercial and industrial		354			381			397			414			430
Commercial real estate		104			107			1,890			1,914			1,937
Consumer		68			80			194			225			221
Total TDRs	$	17,797		$	18,239		$	20,357		$	21,280		$	21,320

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
	Three Months Ended
	September 30, 2022							June 30, 2022							September 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)	$	1,792,365		$	17,640	3.90	%	$	1,730,617		$	16,063	3.72	%	$	1,648,921		$	15,813	3.80	%
Commercial, financial, and agriculture (2)		1,759,567			20,092	4.53	%		1,785,511			16,421	3.69	%		1,836,604			17,344	3.75	%
Installment loans to individuals (2), (3)		44,591			683	6.08	%		43,585			631	5.81	%		49,972			714	5.67	%
Previously securitized loans (4)	***				78	***		***				93	***		***				91	***
Total loans		3,596,523			38,493	4.25	%		3,559,713			33,208	3.74	%		3,535,497			33,962	3.81	%
Securities:
Taxable		1,359,207			9,557	2.79	%		1,269,049			7,548	2.39	%		1,136,519			6,144	2.14	%
Tax-exempt (5)		215,219			1,555	2.87	%		215,603			1,526	2.84	%		245,551			1,590	2.57	%
Total securities		1,574,426			11,112	2.80	%		1,484,652			9,074	2.45	%		1,382,070			7,734	2.22	%
Deposits in depository institutions		289,460			1,529	2.10	%		441,239			781	0.71	%		544,843			196	0.14	%
Total interest-earning assets		5,460,409			51,134	3.72	%		5,485,604			43,063	3.15	%		5,462,410			41,892	3.04	%
Cash and due from banks		81,202							102,532							101,058
Premises and equipment, net		72,196							72,887							75,956
Goodwill and intangible assets		116,297							116,645							117,719
Other assets		278,527							256,354							220,420
Less: Allowance for credit losses		(17,224	)						(17,755	)						(20,407	)
Total assets	$	5,991,407						$	6,016,267						$	5,957,156
Liabilities:
Interest-bearing demand deposits	$	1,151,122		$	272	0.09	%	$	1,156,200		$	148	0.05	%	$	1,093,243		$	127	0.05	%
Savings deposits		1,431,591			358	0.10	%		1,430,121			182	0.05	%		1,315,462			169	0.05	%
Time deposits (2)		964,447			956	0.39	%		1,004,356			999	0.40	%		1,126,553			1,659	0.58	%
Short-term borrowings		270,310			440	0.65	%		288,031			123	0.17	%		282,722			115	0.16	%
Total interest-bearing liabilities		3,817,470			2,026	0.21	%		3,878,708			1,452	0.15	%		3,817,980			2,070	0.22	%
Noninterest-bearing demand deposits		1,455,123							1,435,256							1,356,745
Other liabilities		100,303							85,075							86,263
Stockholders' equity		618,511							617,228							696,168
Total liabilities and
stockholders' equity	$	5,991,407						$	6,016,267						$	5,957,156
Net interest income				$	49,108						$	41,611						$	39,822
Net yield on earning assets						3.57	%						3.04	%						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)				$	308						$	3						$	1,120
(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				$	64						$	77						$	154
Commercial, financial, and agriculture					103							118							265
Installment loans to individuals					7							15							21
Time deposits					21							21							48
				$	195						$	231						$	488
(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)
	Nine Months Ended
	September 30, 2022							September 30, 2021
	Average					Yield/		Average					Yield/
	Balance			Interest		Rate		Balance			Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,728,557		$	49,299	3.81	%	$	1,669,324		$	48,801	3.91	%
Commercial, financial, and agriculture (2)		1,788,784			52,044	3.89	%		1,833,744			50,044	3.65	%
Installment loans to individuals (2), (3)		44,122			1,921	5.82	%		50,898			2,140	5.62	%
Previously securitized loans (4)	***				311	***		***				414	***
Total loans		3,561,463			103,575	3.89	%		3,553,966			101,399	3.81	%
Securities:
Taxable		1,279,086			23,327	2.44	%		1,043,269			17,318	2.22	%
Tax-exempt (5)		221,035			4,620	2.79	%		243,146			4,811	2.65	%
Total securities		1,500,121			27,947	2.49	%		1,286,415			22,129	2.30	%
Deposits in depository institutions		422,714			2,549	0.81	%		562,272			474	0.11	%
Total interest-earning assets		5,484,298			134,071	3.27	%		5,402,653			124,002	3.07	%
Cash and due from banks		95,105							91,073
Premises and equipment, net		72,964							76,481
Goodwill and intangible assets		116,643							118,084
Other assets		251,071							214,872
Less: Allowance for credit losses		(17,807	)						(22,989	)
Total assets	$	6,002,274						$	5,880,174
Liabilities:
Interest-bearing demand deposits	$	1,149,899		$	550	0.06	%	$	1,057,452		$	373	0.05	%
Savings deposits		1,415,563			715	0.07	%		1,275,211			516	0.05	%
Time deposits (2)		1,005,356			3,168	0.42	%		1,181,166			6,806	0.77	%
Short-term borrowings		278,211			677	0.33	%		292,845			357	0.16	%
Total interest-bearing liabilities		3,849,029			5,110	0.18	%		3,806,674			8,052	0.28	%
Noninterest-bearing demand deposits		1,429,887							1,289,247
Other liabilities		86,585							82,953
Stockholders' equity		636,773							701,300
Total liabilities and
stockholders' equity	$	6,002,274						$	5,880,174
Net interest income				$	128,961						$	115,950
Net yield on earning assets						3.14	%						2.87	%
(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)				$	609						$	2,443
(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				$	231						$	472
Commercial, financial, and agriculture					507							956
Installment loans to individuals					41							72
Time deposits					62							145
				$	841						$	1,645
(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																Nine Months Ended
	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021				September 30, 2022			September 30, 2021
Net Interest Income/Margin
Net interest income ("GAAP")	$	48,782		$	41,290		$	37,916		$	40,631		$	39,488			$	127,991		$	114,942
Taxable equivalent adjustment		326			321			323			325			334				970			1,008
Net interest income, fully taxable equivalent	$	49,108		$	41,611		$	38,239		$	40,956		$	39,822			$	128,961		$	115,950
Average interest earning assets	$	5,460,409		$	5,485,604		$	5,507,397		$	5,521,386		$	5,462,410			$	5,484,298		$	5,402,653
Net Interest Margin		3.57	%		3.04	%		2.82	%		2.94	%		2.89	%			3.14	%		2.87	%
Accretion related to fair value adjustments		-0.01	%		-0.02	%		-0.03	%		-0.03	%		-0.04	%			-0.02	%		-0.04	%
Net Interest Margin (excluding accretion)		3.56	%		3.02	%		2.79	%		2.91	%		2.85	%			3.12	%		2.83	%
Tangible Equity Ratio (period end)
Equity to assets ("GAAP")		9.22	%		9.48	%		10.52	%		11.34	%		11.37	%
Effect of goodwill and other intangibles, net		-1.81	%		-1.72	%		-1.77	%		-1.76	%		-1.78	%
Tangible common equity to tangible assets		7.41	%		7.76	%		8.75	%		9.58	%		9.59	%

 

Contacts

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