City Holding Company Announces Record Quarterly Results

City Holding Company ("Company" or "City") (NASDAQ:CHCO), a $6.7 billion bank holding company headquartered in Charleston, West Virginia, today announced record quarterly net income of $35.2 million and diluted earnings of $2.41 per share for the quarter ended September 30, 2025, driven by strong loan growth, higher net interest income, and continued credit quality stability. In the third quarter of 2025, the Company achieved a return on assets of 2.11% and a return on tangible equity of 22.5%.

Net Interest Income

The Company's net interest income increased approximately $2.2 million, or 3.7%, from $58.9 million during the second quarter of 2025 to $61.1 million during the third quarter of 2025. The Company's tax equivalent net interest income increased $2.2 million, or 3.7%, from $59.1 million for the second quarter of 2025 to $61.3 million for the third quarter of 2025. This increase was primarily due to an increase in the yield on loans (8 basis points) and an increase in average loans outstanding ($68.1 million), which increased net interest income by $1.0 million and $1.0 million, respectively. In addition, net interest income increased $0.4 million due to an increase in the yield on investments (9 basis points), and by $0.3 million due to a decrease in the cost of interest bearing liabilities (3 basis points). These increases were partially offset by a decrease in the average balance of deposits in depository institutions ($72.7 million) which decreased net interest income by $0.8 million. The Company's reported net interest margin increased from 3.95% for the second quarter of 2025 to 4.04% for the third quarter of 2025.

Credit Quality

The Company's ratio of nonperforming assets to total loans and other real estate owned remained stable at 0.32%, or $14.3 million, at September 30, 2025 compared to 0.33%, or $14.2 million, at June 30, 2025. Total past due loans increased slightly from $8.0 million, or 0.18% of total loans outstanding, at June 30, 2025, to $8.3 million, or 0.19% of total loans outstanding at September 30, 2025.

As a result of the Company's quarterly analysis of the adequacy of the allowance for credit losses, the Company recorded a recovery of credit losses of $0.5 million in the third quarter of 2025, compared to a provision for credit losses of $1.2 million for the comparable period in 2024, and a recovery of credit losses of $2.0 million for the second quarter of 2025. The recovery of credit losses in the third quarter was primarily related to net recoveries of $0.4 million for the quarter ended September 30, 2025.

Non-interest Income

Non-interest income was $20.2 million during the quarter ended September 30, 2025, as compared to $20.3 million during the quarter ended September 30, 2024. During the third quarter of 2025, the Company reported $0.1 million of unrealized fair value gains on the Company's equity securities, as compared to $0.4 million of unrealized fair value gains on the Company's equity securities during the third quarter of 2024.

Exclusive of these items, non-interest income remained consistent at $20.0 million for both the third quarter of 2024 and the third quarter of 2025. Increases of $0.3 million (4.3%) in service fees and $0.2 million (5.2%) in wealth and investment management fee income were essentially offset by lower bank owned life insurance (due to death benefit proceeds in the third quarter of 2024) of $0.5 million.

Non-interest Expenses

Non-interest expenses increased $0.3 million, or 0.7%, from $37.6 million in the third quarter of 2024 to $37.9. million in the third quarter of 2025. This increase was largely due to an increase in salaries and employee benefits of $0.5 million and an increase of $0.3 million in other tax-related matters. These increases were partially offset by lower advertising $0.4 million and other expenses $0.3 million.

Balance Sheet Trends

Gross loans increased $73.6 million (1.7%) from June 30, 2025 to $4.41 billion at September 30, 2025. Residential real estate loans increased $25.3 million (1.3%), commercial real estate loans increased $24.1 million (1.4%), commercial and industrial loans increased $17.3 million (4.2%), and home equity loans increased $10.8 million (5.2%) during the quarter ended September 30, 2025.

Period-end deposit balances increased $8.8 million, or 0.2%, from June 30, 2025, to September 30, 2025. Total average depository balances remained flat from the quarter ended June 30, 2025 to the quarter ended September 30, 2025. Increases in average time deposit balances of $11.6 million and average noninterest-bearing demand deposit balances of $11.0 million were essentially offset by decreases in average interest bearing demand deposits of $14.3 million and average savings deposit balances of $6.3 million.

Income Tax Expense

The Company's effective income tax rate for the third quarter of 2025 was 19.7% compared to 19.0% for the year ended December 31, 2024 and 19.7% for the quarter ended September 30, 2024.

Capitalization and Liquidity

The Company's gross loan to deposit ratio was 83.9% and its gross loan to asset ratio was 66.2% at September 30, 2025. The Company maintained investment securities totaling 23.1% of assets as of the same date. The Company's deposit mix is weighted heavily toward checking and saving accounts, which funded 58.7% of assets at September 30, 2025. Time deposits funded 19.5% of assets at September 30, 2025, with only 14.9% of time deposits having balances of more than $250,000, reflecting the core retail orientation of the Company.

City Holding Company is the parent company of City National Bank of West Virginia ("City National"). City National has borrowing facilities with the Federal Reserve Bank and the Federal Home Loan Bank that can be accessed as necessary to fund operations and to provide contingency funding. These borrowing facilities are collateralized by various loans held on City National's balance sheet. As of September 30, 2025, City National had the capacity to borrow an additional $1.7 billion from these existing borrowing facilities. In addition, approximately $725 million of City National's investment securities were pledged to collateralize customer repurchase agreements and various deposit accounts, leaving approximately $815 million of City National's investment securities unpledged at September 30, 2025.

The Company continues to be strongly capitalized with tangible equity of $641 million at September 30, 2025. The Company's tangible equity ratio increased from 9.1% at December 31, 2024 to 9.8% at September 30, 2025. At September 30, 2025, City National's Leverage Ratio was 10.2%, its Common Equity Tier I ratio was 15.8%, its Tier I Capital ratio was 15.8%, and its Total Risk-Based Capital ratio was 16.3%. These regulatory capital ratios are significantly above levels required to be considered "well capitalized," which is the highest possible regulatory designation.

On September 24, 2025, the Board of Directors of the Company approved a quarterly cash dividend of $0.87 per share, payable October 31, 2025 to shareholders of record as of October 15, 2025. This represents a 10.0% increase from the $0.79 per share dividend paid on July 31, 2025. At September 30, 2025, City Holding Company had significant resources available to repurchase shares with a cash balance of $54 million and dividends available from City National of $100 million through the nine months ended September 30, 2025. The parent company's annual expenditures are approximately $50 million (based on the Company's operating expenses, contractual obligations and current quarterly dividend of $0.87 per share)

City National operates 96 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, 2024 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) 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; (3) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (4) changes in the interest rate environment; (5) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (6) changes in technology and increased competition, including competition from non-bank financial institutions; (7) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers' performance and creditworthiness; (8) difficulty growing loan and deposit balances; (9) our ability to effectively execute our business plan, including with respect to future acquisitions; (10) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries, including changes in deposit insurance premiums; (11) 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; (12) regulatory enforcement actions and adverse legal actions; (13) difficulty attracting and retaining key employees; and (14) 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, 2025 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary September 30, 2025 results and will adjust the amounts if necessary.