City Holding(CHCO) - 2025 Q3 - Quarterly Results

Executive Summary Record Quarterly Results City Holding Company reported record Q3 2025 net income of $35.2 million and diluted EPS of $2.41, driven by strong loan growth and higher net interest income Q3 2025 Key Financial Metrics | Metric | Value | | :-------------------------- | :---------- | | Net Income | $35.2 million | | Diluted EPS | $2.41 | | Return on Assets (ROA) | 2.11% | | Return on Tangible Equity | 22.5% | Financial Performance Analysis (Quarterly) Net Interest Income Net interest income increased by $2.2 million (3.7%) to $61.1 million in Q3 2025, driven by higher loan yields, increased average loans, and reduced liability costs Net Interest Income & Margin Trends (QoQ) | Metric | Q3 2025 | Q2 2025 | Change (QoQ) | | :-------------------------- | :---------- | :---------- | :----------- | | Net Interest Income | $61.1 million | $58.9 million | +$2.2 million (3.7%) | | Tax Equivalent Net Interest Income | $61.3 million | $59.1 million | +$2.2 million (3.7%) | | Net Interest Margin | 4.04% | 3.95% | +0.09% | - Increase in yield on loans (8 basis points) and average loans outstanding ($68.1 million) contributed $1.0 million each to net interest income. A decrease in the cost of interest-bearing liabilities (3 basis points) added $0.3 million[3] Credit Quality Credit quality remained stable in Q3 2025, with nonperforming assets at 0.32% of total loans and a $0.5 million recovery of credit losses Credit Quality Metrics | Metric | Sep 30, 2025 | Jun 30, 2025 | | :---------------------------------------- | :----------- | :----------- | | Nonperforming Assets to Total Loans & OREO | 0.32% | 0.33% | | Total Nonperforming Assets | $14.3 million | $14.2 million | | Total Past Due Loans | $8.3 million | $8.0 million | | Past Due Loans as % of Total Loans | 0.19% | 0.18% | Credit Loss (Recovery)/Provision | Period | Amount |\n| :----------------- | :----------- | | Q3 2025 | $(0.5) million (Recovery) | | Q2 2025 | $(2.0) million (Recovery) | | Q3 2024 | $1.2 million (Provision) | Non-Interest Income Non-interest income for Q3 2025 was $20.2 million, consistent year-over-year, with service fee and wealth management increases offsetting lower bank-owned life insurance income Non-Interest Income (YoY) | Metric | Q3 2025 | Q3 2024 | Change (YoY) | | :---------------------------------------- | :---------- | :---------- | :----------- | | Total Non-Interest Income | $20.2 million | $20.3 million | -$0.1 million | | Unrealized Fair Value Gains (Equity Securities) | $0.1 million | $0.4 million | -$0.3 million | | Non-Interest Income (exclusive of gains) | $20.0 million | $20.0 million | Consistent | - Service fees increased by $0.3 million (4.3%) and wealth and investment management fee income increased by $0.2 million (5.2%). These were offset by a $0.5 million decrease in bank-owned life insurance due to death benefit proceeds in Q3 2024[7] Non-Interest Expenses Non-interest expenses increased slightly by $0.3 million (0.7%) year-over-year, driven by higher salaries and tax-related matters, partially offset by reduced advertising Non-Interest Expenses (YoY) | Metric | Q3 2025 | Q3 2024 | Change (YoY) | | :-------------------------- | :---------- | :---------- | :----------- | | Total Non-Interest Expenses | $37.9 million | $37.6 million | +$0.3 million (0.7%) | - Increases in salaries and employee benefits ($0.5 million) and other tax-related matters ($0.3 million) were partially offset by lower advertising ($0.4 million) and other expenses ($0.3 million)[8] Income Tax Expense The effective income tax rate for Q3 2025 remained consistent at 19.7% compared to the prior year - Effective income tax rate for Q3 2025 was 19.7%, consistent with Q3 2024[11] Balance Sheet Overview Balance Sheet Trends Gross loans increased by $73.6 million (1.7%) to $4.41 billion at September 30, 2025, with broad growth, while period-end deposit balances rose slightly by 0.2% Loan Growth (QoQ) | Loan Type | Increase (QoQ) | Percentage Change | | :------------------------ | :------------- | :---------------- | | Gross Loans (Total) | $73.6 million | 1.7% | | Residential Real Estate | $25.3 million | 1.3% | | Commercial Real Estate | $24.1 million | 1.4% | | Commercial and Industrial | $17.3 million | 4.2% | | Home Equity | $10.8 million | 5.2% | - Period-end deposit balances increased $8.8 million (0.2%) from June 30, 2025, to September 30, 2025. Total average depository balances remained flat QoQ, with increases in average time deposit and noninterest-bearing demand deposit balances offset by decreases in average interest-bearing demand and savings deposit balances[10] Capitalization and Liquidity City Holding Company maintained strong capitalization with a 9.8% tangible equity ratio and $1.7 billion in borrowing capacity, exceeding 'well capitalized' regulatory levels Key Capital & Liquidity Metrics (Sep 30, 2025) | Metric | Value | | :---------------------------------------- | :---------- | | Gross Loan to Deposit Ratio | 83.9% | | Gross Loan to Asset Ratio | 66.2% | | Investment Securities as % of Assets | 23.1% | | Tangible Equity | $641 million | | Tangible Equity Ratio | 9.8% | | City National Bank Leverage Ratio | 10.2% | | City National Bank Common Equity Tier I Ratio | 15.8% | | City National Bank Total Risk-Based Capital Ratio | 16.3% | - City National Bank had the capacity to borrow an additional $1.7 billion from existing borrowing facilities and approximately $815 million of investment securities were unpledged[13][14] Shareholder Information Dividends and Share Repurchases The Board approved a quarterly cash dividend of $0.87 per share, a 10.0% increase, with $54 million cash and $100 million in available dividends for repurchases - Quarterly cash dividend of $0.87 per share approved, a 10.0% increase from the prior $0.79 per share dividend[16] Resources for Share Repurchases (Sep 30, 2025) | Resource | Amount | | :---------------------------------------- | :----------- | | Cash Balance | $54 million | | Dividends Available from City National (YTD) | $100 million | Forward-Looking Statements This section outlines forward-looking statements, subject to inherent uncertainties, risks, and changes in circumstances beyond management's control, as detailed in the Form 10-K - Forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstances, many of which are outside of management's control[17] - Factors that could cause actual results to differ include general economic conditions, credit risk, changes in the real estate market, interest rate environment, operational risk (including cybersecurity), increased competition, and changes in regulations and government policies[17] - The Company undertakes no obligation to update any forward-looking statement and will evaluate subsequent events through the filing of its September 30, 2025 Form 10-Q[18] Financial Tables and Supplementary Data Financial Highlights This section summarizes key financial performance indicators, including earnings, per share data, market information, and critical ratios for various periods Selected Financial Highlights ($ in thousands) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :---------------------------------------- | :----------- | :----------- | :----------- | | Net Interest Income (fully taxable equivalent) | $61,294 | $59,116 | $55,823 | | Net Income available to common shareholders | $35,188 | $33,387 | $29,809 | | Diluted Earnings per share | $2.41 | $2.29 | $2.02 | | Cash dividends declared | $0.87 | $0.79 | $0.79 | | Return on average assets | 2.11% | 2.03% | 1.87% | | Net Interest Margin | 4.04% | 3.95% | 3.87% | | Tangible equity to tangible assets | 9.84% | 9.40% | 9.26% | Consolidated Statements of Income This table presents unaudited consolidated statements of income, detailing interest income and expense, net interest income, credit loss provisions, and net income for various periods Consolidated Statements of Income (Selected Data, $ in thousands) | Metric | Q3 2025 | Q2 2025 | Q3 2024 | YTD 2025 | YTD 2024 | | :---------------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Total Interest Income | $82,090 | $80,291 | $78,051 | $239,769 | $227,609 | | Total Interest Expense | $20,983 | $21,367 | $22,446 | $63,923 | $62,952 | | Net Interest Income | $61,107 | $58,924 | $55,605 | $175,846 | $164,657 | | (Recovery of) Provision for credit losses | $(500) | $(2,000) | $1,200 | $(2,500) | $1,520 | | Total Non-Interest Income | $20,154 | $19,236 | $20,348 | $58,127 | $57,207 | | Total Non-Interest Expense | $37,915 | $38,999 | $37,638 | $114,549 | $110,310 | | Net Income Available to Common Shareholders | $35,188 | $33,387 | $29,809 | $98,917 | $88,447 | Consolidated Balance Sheets This table provides unaudited consolidated balance sheets, presenting assets, liabilities, and stockholders' equity at September 30, 2025, and prior period-ends Consolidated Balance Sheets (Selected Data, $ in thousands) | Metric | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | | :---------------------------------------- | :----------- | :----------- | :----------- | | Total Assets | $6,667,632 | $6,598,137 | $6,459,459 | | Gross loans | $4,412,775 | $4,339,196 | $4,274,776 | | Total deposits | $5,257,592 | $5,248,820 | $5,144,150 | | Total Liabilities | $5,868,689 | $5,833,922 | $5,728,795 | | Total Stockholders' Equity | $798,943 | $764,215 | $730,664 | | Total CET 1 capital | $726,739 | $702,729 | $688,707 | Loan Portfolio Details This table details the Company's gross loan portfolio by category at various period-ends, including commercial, residential, home equity, consumer, and DDA overdrafts Gross Loan Portfolio by Type ($ in thousands, Sep 30, 2025) | Loan Type | Amount | | :------------------------ | :----------- | | Commercial and industrial | $426,654 | | Commercial real estate | $1,802,979 | | Residential real estate | $1,909,791 | | Home equity | $218,750 | | Consumer | $50,056 | | DDA overdrafts | $4,545 | | Gross Loans Total | $4,412,775 | Asset Quality Information This section provides detailed asset quality metrics, including allowance for loan losses, charge-offs, recoveries, nonaccrual loans, past due loans, and total non-performing assets for various periods Asset Quality Metrics (Selected Data, $ in thousands) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :---------------------------------------- | :----------- | :----------- | :----------- | | Allowance for Loan Losses (End of Period) | $19,658 | $19,724 | $21,832 | | Net recoveries (charge-offs) | $434 | $55 | $(2,056) | | Total Non-Performing Assets | $14,277 | $14,248 | $16,198 | | Non-performing assets as % of loans and OREO | 0.32% | 0.33% | 0.39% | | Total Past Due Loans | $8,289 | $7,986 | $11,319 | Average Balance Sheets, Yields, and Rates (Quarterly) This table presents average balances, interest income/expense, and corresponding yields/rates for interest-earning assets and interest-bearing liabilities for Q3 2025 and comparable periods Average Balance Sheets, Yields, and Rates (Q3 2025, $ in thousands) | Metric | Average Balance | Interest | Yield/Rate | | :---------------------------------------- | :-------------- | :------- | :--------- | | Total loans | $4,378,342 | $64,606 | 5.85% | | Total interest-earning assets | $6,016,678 | $82,277 | 5.43% | | Total interest-bearing liabilities | $4,360,055 | $20,983 | 1.91% | | Net Interest Income | | $61,294 | | | Net Yield on Earning Assets | | | 4.04% | - Yield on interest earning assets was 5.43% in Q3 2025, up from 5.38% in Q2 2025. Cost of interest bearing liabilities decreased to 1.91% in Q3 2025 from 1.95% in Q2 2025[29] Average Balance Sheets, Yields, and Rates (Nine Months) This table presents average balances, interest income/expense, and corresponding yields/rates for interest-earning assets and interest-bearing liabilities for the nine months ended September 30, 2025, and 2024 Average Balance Sheets, Yields, and Rates (YTD Q3 2025, $ in thousands) | Metric | Average Balance | Interest | Yield/Rate | | :---------------------------------------- | :-------------- | :------- | :--------- | | Total loans | $4,327,432 | $188,111 | 5.81% | | Total interest-earning assets | $5,976,923 | $240,339 | 5.38% | | Total interest-bearing liabilities | $4,355,580 | $63,923 | 1.96% | | Net Interest Income | | $176,416 | | | Net Yield on Earning Assets | | | 3.95% | - For the nine months ended September 30, 2025, the yield on interest earning assets was 5.38%, consistent with the prior year, while the cost of interest bearing liabilities decreased to 1.96% from 2.03%[32] Non-GAAP Reconciliations This section provides reconciliations for non-GAAP financial measures, including net interest income (fully taxable equivalent) and the tangible common equity to tangible assets ratio Tangible Equity Ratio Reconciliation (Sep 30, 2025) | Metric | Value | | :---------------------------------------- | :------ | | Equity to assets ("GAAP") | 11.98% | | Effect of goodwill and other intangibles, net | (2.14%) | | Tangible common equity to tangible assets | 9.84% | Commercial Loan Information This table details the commercial loan portfolio by sector, including total outstanding amount, percentage of total loans, average Debt Service Coverage (DSC), and average Loan-to-Value (LTV) ratios Commercial Loan Information (Sep 30, 2025, $ in thousands) | Commercial Sector | Total | % of Total Loans | Average DSC | Average LTV | | :-------------------------------------- | :------- | :--------------- | :---------- | :---------- | | Lessors of Residential Buildings & Dwellings | $495,937 | 11.27% | 1.64 | 67% | | Lessors of Nonresidential Buildings | $606,257 | 13.78% | 1.42 | 65% | | Hotels & Motels | $397,755 | 9.04% | 1.77 | 67% | Estimated Uninsured Deposits This table presents management's estimate of uninsured deposits by type (noninterest-bearing, interest-bearing demand, savings, and time deposits) for September 30, 2025, and June 30, 2025 Estimated Uninsured Deposits by Deposit Type | Deposit Type | Sep 30, 2025 | Jun 30, 2025 | | :-------------------------------- | :----------- | :----------- | | Noninterest-Bearing Demand Deposits | 17% | 16% | | Interest-Bearing Demand Deposits | 15% | 14% | | Savings Deposits | 13% | 12% | | Time Deposits | 17% | 17% | | Total Deposits | 15% | 15% | Net Growth in DDA Accounts This table illustrates the net growth in DDA (Demand Deposit Account) accounts annually from 2018 to 2025, showing new accounts, net new accounts, and percentage growth Net Growth in DDA Accounts | Year | New DDA Accounts | Net Number of New Accounts | Percentage | | :--- | :--------------- | :------------------------- | :--------- | | 2025 | 24,379 | 3,763 | 1.4% | | 2024 | 32,238 | 4,497 | 1.8% | | 2023*| 31,745 | 4,768 | 1.9% |