CITY HOLDING CO

CITY HOLDING CO Annual Report – A Comprehensive Review for Investors

This summary provides an in-depth look at CITY HOLDING CO's performance and strategic direction, drawn from its latest 10-K filing. We focus primarily on the fiscal year ending December 31, 2025, exploring key financial indicators, operational strengths, and potential risks to help you understand the company's health and future prospects.

Key Financial Highlights for 2025

CITY HOLDING CO showed strong financial indicators in 2025, characterized by asset growth and a solid capital position.

• Total Assets: Grew to $7.5 billion by the end of 2025, demonstrating overall expansion.
• Total Deposits: Increased to $6.2 billion, reflecting strong customer relationships and stable funding.
• Capital Ratios: The company maintained strong capital ratios, including a Common Equity Tier 1 (CET1) ratio of 13.5%, well above regulatory minimums and signaling financial resilience.

Building Financial Strength & Shareholder Value

CITY HOLDING CO consistently strengthened its financial foundation. Retained earnings—profits reinvested back into the business—showed steady growth: from $875.4 million at the end of 2022, to $926.9 million in 2023, $978.4 million in 2024, and reaching $1.03 billion by the end of 2025. This consistent growth highlights the company's ability to generate and retain earnings, supporting future expansion.

The company maintains a robust liquidity position through a diversified funding base, access to wholesale funding markets, and a strong cash and investment securities portfolio, ensuring its ability to meet financial obligations and support lending activities.

CITY HOLDING CO also delivered shareholder value through its dividend policy.

Expanding Our Operational Footprint & Strategic Growth (Business Overview)

CITY HOLDING CO operates primarily through its City National Bank brand, maintaining a significant physical presence alongside growing digital banking services. As of the end of 2025, the bank operated 130 branches across four states:

• West Virginia: 71 branches
• Kentucky: 20 branches
• Virginia: 20 branches
• Ohio: 19 branches

In a key strategic move, the company acquired Citizens Commerce Bancshares Inc. in March 2023. This acquisition expanded CITY HOLDING CO's market share and diversified its revenue streams, adding approximately $322.6 million in assets and $274.3 million in core deposits. This integration positively contributed to the company's overall growth and profitability in 2025.

A Closer Look at the Loan Portfolio

Lending is a core banking activity, and CITY HOLDING CO's loan portfolio demonstrates its commitment to serving both businesses and individuals. As of December 31, 2025, total loans not past due reached $5.86 billion, a modest increase from $5.84 billion in 2024. Here's a breakdown:

• Commercial Loans: Grew from $1.45 billion in 2024 to $1.48 billion in 2025, making up approximately 25.3% of the total portfolio.
• Commercial Real Estate (CRE) Loans: These loans, totaling $2.47 billion (or 42.2% of the portfolio), cover properties like hotels and multi-family housing.
• Residential Real Estate Loans: Amounting to $1.51 billion (or 25.8%), primarily for home mortgages.
• Home Equity Loans: $105.1 million, or 1.8%.
• Consumer Loans: $305.1 million, or 5.2%, for personal use.
• Demand Deposit Account Overdrafts: A smaller category at $5.1 million, or 0.1%.

The company maintained a competitive Net Interest Margin (NIM)—a key measure of lending profitability—reflecting effective management of interest-earning assets and interest-bearing liabilities.

Managing Loan Quality and Risk (Risk Factors)

Strong loan quality is paramount for a bank. While some loans inevitably become past due, CITY HOLDING CO actively monitors and manages this risk. Loans past due totaled $17.3 million (approximately 0.29% of the total loan portfolio) at year-end 2025. This breaks down as:

• $10.1 million (30-59 days past due)
• $5.1 million (60-89 days past due)
• $2.1 million (90 days or more past due)

To proactively address potential credit losses, the company maintains an Allowance for Credit Losses (ACL)—a reserve set aside to cover estimated future loan losses. The Provision for Credit Losses represents the amount added to this reserve during the year, based on economic forecasts and portfolio analysis.

CITY HOLDING CO also offers various loan modifications, such as payment deferrals and term extensions, to assist borrowers facing temporary financial hardship. This proactive approach mitigates defaults and supports customer retention.

Beyond credit risk, the company actively manages other significant areas of risk:

• Interest Rate Risk: Impact of fluctuating interest rates on net interest income.
• Liquidity Risk: Ensuring sufficient funds to meet obligations.
• Operational Risk: Risks associated with internal processes, systems, and people.
• Cybersecurity Risk: Protecting sensitive customer data and systems from cyber threats.
• Regulatory Risk: Adhering to an evolving landscape of banking regulations.
• Economic Risk: Sensitivity to regional and national economic downturns.

Competitive Position

CITY HOLDING CO operates within a highly competitive regional banking environment. It competes with national, regional, and community banks, credit unions, and non-bank financial service providers. Key competitive strengths include:

• Strong Community Ties: Deep-rooted relationships within its primary markets.
• Customer-Centric Service: Personalized service, differentiating it from larger institutions.
• Strategic Branch Network: A well-established physical presence, complemented by digital offerings.
• Diversified Loan Portfolio: Serving a broad range of commercial and retail clients.
• Prudent Management: A history of sound financial management and risk control.

Factors influencing the company's ability to attract and retain customers, grow its loan and deposit base, and maintain profitability include interest rate levels, economic conditions, regulatory changes, and the competitive landscape for banking products and services.

Strategic Outlook & Future Growth (Future Outlook)

Looking ahead, CITY HOLDING CO focuses on several strategic priorities to drive sustainable growth and enhance shareholder value. These include:

• Organic Growth: Expand its customer base and loan portfolio within existing markets.
• Digital Transformation: Invest in technology to enhance customer experience and operational efficiency.
• Prudent Risk Management: Maintain a disciplined approach to credit underwriting and overall risk mitigation.
• Operational Efficiency: Optimize processes to control costs and improve profitability.
• Potential Strategic Acquisitions: Evaluate opportunities that align with its growth strategy and market expansion goals.

Management anticipates a continued focus on deposit gathering, disciplined lending, and expense management to navigate the evolving economic and interest rate environment.

Conclusion

CITY HOLDING CO concluded 2025 with strong financial results, a growing operational footprint, and a well-managed loan portfolio. Its consistent growth in retained earnings, robust capital position, and strategic expansion efforts position it as a stable regional bank. While facing inherent risks common to the banking industry, the company's proactive risk management and clear strategic vision demonstrate a commitment to long-term value creation for its investors.