CHCO 10-K & 10-Q changes, risk factors and insider trading

While the economic and business environments in West Virginia, Kentucky, Virginia and southeastern Ohio have shown resilience, there can be no assurance that such resilience and improvement will continue or that the economies in the Company’s market areas, or the United States as a whole, will not slip into a recession. A lack of continued economic improvement or economic recession could adversely affect the Company’s results of operation and financial condition. An economic slowdownslowdown, or an increase in joblessness, whether caused by general economic conditions or the rise of alternative technologies replacing members of the workforce, could have the following consequences:

The oil, natural gas and coal industries, and businesses ancillary thereto, play an important role in the economies of West Virginia, Kentucky, Virginia and southeastern Ohio. Historic, and ongoing, volatility in oil and gas prices has negatively impacted oil and gas and other businesses in the Company’s market areas. Additionally, the coal industry continueshas tohistorically bebeen in decline as a result of increased environmental and safety regulatory burden, increased competition from alternative energy sources and a decline in demand for coal. The Company has limited direct exposure to coal industry specific loans. Prolonged low oil and gas prices, and continued decline in the coal industry, could result in downward pressure on businesses in the Company’s market area which could negatively affect City National’s customers (both individuals and businesses). As a result, the Company’s operating results and financial condition could be negatively impacted.

The Company’s customers may default on the repayment of loans, which may negatively impact the Company’s earnings due to loss of principal and interest income. Increased operating expenses may result from management's allocation of time and resources to the collection and work-out of the loan. Collection efforts may or may not be successful causing the Company to write off the loan or repossess the collateral securing the loan, which may or may not exceed the balance of the loan. The Company may experience fluctuations in its default rate driven by general economic conditions, or by increases in technology that lead to cross-industry, widespread job displacement. To the extent the Company’s customers are impacted by these conditions, the default rate could accelerate.

Changes in monetary policy, including changes in interest rates, could influence not only the interest income the Company receives on loans and securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) the Company’s ability to originate loans and obtain deposits, (ii) the fair value of the Company’s financial assets and liabilities, and (iii) the average duration of the Company’s mortgage-backed securities portfolio. The Company’s earnings and cash flows are largely dependent upon its net interest income. Net interest income is the difference between interest income earned on interest-earning assets, such as loans and securities, and interest expense paid on interest-bearing liabilities, such as deposits and borrowed funds. Interest rates are highly sensitive to many factors that are beyond the Company’s control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Board of Governors of the Federal Reserve System. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, the Company’s net interest income, and therefore its earnings and net profit, could be adversely affected. Earnings also could be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings. Changes in interest rates may also negatively affect the ability of the Company's borrowers to repay their loans, particularly as interest rates rise and adjustable-rate loans become more expensive.

Although the Company’s common stock is listed for trading on the NASDAQ Global Select Market, the trading volume in its common stock is less than that of some other financial services companies. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of the Company’s common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which the Company has no control. Given the lower trading volume of the Company’s common stock, significant sales of the Company’s common stock, or the expectation of these sales, could cause the Company’s stock price to fall.

Neither the FDIC nor any other governmental agency insures the shares of the Company’s common stock. Therefore, the value of common stock of the Company will be based on market value and may decline.fluctuate.

Consumers may decide not to use banks to complete their financial transactions or invest or deposit their funds. Technology and other changes, including the emergence of fin-tech companies are allowing parties to complete financial transactions through alternative methods that historically have involved banks. For example, consumers can pay bills and transfer funds directly without the assistance of banks. In addition, the emergence, adoption, and evolution of new technologies that do not require intermediation, including distributed ledgers such as digital assets and blockchain, as well as advances in automation, artificial intelligence, and robotics, could significantly affect the competition for financial services. The process of eliminating banks as intermediaries, known as "disintermediation," could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost of deposits as a source of funds could have a material adverse effect on our financial condition and results of operations. Furthermore, some of the Company's non-bank competitors are not subject to the same regulations that the Company is and, therefore, may have greater flexibility in competing for business.

A significant portion of the business conducted in the Company's trustwealth and investment management division involves the Company assuming the special role of a fiduciary to its customers and to the beneficiaries of its customers' assets. Customers or beneficiaries could make claims and take legal action relating to the Company’s fiduciary activities. Whether such claims and legal action related to the Company's performance of its fiduciary responsibilities are founded or unfounded, if such matters are not resolved in a manner favorable to the Company, they may result in significant financial liability. Furthermore, the mere existence of a claim or legal action related to the Company’s fiduciary activities could adversely affect the Company’s reputation among customers and prospective customers. Any financial liability or reputation damage could have a material adverse effect on the Company’s business, which, in turn, could have a material adverse effect on its financial condition and results of operations.

The Company’s business, as well as the operations and activities of its customers, could be negatively impacted by climate change. Climate change presents both immediate and long-term risks to the Company and its customers, and these risks are expected to increase over time. Climate change presents multi-faceted risks, including: operational risk from the physical effects of climate events on the Company and its customers’ facilities and other assets; credit risk from borrowers with significant exposure to climate risk; transition risks associated with the transition to a less carbon-dependent economy; and reputational risk from stakeholder concerns about the Company’s practices related to climate change, the Company’s carbon footprint, and the Company’s business relationships with clients who operate in carbon-intensive industries. The Company’s success depends on its relationships with customers and general economic conditions. Because the Company’s customer base is geographically concentrated in West Virginia, Kentucky, Virginia, and southeastern Ohio, if the customers in those geographies are physically impacted by climate change, the Company may be financially impacted as well. In addition, an economic transition to mitigate climate change on a broader scale could have a negative or destabilizing impact on the general economic conditions of the country, which could also have a negative impact on the financial outcomes of the Company.

City Holding Company (the "Company"), a West Virginia corporation headquartered in Charleston, West Virginia, is a registered financial holding company under the Bank Holding Company Act and conducts its principal activities through its wholly owned subsidiary, City National Bank of West Virginia ("City National"). City National is a retail and consumer-oriented community bank with 9796 bank branches in West Virginia (58), Kentucky (22), Virginia (13) and southeastern Ohio (43). City National provides credit, deposit, and trustwealth and investment management services to its customers in a broad geographical area that includes many rural and small community markets in addition to larger cities including Charleston (WV), Huntington (WV), Martinsburg (WV), Ashland (KY), Lexington (KY), Winchester (VA) and Staunton (VA). In the Company's key markets, the Company's primary subsidiary, City National, often ranks in the top three relative to deposit market share and the top two relative to branch share (Charleston/Huntington MSA, Beckley/Lewisburg counties, Staunton MSA and Winchester, VA/WV Eastern Panhandle counties). In addition to its branch network, City National's delivery channels include automated-teller-machines ("ATMs"), interactive-teller-machines ("ITMs"), mobile banking, debit cards, interactive voice response systems, and internet technology. The Company’s business activities are currently limited to one reportable business segment, which is community banking. See Note Twenty-ThreeThree for additional information on the Company's reportable business segment.

The accounting policies of the Company conform to U.S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. These estimates and assumptions are based on information available to management as of the date of the financial statements. Actual results could differ significantly from management’s estimates. As this information changes, management’s estimates and assumptions used to prepare the Company’s financial statements and related disclosures may also change. The most significant accounting policies followed by the Company are presented in Note One of the Notes to Consolidated Financial Statements included herein. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified: (i) the determination of the allowance for credit losses and (ii) income taxes and (iii) acquisition and preliminary purchase price accounting to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new information becomes available.

The Company uses a number of economic variables in its scenarios to estimate the allowance for credit losses, with the most significant drivers being an unemployment rate forecast and qualitative adjustments. In the December 31, 20242025 estimate, the Company assumed ana 2-year unemployment forecast range of 4.2% to 4.8%,4.6%, compared to a range of 3.8%4.2% to 4.8% utilized in the December 31, 20232024 estimate. Historical loss rates from periods where the average unemployment rate matches the forecast range are considered when calculating the forecast period loss rate. Based on sensitivity of the portfolio, the change had noa materialless than $0.5 million impact on the reserve.

Based on sensitivity analysis of all portfolios, a 0.0050% change (slight improvement or decline on bank's scale) in all 11 qualitative risk factors (where assigned) would have a $2.2$2.4 million impact on the reserve allocation. Changing each factor by 0.01% (moderate improvement or decline) would have a $4.5$4.7 million impact. Management recognizes that these are extreme scenarios and it is very unlikely that all risk factors would change by 0.005% or 0.01% simultaneously. There were no changes to any qualitative factors forFor the year ended December 31, 2024.2025 estimate, management assigned a slight improvement (0.005% decrease) to the Criticized/Classified loan trends factor in each commercial pool which decreased the reserve $0.1 million.

Cash and cash equivalents increaseddecreased $69.1$33.5 million (44.2%14.9%) from $156.3 million at December 31, 2023, to $225.4 million at December 31, 20242024, to $191.9 million at December 31, 2025, primarily due to an increase in depositgross balances, cash provided by operations, and anloans, increase in FHLBinvestment long-termbalances, advancesand treasury share repurchases that were partially offset by an increase in grossdeposit loansbalances and annet increaseincome in investment balances.retained.

Gross loans increased $148.9$232.2 million (3.6%5.4%) from December 31, 20232024 to $4.27$4.51 billion at December 31, 2024.2025. Commercial real estate loans increased $95.2$98.6 million (5.7%5.6%), residential real estate loans increased $35.5$86.5 million (2.0%4.7%), commercial and industrial loans increased $34.1 million (8.1%), and home equity loans increased $32.0$25.5 million (19.1%12.8%) for the year ended December 31, 2024.2025. These increases were partially offset by a decrease in consumer loans of $7.4$10.5 million (11.4%) and a decrease in commercial and industrial loans of $7.1 million (1.7%18.1%).

Total deposits increased $209.9$156.8 million (4.3%3.0%) from December 31, 20232024 to $5.1$5.3 billion at December 31, 2024.2025. TimeNoninterest-bearing demand deposit balances increased $208.1$69.2 million, time deposit balances increased $54.2 million, savings deposit balances increased $29.2 million, and interest-bearing demand deposit balances increased $44.2 million, and noninterest-bearing demand deposit balances increased $1.6$4.2 million. These increases were partially offset by a decrease in savings deposit balances of $44.1 million.

Selected income statement fluctuations and ratios are summarized in the following table (dollars in millions):

Exclusive of these realized and unrealized gains and losses, non-interest income increased $0.9 million, or 1.2%, from $75.1 million for 2023 to $76.0 million for 2024. This increase was largely attributable to an increase of $1.7 million, or 17.7%, in trustwealth and investment management fee income and an increase of $1.5 million, or 5.3%, from service charges. Additionally, bankcard revenues increased $0.5 million, or 1.9%, from the year ended December 31, 2023. These increases were partially offset by a decrease of $2.0 million from bank owned life insurance (lower death benefits) and $0.8 million in other income.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company was in a net deferred tax asset position ($41.7$30.0 million) at December 31, 20242025 and a net deferred tax asset position ($42.2$41.7 million) at December 31, 2023.2024. The decrease was primarily due to a decrease in the deferred tax asset associated with unrealized securities losses ($11.2 million), as the market values of the Company's investment portfolio increased.

The components of the Company’s net deferred tax assets are disclosed in Note Twelve of the Notes to Consolidated Financial Statements. Realization of the most significant net deferred tax assets is primarily dependent on future events taking place that will reverse the current deferred tax assets. The deferred tax asset associated with unrealized securities losses is the tax impact of the unrealized losses on the Company’s available-for-sale security portfolio. The impact of the Company’s unrealized losses is noted in the Company’s Consolidated Statements of Changes in Shareholders’ Equity as an adjustment to Accumulated Other Comprehensive (Loss) Income. This deferred tax asset would be realized if the unrealized securities losses on the Company's securities were realized from the sales of the related securities. The Company believes that it is more likely than not that each of the deferred tax assets will be realized and that no significantmaterial valuation allowances were necessary as of December 31, 20242025 or 2023.2024.

The Company manages its asset and liability mix to balance its desire to maximize net interest income against its desire to minimize risks associated with capitalization, interest rate volatility, and liquidity. Historically, the Company has utilized derivative instruments, when appropriate, to assist in attaining this goal. During the year ending December 31, 2020, the Company entered into three $50 million swap agreements that hedged interest rate risk on certain pools of the Company’s investment securities. These agreements requirerequired the Company to pay rates ranging from 0.20% to 0.24%, while receiving the federal funds effective rate in return. Interest income and changes in market valuations from these swap agreements arewere recognized as investment income in the accompanying statements of income. These agreements maturematured in October ($50 million) and November ($100 million) of 2025. During the year ending December 31, 2023, the Company entered into a $100 million swap agreement that hedged interest rate risk on certain loans of the Company. This agreement requires the Company to pay 3.60%, while receiving SOFR in return. Interest income and changes in market valuations from this swap agreement are recognized as loan interest income in the accompanying statements of income. This agreement matures in March 2026 With respect to liquidity, the Company has chosen a conservative posture and believes that its liquidity position is strong. As illustrated in the Consolidated Statements of Cash Flows, the Company generated $131.9 million of cash from operating activities during 2024, primarily from interest income received on loans and investments, net of interest expense paid on deposits and borrowings.2026.

During year ended December 31, 2024,2025, Shareholders’ Equity increased $54$79 million, or 7.9%,10.8%, from $677 million at December 31, 2023 to $731 million at December 31, 2024.2024 to $810 million at December 31, 2025. This increase was primarily due to net income of $117$130 million thatand wasother comprehensive income of $39 million, which were partially offset by cash dividends declared of $45$48 million,million and common share repurchases of $18 million, and other comprehensive losses of $5$46 million.

During the year ended December 31, 2024,2025, the Company repurchased approximately 179,000397,000 common shares at a weighted average price of $100.24$115.24 per share as part of a one million share repurchase plan authorized by the Board of Directors in January 2024. At December 31, 2024,2025, the Company could repurchase anapproximately 424,000 additional approximately 821,000 shares under the current plan.

The commercial and industrial ("C&I") loan portfolio consists of loans to corporate and other legal entity borrowers, primarily small to mid-size industrial and commercial companies. C&I loans typically involve a higher level of risk than other loan types, including industry specific risks such as the pertinent economy, new technology, labor rates and cyclicality, as well as customer specific factors, such as cash flow, financial structure, operating controls and asset quality. Collateral securing these loans includes equipment, machinery, inventory, receivables and vehicles. C&I loans decreasedincreased $7.1$34.1 million from December 31, 20232024 to $454.0 million at December 31, 2024.2025.

The Company evaluates the recoverability of goodwill and indefinite lived intangible assets annually as of November 30th, or more frequently if events or changes in circumstances warrant, such as a material adverse change in the Company's business. Goodwill is considered to be impaired when the carrying value of a reporting unit exceeds its estimated fair value. Indefinite-lived intangible assets are considered impaired if their carrying value exceeds their estimated fair value. As described in Note Twenty-ThreeThree of the Notes to Consolidated Financial Statements, the Company conducts its business activities through one reportable business segment – community banking. Fair values are estimated by reviewing the Company’s stock price as it compares to book value and the Company’s reported earnings. In addition, the impact of future earnings and activities is considered in the Company’s analysis. The Company had approximately $150 million of goodwill at December 31, 20242025 and December 31, 2023.2024. No impairment was required to be recognized in 20242025 or 2023,2024, as the estimated fair value of the Company has continued to exceed its book value.

The Company has time certificates of deposit that meet or exceed the FDIC insurance limit of $250,000 totaling an estimated $441.9$467.7 million at December 31, 2024.2025. Scheduled maturities of uninsured portion of time certificates of deposit are estimated at December 31, 20242025 and are summarized in the table below (in thousands).

The Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize impacts to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current actions will have immaterial results, or that no material actions may be presented in the future. As of December 31, 2025, management expects the resolution of current legal actions will not have a material impact on the Company's financial statements.

The accounting policies of the Company conform with U.S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. These estimates and assumptions are based on information available to management as of the date of the financial statements. Actual results could differ significantly from management’s estimates. As this information changes, management’s estimates and assumptions used to prepare the Company’s financial statements and related disclosures may also change. The most significant accounting policies followed by the Company are presented in Note One to the audited financial statements included in the Company’s 2025 Annual Report to Shareholders. The information included in this Quarterly Report on Form 10-Q, including the Consolidated Financial Statements, Notes to Consolidated Financial Statements, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, should be read in conjunction with the financial statements and notes thereto included in the 2025 Annual Report of the Company. Based on the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified: (i) the determination of the allowance for credit losses and (ii) income taxes and (iii) acquisition and preliminary purchase price accounting to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new information becomes available.

Allowance for Credit Losses (ACL)

The allowance for credit lossesACL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off in the future. Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency level, or term, as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors. These evaluations are conducted at least quarterly and more frequently if deemed necessary. Additionally, all commercial loans within the portfolio are subject to internal risk grading. Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process.

In evaluating the appropriateness of its allowance for credit losses,ACL, the Company stratifies the loan portfolio into sixfive major groupings. The Company has identified the following portfolio segments and measures the allowance for credit lossesACL using the following methods:

(1) For demand deposit overdrafts, the allowance for credit losses is measured using the historical loss rate Migration is an analysis that tracks a closed pool of loans for a configurable period of time and calculates a loss ratio on only those loans in the pool at the start date based on outstanding balance. Vintage is a predictive loss model that includes a reasonable approximation of probable and estimable future losses by tracking each loan's net losses over the life of the loan as compared to its original balance. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable, the expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

The Company uses a number of economic variables in its scenarios to estimate the Allowance for credit losses (ACL),ACL, with the most significant drivers being an unemployment rate forecast and qualitative adjustments. In the MarchJune 31,30, 2026 and December 31, 2025 estimates, the Company assumed a 2-year unemployment forecast range of 4.2% to 4.6%. Historical loss rates from periods where the average unemployment rate matches the forecast range are considered when calculating the forecast period loss rate. Historical loss rates from periods where the average unemployment rate matches the forecast range are considered when calculating the forecast period loss rate.

Based on sensitivity analysis of all portfolios, a 0.0050% change (slight improvement or decline on bank's scale) in all 11 qualitative risk factors (where assigned) would have a $2.4 million impact on the reserve allocation. Changing each factor by 0.01% (moderate improvement or decline) would have a $4.7 million impact. Management recognizes that these are extreme scenarios and it is very unlikely that all risk factors would change by 0.005% or 0.01% simultaneously. For the MarchJune 31,30, 2026 estimate, management did not adjust any qualitative factors utilized in the previous quarter.

The Company's net interest income was $59.6$60.8 million for the three months ended MarchJune 31,30, 2026 compared to $55.8$58.9 million for the three months ended MarchJune 31,30, 2025 (see Net Interest Income). The Company recorded a $0.6$0.4 million provision of credit losses for the three months ended March 31, 2026 compared to no provision for credit losses for the three months ended MarchJune 31,30, 2026 compared to a $1.9 million recovery of credit losses for the three months ended June 30, 2025 (see Allowance for Credit Losses). As further discussed under the caption Non-Interest Income and Non-Interest Expense, non-interest income increased $0.9$1.2 million and non-interest expense increased $1.8$0.6 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.

Cash and cash equivalents increased $107.1$75.3 million (55.8%39.2%) from December 31, 2025 to $299.0$267.2 million at MarchJune 31,30, 2026 primarily due to income from operations, an increase in deposit balances and proceeds from maturities and calls of available-for-sale securities that were partially offset by cash utilized for common stock repurchases Total investment securities decreased $(62.2) million ((4.1)%) from December 31, 2025 to $1.47 billion at March 31, 2026, due to maturities and calls of available-for-sale securities.repurchases.

Gross loans decreasedremained $11.3stable millionat (0.3%)$4.50 frombillion at December 31, 2025 to $4.50 billion at March 31, 2026. Commercial and industrialJune 30, 2026, respectively. Consumer loans decreased $12.4$7.4 million (2.7%) and consumerresidential real estate loans decreased $4.4$3.5 million (9.2%) during the first threesix months of 2026. These decreases were partiallyessentially offset by an increaseincreases in residentialhome realequity estate loans of $3.3($6.4 million (0.2%) and commercial real estate loans of $1.6($2.9 million) (0.1%).loans.

Total deposits increased $42.6$39.2 million (0.8%0.7%) from December 31, 2025 to $5.3 billion at MarchJune 31,30, 2026. Savings deposits increased $32.3$43.7 million, non interest-bearing demand deposit balances increased $8.1 million, and time deposit balances increased $6.8 million, and interest-bearing demand deposits increased $6.3$5.3 million. These increases were partially offset by a decrease of $2.8$17.9 million in non interest-bearing demand deposits.

The Company’s net interest income increased approximately $3.8 million, or 6.8%, from $55.8$114.7 million duringfor the firstsix quartermonths ofended June 30, 2025 to $59.6$120.4 million duringfor the firstsix quartermonths ofended June 30, 2026. The Company’s tax equivalent net interest income increased approximately $3.9$5.8 million fromto $56.0$120.9 million for the firstsix quartermonths ofended 2025June to30, $59.92026 from $115.1 million forin the firstsix quartermonths ofended 2026June (see30, Non-GAAP section).2025. Net interest income increased by $3.1 million due to a decrease in the cost of interest-bearing liabilities (26 basis points) and by $2.9 million due to an increase in average loan balances ($203.3$197.3 million). Additionally,and decrease in cost of interest-bearing liabilities (23 basis points) which increased net interest income increasedby $0.6$5.7 million dueand to$5.6 anmillion, increase in average investment security balances ($64.4 million).respectively.

These increases were partially offset by a lowerdecrease in yield earned on investment securities (33 basis points) which decreased net interest income by $1.0$2.3 million.million Additionally,and an increase inhigher average balancebalances of interest-bearing liabilities ($84.2$79.4 million) and decrease in average balance of deposits in depository institutions ($60.7 million) each lowereddecreased net interest income by $0.7$1.3 million. The Company’s reported net interest margin increased slightly from 3.84%3.90% for the firstsix quartermonths ofended June 30, 2025 to 3.97% for the firstsix quartermonths ofended June 30, 2026.

Rate/Volume Analysis of Changes in Interest Income and Interest Expense (in thousands)

The following table presents estimated uninsured deposits by type as of MarchJune 31,30, 2026 and December 31, 2025:

Loan balances decreased $11.3$1.6 million from December 31, 2025 to MarchJune 31,30, 2026.

The commercial and industrial ("C&I") loan portfolio consists of loans to corporate borrowers that are primarily in small to mid-size industrial and commercial companies. Collateral securing these loans includes equipment, machinery, inventory, receivables and vehicles. C&I loans are considered to contain a higher level of risk than other loan types, although care is taken to minimize these risks. Numerous risk factors impact this portfolio, including industry specific risks such as the economy, new technology, labor rates and cyclicality, as well as customer specific factors, such as cash flow, financial structure, operating controls and asset quality. C&I loans decreasedincreased $12.4$0.1 million from December 31, 2025 to MarchJune 31,30, 2026.

Commercial real estate loans consist of commercial mortgages, which generally are secured by nonresidential and multi-family residential properties, including hotel/motel and apartment lending. Commercial real estate loans are made to many of the same customers and carry similar industry risks as C&I loans. Commercial real estate loans increased $1.6$2.9 million from December 31, 2025 to MarchJune 31,30, 2026. At MarchJune 31,30, 2026, $39.5$43.4 million of the commercial real estate loans were for commercial properties under construction.

◦Commercial 1-4 Family loans increased $10.9$13.1 million from December 31, 2025 to MarchJune 31,30, 2026. Commercial 1-4 Family loans consist of residential single-family, duplex, triplex, and fourplex rental properties and totaled $221.2$223.3 million as of MarchJune 31,30, 2026. Risk characteristics are driven by rental housing demand as well as economic and employment conditions. These properties exhibit greater risk than multi-family properties due to fewer income sources.

◦Hotel loans decreased $2.8$2.5 million from December 31, 2025 to MarchJune 31,30, 2026. The Hotel portfolio is comprised of all lodging establishments and totaled $395.9$396.1 million as of MarchJune 31,30, 2026. Risk characteristics relate to the demand for travel.

◦Multi-family loans decreased $9.7$5.5 million from December 31, 2025 to MarchJune 31,30, 2026. Multi-family consists of 5 or more family residential apartment lending. The portfolio totaled $227.7$231.9 million as of MarchJune 31,30, 2026. Risk characteristics are driven by rental housing demand as well as economic and employment conditions.

◦Non-residential commercial real estate includes properties such as retail, office, warehouse, storage, healthcare, entertainment, religious, and other nonresidential commercial properties. The non-residential product type is further segmented into owner- and non-owner occupied properties. Nonresidential non-owner occupied commercial real estate totaled $772.8$765.4 million at MarchJune 31,30, 2026 and increaseddecreased $5.2$2.2 million from December 31, 2025 to MarchJune 31,30, 2026.

◦Nonresidential owner-occupied commercial real estate totaled $251.4$253.5 million at MarchJune 31,30, 2026 and decreasedincreased $2.0$0.1 million from December 31, 2025. Risk characteristics relate to levels of consumer spending and overall economic conditions.

Residential real estate loans increaseddecreased $3.3$3.5 million from December 31, 2025 to MarchJune 31,30, 2026. Residential real estate loans represent loans to consumers that are secured by a first lien on residential property. Residential real estate loans provide for the purchase or refinance of a residence and first-lien home equity loans allow consumers to borrow against the equity in their home. These loans primarily consist of single family five- and seven-year adjustable rate mortgages with terms that amortize up to 30 years. The Company also offers fixed-rate residential real estate loans that are generally sold in the secondary market that are not included on the Company's balance sheet; the Company does not retain the servicing rights to these loans. Residential mortgage loans are generally underwritten to comply with Fannie Mae guidelines, while the home equity loans are underwritten with typically less documentation, but with lower loan-to-value ratios and shorter maturities. At MarchJune 31,30, 2026, $9.6$11.1 million of the residential real estate loans were for properties under construction.

Home equity loans remainedincreased flatby $6.4 million during the first threesix months of 2026. The Company's home equity loans represent loans to consumers that are secured by a second (or junior) lien on a residential property. Home equity loans allow consumers to borrow against the equity in their home without paying off an existing first lien. These loans consist of home equity lines of credit ("HELOC") and amortized home equity loans that require monthly installment payments. Home equity loans are underwritten with less documentation, lower loan-to-value ratios and for shorter terms than residential mortgage loans. The amount of credit extended is directly related to the value of the real estate at the time the loan is made.

Consumer loans may be secured by automobiles, boats, recreational vehicles and other personal property or they may be unsecured. The Company monitors the risk associated with these types of loans by monitoring such factors as portfolio growth, lending policies and economic conditions. Underwriting standards are continually evaluated and modified based upon these factors. Consumer loans decreased by $4.4$7.4 million during the first threesix months of 2026.

Management systematically monitors the loan portfolio and the appropriateness of the allowance for credit losses on a quarterly basis to provide for expected losses inherent in the portfolio. Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors. The Company's estimate of future economic conditions utilized in its provision estimate is primarily dependent on expected unemployment ranges over a two-year period. Beyond two years, a straight line reversion to historical average loss rates is applied over the life of the loan pool in the migration methodology. The vintage methodology applies future average loss rates based on net losses in historical periods where the unemployment rate was within the forecasted range. As a result of the Company’s quarterly analysis of the adequacy of the Allowance for Credit Losses, the Company recorded a provision of credit losses of $0.6$0.4 million in the firstsecond quarter of 2026 compared to noa provision$1.9 formillion recovery of credit losses recorded in the firstsecond quarter of 2025.

Based on the Company’s analysis of the adequacy of the allowance for credit losses and in consideration of the known factors utilized in computing the allowance, management believes that the allowance for credit losses as of MarchJune 31,30, 2026 is adequate to provide for expected losses inherent in the Company’s loan portfolio. Future provisions for credit losses will be dependent upon trends in loan balances including the composition of the loan portfolio, changes in loan quality and loss experience trends, and recoveries of previously charged-off loans, among other factors.

The Allowance for Credit Losses decreasedincreased slightly from $19.9$19.3 million at December 31, 2025 to $19.7$19.8 million at MarchJune 31,30, 2026. The Company recorded a provision for credit losses of $0.6$0.4 million in the firstsecond quarter of 2026, compared to noa provisionrecovery forof credit losses of $1.9 million for the comparable period in 2025, and a provision for credit losses of $1.1$0.6 million for the fourthfirst quarter of 2025.2026. The provision for credit losses in the firstsecond quarter of 2026 was primarily related to the downgrade of a commercial real estate loan forand a moviemarginal theater that had been transferred to nonaccrual statusincrease in the thirdhistorical quarterloss ofrate 2024.for Due to further cash flow deterioration, a $0.85 million charge-off was recorded in the quarter ending March 31, 2026, leaving an outstanding balance of approximately $5.0 million. This charge-off was partially offset by a decline in loan balances from the fourth quarter of 2025commercial and netindustrial recoveries (exclusive of the movie theater charge-off)loans during the quarter ended MarchJune 31,30, 2026, which were partially offset by net recoveries of $0.2 million during the quarter ended June 30, 2026.

Non-InterestExcluding Income:net Non-interestinvestment securities gains and losses, non-interest income increased $0.9from $38.7 million from $18.7 million infor the firstsix quartermonths ofended June 30, 2025 to $19.6$40.7 million infor the firstsix quartermonths ofended June 30, 2026. ThisThe increase was duelargely attributable to an increase of $0.4 million, or 14.3%, in wealth and investment management fee income,income aof $0.3$0.9 million,million or(14.4%), 43.6%,an increase in otherservices income,charges of $0.6 million (4.3%), and an increase of $0.2 million, or 3.4%, in servicebankcard charges. These increases were partially offset by a decrease in bank owned life insurancerevenue of $0.2$0.4 million.million (2.8%).

Non-Interest Expense: Non-interest expenses increased $1.8$2.4 million,million or 4.6%,(3.2%), from $37.6$77.1 million in the first quartersix months of 2025 to $39.4$79.5 million in the first quartersix months of 2026.2026 This increase was largelyprimarily due to an increase in salaries and employee benefit expensesbenefits ($1.0$1.4 million due to salary adjustments (3.5%) and increased health insurance (11.3%)), other tax related matters ($0.4$0.5 million), and equipment and software related expenses ($0.2$0.4 million).

Income Tax Expense: The Company'sCompany’s effective income tax rate for the threesix months ended MarchJune 31,30, 2026 and March 31, 2025 was 19.2%,19.3% andcompared 17.8%,to respectively.18.4% for the six months ended June 30, 2025.

The Company evaluates the adequacy of liquidity at both the City Holding level and at the City National level. At the City Holding level, the principal source of cash is dividends from City National. Dividends paid by City National to City Holding are subject to certain legal and regulatory limitations. Generally, any dividends in amounts that exceed the earnings retained by City National in the current year plus retained net profits for the preceding two years must be approved by regulatory authorities. At MarchJune 31,30, 2026, City National could pay dividends up to $49.4$83.0 million plus net profits for the remainder of 2026, as defined by statute, up to the dividend declaration date without prior regulatory permission.

Additionally, City Holding anticipates continuing the payment of dividends on its common stock, which are expected to approximate $49.1$48.9 million on an annualized basis over the next 12 months based on common shares outstanding at MarchJune 31,30, 2026. However, dividends to shareholders can, if necessary, be suspended. In addition to these anticipated cash needs, City Holding has operating expenses and other contractual obligations, which are estimated to require $2.9$2.5 million of additional cash over the next 12 months. As of MarchJune 31,30, 2026, City Holding reported a cash balance of $105.6$86.4 million and management believes that City Holding’s available cash balance, together with cash dividends from City National, will be adequate to satisfy its funding and cash needs over the next 12 months.

As illustrated in the consolidated statements of cash flows, the Company generated $38.0$70.7 million of cash from operating activities during the first threesix months of 2026, primarily from interest income received on loans and investments, net of interest expense paid on deposits and borrowings. The Company generated $65.2$19.0 million of cash in investing activities during the first threesix months of 2026, primarily due to proceeds from maturities and calls on investment securities of $56.7$117.8 million andwhich a net decrease in loans of $10.5 million. These cash generating impacts werewas partially offset by payments$97.4 million in purchases of $1.4 millionavailable for lowsale income housing tax credits.securities. The Company generatedutilized $3.9$14.4 million of cash in financing activities during the first threesix months of 2026,2026 principallydue asto a resultpurchases of treasury stock of $38.1 million and dividends paid of $24.9 million. The cash utilized for financing activities was partially offset by a net increase in interest-bearing deposits of $45.4$31.1 million andmillion, an increase in customer repurchase agreements of $7.2 million. These increases were partially offset by purchases of treasury stock of $30.9 million, dividends paid of $14.8$9.9 million, and a net decreaseincrease in non-interest bearing deposits of $2.8$8.1 million.

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 MarchJune 31,30, 2026, City National had the capacity to borrow an additional $1.8 billion from these existing borrowing facilities. In addition, approximately $709$715 million of City National’s investment securities were pledged to collateralize customer repurchase agreements and various deposit accounts, leaving approximately $762$791 million of City National’s investment securities unpledged at MarchJune 31,30, 2026. City National also segregates certain mortgage loans, mortgage-backed securities, and other investment securities in a separate subsidiary so that it can separately monitor the asset quality of these primarily mortgage-related assets, which could be used to raise cash through securitization transactions or obtain additional equity or debt financing if necessary.

With respect to liquidity, the Company has chosen a conservative posture and believes that its liquidity position is strong. The Company’s net loan to asset ratio is 66.2% as of MarchJune 31,30, 2026 and deposit balances fund 79.0%78.8% of total assets. The Company has obligations to extend credit, but these obligations are primarily associated with existing home equity loans that have predictable borrowing patterns across the portfolio. The Company has investment security balances with carrying values that totaled $1.5 billion at MarchJune 31,30, 2026, and that exceeded the Company’s non-deposit sources of borrowing, which totaled $524.8$527.6 million. Further, the Company’s deposit mix has a high proportion of transaction and savings accounts that fund 59.7%59.5% of the Company’s total assets. As interest rates increase, deposit balances may decline or the composition of the deposit portfolio may shift to higher yielding deposit products, such as money market accounts or time deposits.

Shareholders' equity decreased $15.3$0.7 million for the threesix months ended MarchJune 31,30, 2026, primarily due to cash dividends declared of $12.4 million and the repurchase of 262,017321,173 common shares at a weighted average price of $117.79$118.65 per share ($30.9$38.1 million) as part of a one million share repurchase planplans authorized by the Board of Directors in January 2024.2024 Aand newMarch plan2026 wasand authorizedcash bydividends the Boarddeclared of Directors$24.6 in March 2026.million. These decreases were partially offset by net income of $31.7$65.0 million.

The Basel III Capital Rules require City Holding and City National to maintain minimum Common Equity Tier 1 (CET 1,1), Tier 1 and Total Capital ratios, along with a capital conservation buffer, effectively resulting in new minimum capital ratios (which are shown in the table below). The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The Basel III Capital Rules also provide for a “countercyclical capital buffer” that is applicable to only certain covered institutions and does not have any current applicability to the Company.