CITY HOLDING CO

Previous wording

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 (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.

Current wording

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 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.

Previous wording

The allowance for credit losses 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.

Current wording

The ACL 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.

Previous wording

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

Current wording

In evaluating the appropriateness of its ACL, the Company stratifies the loan portfolio into five major groupings. The Company has identified the following portfolio segments and measures the ACL using the following methods:

Previous wording

The Company uses a number of economic variables in its scenarios to estimate the Allowance for credit losses (ACL), with the most significant drivers being an unemployment rate forecast and qualitative adjustments. In the March 31, 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.

Current wording

The Company uses a number of economic variables in its scenarios to estimate the ACL, with the most significant drivers being an unemployment rate forecast and qualitative adjustments. In the June 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.

Previous wording

The Company's net interest income was $59.6 million for the three months ended March 31, 2026 compared to $55.8 million for the three months ended March 31, 2025 (see Net Interest Income). The Company recorded a $0.6 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 March 31, 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 million and non-interest expense increased $1.8 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Current wording

The Company's net interest income was $60.8 million for the three months ended June 30, 2026 compared to $58.9 million for the three months ended June 30, 2025 (see Net Interest Income). The Company recorded a $0.4 million provision for credit losses for the three months ended June 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 $1.2 million and non-interest expense increased $0.6 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

Previous wording

Cash and cash equivalents increased $107.1 million (55.8%) from December 31, 2025 to $299.0 million at March 31, 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

Current wording

Cash and cash equivalents increased $75.3 million (39.2%) from December 31, 2025 to $267.2 million at June 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.

Previous wording

Total investment securities decreased$(62.2) million ((4.1)%) from December 31, 2025 to $1.47 billion at March 31, 2026, due tomaturities and calls of available-for-sale securities.

Current wording

Total investment securities decreased$26.3 million (1.7)% from December 31, 2025 to $1.51 billion at June 30, 2026, due tomaturities and calls of available-for-sale securities.

Previous wording

Gross loans decreased $11.3 million (0.3%) from December 31, 2025 to $4.50 billion at March 31, 2026. Commercial and industrial loans decreased $12.4 million (2.7%) and consumer loans decreased $4.4 million (9.2%) during the first three months of 2026. These decreases were partially offset by an increase in residential real estate loans of $3.3 million (0.2%) and commercial real estate loans of $1.6 million (0.1%).

Current wording

Gross loans remained stable at $4.50 billion at December 31, 2025 and June 30, 2026, respectively. Consumer loans decreased $7.4 million and residential real estate loans decreased$3.5 million during the first six months of 2026. These decreases were essentially offset by increases in home equity ($6.4 million) and commercial real estate ($2.9 million) loans.

Previous wording

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

Current wording

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

Previous wording

The Company’s net interest income increased approximately $3.8 million, or 6.8%, from $55.8 million during the first quarter of 2025 to $59.6 million during the first quarter of 2026. The Company’s tax equivalent net interest income increased approximately $3.9 million from $56.0 million for the first quarter of 2025 to $59.9 million for the first quarter of 2026 (see Non-GAAP section). 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 million). Additionally, net interest income increased $0.6 million due to an increase in average investment security balances ($64.4 million).

Current wording

The Company’s net interest income increased approximately $1.8 million, or 3.11%, from $58.9 million during the second quarter of 2025 to $60.8 million during the second quarter of 2026. The Company’s tax equivalent net interest income increased approximately $1.9 million from $59.1 million for the second quarter of 2025 to $61.0 million for the second quarter of 2026 (see Non-GAAP section). Net interest income increased by $2.8 million due to an increase in average loan balances ($191.2 million) and increased $2.5 million due to a decrease in the cost of interest-bearing liabilities (21 basis points).

Previous wording

These increases were partially offset by a lower yield earned on investment securities which decreased net interest income by $1.0 million. Additionally, an increase in average balance of interest-bearing liabilities ($84.2 million) and decrease in average balance of deposits in depository institutions ($60.7 million) each lowered net interest income by $0.7 million. The Company’s reported net interest margin increased from 3.84% for the first quarter of 2025 to 3.97% for the first quarter of 2026.

Current wording

These increases were partially offset by a lower yield earned on investment securities (37 basis points) and a decrease in average investment security balances ($62.6 million) which decreased net interest income by $1.2 million and $0.8 million, respectively. Additionally, an increase in average balance of interest-bearing liabilities ($74.7 million) decreased net interest income by $0.5 million and a lower yield earned on loans (4 basis points) decreased net interest income by $0.5 million. The Company’s reported net interest margin increased from 3.95% for the second quarter of 2025 to 3.97% for the second quarter of 2026.

Previous wording

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 decreased $12.4 million from December 31, 2025 to March 31, 2026.

Current wording

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 increased $0.1 million from December 31, 2025 to June 30, 2026.

Previous wording

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 million from December 31, 2025 to March 31, 2026. At March 31, 2026, $39.5 million of the commercial real estate loans were for commercial properties under construction.

Current wording

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 $2.9 million from December 31, 2025 to June 30, 2026. At June 30, 2026, $43.4 million of the commercial real estate loans were for commercial properties under construction.

Previous wording

◦Commercial 1-4 Family loans increased $10.9 million from December 31, 2025 to March 31, 2026. Commercial 1-4 Family loans consist of residential single-family, duplex, triplex, and fourplex rental properties and totaled $221.2 million as of March 31, 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.

Current wording

◦Commercial 1-4 Family loans increased $13.1 million from December 31, 2025 to June 30, 2026. Commercial 1-4 Family loans consist of residential single-family, duplex, triplex, and fourplex rental properties and totaled $223.3 million as of June 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.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

◦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 million at March 31, 2026 and increased $5.2 million from December 31, 2025 to March 31, 2026.

Current wording

◦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 $765.4 million at June 30, 2026 and decreased $2.2 million from December 31, 2025 to June 30, 2026.

Previous wording

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

Current wording

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

Previous wording

Residential real estate loans increased $3.3 million from December 31, 2025 to March 31, 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 March 31, 2026, $9.6 million of the residential real estate loans were for properties under construction.

Current wording

Residential real estate loans decreased $3.5 million from December 31, 2025 to June 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 June 30, 2026, $11.1 million of the residential real estate loans were for properties under construction.

Previous wording

Home equity loans remained flat during the first three 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.

Current wording

Home equity loans increased by $6.4 million during the first six 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.

Previous wording

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 million during the first three months of 2026.

Current wording

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 $7.4 million during the first six months of 2026.

Previous wording

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 million in the first quarter of 2026 compared to no provision for credit losses recorded in the first quarter of 2025.

Current wording

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 $0.4 million in the second quarter of 2026 compared to a $1.9 million recovery of credit losses recorded in the second quarter of 2025.

Previous wording

The Allowance for Credit Losses decreased slightly from $19.9 million at December 31, 2025 to $19.7 million at March 31, 2026. The Company recorded a provision for credit losses of $0.6 million in the first quarter of 2026, compared to no provision for credit losses for the comparable period in 2025, and a provision for credit losses of $1.1 million for the fourth quarter of 2025. The provision for credit losses in the first quarter of 2026 was primarily related to a commercial loan for a movie theater that had been transferred to nonaccrual status in the third quarter of 2024. 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 2025 and net recoveries (exclusive of the movie theater charge-off) during the quarter ended March 31, 2026.

Current wording

The Allowance for Credit Losses increased slightly from $19.3 million at December 31, 2025 to $19.8 million at June 30, 2026. The Company recorded a provision for credit losses of $0.4 million in the second quarter of 2026, compared to a recovery of credit losses of $1.9 million for the comparable period in 2025, and a provision for credit losses of $0.6 million for the first quarter of 2026. The provision for credit losses in the second quarter of 2026 was primarily related to the downgrade of a commercial real estate loan and a marginal increase in the historical loss rate for commercial and industrial loans during the quarter ended June 30, 2026, which were partially offset by net recoveries of $0.2 million during the quarter ended June 30, 2026.

Previous wording

Non-Interest Income: Non-interest income increased $0.9 million from $18.7 million in the first quarter of 2025 to $19.6 million in the first quarter of 2026. This increase was due to an increase of $0.4 million, or 14.3%, in wealth and investment management fee income, a $0.3 million, or 43.6%, increase in other income, and an increase of $0.2 million, or 3.4%, in service charges. These increases were partially offset by a decrease in bank owned life insurance of $0.2 million.

Current wording

Exclusive of these items, non-interest income increased $1.1 million from $19.6 million for the second quarter of 2025 to $20.7 million for the second quarter of 2026. This increase was due to an increase of $0.4 million, or 14.4% in wealth and investment fee income, an increase of $0.4 million, or 5.2%, in service charges, and a $0.3 million, or 4.4%, increase in bankcard revenue.

Previous wording

Non-Interest Expense: Non-interest expenses increased $1.8 million, or 4.6%, from $37.6 million in the first quarter of 2025 to $39.4 million in the first quarter of 2026. This increase was largely due to an increase in salaries and employee benefit expenses ($1.0 million due to salary adjustments (3.5%) and increased health insurance (11.3%)), other tax related matters ($0.4 million), and equipment and software related expenses ($0.2 million).

Current wording

Non-Interest Expense: Non-interest expenses increased $0.6 million, or 1.5%, from $39.2 million in the second quarter of 2025 to $39.8 million in the second quarter of 2026. This increase was largely due to an increase in salaries and employee benefit expenses ($0.5 million) and equipment and software related expenses ($0.2 million).

Previous wording

Income Tax Expense: The Company's effective income tax rate for the three months ended March 31, 2026 and March 31, 2025 was 19.2%, and 17.8%, respectively.

Current wording

Income Tax Expense: The Company's effective income tax rate for the three months ended June 30, 2026 and June 30, 2025 was 19.4%, and 18.9%, respectively.

Previous wording

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 March 31, 2026, City National could pay dividends up to $49.4 million plus net profits for the remainder of 2026, as defined by statute, up to the dividend declaration date without prior regulatory permission.

Current wording

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 June 30, 2026, City National could pay dividends up to $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.

Previous wording

Additionally, City Holding anticipates continuing the payment of dividends on its common stock, which are expected to approximate $49.1 million on an annualized basis over the next 12 months based on common shares outstanding at March 31, 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 million of additional cash over the next 12 months. As of March 31, 2026, City Holding reported a cash balance of $105.6 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.

Current wording

Additionally, City Holding anticipates continuing the payment of dividends on its common stock, which are expected to approximate $48.9 million on an annualized basis over the next 12 months based on common shares outstanding at June 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 $2.5 million of additional cash over the next 12 months. As of June 30, 2026, City Holding reported a cash balance of $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.

Previous wording

As illustrated in the consolidated statements of cash flows, the Company generated $38.0 million of cash from operating activities during the first three 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 million of cash in investing activities during the first three months of 2026, primarily due to proceeds from maturities and calls on investment securities of $56.7 million and a net decrease in loans of $10.5 million. These cash generating impacts were partially offset by payments of $1.4 million for low income housing tax credits. The Company generated $3.9 million of cash in financing activities during the first three months of 2026, principally as a result of a net increase in interest-bearing deposits of $45.4 million and 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 million, and a net decrease in non-interest bearing deposits of $2.8 million.

Current wording

As illustrated in the consolidated statements of cash flows, the Company generated $70.7 million of cash from operating activities during the first six months of 2026, primarily from interest income received on loans and investments, net of interest expense paid on deposits and borrowings. The Company generated $19.0 million of cash in investing activities during the first six months of 2026, primarily due to proceeds from maturities and calls on investment securities of $117.8 million which was partially offset by $97.4 million in purchases of available for sale securities. The Company utilized $14.4 million of cash in financing activities during the first six months of 2026 due to purchases 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 $31.1 million, an increase in customer repurchase agreements of $9.9 million, and a net increase in non-interest bearing deposits of $8.1 million.

Previous wording

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 March 31, 2026, City National had the capacity to borrow an additional $1.8 billion from these existing borrowing facilities. In addition, approximately $709 million of City National’s investment securities were pledged to collateralize customer repurchase agreements and various deposit accounts, leaving approximately $762 million of City National’s investment securities unpledged at March 31, 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.

Current wording

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 June 30, 2026, City National had the capacity to borrow an additional $1.8 billion from these existing borrowing facilities. In addition, approximately $715 million of City National’s investment securities were pledged to collateralize customer repurchase agreements and various deposit accounts, leaving approximately $791 million of City National’s investment securities unpledged at June 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.

Previous wording

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 March 31, 2026 and deposit balances fund 79.0% 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 March 31, 2026, and that exceeded the Company’s non-deposit sources of borrowing, which totaled $524.8 million. Further, the Company’s deposit mix has a high proportion of transaction and savings accounts that fund 59.7% 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.

Current wording

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 June 30, 2026 and deposit balances fund 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 June 30, 2026, and that exceeded the Company’s non-deposit sources of borrowing, which totaled $527.6 million. Further, the Company’s deposit mix has a high proportion of transaction and savings accounts that fund 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.

Previous wording

Shareholders' equity decreased $15.3 million for the three months ended March 31, 2026, primarily due to cash dividends declared of $12.4 million and the repurchase of 262,017 common shares at a weighted average price of $117.79 per share ($30.9 million) as part of a one million share repurchase plan authorized by the Board of Directors in January 2024. A new plan was authorized by the Board of Directors in March 2026. These decreases were partially offset by net income of $31.7 million.

Current wording

Shareholders' equity decreased $0.7 million for the six months ended June 30, 2026, primarily due to the repurchase of 321,173 common shares at a weighted average price of $118.65 per share ($38.1 million) as part of a one million share repurchase plans authorized by the Board of Directors in January 2024 and March 2026 and cash dividends declared of $24.6 million. These decreases were partially offset by net income of $65.0 million.

Previous wording

The Basel III Capital Rules require City Holding and City National to maintain minimum CET 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.

Current wording

The Basel III Capital Rules require City Holding and City National to maintain minimum Common Equity Tier 1 (CET 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