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What changed in CITY HOLDING CO's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CITY HOLDING CO's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+195 added−195 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in CITY HOLDING CO's 2024 10-K

195 paragraphs added · 195 removed · 170 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

36 edited+4 added−4 removed111 unchanged
Biggest changeThe Company’s minimum required capital ratios for both City Holding and City National include the 2.5% capital conservation buffer and are illustrated in the following tables (dollars in thousands): December 31, 2023 Actual Minimum Required - Basel III Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio CET 1 Capital City Holding Company $ 627,579 15.7 % $ 279,768 7.0 % $ 259,875 6.5 % City National Bank 549,031 13.8 % 278,692 7.0 % 258,785 6.5 % Tier 1 Capital City Holding Company 627,579 15.7 % 339,718 8.5 % 319,735 8.0 % City National Bank 549,031 13.8 % 338,412 8.5 % 318,505 8.0 % Total Capital City Holding Company 648,646 16.2 % 419,652 10.5 % 399,669 10.0 % City National Bank 570,099 14.3 % 418,038 10.5 % 398,131 10.0 % Tier 1 Leverage Ratio City Holding Company 627,579 10.2 % 245,468 4.0 % 306,835 5.0 % City National Bank 549,031 8.9 % 245,587 4.0 % 306,984 5.0 % 8 December 31, 2022 Actual Minimum Required - Basel III Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio CET 1 Capital City Holding Company $ 598,068 16.2 % $ 257,965 7.0 % $ 239,538 6.5 % City National Bank 508,586 13.9 % 256,520 7.0 % 238,197 6.5 % Tier 1 Capital City Holding Company 598,068 16.2 % 313,243 8.5 % 294,817 8.0 % City National Bank 508,586 13.9 % 311,488 8.5 % 293,166 8.0 % Total Capital City Holding Company 612,654 16.6 % 386,947 10.5 % 368,521 10.0 % City National Bank 523,172 14.3 % 384,780 10.5 % 366,457 10.0 % Tier 1 Leverage Ratio City Holding Company 598,068 10.0 % 238,954 4.0 % 298,692 5.0 % City National Bank 508,586 8.6 % 237,973 4.0 % 297,466 5.0 % Management believes that, as of December 31, 2023, City Holding and City National meet all capital adequacy requirements under Basel III.
Biggest changeThe Company’s minimum required capital ratios for both City Holding and City National include the 2.5% capital conservation buffer and are illustrated in the following tables (dollars in thousands): December 31, 2024 Actual Minimum Required - Basel III Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio CET 1 Capital City Holding Company $ 688,707 16.5 % $ 291,989 7.0 % $ 271,133 6.5 % City National Bank 563,301 13.6 % 291,068 7.0 % 270,277 6.5 % Tier 1 Capital City Holding Company 688,707 16.5 % 354,558 8.5 % 333,702 8.0 % City National Bank 563,301 13.6 % 353,439 8.5 % 332,649 8.0 % Total Capital City Holding Company 709,820 17.0 % 437,983 10.5 % 417,127 10.0 % City National Bank 584,415 14.1 % 436,602 10.5 % 415,811 10.0 % Tier 1 Leverage Ratio City Holding Company 688,707 10.6 % 259,325 4.0 % 324,156 5.0 % City National Bank 563,301 8.7 % 258,477 4.0 % 323,096 5.0 % 8 December 31, 2023 Actual Minimum Required - Basel III Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio CET 1 Capital City Holding Company $ 627,579 15.7 % $ 279,768 7.0 % $ 259,875 6.5 % City National Bank 549,031 13.8 % 278,692 7.0 % 258,785 6.5 % Tier 1 Capital City Holding Company 627,579 15.7 % 339,718 8.5 % 319,735 8.0 % City National Bank 549,031 13.8 % 338,412 8.5 % 318,505 8.0 % Total Capital City Holding Company 648,646 16.2 % 419,652 10.5 % 399,669 10.0 % City National Bank 570,099 14.3 % 418,038 10.5 % 398,131 10.0 % Tier 1 Leverage Ratio City Holding Company 627,579 10.2 % 245,468 4.0 % 306,835 5.0 % City National Bank 549,031 8.9 % 245,587 4.0 % 306,984 5.0 % Management believes that, as of December 31, 2024, City Holding and City National meet all capital adequacy requirements under Basel III.
The Company is listed on the Nasdaq Global Select Market ("NASDAQ") under the trading symbol "CHCO" and is subject to the rules of the NASDAQ for listed companies. City National is organized as a national banking association under the National Bank Act of 1863, as amended (the "National Bank Act").
The Company is listed on the Nasdaq Global Select Market ("NASDAQ") under the trading symbol "CHCO" and is subject to the rules of NASDAQ for listed companies. City National is organized as a national banking association under the National Bank Act of 1863, as amended (the "National Bank Act").
Underwriting standards require a comprehensive credit analysis and independent evaluation of all larger balance commercial loans by the loan committee prior to approval. City National categorizes commercial loans by industry according to the North American Industry Classification System ("NAICS") to monitor its portfolio for possible concentrations in one or more industries.
Underwriting standards require a comprehensive credit analysis and independent evaluation of all larger balance commercial loans by the Company's loan committee prior to approval. City National categorizes commercial loans by industry according to the North American Industry Classification System ("NAICS") to monitor its portfolio for possible concentrations in one or more industries.
To bring out the best in our employees and our company, we introduced the "Integrity in Action" program that gives all employees additional resources to help protect our company and uphold our high standards. We support all of the communities in which we serve, and our employees embrace this opportunity.
To bring out the best in our employees and our Company, we introduced the "Integrity in Action" program that gives all employees additional resources to help protect our Company and uphold our high standards. We support all of the communities in which we serve, and our employees embrace this 4 opportunity.
Although no portion of City National’s loan portfolio is concentrated within a single industry or group of related industries in excess of City National's internally designated limit, residential mortgage loans have historically comprised a significant portion of its loan portfolio. At December 31, 2023, approximately 47% of the Company’s loan portfolio was categorized as residential mortgage and home equity loans.
Although no portion of City National’s loan portfolio is concentrated within a single industry or group of related industries in excess of City National's internally designated limit, residential mortgage loans have historically comprised a significant portion of its loan portfolio. At December 31, 2024, approximately 47% of the Company’s loan portfolio was categorized as residential mortgage and home equity loans.
A change in statutes, regulations or regulatory policies applicable to the Company or our subsidiaries could have a material effect on the Company’s business, financial condition and results of operations. 11 Executive Officers of the Registrant At December 31, 2023, the executive officers of the Company were as follows: Name Age Positions Held with Registrant Charles R.
A change in statutes, regulations or regulatory policies applicable to the Company or our subsidiaries could have a material effect on the Company’s business, financial condition and results of operations. 11 Executive Officers of the Registrant At December 31, 2024, the executive officers of the Company were as follows: Name Age Positions Held with Registrant Charles R.
However, due to the fractured nature of residential mortgage lending, there is no concentration of credits that would be considered materially detrimental to the Company’s financial position or operating results. At December 31, 2023, approximately 51% of the Company’s loan portfolio was categorized as commercial and industrial and commercial real estate.
However, due to the fractured nature of residential mortgage lending, there is no concentration of credits that would be considered materially detrimental to the Company’s financial position or operating results. At December 31, 2024, approximately 51% of the Company’s loan portfolio was categorized as commercial and industrial and commercial real estate.
No dividends were paid in 2023 or 2022 that required regulatory approval. The payment of dividends by the Company and City National may also be limited by other factors, such as requirements to maintain adequate capital above regulatory guidelines.
No dividends were paid in 2024 or 2023 that required regulatory approval. The payment of dividends by the Company and City National may also be limited by other factors, such as requirements to maintain adequate capital above regulatory guidelines.
Banking regulators also take into account CRA ratings when considering approval of a proposed merger or acquisition transaction. Depository institutions are typically examined for CRA compliance every three years, although the frequency is at the OCC's discretion. City National received a "satisfactory" rating on its most recent CRA examination in 2022.
Banking regulators also take into account CRA ratings when considering approval of a proposed merger or acquisition transaction. Depository institutions are typically examined for CRA compliance every three years, although the frequency is at the OCC's discretion. City National received a "satisfactory" ra ting on its most recent CRA examination in 2022.
Market Area and Competition City National operates a network of 98 bank branches primarily along the I-64 corridor from Lexington, Kentucky through Lexington, Virginia and along the I-81 corridor through the Shenandoah Valley from Lexington, Virginia to Martinsburg, West Virginia.
Market Area and Competition City National operates a network of 97 bank branches primarily along the I-64 corridor from Lexington, Kentucky through Lexington, Virginia and along the I-81 corridor through the Shenandoah Valley from Lexington, Virginia to Martinsburg, West Virginia.
City National provides banking, trust and investment management and other financial solutions through its network of 98 bank branches and 957 full-time equivalent associates located in West Virginia, Kentucky, Virginia and southeastern Ohio. The Company’s business activities are currently limited to one reportable business segment, which is community banking.
City National provides banking, trust and investment management and other financial solutions through its network of 97 bank branches and 941 full-time equivalent associates located in West Virginia, Kentucky, Virginia and southeastern Ohio. The Company’s business activities are currently limited to one reportable business segment, which is community banking.
As of December 31, 2023, City National reported $427 million of loans classified as "Commercial and Industrial". 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.
As of December 31, 2024, City National reported $420 million of loans classified as "Commercial and Industrial". 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.
As of December 31, 2023, City National reported $1.79 billion of loans classified as "Residential Real Estate." City National's home equity loans represent loans to consumers that are secured by a second (or junior) priority lien on residential real property.
As of December 31, 2024, City National reported $1.82 billion of loans classified as "Residential Real Estate." City National's home equity loans represent loans to consumers that are secured by a second (or junior) priority lien on residential real property.
As of December 31, 2023, City National reported $167.2 million of loans classified as "Home Equity." All mortgage loans, whether fixed rate or adjustable rate, are originated in accordance with acceptable industry standards and comply with regulatory requirements.
As of December 31, 2024, City National reported $199.2 million of loans classified as "Home Equity." All mortgage loans, whether fixed rate or adjustable rate, are originated in accordance with acceptable industry standards and comply with regulatory requirements.
Michael T. Quinlan, Jr. 55 Executive Vice President of Retail Banking, City Holding Company and City National Bank, since January 2021. Jeffrey D. Legge 59 Executive Vice President, Chief Administration Officer and Chief Information Officer, City Holding Company and City National Bank, since December 2005.
Michael T. Quinlan, Jr. 56 Executive Vice President of Retail Banking, City Holding Company and City National Bank, since January 2021. Jeffrey D. Legge 60 Executive Vice President, Chief Administration Officer and Chief Information Officer, City Holding Company and City National Bank, since December 2005.
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. • The Hotel portfolio is comprised of all lodging establishments and totaled $357.1 million as of December 31, 2023.
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. • The Hotel portfolio is comprised of all lodging establishments and totaled $389.7 million as of December 31, 2024.
Specifically, the approval of the OCC is required prior to the payment of dividends by City National in excess of its earnings retained in the current year plus retained net profits for the preceding two years. At December 31, 2023, City National could pay dividends up to $53.3 million without prior regulatory permission.
Specifically, the approval of the OCC is required prior to the payment of dividends by City National in excess of its earnings retained in the current year plus retained net profits for the preceding two years. At December 31, 2024, City National could pay dividends up to $48.2 million without prior regulatory permission.
Our average quarterly employee turnover rate in 2023 was under 7%. As of December 31, 2023, approximately 79% of our current workforce is female, 21% is male, our average tenure is approximately 10 years and approximately 18% of our workforce has a college degree. Compensation and Benefits Programs: We provide competitive compensation and benefits programs to our employees.
Our average quarterly employee turnover rate in 2024 was under 6%. As of December 31, 2024, approximately 79% of our current workforce is female, 21% is male, our average tenure is approximately 10 years and approximately 14% of our workforce has a college degree. Compensation and Benefits Programs: We provide competitive compensation and benefits programs to our employees.
In eastern Kentucky, City National has approximately 22% of the deposit market share in the counties where its bank branches are located. In Virginia, City National has approximately 7% of the deposit market share in the counties along the I-81 corridor where its bank branches are located.
In eastern Kentucky, City National has approximately 24% of the deposit market share in the counties where its bank branches are located. In Virginia, City National has approximately 5% of the deposit market share in the counties along the I-81 corridor where its bank branches are located.
Management monitors industry concentrations against internally established risk-based capital thresholds. As of December 31, 2023, City National was within its internally designated concentration limits. Furthermore, with the exception of loans to borrowers within the "Lessors of Nonresidential Buildings" category, no other NAICS industry classification exceeded 10% of total loans at December 31, 2023.
Management monitors industry concentrations against internally established risk-based capital thresholds. As of December 31, 2024, City National was within its internally designated concentration limits. Furthermore, with the exception of loans to borrowers within the "Lessors of Nonresidential Buildings" and "Lessors of Residential Buildings and Dwellings" categories, no other NAICS industry classification exceeded 10% of total loans at December 31, 2024.
As of December 31, 2023, City National reported $1.67 billion of loans classified as "Commercial Real Estate." 1 In order to group loans with similar risk characteristics, the portfolio is further segmented by product types: • Commercial 1-4 Family loans consist of residential single-family, duplex, triplex, and fourplex rental properties and totaled $206.2 million as of December 31, 2023.
As of December 31, 2024, City National reported $1.77 billion of loans classified as "Commercial Real Estate." 1 In order to group loans with similar risk characteristics, the portfolio is further segmented by product types: • Commercial 1-4 Family loans consist of residential single-family, duplex, triplex, and fourplex rental properties and totaled $197.3 million as of December 31, 2024.
As of December 31, 2023, City National reported $4.9 million of loans classified as "DDA Overdrafts." City National’s loan underwriting guidelines and standards are updated periodically with suggested revisions presented to City National's Board of Directors for approval.
As of December 31, 2024, City National reported $5.7 million of loans classified as "DDA Overdrafts." City National’s loan underwriting guidelines and standards are updated periodically with suggested revisions presented to City National's Board of Directors for approval.
City National's branch network includes 58 branches in West Virginia, 23 branches in Kentucky, 13 branches in Virginia and 4 branches in Ohio.
City National's branch network includes 58 branches in West Virginia, 22 branches in Kentucky, 13 branches in Virginia and 4 branches in southeastern Ohio.
For the year ended December 31, 2023 2022 2021 FDIC insurance expense $ 2,922 $ 1,673 $ 1,583 The Company's FDIC insurance expense increased $1.2 million from the year ended December 31, 2022 to the year ended December 31, 2023.
For the year ended December 31, 2024 2023 2022 FDIC insurance expense $ 2,892 $ 2,922 $ 1,673 The Company's FDIC insurance expense increased $1.2 million from the year ended December 31, 2022 to the year ended December 31, 2023.
Hageboeck, Ph.D. 61 President and Chief Executive Officer, City Holding Company and City National Bank, since February 1, 2005. John A. DeRito 73 Executive Vice President of Commercial Banking, City Holding Company and City National Bank, since June 2004. David L. Bumgarner 58 Executive Vice President and Chief Financial Officer, City Holding Company and City National Bank, since February 2005.
Hageboeck, Ph.D. 62 President and Chief Executive Officer, City Holding Company and City National Bank, since February 1, 2005. John A. DeRito 74 Executive Vice President of Commercial Banking, City Holding Company and City National Bank, since June 2004. David L. Bumgarner 59 Executive Vice President and Chief Financial Officer, City Holding Company and City National Bank, since February 2005.
At December 31, 2023, the outstanding balance of commercial loans to markets outside of the geographical footprint of the bank's branches was approximately $367 million, or 17% of City National's outstanding commercial loan balances. City National has approximately 14% of the deposit market share in the counties of West Virginia where its bank branches are located.
At December 31, 2024, the outstanding balance of commercial loans to markets outside of the geographical footprint of the bank's branches was approximately $420 million, or 19% of City National's outstanding commercial loan balances. City National has approximately 13% of the deposit market share in the counties of West Virginia where its bank branches are located.
Risk characteristics relate to the demand for business and personal travel. • Multi-family consists of 5 or more family residential apartment lending. The portfolio totaled $189.2 million as of December 31, 2023.
Risk characteristics relate to the demand for business and personal travel. • Multi-family consists of 5 or more family residential apartment lending. The portfolio totaled $240.9 million as of December 31, 2024.
As of December 31, 2023, City National reported $65.2 million of loans classified as "Consumer." DDA overdraft balances reflect demand deposit accounts that have been overdrawn by deposit customers and have been reclassified as loans.
As of December 31, 2024, City National reported $57.8 million of loans classified as "Consumer." DDA overdraft balances reflect demand deposit accounts that have been overdrawn by deposit customers and have been reclassified as loans.
Our success is a testament to the quality of financial products and services we provide, but more importantly, to our team and our culture. 4 Employee Demographics: As of December 31, 2023, we employed 973 full and part-time employees (957 FTEs) across our 98 branches throughout West Virginia, Kentucky, Virginia and Southeastern Ohio.
Our success is a testament to the quality of financial products and services we provide, but more importantly, to our team and our culture. Employee Demographics: As of December 31, 2024, we employed 963 full and part-time employees (941 FTEs) across our 97 branches throughout West Virginia, Kentucky, Virginia and southeastern Ohio.
Human Capital We care about our employees and provide not only competitive compensation and benefit packages, but a work environment our employees characterize as "family." We are committed to integrity and the highest ethical standards in regard to how we treat both our customers and our employees.
National Average 334,914.9 331,449.3 1.0 Human Capital We care about our employees and provide not only competitive compensation and benefit packages, but a work environment our employees characterize as "family." We are committed to integrity and the highest ethical standards in regard to how we treat both our customers and our employees.
Nonresidential non-owner occupied commercial real estate totaled $680.6 million while nonresidential owner-occupied commercial real estate totaled $240.3 million as of December 31, 2023. Risk characteristics relate to levels of consumer spending and overall economic conditions.
Nonresidential non-owner occupied commercial real estate totaled $707.3 million while nonresidential owner-occupied commercial real estate totaled $233.5 million as of December 31, 2024. Risk characteristics relate to levels of consumer spending and overall economic conditions.
City National provides merchant credit card services through an agreement with a third party vendor. • Consumer Banking - City National provides banking services to consumers, including checking, savings and money market accounts as well as certificates of deposit and individual retirement accounts. In addition, City National provides consumers with installment and real estate loans and lines of credit.
City National also provides deposit services for commercial customers, including treasury management, lockbox and other cash management services. City National provides merchant credit card services through an agreement with a third-party vendor. • Consumer Banking - City National provides banking services to consumers, including checking, savings and money market accounts as well as certificates of deposit and individual retirement accounts.
In Lawrence County, Ohio, where City National has three bank branches, City National has approximately 18% of the deposit market share. According to the most recent U.S. Census Bureau estimates (2022), in the West Virginia counties where City National's bank branches are located, the population was approximately 1.0 million and has decreased 1.3% since 2010.
In Lawrence County, Ohio, where City National has three bank branches, City National has approximately 19% of the deposit market share. The following table represents changes in population in West Virginia, Kentucky, Virginia, and Ohio counties where City National's branches are located compared to the U.S. national average according to the most recent U.S.
These loans primarily consist of single family three- and five-year adjustable rate mortgages with terms that amortize up to 30 years. City National also offers fixed-rate residential real estate loans.
Residential real estate loans include loans for the purchase or refinance of consumers' residences and first-priority home equity loans that 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. City National also offers fixed-rate residential real estate loans.
Loans to "Lessors of Nonresidential Buildings" were 15% of total loans at December 31, 2023. Management also monitors non-owner occupied commercial real estate as a percent of risk-based capital (based upon regulatory guidance). At December 31, 2023, the Company had $1.4 billion of commercial loans classified as non-owner occupied, which was within its designated concentration threshold.
Loans to "Lessors of Nonresidential Buildings" and "Lessors of Residential Buildings and Dwellings" were 14% and 11% , respectively, of total loans at December 31, 2024. Management also monitors non-owner occupied commercial real estate as a percent of risk-based capital (based upon regulatory guidance).
The increased expense was due to a final rule adopted by the FDIC in October 2022 that increased the initial base deposit insurance assessment rate schedules uniformly by 2 basis points beginning with the first quarterly assessment period of 2023. 10 Under the Federal Deposit Insurance Act, as amended ("FDIA") the FDIC may terminate deposit insurance upon finding that an institution has engaged in unsafe or unsound practices, is in unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
For the year ended December 31, 2024, the Company's FDIC insurance expense remained stable at $2.9 million. 10 Under the Federal Deposit Insurance Act, as amended ("FDIA") the FDIC may terminate deposit insurance upon finding that an institution has engaged in unsafe or unsound practices, is in unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
Removed
City National also provides deposit services for commercial customers, including treasury management, lockbox and other cash management services.
Added
In addition, City National provides consumers with installment and real estate loans and lines of credit.
Removed
Residential real estate loans represent loans to consumers that are secured by a first priority lien on residential real property. Residential real estate loans include loans for the purchase or refinance of consumers' residences and first-priority home equity loans allow consumers to borrow against the equity in their home.
Added
At December 31, 2024, the Company had $1.5 billion of commercial loans classified as non-owner occupied, which was within its designated concentration threshold. Residential real estate loans represent loans to consumers that are secured by a first priority lien on residential real property.
Removed
The population in the counties that City National serves in Kentucky has increased 4.5% since 2010 and the population in the counties City National serves in Virginia along the I-81 corridor has increased 12.1% since 2010, which are more comparable to the national average increase of approximately 7.9%. In Lawrence County, Ohio, the population has decreased 9.3% since 2010.
Added
Census Bureau estimates (in thousands): 2023 (Estimate) 2020 (Actual) Change % West Virginia 996.6 1,000.6 (0.4) % Kentucky 1,408.3 1,420.5 (0.9) Virginia 237.4 230.8 2.9 Lawrence County, Ohio 56.1 58.2 (3.6) U.S.
Removed
On March 10, 2023, the Company acquired 100% of the outstanding common shares of Citizens Commerce Bancshares, Inc. ("Citizens") and its principal banking subsidiary, Citizens Commerce Bank of Versailles, Kentucky. See Note Three for additional information on the acquisition.
Added
The increased expense was due to a final rule adopted by the FDIC in October 2022 that increased the initial base deposit insurance assessment rate schedules uniformly by 2 basis points beginning with the first quarterly assessment period of 2023.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

20 edited+1 added−2 removed141 unchanged
Biggest changeThe Company faces threats to its reputation from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver expected standards of service or quality, regulatory compliance deficiencies, and questionable or fraudulent activities of the Company’s employees and customers. 20 Negative publicity may arise regarding the Company’s business, employees, or customers, with or without merit, and could result in the loss of customers, investors and employees, costly litigation, a decline in revenue, and increased regulatory oversight.
Biggest changeThe Company faces threats to its reputation from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver expected standards of service or quality, regulatory compliance deficiencies, and questionable or fraudulent activities of the Company’s employees and customers.
In developing and marketing new lines of business and/or products and services, the Company may invest significant time and resources. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a 16 new product or service.
In developing and marketing new lines of business and/or products and services, the Company may invest significant time and resources. External factors, such as compliance with regulations, competitive 16 alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
The Company May Not Be Able to Attract and Retain Skilled Key Employees. The Company’s success depends, in in large part, on its ability to attract, retain, motivate and develop key employees.
The Company May Not Be Able to Attract and Retain Skilled Key Employees. The Company’s success depends, in large part, on its ability to attract, retain, motivate and develop key employees.
Any cybersecurity breach or other disruptions, whether by the Company or its third-party vendors, would jeopardize the security of information stored in and transmitted through the Company’s computer systems and network infrastructure, which may result in significant liability to the Company, damage its reputation and inhibit current and potential customers from its using Internet banking services.
Any cybersecurity breach or other disruptions, whether by the Company or its third-party vendors, would jeopardize the security of information stored in and transmitted through the Company’s computer systems and network infrastructure, which may result in significant liability to the Company, damage to its reputation and inhibit current and potential customers from its using internet banking services.
A successful attack to the Company's system security or the system security of one of its critical third-party vendors could cause it serious negative consequences, including significant disruption of operations, misappropriation of confidential information, and damage to its computers or systems or those of its customers and counterparties.
A successful attack to the Company's system security or the system security of one of its critical third-party vendors could cause it serious negative consequences, including significant disruption of operations, misappropriation of confidential information, and/or damage to its computers or systems or those of its customers and counterparties.
The Company could incur substantial costs and suffer other negative consequences, such as: remediation costs, such as liability for stolen assets or information, repairs of system damage, and incentives to customers in an effort to maintain relationships after an attack; increased cybersecurity protection costs, such as organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants; and damage to the Company's competitiveness, stock price, and long-term shareholder values.
The Company could incur substantial costs and suffer other negative consequences, including: remediation costs, such as liability for stolen assets or information, repairs of system damage, and incentives to customers in an effort to maintain relationships after an attack; increased cybersecurity protection costs, such as organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third-party experts and consultants; and damage to the Company's competitiveness, stock price, and long-term shareholder values.
If the loans that are collateralized by real estate become 13 troubled during a time when market conditions are declining or have declined, then, in the event of foreclosure, we may not be able to realize the amount of collateral that we anticipated at the time of originating the loan.
If the loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then, in the event of foreclosure, we may not be able to realize the amount of collateral that we anticipated at the time of originating the loan.
If the value of the real estate serving as collateral for the Company's loan portfolio were to decline materially, a significant part of the Company's loan portfolio could become under-collateralized.
If the value of the 13 real estate serving as collateral for the Company's loan portfolio were to decline materially, a significant part of the Company's loan portfolio could become under-collateralized.
The Company's ability to retain executive officers and the current management teams will continue to be important to the successful implementation of its strategies. The Company has employment agreements with these key employees in the event of a change of control, as well as confidentiality, non-solicitation and non-competition agreements related to its stock options.
The Company's ability to retain executive officers and the current management teams will continue to be important to the successful implementation of its strategies. The Company has employment agreements with these key employees in the event of a change of control, as well as confidentiality, non-solicitation and non-competition agreements related to its stock awards.
The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on the Company's business and financial results. Severe Weather, Natural Disasters, Acts of War or Terrorism, and Other External Events Could Significantly Impact the Company's Business.
The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on the Company's business and financial results. Severe Weather, Natural Disasters, Acts of War or Terrorism, Political Instability, and Other External Events Could Significantly Impact the Company's Business.
The Company recently completed such an impairment analysis and concluded that no impairment charge was necessary for the year ended December 31, 2023. The Company cannot provide assurance whether it will be required to take an impairment charge in the future.
The Company recently completed such an impairment analysis and concluded that no impairment charge was necessary for the year ended December 31, 2024. The Company cannot provide assurance whether it will be required to take an impairment charge in the future.
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. Ongoing volatility in oil and gas prices since 2014 has negatively impacted oil and gas and other businesses in the Company’s market areas.
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.
At December 31, 2023, the Company’s goodwill and other identifiable intangible assets were approximately $163 million. Under current accounting standards, if the Company determines goodwill or intangible assets are impaired, it would be required to write down the value of these assets. The Company conducts an annual review to determine whether goodwill and other identifiable intangible assets are impaired.
At December 31, 2024, the Company’s goodwill and other identifiable intangible assets were approximately $160 million. Under current accounting standards, if the Company determines goodwill or intangible assets are impaired, it would be required to write down the value of these assets. The Company conducts an annual review to determine whether goodwill and other identifiable intangible assets are impaired.
Severe weather, natural disasters, health emergencies (including COVID-19), acts of war or terrorism, and other adverse external events, especially those that directly affect the Company’s market areas, could have a significant impact on the Company’s ability to conduct business.
Severe weather, natural disasters, health emergencies, acts of war or terrorism, political instability, and other adverse external events, especially those that directly affect the Company’s market areas, could have a significant impact on the Company’s ability to conduct business.
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.
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.
While the economic and business environments in West Virginia, Kentucky, Virginia and southeastern Ohio have shown resilience during the recovery from the COVID-19 pandemic, and have shown improvement since the brief recession of 2020, 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 another recession.
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.
The Company Is Subject to Possible Claims and Litigation Relating to Fiduciary Activities. A significant portion of the business conducted in the Company's trust division involves the Company assuming the special role of a fiduciary to its customers and to the beneficiaries of its customers' assets.
A significant portion of the business conducted in the Company's trust 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.
A successful security breach could result in violations of applicable privacy and other laws, financial loss to the Company or to its customers, loss 21 of confidence in its security measures, significant litigation exposure, and harm to its reputation, all of which could have a material adverse effect on the Company.
A successful security breach could result in violations of applicable privacy and other laws, financial loss to the Company or to its customers, loss of confidence in its security measures, significant litigation exposure, and harm to its reputation, all of which could have a material adverse effect on the Company. 21 Criminals are committing fraud at an increasing rate and are using more sophisticated techniques, including the use of artificial intelligence technologies.
Some examples of economic deterioration include declines in economic growth, declines in consumer and business confidence, prolonged increases in inflation, increases in the cost of capital and credit, and limitations in the availability of credit.
Some examples of economic deterioration include declines in economic growth, declines in consumer and business confidence, prolonged increases in inflation, increases in the cost of capital and credit, and limitations in the availability of credit. Trade policies and tariffs could also lead to an uncertain economic environment and increase inflation, reduce consumer spending, or raise the cost of borrowing.
Other changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Company in substantial and unpredictable ways.
These agencies have significant discretion in their ability to enforce penalties and further limit the Company's activities if the Company fails to comply with applicable regulations. Changes and additions to statutes, regulations or regulatory policies, including changes in interpretation, enforcement or implementation of statutes, regulations or policies, could affect the Company in substantial and unpredictable ways.
Removed
These agencies have significant discretion in their ability to enforce penalties and further limit the Company's activities if the Company fails to comply with applicable regulations. The Dodd-Frank Act instituted major changes to the bank and financial institutions regulatory regimes, and additional changes continue to be proposed and implemented by various regulatory agencies.
Added
Negative publicity may arise regarding the Company’s business, employees, or customers, with or without merit, and could 20 result in the loss of customers, investors and employees, costly litigation, a decline in revenue, and increased regulatory oversight. The Company Is Subject to Possible Claims and Litigation Relating to Fiduciary Activities.
Removed
Criminals are committing fraud at an increasing rate and are using more sophisticated techniques, including through use of artificial intelligence technologies.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePeriodic review and assessment of network infrastructure is completed. The Company, in certain instances, may rely on vendors, third-party support, or other outsourcing opportunities. Before introducing a new product or service, the internal controls and competence of a vendor, maintenance and upkeep of a third-party provider’s systems, and financial condition of the third-party vendor are evaluated.
Biggest changeReview and assessment of network infrastructure is completed, periodically. The Company, in certain instances, may rely on vendors, third-party support, or other outsourcing opportunities. Before introducing a new product or service, the internal controls and competence of a vendor, maintenance and upkeep of a third-party provider’s systems, and financial condition of the third-party vendor are evaluated.
The Information Security Officer and Chief Information Officer are assigned as the Incident Response Team leaders 23 and reports summaries of key issues, including significant cybersecurity and/or privacy incidents to Incident Response Team which includes the Chief Executive Officer. If appropriate, the Chief Executive Officer will communicate actions taken the actions taken to our board of directors.
The Information Security Officer and Chief Information Officer are assigned as the Incident Response Team leaders 23 and reports summaries of key issues, including significant cybersecurity and/or privacy incidents to Incident Response Team which includes the Chief Executive Officer. If appropriate, the Chief Executive Officer will communicate the actions taken to our board of directors.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties City National owns the Company’s executive office, located at 25 Gatewater Road, Charleston, West Virginia. This facility has approximately 60,000 square feet and houses the Company's executive and administrative personnel. As of December 31, 2023, City National owns seventy-eight bank branch locations and leases twenty bank branch locations, pursuant to operating leases.
Biggest changeItem 2. Properties City National owns the Company’s executive office, located at 25 Gatewater Road, Charleston, West Virginia. This facility has approximately 60,000 square feet and houses the Company's executive and administrative personnel. As of December 31, 2024, City National owns eighty bank branch locations and leases seventeen bank branch locations, pursuant to operating leases.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−3 removed2 unchanged
Biggest changeAt December 31, 2023, City National could pay $53.3 million in dividends without prior regulatory permission. 25 Stock Performance The following graph sets forth the cumulative total shareholder return (assuming reinvestment of dividends) to the Company’s shareholders during the five-year period ended December 31, 2023, as well as the NASDAQ Composite Index and the KBW NASDAQ Bank Index. 2018 2019 2020 2021 2022 2023 City Holding Company $100.00 $124.83 $109.63 $132.97 $155.94 $190.17 NASDAQ Composite Index $100.00 $136.69 $198.10 $242.03 $163.28 $236.17 KBW Nasdaq Bank Index $100.00 $136.13 $122.09 $168.88 $132.75 $131.57 This graph shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless the Company specifically incorporates this report by reference.
Biggest changeAt December 31, 2024, City National could pay $48.2 million in dividends to the Company without prior regulatory permission. 25 Stock Performance The following graph sets forth the cumulative total shareholder return (assuming reinvestment of dividends) to the Company’s shareholders during the five-year period ended December 31, 2024, as well as the NASDAQ Composite Index and the KBW NASDAQ Bank Index. 2019 2020 2021 2022 2023 2024 City Holding Company $100.00 $87.83 $106.52 $124.92 $152.34 $168.20 NASDAQ Composite Index $100.00 $144.92 $177.06 $119.45 $172.77 $223.87 KBW Nasdaq Bank Index $100.00 $89.69 $124.06 $97.52 $96.65 $132.60 This graph shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless the Company specifically incorporates this report by reference.
It will not be otherwise filed under such Acts. 26 Unregistered Sales of Equity Securities and Use of Proceeds On May 25, 2022, the Board of Directors of the Company authorized the Company to buy back up to 1,000,000 shares of its common stock (approximately 7% of outstanding shares) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders.
It will not be otherwise filed under such Acts. 26 Unregistered Sales of Equity Securities and Use of Proceeds On January 31, 2024, the Board of Directors of the Company authorized the Company to buy back up to 1,000,000 shares of its common stock (approximately 7% of outstanding shares) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders.
Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note S even teen of Notes to Consolidated Financial Statements, the Company’s ability to pay dividends to its shareholders is dependent upon the ability of City National to pay dividends to the Company.
Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note Seventeen of Notes to Consolidated Financial Statements, the Company’s ability to pay dividends to its shareholders is dependent upon the ability of City National to pay dividends to the Company.
This table sets forth the cash dividends declared per share and information regarding the closing market prices per share of the Company’s common stock for the periods indicated. The price ranges are based on transactions as reported on the NASDAQ Global Select Market. At February 26, 2024, there were 2,516 shareholders of record.
This table sets forth the cash dividends declared per share and information regarding the closing market prices per share of the Company’s common stock for the periods indicated. The price ranges are based on transactions as reported on the NASDAQ Global Select Market. At February 24, 2025, there were 2,438 shareholders of record.
No time limit was placed on the duration of the share repurchase program. As part of this authorization, the Company terminated its previous repurchase program that was approved in March 2021.
No time limit was placed on the duration of the share repurchase program. As part of this authorization, the Company terminated its previous repurchase program that was approved in May 2022. There were no common stock repurchases during the quarter ended December 31, 2024. Item 6. Reserved 27
Removed
The following table sets forth information regarding the Company's common stock repurchases transacted during the quarter ended December 31, 2023: Total Number Maximum Number of Shares Purchased of Shares that May as Part of Publicly Yet Be Purchased Total Number of Average Price Announced Plans Under the Plans Period Shares Purchased Paid per Share or Programs or Programs October 1 - October 31, 2023* 69,606 90.61 849,681 150,319 *There were no common stock repurchases in November or December 2023.
Removed
Subsequent to year-ended December 31, 2023, the Board of Directors of the Company authorized the Company to buy back up to 1,000,000 shares of its common stock. Similar to prior approval, no time limit was placed on the duration of the share repurchase program.
Removed
As part of this authorization, the Company rescinded its previous repurchase program that was approved in May 2022. Item 6. Reserved 27

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

101 edited+20 added−16 removed58 unchanged
Biggest changeThe following table reconciles fully taxable equivalent net interest income with net interest income as derived from the Company's financial statements, as well as other non-GAAP measures (dollars in thousands): 36 TABLE THREE NON-GAAP FINANCIAL MEASURES (In thousands) 2023 2022 2021 Net interest income ("GAAP") $ 219,241 $ 180,033 $ 155,573 Taxable equivalent adjustment 1,025 1,306 1,333 Net interest income, fully taxable equivalent $ 220,266 $ 181,339 $ 156,906 Equity to assets ("GAAP") 10.98 % 9.83 % 11.34 % Effect of goodwill and other intangibles, net (2.41) (1.81) (1.76) Tangible common equity to tangible assets 8.57 % 8.02 % 9.58 % Return on average tangible equity ("GAAP") 23.8 % 20.3 % 15.3 % Impact of merger related expenses 0.8 — — Impact of merger related provision 0.3 — — Return on tangible equity, excluding merger related expenses and provision 24.9 % 20.3 % 15.3 % Return on assets ("GAAP") 1.87 % 1.71 % 1.49 % Impact of merger related expenses 0.07 — — Impact of merger related provision 0.03 — — Return on assets, excluding merger related expenses and provision 1.97 % 1.71 % 1.49 % Efficiency ratio 47.8 % 48.2 % 51.3 % Impact of merger expenses (1.8) — — Efficiency ratio, net of merger expenses 46.0 % 48.2 % 51.3 % 37 NON-INTEREST INCOME AND NON-INTEREST EXPENSE 2023 vs. 2022 Selected income statement fluctuations and ratios are summarized in the following table (dollars in millions): For the year ended December 31, 2023 2022 $ Change % Change Net realized investment security (losses) gains $ (4.9) $ — (4.9) N/A Unrealized (losses) gains recognized on equity securities still held $ 0.4 $ (1.6) $ 2.0 125 % Non-interest income, excluding net investment securities (losses) gains 75.1 73.7 1.4 2 % Merger-related expenses 5.2 0.3 4.9 1,822 % Non-interest expense, excluding merger-related expenses 138.4 124.0 14.3 12 % Efficiency ratio, excluding merger-related expenses 46.0 48.2 Full-time equivalent employees 957 909 Non-interest income was $70.6 million for the year ended December 31, 2023, as compared to $72.1 million for the year ended December 31, 2022.
Biggest changeThe following table reconciles fully taxable equivalent net interest income with net interest income as derived from the Company's financial statements, as well as other non-GAAP measures (dollars in thousands): 36 TABLE THREE NON-GAAP FINANCIAL MEASURES (dollars in thousands) 2024 2023 2022 Net interest income ("GAAP") $ 220,237 $ 219,241 $ 180,033 Taxable equivalent adjustment 871 1,025 1,306 Net interest income, fully taxable equivalent $ 221,108 $ 220,266 $ 181,339 Equity to assets ("GAAP") 11.31 % 10.98 % 9.83 % Effect of goodwill and other intangibles, net (2.25) (2.41) (1.81) Tangible common equity to tangible assets 9.06 % 8.57 % 8.02 % 37 NON-INTEREST INCOME AND NON-INTEREST EXPENSE 2024 vs. 2023 Selected income statement fluctuations and ratios are summarized in the following table (dollars in millions): For the year ended December 31, 2024 2023 $ Change % Change Net investment security losses $ (2.7) $ (4.5) $ 1.8 40 % Non-interest income, excluding net investment securities (losses) gains 76.0 75.1 0.9 1 % Non-interest expense, excluding merger-related expenses 147.2 138.4 8.9 6 % Non-interest income was $73.3 million for the year ended December 31, 2024, as compared to $70.6 million for the year ended December 31, 2023.
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 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, 44 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.
The discrete items can vary between periods but historically have remained consistent. Acquisition and Preliminary Purchase Price Allocation The calculation of the Company's acquisition and preliminary purchase price allocation is considered a critical accounting estimate as it involves a significant level of estimation and uncertainty, particularly in relation to the fair value and goodwill calculations.
The discrete items can vary between periods but historically have remained consistent. Acquisition and Preliminary Purchase Price Allocation 30 The calculation of the Company's acquisition and preliminary purchase price allocation is considered a critical accounting estimate as it involves a significant level of estimation and uncertainty, particularly in relation to the fair value and goodwill calculations.
There can be no assurance that current actions will have immaterial results, or that no material actions may be presented in the future. RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS Note Two , "Recent Accounting Pronouncements," of the Notes to Consolidated Financial Statements, discusses recently issued new accounting pronouncements and their expected impact on the Company’s consolidated financial statements. 50
There can be no assurance that current actions will have immaterial results, or that no material actions may be presented in the future. 49 RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS Note Two , "Recent Accounting Pronouncements," of the Notes to Consolidated Financial Statements, discusses recently issued new accounting pronouncements and their expected impact on the Company’s consolidated financial statements. 50
These increases were partially offset by an increase in the cost of interest bearing liabilities (110 basis points) which decreased net interest income by $41.6 million, lower balances of deposits in depository institutions ($214.9 million) that 35 lowered net interest income by $2.3 million, and lower investment balances ($57.8 million) that lowered net interest income by $1.6 million.
These increases were partially offset by an increase in the cost of interest bearing liabilities (110 basis points) which decreased net interest income by $41.6 million, lower balances of deposits in depository institutions ($214.9 million) that lowered net interest income by $2.3 million, and lower investment balances ($57.8 million) that lowered net interest income by $1.6 million.
This increase was largely attributable to an increase of $0.8 million, or 8.7%, in trust and investment management fee income and a $0.6 million, or 2.2%, increase in bankcard revenue. In addition, death benefits from bank owned life insurance increased $0.5 million from the year ended December 31, 2022.
This increase was largely attributable to an increase of $0.8 million, or 8.7%, in trust and investment management fee income and a $0.6 million, or 2.2%, increase in bankcard revenue. In 38 addition, death benefits from bank owned life insurance increased $0.5 million from the year ended December 31, 2022.
Fixed rate mortgage loans are processed and underwritten in accordance with Fannie Mae and Freddie Mac guidelines, while adjustable rate mortgage loans are underwritten in accordance with City National's internal loan policy. Consumer loans may be secured by automobiles, boats, recreational vehicles, certificates of deposit and other personal property, or they may be unsecured.
Fixed rate mortgage loans are processed and underwritten in accordance with Fannie Mae and Freddie Mac guidelines, while adjustable rate mortgage loans are underwritten in accordance with City National's internal loan policy. 45 Consumer loans may be secured by automobiles, boats, recreational vehicles, certificates of deposit and other personal property, or they may be unsecured.
Banking institutions with a ratio of CET 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or 40 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.
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.
LEGAL ISSUES 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 49 actions are ultimately decided.
LEGAL ISSUES 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.
Residential real estate loans include loans for the purchase or refinance of consumers' residence and first-priority home equity loans allow consumers to borrow against the equity in their home. These loans primarily consist of single family three- and five-year adjustable rate mortgages with terms that amortize up to 30 years. City National also offers fixed-rate residential real estate loans.
Residential real estate loans include loans for the purchase or refinance of consumers' residence and first-priority home equity loans that 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. City National also offers fixed-rate residential real estate loans.
The Company categorizes commercial loans by industry according to the North American Industry Classification System ("NAICS") to monitor the portfolio for possible concentrations in one or more industries. Management monitors industry concentrations against internally established risk-based capital thresholds. As of December 31, 2023, City National was within its internally designated concentration limits.
The Company categorizes commercial loans by industry according to the North American Industry Classification System ("NAICS") to monitor the portfolio for possible concentrations in one or more industries. Management monitors industry concentrations against internally established risk-based capital thresholds. As of December 31, 2024, City National was within its internally designated concentration limits.
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 One of the Notes to Consolidated Financial Statements, the Company conducts its business activities through one reportable business segment – community banking.
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-Three of the Notes to Consolidated Financial Statements, the Company conducts its business activities through one reportable business segment – community banking.
Excluding the dividend payments discussed above, the Parent Company has no significant commitments or obligations in years after 2024. City National manages its liquidity position in an effort to effectively and economically satisfy the funding needs of its customers and to accommodate the scheduled repayment of borrowings.
Excluding the dividend payments discussed above, the Parent Company has no significant commitments or obligations in years after 2025. City National manages its liquidity position in an effort to effectively and economically satisfy the funding needs of its customers and to accommodate the scheduled repayment of borrowings.
The Company also provides overdraft protection to certain demand deposit customers that represent an unfunded commitment. As a result of the Company’s off-balance sheet arrangements for 2023 and 2022, no material revenue, expenses, or cash flows were recognized.
The Company also provides overdraft protection to certain demand deposit customers that represent an unfunded commitment. As a result of the Company’s off-balance sheet arrangements for 2024 and 2023, no material revenue, expenses, or cash flows were recognized.
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 December 31, 2023 is adequate to provide for expected losses inherent in the Company’s loan portfolio.
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 December 31, 2024 is adequate to provide for expected losses inherent in the Company’s loan portfolio.
The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and various state taxing authorities for the years ended December 31, 2020 and forward. 30 The effective tax rate is calculated by taking the statutory rate and adjusting for permanent and discrete items.
The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and various state taxing authorities for the years ended December 31, 2021 and forward. The effective tax rate is calculated by taking the statutory rate and adjusting for permanent and discrete items.
For purposes of this table, non-accruing loans have been included in average balances and the following net loan fees (in thousands) have been included in interest income: 2023 2022 2021 Loan fees, net $ 1,366 $ 568 $ 3,550 2. Includes the Company's residential real estate and home equity loan categories. 33 3.
For purposes of this table, non-accruing loans have been included in average balances and the following net loan fees (in thousands) have been included in interest income: 2024 2023 2022 Loan fees, net $ 494 $ 1,366 $ 568 2. Includes the Company's residential real estate and home equity loan categories. 33 3.
Scheduled maturities of uninsured time certificates of deposit are estimated at December 31, 2023 and are summarized in the table below (in thousands).
Scheduled maturities of uninsured time certificates of deposit are estimated at December 31, 2024 and are summarized in the table below (in thousands).
Geographically, the portfolio supports the Company's footprint, with 15% of the portfolio being from municipalities throughout West Virginia, and the remainder from communities in Texas, Washington, Ohio and various other states.
Geographically, the portfolio supports the 43 Company's footprint, with 17% of the portfolio being from municipalities throughout West Virginia, and the remainder from communities in Texas, Washington, Ohio and various other states.
Management’s judgment is necessary to estimate fair value when quoted prices or observable market data are not available. At December 31, 2023, approximately 23% of total assets, or $1.4 billion, consisted of financial instruments recorded at fair value.
Management’s judgment is necessary to estimate fair value when quoted prices or observable market data are not available. At December 31, 2024, approximately 23% of total assets, or $1.5 billion, consisted of financial instruments recorded at fair value.
Most of these financial instruments used valuation methodologies involving observable market data, collectively Level 1 and Level 2 measurements, to determine fair value. At December 31, 2023, approximately $49 million of derivative liabilities were recorded at fair value using methodologies involving observable market data.
Most of these financial instruments used valuation methodologies involving observable market data, collectively Level 1 and Level 2 measurements, to determine fair value. At December 31, 2024, approximately $51 million of derivative liabilities were recorded at fair value using methodologies involving observable market data.
INCOME TAXES Selected information regarding the Company's income taxes is presented in the table below (dollars in millions): For the year ended December 31, 2023 2022 2021 Income tax expense $ 28.7 $ 25.3 $ 23.1 Effective tax rate 20.1 % 19.8 % 20.8 % A reconciliation of the effective tax rate to the statutory rate is included in Note Twelve of the Notes to Consolidated Financial Statements.
INCOME TAXES Selected information regarding the Company's income taxes is presented in the table below (dollars in millions): For the year ended December 31, 2024 2023 2022 Income tax expense $ 27.4 $ 28.7 $ 25.3 Effective tax rate 19.0 % 20.1 % 19.8 % A reconciliation of the effective tax rate to the statutory rate is included in Note Twelve of the Notes to Consolidated Financial Statements.
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 $1.37 billion at December 31, 2023, and that greatly exceeded the Company’s non-deposit sources of borrowing, which totaled $435 million.
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 $1.45 billion at December 31, 2024, and that greatly exceeded the Company’s non-deposit sources of borrowing, which totaled $476 million.
The Company’s reported net interest margin increased from 2.89% for the year ended December 31, 2021 to 3.33% for the year ended December 31, 2022. Non-GAAP Financial Measures Management of the Company uses measures in its analysis of the Company's performance other than those in accordance with generally accepted accounting principles in the United States of America ("GAAP").
The Company’s reported net interest margin increased from 3.33% for the year ended December 31, 2022 to 4.01% for the year ended December 31, 2023. Non-GAAP Financial Measures Management of the Company uses measures in its analysis of the Company's performance other than those in accordance with generally accepted accounting principles in the United States of America ("GAAP").
In the December 31, 2023 estimate, the Company assumed an unemployment forecast range of 3.8% to 4.8%, compared to a range of 3.7% to 4.9% utilized in the December 31, 2022 estimate. Historical loss rates from periods where the average unemployment rate matches the forecast range are considered when calculating the forecast period loss rate.
In the December 31, 2024 estimate, the Company assumed an unemployment forecast range of 4.2% to 4.8%, compared to a range of 3.8% to 4.8% utilized in the December 31, 2023 estimate. Historical loss rates from periods where the average unemployment rate matches the forecast range are considered when calculating the forecast period loss rate.
City National had an additional $1.9 billion and $1.6 billion available from unuse d portions of lines of credit with the FHLB and Federal Reserve Discount Window at December 31, 2023 and 2022, respectively. No short-term or long-term funding has been utilized with certain other financial institutions the Company maintains business relationships as of December 31, 2023.
City National had an additional $1.5 billion and $1.9 billion available from unused portions of lines of credit with the FHLB and Federal Reserve Discount Window at December 31, 2024 and 2023, respectively. No short-term or long-term funding has been utilized with certain other financial institutions the Company maintains business relationships as of December 31, 2024 or December 31, 2023.
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 December 31, 2023, City National could pay dividends up to $53.3 million without prior regulatory permission.
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 December 31, 2024, City National could pay dividends up to $48.2 million without prior regulatory permission.
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 ($42.2 million) at December 31, 2023 and a net deferred tax asset position ($44.9 million) at December 31, 2022.
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 million) at December 31, 2024 and a net deferred tax asset position ($42.2 million) at December 31, 2023.
As of December 31, 2023, the Parent Company reported a cash balance of $64.0 million and management believes that the Parent Company’s available cash balance, together with cash dividends from City National, will be adequate to satisfy its funding and cash needs over the next twelve months.
As of December 31, 2024, the Parent Company reported a cash balance of $117.3 million and management believes that the Parent Company’s available cash balance, together with cash dividends from City National, will be adequate to satisfy its funding and cash needs over the next twelve months.
City National is a retail and consumer-oriented community bank with 98 bank branches in West Virginia (58), Kentucky (23), Virginia (13) and southeastern Ohio (4).
City National is a retail and consumer-oriented community bank with 97 bank branches in West Virginia (58), Kentucky (22), Virginia (13) and southeastern Ohio (4).
As illustrated in the Consolidated Statements of Cash Flows, the Company generated $137.6 million of cash from operating activities during 2023, primarily from interest income received on loans and investments, net of interest expense paid on deposits and borrowings.
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.
The following table shows asset quality ratios as of December 31, 2022 and 2021: 2023 2022 Net charge offs to average loans 0.01 % 0.04 % Provision for (recovery of) credit losses to average loans 0.08 0.01 Allowance for credit losses to nonperforming loans 290.56 317.28 Allowance for credit losses to total loans 0.55 0.47 Non-performing assets as a percentage of total loans and OREO 0.21 0.17 48 GOODWILL The Company evaluates the recoverability of goodwill and indefinite lived intangible assets annually as of November 30 th , or more frequently if events or changes in circumstances warrant, such as a material adverse change in the Company's business.
The following table shows asset quality ratios as of December 31, 2024 and 2023: 2024 2023 Net charge offs to average loans 0.06 % 0.01 % Provision for credit losses to average loans 0.04 0.08 Allowance for credit losses to non-performing loans 154.26 290.56 Allowance for credit losses to total loans 0.51 0.55 Non-performing assets as a percentage of total loans and OREO 0.35 0.21 48 GOODWILL The Company evaluates the recoverability of goodwill and indefinite lived intangible assets annually as of November 30 th , or more frequently if events or changes in circumstances warrant, such as a material adverse change in the Company's business.
The portfolio has 93% rated "A" or better and the remaining portfolio is unrated, as the issuances represented small issuances of revenue bonds. Additional credit support has been purchased by the issuer for 24% of the portfolio, while 76% has no additional credit support.
The portfolio has 92% rated "A" or better and the remaining portfolio is unrated, as the issuances represented small issuances of revenue bonds. Additional credit support has been purchased by the issuer for 25% of the portfolio, while 75% has no additional credit support.
At the Parent Company level, the principal source of cash is dividends from its banking subsidiary, City National. Dividends paid by City National to the Parent Company are subject to certain legal and regulatory limitations.
LIQUIDITY AND CAPITAL RESOURCES Liquidity The Company evaluates the adequacy of liquidity at both the Parent Company level and at the banking subsidiary level. At the Parent Company level, the principal source of cash is dividends from its banking subsidiary, City National. Dividends paid by City National to the Parent Company are subject to certain legal and regulatory limitations.
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.
The portfolio totaled $240.9 million as of December 31, 2024. 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.
Further, the Company’s deposit mix has a very high proportion of transaction and savings accounts that fund 63.1% of the Company’s total assets and the Company uses time deposits over $250,000 to fund 5.5% of total assets compared to its peers, which fund 12.3% of total assets with such deposits.
Further, the Company’s deposit mix has a very high proportion of transaction and savings accounts that fund 60.3% of the Company’s total assets and the Company uses time deposits over $250,000 to fund 6.8% of total assets compared to its peers, which fund 10.6% of total assets with such deposits.
Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions: 2023 2022 2021 Residential real estate $ 243 $ 298 $ 620 Commercial, financial, and agriculture 2,276 642 1,198 Installment loans to individuals 41 45 87 Time deposits 535 83 193 Total $ 3,095 $ 1,068 $ 2,098 4.
Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions: 2024 2023 2022 Residential real estate $ 202 $ 243 $ 298 Commercial, financial, and agriculture 3,301 2,276 642 Installment loans to individuals 21 41 45 Time deposits 110 535 83 Total $ 3,634 $ 3,095 $ 1,068 4.
As a result of the Company’s analysis of the adequacy of the Allowance for Credit Losses, the Company recorded a provision for credit losses of $3.2 million for the year ended December 31, 2023 and $0.5 million for year ended December 31, 2022.
As a result of the Company’s analysis of the adequacy of the Allowance for Credit Losses, the Company recorded a provision for credit losses of $1.8 million for the year ended December 31, 2024 and $3.2 million for the year ended December 31, 2023.
No impairment was required to be recognized in 2023 or 2022, as the estimated fair value of the Company has continued to exceed its book value. CERTIFICATES OF DEPOSIT The Company has time certificates of deposit that meet or exceed the FDIC insurance limit of $250,000 totaling an estimated $338.4 million.
No impairment was required to be recognized in 2024 or 2023, as the estimated fair value of the Company has continued to exceed its book value. CERTIFICATES OF DEPOSIT The Company has time certificates of deposit that meet or exceed the FDIC insurance limit of $250,000 totaling an estimated $441.9 million at December 31, 2024.
FINANCIAL SUMMARY The Company’s financial performance over the previous three years is summarized in the following table: 2023 2022 2021 Net income available to common shareholders (in thousands) $ 114,365 $ 102,071 $ 88,080 Earnings per common share, basic $ 7.62 $ 6.81 $ 5.67 Earnings per common share, diluted $ 7.61 $ 6.80 $ 5.66 Cash dividends declared $ 2.73 $ 2.50 $ 2.34 Book value per share $ 45.65 $ 39.08 $ 45.22 Dividend payout ratio 35.9 % 36.8 % 41.3 % ROA* 1.87 % 1.71 % 1.49 % ROE* 18.0 % 16.5 % 12.7 % ROATCE* 23.8 % 20.3 % 15.3 % *ROA (Return on Average Assets) is a measure of the effectiveness of asset utilization.
FINANCIAL SUMMARY The Company’s financial performance over the previous three years is summarized in the following table: 2024 2023 2022 Net income available to common shareholders (in thousands) $ 117,101 $ 114,365 $ 102,071 Earnings per common share, basic $ 7.91 $ 7.62 $ 6.81 Earnings per common share, diluted $ 7.89 $ 7.61 $ 6.80 Cash dividends declared $ 3.01 $ 2.73 $ 2.50 Book value per share $ 49.69 $ 45.65 $ 39.08 Dividend payout ratio 38.1 % 35.9 % 36.8 % ROA* 1.85 % 1.87 % 1.71 % ROE* 16.4 % 18.0 % 16.5 % ROATCE* 21.2 % 23.8 % 20.3 % *ROA (Return on Average Assets) is a measure of the effectiveness of asset utilization.
The Company’s net loan to asset ratio is 66.5% as of December 31, 2023 and deposit balances fund 80.0% of total assets as compared to 72.9% for its peers (Bank Holding Company Peer Group, as of the most recent data available as of September 30, 2023, which includes commercial banks with assets ranging from $3 billion to $10 billion).
The Company’s net loan to asset ratio is 65.8% as of December 31, 2024 and deposit balances fund 79.6% of total assets as compared to 72.2% for its peers (Bank Holding Company Peer Group, as of the most recent data available as of September 30, 2024, which includes commercial banks with assets ranging from $3 billion to $10 billion).
TABLE SEVEN MATURITY DISTRIBUTION OF UNINSURED CERTIFICATES OF DEPOSIT Amounts Three months or less $ 26,647 Over three months through six months 36,533 Over six months through twelve months 41,224 Over twelve months 31,949 Total $ 136,353 FAIR VALUE MEASUREMENTS The Company determines the fair value of its financial instruments based on the fair value hierarchy established in ASC Topic 820, whereby the fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
TABLE SEVEN MATURITY DISTRIBUTION OF UNINSURED CERTIFICATES OF DEPOSIT Amounts Three months or less $ 50,418 Over three months through six months 68,370 Over six months through twelve months 49,746 Over twelve months 11,605 Total $ 180,139 FAIR VALUE MEASUREMENTS The Company determines the fair value of its financial instruments based on the fair value hierarchy established in ASC Topic 820, whereby the fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
In computing the provision for income taxes, management must make judgments regarding interpretation of laws in those jurisdictions. Because the application of tax laws and regulations for many types of transactions is susceptible to varying interpretations, amounts reported in the financial statements could be changed at a later date upon final determinations by taxing authorities.
Because the application of tax laws and regulations for many types of transactions is susceptible to varying interpretations, amounts reported in the financial statements could be changed at a later date upon final determinations by taxing authorities.
Nonresidential non-owner occupied commercial real 44 estate totaled $680.6 million while nonresidential owner-occupied commercial real estate totaled $240.3 million as of December 31, 2023. Risk characteristics relate to levels of consumer spending and overall economic conditions.
Nonresidential non-owner occupied commercial real estate totaled $707.3 million while nonresidential owner-occupied commercial real estate totaled $233.5 million as of December 31, 2024. Risk characteristics relate to levels of consumer spending and overall economic conditions.
The Company manages the risk associated with consumer loans by monitoring such factors as portfolio size and growth, internal lending policies and pertinent economic conditions. City National's underwriting standards are continually evaluated and modified based upon these factors.
The Company manages the risk associated with consumer loans by monitoring such factors as portfolio size and growth, internal lending policies and pertinent economic conditions. City National's underwriting standards are continually evaluated and modified based upon these factors. Consumer loans decreased $7.4 million from 2023 to $58 million at December 31, 2024.
The credit and collateral documents for each potential purchased loan are reviewed to ensure the credit metrics are acceptable to management. At December 31, 2023, $23 million of the residential real estate loans were for properties under construction.
The credit and collateral documents for each potential purchased loan are reviewed to ensure the credit metrics are acceptable to management. At December 31, 2024, $7.5 million of the residential real estate loans were for properties under construction. Home equity loans increased $32.0 million from December 31, 2023 to $199 million at December 31, 2024.
However, dividends to shareholders can, if necessary, be suspended. In addition to these anticipated cash needs, the Parent Company has operating expenses and other contractual obligations, which are estimated to require $1.6 million of additional cash over the next 12 months.
In addition to these anticipated cash needs, the Parent Company has operating expenses and other contractual obligations, which are estimated to 39 require $1.8 million of additional cash over the next 12 months.
The Company's municipal bond portfolio of $213 million as of December 31, 2023 has an average tax equivalent yield of 2.45% with an average maturity of 12.1 years. The average dollar amount invested in each security is $0.8 million.
The Company's municipal bond portfolio of $184 million as of December 31, 2024 has an average tax equivalent yield of 2.58% with an average maturity of 11.2 years. The average dollar amount invested in each security is $1.3 million.
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.
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, 2024 and December 31, 2023.
The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments. 2023 2022 Amount Percent of Loans in Each Category to Total Loans Amount Percent of Loans in Each Category to Total Loans Commercial and industrial $ 4,474 10 % $ 3,568 10 % 1-4 Family 1,402 5 % 566 3 Hotels 2,211 9 % 2,332 10 Multi-family 1,002 5 % 380 5 Non Residential Non-Owner Occupied 4,077 16 % 2,019 16 Non Residential Owner Occupied 2,453 6 % 1,315 5 Commercial real estate 11,145 41 % 6,612 39 Residential real estate 5,398 43 % 5,427 46 Home equity 490 4 % 290 4 Consumer 269 2 % 110 1 DDA overdrafts 969 — % 1,101 — Allowance for Credit Losses $ 22,745 100 % $ 17,108 100 % The ACL increased from $17.1 million at December 31, 2022 to $22.7 million at December 31, 2023.
The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments. 2024 2023 Amount Percent of Loans in Each Category to Total Loans Amount Percent of Loans in Each Category to Total Loans Commercial and industrial $ 4,541 10 % $ 4,474 10 % 1-4 Family 1,366 5 1,402 5 Hotels 2,355 9 2,211 9 Multi-family 1,390 6 1,002 5 Non Residential Non-Owner Occupied 3,001 16 4,077 16 Non Residential Owner Occupied 1,725 5 2,453 6 Commercial real estate 9,837 41 11,145 41 Residential real estate 5,798 43 5,398 43 Home equity 643 5 490 4 Consumer 314 1 269 2 DDA overdrafts 789 — 969 — Allowance for Credit Losses $ 21,922 100 % $ 22,745 100 % The ACL decreased from $22.7 million at December 31, 2023 to $21.9 million at December 31, 2024.
This increase was primarily due to an increase in salaries and employee benefit expenses ($4.7 million, due to higher salary adjustments during 2022, increased incentive compensation, and increased health insurance) and equipment and software related expenses ($1.3 million). In addition, occupancy related expenses increased $0.6 million, advertising increased $0.3 million, and merger-related expenses increased $0.3 million.
This increase was primarily due to an increase in salaries and employee benefit expenses ($3.2 million due to salary adjustments (4.1%) and increased health insurance (5.0%)) and equipment and software related expense ($1.5 million). In addition, bankcard expense increased $1.1 million and advertising expenses increased $0.7 million.
The Company’s reported net interest margin increased from 3.33% for the year ended December 31, 2022 to 4.01% for the year ended December 31, 2023. 2022 vs. 2021 The Company’s net interest income increased from $155.6 million for the year ended December 31, 2021 to $180.0 million for the year ended December 31, 2022.
The Company’s reported net interest margin decreased from 4.01% for the year ended December 31, 2023 to 3.86% for the year ended December 31, 2024. 35 2023 vs. 2022 The Company’s net interest income increased from $180.0 million for the year ended December 31, 2022 to $219.2 million for the year ended December 31, 2023.
Second priority lien home equity loans are underwritten with less documentation than first priority lien residential real estate loans but typically have similar loan-to-value ratios and other terms as first priority lien residential real estate loans.
These loans include home equity lines of credit ("HELOC") and amortized home equity loans that require monthly installment payments. Second priority lien home equity loans are underwritten with less documentation than first priority lien residential real estate loans but typically have similar loan-to-value ratios and other terms as first priority lien residential real estate loans.
Regulatory agencies can initiate certain mandatory actions if either City Holding or City National fails to meet the minimum capital requirements, as shown above.
Regulatory agencies can initiate certain mandatory actions if either City Holding or City National fails to meet the minimum capital requirements, as shown above. As of December 31, 2024, management believes that City Holding and City National meet all capital adequacy requirements.
NET INTEREST INCOME 2023 2022 2021 Total interest income $ 271,264 $ 189,688 $ 165,467 Total interest expense 52,023 9,655 9,894 Net interest income 219,241 180,033 155,573 2023 vs. 2022 The Company’s net interest income increased from $180.0 million for the year ended December 31, 2022 to $219.2 million for the year ended December 31, 2023.
NET INTEREST INCOME 2024 2023 2022 Total interest income $ 306,429 $ 271,264 $ 189,688 Total interest expense 86,192 52,023 9,655 Net interest income 220,237 219,241 180,033 2024 vs. 2023 The Company’s net interest income increased from $219.2 million for the year ended December 31, 2023 to $220.2 million for the year ended December 31, 2024.
During the year ended December 31, 2023, the Company repurchased approximately 666,575 common shares at a weighted average price of $90.21 per share as part of a one million share repurchase plan authorized by the Board of Directors in May 2022. At December 31, 2023, the Company could repurchase an additional approximately 150,319 shares under the current plan.
During the year ended December 31, 2024, the Company repurchased approximately 179,000 common shares at a weighted average price of $100.24 per share as part of a one million share repurchase plan authorized by the Board of Directors in January 2024. At December 31, 2024, the Company could repurchase an additional approximately 821,000 shares under the current plan.
Short-term borrowings and FHLB long-term advances represent borrowings of the Company and have stated maturity dates. Operating leases between the Company and the lessor have stated expiration dates and renewal terms.
Short-term borrowings and FHLB long-term advances represent borrowings of the Company and have stated maturity dates.
Changing each factor by 0.01% (moderate improvement or decline) would have a $4.3 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.
Changing each factor by 0.01% (moderate improvement or decline) would have a $4.5 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 for the year ended December 31, 2024.
As of December 31, 2023, management believes that City Holding and City National meet all capital adequacy requirements. 41 In November 2019, the federal banking regulators published final rules implementing a simplified measure of capital adequacy for certain banking organizations that have less than $10 billion in total consolidated assets.
In November 2019, the federal banking regulators published final rules implementing a simplified measure of capital adequacy for certain banking organizations that have less than $10 billion in total consolidated assets.
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. On March 10, 2023, the Company acquired 100% of the outstanding common shares of Citizens Commerce Bancshares, Inc.
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-Three for additional information on the Company's reportable business segment.
These increases were partially offset by a decrease of $0.6 million in service charges. Non-interest expenses, excluding merger expenses, increased $14.3 million, or 12%, from $124.0 million for the year ended 2022 to $138.4 million for the year ended 2023.
These increases were partially offset by a decrease of $0.6 million in service charges. Non-interest expenses increased $19.2 million, or 15.5%, from $124.3 million for 2022 to $143.5 million for 2023.
During the second quarter of 2023, the Company borrowed $100.0 million from the Federal Home Loan Bank at a weighted average rate of 4.01%. 32 TABLE ONE AVERAGE BALANCE SHEETS AND NET INTEREST INCOME (In thousands) 2023 2022 2021 Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Assets Loan portfolio (1) : Residential real estate (2),(3) $ 1,899,239 $ 88,083 4.64 % $ 1,755,772 $ 68,581 3.91 % $ 1,658,710 $ 65,060 3.92 % Commercial, financial, and agriculture (3) 1,935,038 120,783 6.24 1,781,132 75,390 4.23 1,838,560 68,784 3.74 Installment loans to individuals (3),(4) 66,636 3,828 5.74 46,622 2,567 5.51 48,708 2,831 5.81 Total loans 3,900,913 212,694 5.45 3,583,526 146,538 4.09 3,545,978 136,675 3.85 Securities: Taxable 1,273,674 48,335 3.79 1,288,252 34,445 2.67 1,075,550 23,071 2.15 Tax-exempt (5) 175,383 4,878 2.78 218,588 6,217 2.84 242,125 6,362 2.63 Total securities 1,449,057 53,213 3.67 1,506,840 40,662 2.70 1,317,675 29,433 2.23 Deposits in depository institutions 142,299 6,382 4.48 357,184 3,794 1.06 568,928 693 0.12 Total interest-earning assets 5,492,269 272,289 4.96 5,447,550 190,994 3.51 5,432,581 166,801 3.07 Cash and due from banks 74,443 88,581 92,847 Bank premises and equipment 72,582 72,590 76,069 Goodwill and intangible assets 153,937 116,469 117,899 Other assets 329,198 271,685 216,493 Less: allowance for credit losses (22,089) (17,687) (21,922) Total assets $ 6,100,340 $ 5,979,188 $ 5,913,967 Liabilities Interest-bearing demand deposits $ 1,291,234 11,048 0.86 % $ 1,150,007 1,234 0.11 % $ 1,071,628 504 0.05 % Savings deposits 1,332,527 7,979 0.60 1,414,727 1,544 0.11 1,291,225 689 0.05 Time deposits (3) 969,329 18,260 1.88 983,046 4,666 0.47 1,157,502 8,213 0.71 Short-term borrowings 290,440 12,027 4.14 284,611 2,211 0.78 298,413 489 0.16 FHLB long-term advances 66,849 2,709 4.05 — — — — — — Total interest-bearing liabilities 3,950,379 52,023 1.32 3,832,391 9,655 0.25 3,818,768 9,895 0.26 Noninterest-bearing demand deposits 1,389,295 1,429,415 1,315,801 Other liabilities 125,377 98,553 84,377 Total shareholders’ equity 635,289 618,829 695,021 Total liabilities and shareholders’ equity $ 6,100,340 $ 5,979,188 $ 5,913,967 Net interest income $ 220,266 $ 181,339 $ 156,906 Net yield on earning assets 4.01 % 3.33 % 2.89 % 1.
During the year ended December 31, 2024, the Company borrowed an additional $50.0 million from the Federal Home Loan Bank. 32 TABLE ONE AVERAGE BALANCE SHEETS AND NET INTEREST INCOME (In thousands) 2024 2023 2022 Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Assets Loan portfolio (1) : Residential real estate (2),(3) $ 1,978,804 $ 100,401 5.07 % $ 1,899,239 $ 88,083 4.64 % $ 1,755,772 $ 68,581 3.91 % Commercial, financial, and agriculture (3) 2,088,474 137,071 6.56 1,935,038 120,783 6.24 1,781,132 75,390 4.23 Installment loans to individuals (3),(4) 66,565 4,048 6.08 66,636 3,828 5.74 46,622 2,567 5.51 Total loans 4,133,843 241,520 5.84 3,900,913 212,694 5.45 3,583,526 146,538 4.09 Securities: Taxable 1,295,289 54,132 4.18 1,273,674 48,335 3.79 1,288,252 34,445 2.67 Tax-exempt (5) 158,257 4,153 2.62 175,383 4,878 2.78 218,588 6,217 2.84 Total securities 1,453,546 58,285 4.01 1,449,057 53,213 3.67 1,506,840 40,662 2.70 Deposits in depository institutions 144,134 7,495 5.20 142,299 6,382 4.48 357,184 3,794 1.06 Total interest-earning assets 5,731,523 307,300 5.36 5,492,269 272,289 4.96 5,447,550 190,994 3.51 Cash and due from banks 104,575 74,443 88,581 Bank premises and equipment 71,298 72,582 72,590 Goodwill and intangible assets 161,318 153,937 116,469 Other assets 299,378 329,198 271,685 Less: allowance for credit losses (22,804) (22,089) (17,687) Total assets $ 6,345,288 $ 6,100,340 $ 5,979,188 Liabilities Interest-bearing demand deposits $ 1,323,507 $ 15,335 1.16 % $ 1,291,234 $ 11,048 0.86 % $ 1,150,007 $ 1,234 0.11 % Savings deposits 1,231,698 8,917 0.72 1,332,527 7,979 0.60 1,414,727 1,544 0.11 Time deposits (3) 1,149,773 40,277 3.50 969,329 18,260 1.88 983,046 4,666 0.47 Short-term borrowings 337,368 15,500 4.59 290,440 12,027 4.14 284,611 2,211 0.78 FHLB long-term advances 146,721 6,163 4.20 66,849 2,709 4.05 — — — Total interest-bearing liabilities 4,189,067 86,192 2.06 3,950,379 52,023 1.32 3,832,391 9,655 0.25 Noninterest-bearing demand deposits 1,336,625 1,389,295 1,429,415 Other liabilities 107,061 125,377 98,553 Total shareholders’ equity 712,535 635,289 618,829 Total liabilities and shareholders’ equity $ 6,345,288 $ 6,100,340 $ 5,979,188 Net interest income $ 221,108 $ 220,266 $ 181,339 Net yield on earning assets 3.86 % 4.01 % 3.33 % 1.
Average yields on investments available-for-sale are computed based on amortized cost. Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity. 43 TABLE FIVE LOAN PORTFOLIO Loans increased $479.7 million (13.2%) from December 31, 2022 to $4.13 billion at December 31, 2023. The Company’s acquisition of Citizens increased total loans by $254.7 million.
Average yields on investments available-for-sale are computed based on amortized cost. Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity. TABLE FIVE LOAN PORTFOLIO Loans increased $148.9 million (3.6%) from December 31, 2023 to $4.27 billion at December 31, 2024.
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 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.
Management re-underwrites 100% of the portfolio on an annual basis, using the same guidelines that are used to underwrite its commercial loans. Revenue bonds were 57% of the portfolio, while the remaining 43% were general obligation bonds.
Management aggregates by issuer, and re-underwrites all securities greater than $1 million in the portfolio on an annual basis, using the same guidelines that are used to underwrite its commercial loans. Revenue bonds were 58% of the portfolio, while the remaining 42% were general obligation bonds.
At December 31, 2023, $2 million of the commercial real estate loans were for commercial properties under construction. In order to group loans with similar risk characteristics, the portfolio is further segmented by product types: ◦ Commercial 1-4 Family loans consist of residential single-family, duplex, triplex, and fourplex rental properties and totaled $206.2 million as of December 31, 2023.
In order to group loans with similar risk characteristics, the portfolio is further segmented by product types: ◦ Commercial 1-4 Family loans consist of residential single-family, duplex, triplex, and fourplex rental properties and totaled $197.3 million as of December 31, 2024. Risk characteristics are driven by rental housing demand as well as economic and employment conditions.
This increase was largely due to an increase in salaries and employee benefits of $6.6 million due to salary adjustments, Citizens personnel ($1.9 million), and increased health insurance along with increase in other expenses of $4.9 million.
This increase was primarily due to an increase in other expenses ($9.8 million, due primarily to higher acquisition and integration expenses associated with the completed acquisition of Citizens ($5.2 million)) and salaries and employee benefit expenses ($6.6 million due to salary adjustments, Citizens personnel ($1.9 million), and increased health insurance).
The composition of the Company’s loan portfolio as of the dates indicated follows (in thousands): 2023 2022 Commercial and industrial $ 426,951 $ 373,890 1-4 Family 206,237 116,192 Hotels 357,142 340,404 Multi-family 189,165 174,786 Non Residential Non-Owner Occupied 680,590 585,964 Non Residential Owner Occupied 240,328 174,961 Commercial real estate 1,673,462 1,392,307 Residential real estate 1,788,149 1,693,523 Home equity 167,201 134,317 Consumer 65,246 48,806 DDA overdrafts 4,914 3,415 Total loans $ 4,125,923 $ 3,646,258 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.
The composition of the Company’s loan portfolio as of the dates indicated follows (in thousands): 2024 2023 Commercial and industrial $ 419,838 $ 426,951 1-4 Family 197,258 206,237 Hotels 389,660 357,142 Multi-family 240,943 189,165 Non Residential Non-Owner Occupied 707,265 680,590 Non Residential Owner Occupied 233,497 240,328 Commercial real estate 1,768,623 1,673,462 Residential real estate 1,823,610 1,788,149 Home equity 199,192 167,201 Consumer 57,816 65,246 DDA overdrafts 5,697 4,914 Total loans $ 4,274,776 $ 4,125,923 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.
The Company’s minimum required capital ratios for both City Holding and City National include the 2.5% capital conservation buffer and are illustrated in the following tables (in thousands): December 31, 2023 Actual Minimum Required - Basel III Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio CET 1 Capital City Holding Company $ 627,579 15.7 % $ 279,768 7.0 % $ 259,875 6.5 % City National Bank 549,031 13.8 % 278,692 7.0 % 258,785 6.5 % Tier 1 Capital City Holding Company 627,579 15.7 % 339,718 8.5 % 319,735 8.0 % City National Bank 549,031 13.8 % 338,412 8.5 % 318,505 8.0 % Total Capital City Holding Company 648,646 16.2 % 419,652 10.5 % 399,669 10.0 % City National Bank 570,099 14.3 % 418,038 10.5 % 398,131 10.0 % Tier 1 Leverage Ratio City Holding Company 627,579 10.2 % 245,468 4.0 % 306,835 5.0 % City National Bank 549,031 8.9 % 245,587 4.0 % 306,984 5.0 % December 31, 2022 Actual Minimum Required - Basel III Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio CET 1 Capital City Holding Company $ 598,068 16.2 % $ 257,965 7.0 % $ 239,538 6.5 % City National Bank 508,586 13.9 % 256,520 7.0 % 238,197 6.5 % Tier 1 Capital City Holding Company 598,068 16.2 % 313,243 8.5 % 294,817 8.0 % City National Bank 508,586 13.9 % 311,488 8.5 % 293,166 8.0 % Total Capital City Holding Company 612,654 16.6 % 386,947 10.5 % 368,521 10.0 % City National Bank 523,172 14.3 % 384,780 10.5 % 366,457 10.0 % Tier 1 Leverage Ratio City Holding Company 598,068 10.0 % 238,954 4.0 % 298,692 5.0 % City National Bank 508,586 8.6 % 237,973 4.0 % 297,466 5.0 % As of December 31, 2023, management believes that City Holding Company, and its banking subsidiary, City National, were "well capitalized." City Holding is subject to regulatory capital requirements administered by the Federal Reserve, while City National is subject to regulatory capital requirements administered by the OCC and the FDIC.
The Company’s minimum required capital ratios for both City Holding and City National include the 2.5% capital conservation buffer and are illustrated in the following tables (in thousands): December 31, 2024 Actual Minimum Required - Basel III Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio CET 1 Capital City Holding Company $ 688,707 16.5 % $ 291,989 7.0 % $ 271,133 6.5 % City National Bank 563,301 13.6 % 291,068 7.0 % 270,277 6.5 % Tier 1 Capital City Holding Company 688,707 16.5 % 354,558 8.5 % 333,702 8.0 % City National Bank 563,301 13.6 % 353,439 8.5 % 332,649 8.0 % Total Capital City Holding Company 709,820 17.0 % 437,983 10.5 % 417,127 10.0 % City National Bank 584,415 14.1 % 436,602 10.5 % 415,811 10.0 % Tier 1 Leverage Ratio City Holding Company 688,707 10.6 % 259,325 4.0 % 324,156 5.0 % City National Bank 563,301 8.7 % 258,477 4.0 % 323,096 5.0 % 41 December 31, 2023 Actual Minimum Required - Basel III Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio CET 1 Capital City Holding Company $ 627,579 15.7 % $ 279,768 7.0 % $ 259,875 6.5 % City National Bank 549,031 13.8 % 278,692 7.0 % 258,785 6.5 % Tier 1 Capital City Holding Company 627,579 15.7 % 339,718 8.5 % 319,735 8.0 % City National Bank 549,031 13.8 % 338,412 8.5 % 318,505 8.0 % Total Capital City Holding Company 648,646 16.2 % 419,652 10.5 % 399,669 10.0 % City National Bank 570,099 14.3 % 418,038 10.5 % 398,131 10.0 % Tier 1 Leverage Ratio City Holding Company 627,579 10.2 % 245,468 4.0 % 306,835 5.0 % City National Bank 549,031 8.9 % 245,587 4.0 % 306,984 5.0 % As of December 31, 2024, management believes that City Holding Company, and its banking subsidiary, City National, were "well capitalized." City Holding is subject to regulatory capital requirements administered by the Federal Reserve, while City National is subject to regulatory capital requirements administered by the OCC and the FDIC.
Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. 34 TABLE TWO RATE/VOLUME ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE (In thousands) 2023 vs. 2022 Increase (Decrease) Due to Change In: 2022 vs. 2021 Increase (Decrease) Due to Change In: Volume Rate Net Volume Rate Net Interest-earning assets: Loan portfolio Residential real estate $ 5,604 $ 13,898 $ 19,502 $ 3,774 $ (58) $ 3,716 Commercial, financial, and agriculture 6,514 38,879 45,393 (2,148) 8,754 6,606 Installment loans to individuals 1,102 159 1,261 (121) (143) (264) Previously securitized loans — — — — (195) (195) Total loans 13,220 52,936 66,156 1,505 8,358 9,863 Securities: Taxable (390) 14,280 13,890 4,563 6,811 11,374 Tax-exempt (1) (1,229) (110) (1,339) (618) 473 (145) Total securities (1,619) 14,170 12,551 3,945 7,284 11,229 Deposits in depository institutions (2,283) 4,871 2,588 (258) 3,359 3,101 Total interest-earning assets $ 9,318 $ 71,977 $ 81,295 $ 5,192 $ 19,001 $ 24,193 Interest-bearing liabilities: Interest-bearing demand deposits $ 152 $ 9,662 $ 9,814 $ 37 $ 693 $ 730 Savings deposits (90) 6,525 6,435 66 789 855 Time deposits (65) 13,659 13,594 (1,238) (2,309) (3,547) Short-term borrowings 45 9,771 9,816 (23) 1,745 1,722 FHLB long-term advances 2,709 — 2,709 — — — Total interest-bearing liabilities 2,751 39,617 42,368 (1,158) 918 (240) Net Interest Income $ 6,567 $ 32,360 $ 38,927 $ 6,350 $ 18,083 $ 24,433 1.
Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. 34 TABLE TWO RATE/VOLUME ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE (In thousands) 2024 vs. 2023 Increase (Decrease) Due to Change In: 2023 vs. 2022 Increase (Decrease) Due to Change In: Volume Rate Net Volume Rate Net Interest-earning assets: Loan portfolio Residential real estate $ 3,690 $ 8,628 $ 12,318 $ 5,604 $ 13,898 $ 19,502 Commercial, financial, and agriculture 9,577 6,711 16,288 6,514 38,879 45,393 Installment loans to individuals (4) 224 220 1,102 159 1,261 Total loans 13,263 15,563 28,826 13,220 52,936 66,156 Securities: Taxable 820 4,977 5,797 (390) 14,280 13,890 Tax-exempt (1) (476) (249) (725) (1,229) (110) (1,339) Total securities 344 4,728 5,072 (1,619) 14,170 12,551 Deposits in depository institutions 82 1,031 1,113 (2,283) 4,871 2,588 Total interest-earning assets $ 13,689 $ 21,322 $ 35,011 $ 9,318 $ 71,977 $ 81,295 Interest-bearing liabilities: Interest-bearing demand deposits $ 276 $ 4,011 $ 4,287 $ 152 $ 9,662 $ 9,814 Savings deposits (604) 1,542 938 (90) 6,525 6,435 Time deposits 3,399 18,618 22,017 (65) 13,659 13,594 Short-term borrowings 1,943 1,530 3,473 45 9,771 9,816 FHLB long-term advances 3,237 217 3,454 2,709 — 2,709 Total interest-bearing liabilities 8,251 25,918 34,169 2,751 39,617 42,368 Net Interest Income $ 5,438 $ (4,596) $ 842 $ 6,567 $ 32,360 $ 38,927 1.
("Citizens") and its principal banking subsidiary, Citizens Commerce Bank of Versailles, Kentucky. See Note Three for additional information on the acquisition. CRITICAL ACCOUNTING POLICIES AND ESTIMATES 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.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES 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.
This liability represents an estimate of tax positions that the Company has taken in its tax returns that may ultimately not be sustained upon examination by tax authorities. As the ultimate amount and timing of any future cash settlements cannot be predicted with reasonable reliability, this estimated liability has been excluded from the contractual obligations table.
As the ultimate amount and timing of any future cash settlements cannot be predicted with reasonable reliability, this estimated liability has been excluded from the contractual obligations table.
At December 31, 2023, the Company had $1.5 billion of commercial loans classified as non-owner occupied and was within its designated concentration threshold. Residential real estate loans increased $51.3 million from December 31, 2022 to $1.79 billion at December 31, 2023, excluding $43.4 million of residential real estate loans acquired from Citizens.
Management also monitors non-owner occupied commercial real estate as a percent of risk based capital (based upon regulatory guidance). At December 31, 2024, the Company had $1.5 billion of commercial loans classified as non-owner occupied and was within its designated concentration threshold. Residential real estate loans increased $35.5 million from December 31, 2023 to $1.82 billion at December 31, 2024.
During 2023, the Parent Company used cash obtained from the dividends received primarily to: (1) pay common dividends to shareholders and (2) fund repurchases of the Company's common shares.
During 2024, the Parent Company used cash obtained from the dividends received primarily to: (1) pay common dividends to shareholders and (2) fund repurchases of the Company's common shares. Additional information concerning sources and uses of cash by the Parent Company is discussed in Note Nineteen of the Notes to Consolidated Financial Statements.
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.
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.
Risk characteristics relate to the demand for both business and personal travel. ◦ Multi-family consists of 5 or more family residential apartment lending. The portfolio totaled $189.2 million as of December 31, 2023.
These properties exhibit greater risk than multi-family properties due to fewer income sources. ◦ The Hotel portfolio is comprised of all lodging establishments and totaled $389.7 million as of December 31, 2024. Risk characteristics relate to the demand for both business and personal travel. ◦ Multi-family consists of 5 or more family residential apartment lending.
C&I loans increased $38.4 million from December 31, 2022 to December 31, 2023, excluding $14.7 million of C&I loans acquired from Citizens. 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.
C&I loans decreased $7.1 million from December 31, 2023 to December 31, 2024. 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 to many of the same customers and carry similar industry risks as C&I loans, but have different collateral risk.
The Company’s tax equivalent net interest income increased $24.4 million, or 15.6%, from $156.9 million for the year ended December 31, 2021 to $181.3 million for the year ended December 31, 2022.
The Company’s tax equivalent net interest income increased $0.8 million, or 0.4%, from $220.3 million for the year ended December 31, 2023 to $221.1 million for the year ended December 31, 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. With respect to liquidity, the Company has chosen a conservative posture and believes t hat its liquidity position is strong.
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 this goal.
In total, the qualitative changes increased the ACL by approximately $0.5 million for the year ended December 31, 2023. Income Taxes The Income Taxes section of this Annual Report on Form 10-K provides management’s analysis of the Company’s income taxes. The Company is subject to federal and state income taxes in the jurisdictions in which it conducts business.
Income Taxes The Income Taxes section of this Annual Report on Form 10-K provides management’s analysis of the Company’s income taxes. The Company is subject to federal and state income taxes in the jurisdictions in which it conducts business. In computing the provision for income taxes, management must make judgments regarding interpretation of laws in those jurisdictions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInternally, the Company considers a variety of interest rate scenarios that are deemed to be possible while considering the level of risk it is willing to assume in "worst-case" scenarios such as shown by the following: Immediate Basis Point Change in Interest Rates Implied Federal Funds Rate Associated with Change in Interest Rates Estimated Increase (Decrease) in Net Income Over 12 Months December 31, 2023 +300 8.50 -4.5 % +200 7.50 -2.4 +100 6.50 -1.6 -100 4.50 -7.2 -200 3.50 -8.3 -300 2.50 -13.9 December 31, 2022 +300 7.50 % -4.5 % +200 6.50 -2.6 +100 5.50 -1.2 -100 3.50 -5.5 -200 2.50 -14.4 -300 1.50 -19.3 These estimates are highly dependent upon assumptions made by management, including, but not limited to, assumptions regarding the manner in which interest-bearing demand deposit and savings deposit accounts reprice in different interest rate scenarios, changes in the composition of deposit balances, pricing behavior of competitors, prepayments of loans 51 and deposits under alternative rate environments, and new business volumes and pricing.
Biggest changeInternally, the Company considers a variety of interest rate scenarios that are deemed to be possible while considering the level of risk it is willing to assume in "worst-case" scenarios such as shown by the following: Immediate Basis Point Change in Interest Rates Implied Federal Funds Rate Associated with Change in Interest Rates Estimated Increase (Decrease) in Net Income Over 12 Months December 31, 2024 +300 7.50 3.2 % +200 6.50 5.9 +100 5.50 7.0 -100 3.50 -2.9 -200 2.50 -7.8 -300 1.50 -13.2 December 31, 2023 +300 8.50 % -4.5 % +200 7.50 -2.4 +100 6.50 -1.6 -100 4.50 -7.2 -200 3.50 -8.3 -300 2.50 -13.9 These estimates are highly dependent upon assumptions made by management, including, but not limited to, assumptions regarding the manner in which interest-bearing demand deposit and savings deposit accounts reprice in different interest rate scenarios, changes in the composition of deposit balances, pricing behavior of competitors, prepayments of loans 51 and deposits under alternative rate environments, and new business volumes and pricing.
Significant changes in interest rates by the Federal Reserve could result in similar changes in LIBOR and SOFR interest rates, prime rates, and other benchmark interest rates that could materially affect the estimated fair value of the Company’s investment securities portfolio, interest paid on the Company’s short-term and long-term borrowings, interest earned on the Company’s loan portfolio and interest paid on its deposit accounts.
Significant changes in interest rates by the Federal Reserve could result in similar changes in SOFR interest rates, prime rates, and other benchmark interest rates that could materially affect the estimated fair value of the Company’s investment securities portfolio, interest paid on the Company’s short-term and long-term borrowings, interest earned on the Company’s loan portfolio and interest paid on its deposit accounts.
As a result, there can be no assurance that the estimates above will be achieved in the event that interest rates increase or decrease during 2023 and beyond. The estimates above do not necessarily imply that the Company will experience increases in net income if market interest rates rise.
As a result, there can be no assurance that the estimates above will be achieved in the event that interest rates increase or decrease during 2025 and beyond. The estimates above do not necessarily imply that the Company will experience increases in net income if market interest rates rise.
Such analyses quantify the effects of various interest rate scenarios on projected net interest income. The Company’s policy objective is to avoid negative fluctuations in net income or the economic value of equity of more than 15% within a 12-month period, assuming an immediate parallel increase of 100 to 300 basis points.
Such analyses quantify the effects of various interest rate scenarios on projected net interest income. The Company’s policy objective is to avoid negative fluctuations in net income more than 15% within a 12-month period, assuming an immediate parallel increase or decrease of 100 to 300 basis points.
The table above indicates how the Company’s net income and the economic value of equity behave relative to an increase or decrease in rates compared to what would otherwise occur if rates remain stable. 52
The table above indicates how the Company’s net income behave relative to an increase or decrease in rates compared to what would otherwise occur if rates remain stable. 52

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