City Holding (CHCO) 8-K City Holding Company Announces Record First Quarter Results

NEWS RELEASE

For Immediate Release

April 23, 2015

For Further Information Contact:

Charles R. Hageboeck, Chief Executive Officer and President

(304) 769-1102

City Holding Company Announces Record First Quarter Results

Charleston, West Virginia - City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $3.6 billion bank holding company headquartered in Charleston, today announced record quarterly diluted earnings of $1.17 per share and record quarterly net income of $18.0 million. Effective January 1, 2015, the Company sold its insurance operations, “CityInsurance”, and recognized a one-time after tax gain of $5.8 million, or $0.37 per diluted share, in the first quarter of 2015.

Net Interest Income

The Company’s tax equivalent net interest income increased $0.1 million, or 0.4%, from $29.4 million during the fourth quarter of 2014 to $29.5 million during the first quarter of 2015. This increase is due to additional accretion from fair value adjustments related to the acquisitions of Virginia Savings Bank and Community Bank ($2.5 million for the quarter ended March 31, 2015 compared to $1.3 million for the quarter ended December 31, 2014). This increase was partially offset by a decrease in interest income from commercial loans of $0.6 million due to lower yields as a result of a continued competitive commercial lending environment. The Company’s reported net interest margin increased from 3.89% for the fourth quarter of 2014 to 3.99% for the first quarter of 2015. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.66% for the quarter ended March 31, 2015 and 3.71% for the quarter ended December 31, 2014.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned increased slightly from 0.90% at December 31, 2014 to 0.96% at March 31, 2015. Excluded from this ratio are purchased credit-impaired loans in which the Company estimated cash flows and estimated a credit mark. Such loans would be considered nonperforming loans if the loan’s performance deteriorates below the initial expectations. Total past due loans decreased modestly from $10.7 million, or 0.40% of total loans outstanding, at December 31, 2014 to $10.2 million, or 0.39% of total loans outstanding, at March 31, 2015. Acquired past due loans represent approximately 45% of total past due loans and have declined $11.9 million, or 72%, since March 31, 2013.

As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $0.9 million in the first quarter of 2015, compared to $1.4 for the comparable period in 2014 and $0.4 million for the fourth quarter of 2014. The provision for loan losses recorded in the first quarter of 2015 reflects difficulties of certain commercial borrowers of the Company during the quarter, the downgrade of their related credits and management’s assessment of the impact of these difficulties on the ultimate collectability of the loans. Additionally, the first quarter of 2015 includes

$0.25 million of provision expense related to purchased credit impaired loans. Changes in the amount of the provision and related allowance are based on the Company’s detailed systematic methodology and are directionally consistent with changes in the composition and quality of the Company’s loan portfolio. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision and allowance for loan losses that is directionally consistent with changes in asset quality and loss experience.

Non-interest Income

Effective January 1, 2015, the Company sold its insurance operations, CityInsurance, which resulted in a pre-tax gain of $11.1 million. Exclusive of this gain, non-interest income declined from $14.2 million for the first quarter of 2014 to $12.9 million for the first quarter of 2015. The primary reason for this decline was the sale of CityInsurance which had insurance commission revenues of $2.0 million in the first quarter of 2014. In addition, service charges decreased $0.2 million, or 3.8%, from the first quarter of 2014 to $5.9 million. These decreases were partially offset by increases in bankcard revenues of $0.4 million (10.6%), other income of $0.4 million, and trust and investment management fee income of $0.2 million (15.7%).

Non-interest Expenses

Non-interest expenses decreased $0.2 million, from $23.4 million in the first quarter of 2014 to $23.2 million in the first quarter of 2015. This drop was largely due to a decline in salaries and employee benefit expense of $1.0 million, or 7.3%, to $12.2 million. This decrease was due to a reduction in the Company’s salary expense as a result of the sale of CityInsurance. This decrease was partially offset by an increase in other expenses of $0.8 million to $2.7 million. During the first quarter of 2014, the Company’s non-income based taxes decreased due to the recognition of a previously unrecognized tax position due to the close of the statute of limitations for a previous tax year and was discrete to the first quarter of 2014.

Balance Sheet Trends

Loans decreased $19.6 million (0.7%) from December 31, 2014 to $2.63 billion at March 31, 2015. Commercial real estate loans decreased $17.2 million (1.7%), commercial and industrial (“C&I”) loans decreased $8.3 million (6.3%), home equity junior lien loans fell $1.9 million (1.3%), and consumer loans declined $1.3 million (3.2%). These decreases were partially offset by an increase in residential real estate loans of $8.7 million (0.7%).

Total average depository balances increased $74.7 million, or 2.6%, from the quarter ended December 31, 2014 to the quarter ended March 31, 2015. Increases in savings deposits ($51.8 million), interest-bearing deposits ($17.1 million), and noninterest-bearing demand deposits ($14.4 million) were partially offset by a decrease in time deposits ($8.5 million).

Income Tax Expense

The Company’s effective income tax rate for the first quarter of 2015 was 38.7% compared to 31.4% for the year ended December 31, 2014, and 29.6% for the quarter ended March 31, 2014. As noted previously, the Company sold CityInsurance in the first quarter of 2015. As a result of differences between the book and tax basis of the assets that were sold, the Company’s income tax expense increased by $1.1 million. During the first quarter of 2014, the Company reduced income tax expense by $0.8 million due to the recognition of previously unrecognized tax position resulting from the close of the statute of limitations for a previous

tax year. Exclusive of the sale of CityInsurance in the first quarter of 2015 and the discrete item recognized in the first quarter of 2014, the Company’s tax rate from operations was 33.3% and 33.6%, for the quarters ended March 31, 2015 and March 31, 2014, respectively.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 89.5% and the loan to asset ratio was 74.1% at March 31, 2015. The Company maintained investment securities totaling 10.4% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 54.3% of assets at March 31, 2015. Time deposits fund 28.5% of assets at March 31, 2015, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.

The Company is also strongly capitalized. The Company’s tangible equity ratio increased from 9.4% at December 31, 2014 to 9.6% at March 31, 2015. At March 31, 2015, City National Bank’s Leverage Ratio is 9.07%, its Common Equity Tier I ratio is 11.87%, its Tier I Capital ratio is 13.04%, and its Total Risk-Based Capital ratio is 13.89%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On March 26, 2015, the Board approved a quarterly cash dividend of $0.42 cents per share payable April 30, 2015, to shareholders of record as of April 15, 2015.

City Holding Company is the parent company of City National Bank of West Virginia. City National operates 82 branches across West Virginia, Virginia, Kentucky and Ohio.

Forward-Looking Information

This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such information involves risks and uncertainties that could result in the Company's actual results differing materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (12) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; (13)the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject the Company and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses; (14) the impact of new minimum capital thresholds established as a part of the implementation of Basel III; and (15) other risk factors relating to the banking industry or the Company as detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those risk factors included in the disclosures under the heading “ITEM 1A Risk Factors” of the Company’s Annual Report on

Form 10-K for the fiscal year ended December 31, 2014.  Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its March 31, 2015 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2015 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)

	Three Months Ended March 31,						Percent
	2015			2014			Change
Earnings ($000s, except per share data):
Net Interest Income (FTE)	$	29,533		$	30,193		(2.19)%
Net Income available to common shareholders	17,992			13,803			30.35%
Earnings per Basic Share	1.18			0.87			35.04%
Earnings per Diluted Share	1.17			0.86			35.72%
Key Ratios (percent):
Return on Average Assets	2.04		%	1.63		%	25.18%
Return on Average Tangible Equity	21.58		%	17.32		%	24.60%
Net Interest Margin	3.99		%	4.15		%	(3.75)%
Efficiency Ratio	54.24		%	52.28		%	3.75%
Average Shareholders' Equity to Average Assets	11.48		%	11.64		%	(1.34)%
Consolidated Risk Based Capital Ratios (a):
CET I	14.04		%	*			N/A
Tier I	14.70		%	13.58		%	8.25%
Total	15.57		%	14.47		%	7.60%
Tangible Equity to Tangible Assets	9.60		%	9.60		%	(0.01)%
Common Stock Data:
Cash Dividends Declared per Share	$	0.42		$	0.40		5.00%
Book Value per Share	26.63			25.05			6.30%
Tangible Book Value per Share	21.96			20.28			8.28%
Market Value per Share:
High	48.09			46.69			3.00%
Low	41.76			42.15			(0.93)%
End of Period	47.03			44.86			4.84%
Price/Earnings Ratio (b)	9.96			12.83			(22.36)%
(a) The March 31, 2015 efficiency ratio calculation excludes the gain on sale of insurance division.
(b) March 31, 2015 risk-based capital ratios are estimated.
(c) March 31, 2015 price/earnings ratio computed based on annualized first quarter 2015 earnings.
(*) Basel III CET 1 ratio requirements are effective beginning January 1, 2015 and are not required for prior periods.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)

Book Value and Market Price Range per Share
									Market Price
	Book Value per Share								Range per Share
	March 31		June 30		September 30		December 31		Low		High
2011	$	20.39	$	20.58	$	20.86	$	21.05	$	26.06	$	37.22
2012	21.46		21.63		22.14		22.47		30.96		37.16
2013	23.36		23.52		24.03		24.61		36.07		49.21
2014	25.05		25.45		25.52		25.85		41.20		46.95
2015	26.63								41.76		48.09
Earnings per Basic Share
	Quarter Ended
	March 31		June 30		September 30		December 31		Year-to-Date
2011	$	0.62	$	0.65	$	0.77	$	0.65	$	2.68
2012	0.68		0.50		0.71		0.73		2.63
2013	0.51		0.83		0.89		0.84		3.07
2014	0.87		0.81		0.76		0.95		3.40
2015	1.18								1.18
Earnings per Diluted Share
	Quarter Ended
	March 31		June 30		September 30		December 31		Year-to-Date
2011	$	0.62	$	0.64	$	0.76	$	0.65	$	2.67
2012	0.67		0.50		0.71		0.73		2.61
2013	0.51		0.82		0.88		0.83		3.04
2014	0.86		0.80		0.76		0.95		3.38
2015	1.17								1.17

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited) ($ in 000s, except per share data)

	Three Months Ended March 31,
	2015		2014
Interest Income
Interest and fees on loans	$	29,388	$	29,734
Interest on investment securities:
Taxable	2,712		3,003
Tax-exempt	264		281
Total Interest Income	32,364		33,018
Interest Expense
Interest on deposits	2,741		2,753
Interest on short-term borrowings	82		75
Interest on long-term debt	150		150
Total Interest Expense	2,973		2,978
Net Interest Income	29,391		30,040
Provision for loan losses	888		1,363
Net Interest Income After Provision for Loan Losses	28,503		28,677
Non-Interest Income
Gains on sale of investment securities	14		83
Service charges	5,927		6,160
Bankcard revenue	4,074		3,685
Insurance commissions	—		2,025
Trust and investment management fee income	1,200		1,037
Bank owned life insurance	764		756
Gain on sale of insurance division	11,084		—
Other income	958		559
Total Non-Interest Income	24,021		14,305
Non-Interest Expense
Salaries and employee benefits	12,179		13,139
Occupancy and equipment	2,590		2,615
Depreciation	1,511		1,478
FDIC insurance expense	450		410
Advertising	704		824
Bankcard expenses	818		806
Postage, delivery, and statement mailings	561		575
Office supplies	346		410
Legal and professional fees	567		409
Telecommunications	475		338
Repossessed asset losses, net of expenses	220		379
Other expenses	2,744		1,993
Total Non-Interest Expense	23,165		23,376
Income Before Income Taxes	29,359		19,606
Income tax expense	11,367		5,803
Net Income Available to Common Shareholders	$	17,992	$	13,803
Distributed earnings allocated to common shareholders	$	6,315	$	6,224
Undistributed earnings allocated to common shareholders	11,468		7,438
Net earnings allocated to common shareholders	$	17,783	$	13,662
Average common shares outstanding	15,067		15,631
Effect of dilutive securities:
Employee stock options and warrants	82		165
Shares for diluted earnings per share	15,149		15,796
Basic earnings per common share	$	1.18	$	0.87
Diluted earnings per common share	$	1.17	$	0.86
Dividends declared per common share	$	0.42	$	0.40
Comprehensive Income	$	18,898	$	14,579

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited) ($ in 000s, except per share data)

	Three Months Ended
	March 31, 2015			March 31, 2014
Balance at January 1	$	390,853		$	387,623
Net income	17,992			13,803
Other comprehensive income:
Change in unrealized (loss) gain on securities available-for-sale	906			776
Cash dividends declared ($0.42/share) and ($0.40/share), respectively	(6,389		)	(6,287		)
Issuance of stock award shares, net	740			572
Exercise of 28,500 stock options	973			—
Exercise of 7,000 stock options	—			199
Purchase of 68,145 common shares of treasury	—			(2,936		)
Balance at March 31	$	405,075		$	393,750

CITY HOLDING COMPANY AND SUBSIDIARIES

Condensed Consolidated Quarterly Statements of Income

(Unaudited) ($ in 000s, except per share data)

	Quarter Ended
	March 31			December 31			September 30			June 30			March 31
	2015			2014			2014			2014			2014
Interest income	$	32,364		$	32,282		$	32,438		$	31,828		$	33,018
Taxable equivalent adjustment	142			164			152			151			153
Interest income (FTE)	32,506			32,446			32,590			31,979			33,171
Interest expense	2,973			3,041			2,968			2,973			2,978
Net interest income	29,533			29,405			29,622			29,006			30,193
Provision for loan losses	888			384			1,872			435			1,363
Net interest income after provision
for loan losses	28,645			29,021			27,750			28,571			28,830
Noninterest income	24,021			14,669			14,609			15,139			14,305
Noninterest expense	23,165			23,035			24,325			24,305			23,376
Income before income taxes	29,501			20,655			18,034			19,405			19,759
Income tax expense	11,367			5,961			6,010			6,497			5,803
Taxable equivalent adjustment	142			164			152			151			153
Net income	$	17,992		$	14,530		$	11,872		$	12,757		$	13,803
Allocated to common shareholders:
Distributed earnings	$	6,315		$	5,996		$	6,073		$	6,178		$	6,224
Undistributed earnings	11,468			8,378			5,673			6,448			7,439
Net earnings allocated to common shareholders	$	17,783		$	14,374		$	11,746		$	12,626		$	13,663
Average common shares outstanding	15,067			15,096			15,363			15,556			15,631
Effect of dilutive securities:
Employee stock options and warrants	82			86			82			150			165
Shares for diluted earnings per share	15,149			15,182			15,445			15,706			15,796
Basic earnings per common share	$	1.18		$	0.95		$	0.76		$	0.81		$	0.87
Diluted earnings per common share	1.17			0.95			0.76			0.80			0.86
Cash dividends declared per share	0.42			0.40			0.40			0.40			0.40
Net Interest Margin	3.99		%	3.89		%	3.95		%	3.95		%	4.15		%
Interest Income from Accretion Related to Fair
Value Adjustments Recorded as a
Result of Acquisition:	$	2,450		$	1,307		$	1,836		$	1,494		$	2,151
Net Interest Margin (excluding accretion)	3.66		%	3.71		%	3.71		%	3.75		%	3.85		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Non-Interest Income and Non-Interest Expense

(Unaudited) ($ in 000s)

	Quarter Ended
	March 31		December 31		September 30		June 30		March 31
	2015		2014		2014		2014		2014
Non-Interest Income:
Service charges	$	5,927	$	6,750	$	6,934	$	6,739	$	6,160
Bankcard revenue	4,074		3,744		3,796		3,838		3,685
Insurance commissions	—		1,238		1,396		1,319		2,025
Trust and investment management fee income	1,200		1,363		1,103		1,111		1,037
Bank owned life insurance	764		778		771		765		756
Gain on sale of insurance division	11,084		—		—		—		—
Other income	958		612		538		549		559
Subtotal	24,007		14,485		14,538		14,321		14,222
Gain (loss) on sale of investment securities	14		184		71		818		83
Total Non-Interest Income	$	24,021	$	14,669	$	14,609	$	15,139	$	14,305
Non-Interest Expense:
Salaries and employee benefits	$	12,179	$	12,489	$	13,144	$	12,977	$	13,139
Occupancy and equipment	2,590		2,449		2,531		2,395		2,615
Depreciation	1,511		1,534		1,542		1,533		1,478
FDIC insurance expense	450		448		432		357		410
Advertising	704		726		799		925		824
Bankcard expenses	818		891		843		833		806
Postage, delivery and statement mailings	561		549		557		530		575
Office supplies	346		360		405		420		410
Legal and professional fees	567		552		476		612		409
Telecommunications	475		522		510		506		338
Repossessed asset (gains) losses, net of expenses	220		27		31		142		379
Other expenses	2,744		2,488		3,055		3,075		1,993
Total Non-Interest Expense	$	23,165	$	23,035	$	24,325	$	24,305	$	23,376
Employees (Full Time Equivalent)	845		889		908		912		925
Branch Locations	82		82		82		82		82

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

($ in 000s)

	March 31, 2015			December 31, 2014
	(Unaudited)
Assets
Cash and due from banks	$	235,004		$	138,503
Interest-bearing deposits in depository institutions	10,106			9,725
Federal funds sold	—			—
Cash and cash equivalents	245,110			148,228
Investment securities available-for-sale, at fair value	273,856			254,043
Investment securities held-to-maturity, at amortized cost	87,455			90,786
Other securities	9,857			9,857
Total investment securities	371,168			354,686
Gross loans	2,632,471			2,652,066
Allowance for loan losses	(20,179		)	(20,150		)
Net loans	2,612,292			2,631,916
Bank owned life insurance	95,880			95,116
Premises and equipment, net	76,910			77,988
Accrued interest receivable	7,752			6,826
Net deferred tax assets	35,335			36,766
Intangible assets	70,964			74,198
Other assets	37,674			35,909
Total Assets	$	3,553,085		$	3,461,633
Liabilities
Deposits:
Noninterest-bearing	$	551,596		$	545,465
Interest-bearing:
Demand deposits	654,832			639,932
Savings deposits	722,324			660,727
Time deposits	1,013,630			1,026,663
Total deposits	2,942,382			2,872,787
Short-term borrowings
Customer repurchase agreements	132,588			134,931
Long-term debt	16,495			16,495
Other liabilities	56,545			46,567
Total Liabilities	3,148,010			3,070,780
Stockholders' Equity
Preferred stock, par value $25 per share: 500,000 shares authorized; none issued	—			—
Common stock, par value $2.50 per share: 50,000,000 shares authorized;
18,499,282 shares issued at March 31, 2015 and December 31, 2014
less 3,285,958 and 3,345,590 shares in treasury, respectively	46,249			46,249
Capital surplus	106,397			107,370
Retained earnings	373,812			362,211
Cost of common stock in treasury	(118,130		)	(120,818		)
Accumulated other comprehensive loss:
Unrealized gain on securities available-for-sale	2,096			1,190
Underfunded pension liability	(5,349		)	(5,349		)
Total Accumulated Other Comprehensive Loss	(3,253		)	(4,159		)
Total Stockholders' Equity	405,075			390,853
Total Liabilities and Stockholders' Equity	$	3,553,085		$	3,461,633

CITY HOLDING COMPANY AND SUBSIDIARIES

Investment Portfolio

(Unaudited) ($ in 000s)

			Credit-Related
			Net Investment
			Impairment
			Losses Through			Unrealized
	Original Cost		March 31, 2015			Gains (Losses)			Carrying Value
US Government Agencies	$	1,713	—			$	2		$	1,715
Mortgage Backed Securities	292,831		—			2,463			295,294
Municipal Bonds	38,147		—			767			38,914
Pooled Bank Trust Preferreds	20,664		(20,171		)	1,167			1,660
Single Issuer Bank Trust Preferreds,
Subdebt of Financial Institutions, and
Bank Holding Company Preferred Stocks	22,040		(1,015		)	(2,350		)	18,675
Money Markets and Mutual Funds	1,525		—			10			1,535
Federal Reserve Bank and FHLB stock	9,857		—			—			9,857
Community Bank Equity Positions	3,715		(1,584		)	1,387			3,518
Total Investments	$	390,492	$	(22,770	)	$	3,446		$	371,168

CITY HOLDING COMPANY AND SUBSIDIARIES

Loan Portfolio

(Unaudited) ($ in 000s)

	March 31		December 31		September 30		June 30		March 31
	2015		2014		2014		2014		2014
Residential real estate (1)	$	1,303,258	$	1,294,576	$	1,274,062	$	1,242,972	$	1,212,232
Home equity - junior liens	143,670		145,604		146,965		145,452		144,482
Commercial and industrial	124,342		132,641		130,462		131,627		126,569
Commercial real estate (2)	1,019,562		1,036,738		1,034,593		1,011,367		1,027,431
Consumer	38,436		39,705		41,042		42,858		42,320
DDA overdrafts	3,203		2,802		3,618		3,501		4,001
Gross Loans	$	2,632,471	$	2,652,066	$	2,630,742	$	2,577,777	$	2,557,035
Construction loans included in:
(1) - Residential real estate loans	$	17,459	$	22,992	$	22,426	$	20,078	$	17,697
(2) - Commercial real estate loans	30,554		28,652		24,875		24,608		28,894

CITY HOLDING COMPANY AND SUBSIDIARIES

Acquisition Activity - Accretion

(Unaudited) ($ in 000s)

The following table presents the actual and forecasted accretion related to the fair value adjustments on net interest income recorded as a result of the Virginia Savings Bancorp ("Virginia Savings") and Community Financial Corporation ("Community") acquisitions:

	Virginia Savings				Community
	Loan		Certificates of		Loan		Certificates of
Year Ended:	Accretion (a)		Deposits (a)		Accretion (a)		Deposits (a)		Total
1Q 2015	$	123	$	129	$	2,158	$	40	$	2,450
Remainder 2015	336		388		1,734		120		2,578
2016	276		497		1,480		48		2,301
2017	154		—		1,070		—		1,224
a - 1Q 2015 amounts are based on actual results. Remainder 2015, 2016 and 2017 amounts are based on estimated amounts.

Note: The amounts reflected in the table above require management to make significant assumptions based on estimated future default, prepayment and discount rates. Actual performance could be significantly different from that assumed, which could result in the actual results being materially different from the amounts forecasted above.

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)

	Three Months Ended December 31,
				2014							2013
	Average					Yield/		Average					Yield/
	Balance			Interest		Rate		Balance			Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,436,720		$	14,201	4.01	%	$	1,350,556		$	13,746	4.13	%
Commercial, financial, and agriculture (2)	1,149,798			13,586		4.79	%	1,167,606			14,236		4.94	%
Installment loans to individuals (2), (3)	49,882			1,150		9.35	%	52,557			1,179		9.10	%
Previously securitized loans (4)	***			451		***		***			574		***
Total loans	2,636,400			29,388		4.52	%	2,570,719			29,735		4.69	%
Securities:
Taxable	327,185			2,712		3.36	%	345,982			3,003		3.52	%
Tax-exempt (5)	28,477			406		5.78	%	27,506			433		6.38	%
Total securities	355,662			3,118		3.56	%	373,488			3,436		3.73	%
Deposits in depository institutions	8,968			—		—	%	8,831			—		—	%
Total interest-earning assets	3,001,030			32,506		4.39	%	2,953,038			33,171		4.56	%
Cash and due from banks	222,409							125,221
Bank premises and equipment	77,638							82,214
Other assets	244,686							246,091
Less: Allowance for loan losses	(20,658		)					(21,221		)
Total assets	$	3,525,105						$	3,385,343
Liabilities:
Interest-bearing demand deposits	636,810			132		0.08	%	611,797			176		0.12	%
Savings deposits	694,700			181		0.11	%	618,412			207		0.14	%
Time deposits (2)	1,021,474			2,428		0.96	%	1,070,065			2,370		0.90	%
Short-term borrowings	129,647			82		0.26	%	118,771			75		0.26	%
Long-term debt	16,495			150		3.69	%	16,495			150		3.69	%
Total interest-bearing liabilities	2,499,126			2,973		0.48	%	2,435,540			2,978		0.50	%
Noninterest-bearing demand deposits	571,340							517,207
Other liabilities	49,996							38,705
Stockholders' equity	404,643							393,891
Total liabilities and shareholders' equity	$	3,525,105						$	3,385,343
Net interest income				$	29,533						$	30,193
Net yield on earning assets						3.99	%						4.15	%

(1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.

(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings") and Community Financial Corporation ("Community"):

	Three Months Ended March 31, 2015						Three Months Ended March 31, 2014
	Virginia						Virginia
	Savings		Community		Total		Savings		Community		Total
Residential real estate	$	64	$	133	$	197	$	151	$	115	$	266
Commercial, financial, and agriculture	29		1,959		1,988		114		1,324		1,438
Installment loans to individuals	30		66		96		34		189		223
Time deposits	129		40		169		131		93		224
	$	252	$	2,198	$	2,450	$	430	$	1,721	$	2,151

(3) Includes the Company's consumer and DDA overdrafts loan categories.

(4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.

(5) Computed on a fully Federal tax-equivalent basis, assuming a tax rate of approximately 35%.

CITY HOLDING COMPANY AND SUBSIDIARIES

Analysis of Risk-Based Capital

(Unaudited) ($ in 000s)

	March 31			December 31			September 30			June 30			March 31
	2015 (a)			2014			2014			2014			2014
Tier I Capital:
Stockholders' equity	$	405,075		$	390,853		$	391,673		$	397,231		$	393,750
Goodwill and other intangibles	(69,227		)	(74,011		)	(74,247		)	(74,483		)	(74,719		)
Accumulated other comprehensive loss	3,253			4,159			2,921			2,509			4,214
Qualifying trust preferred stock	16,000			16,000			16,000			16,000			16,000
Excess deferred tax assets	(1,564		)	(3,838		)	(3,131		)	(4,019		)	(6,508		)
Total tier I capital	$	353,537		$	333,163		$	333,216		$	337,238		$	332,737
Qualifying trust preferred stock	$	(16,000	)	*			*			*			*
Total CET I capital	$	337,537		*			*			*			*
Total Risk-Based Capital:
Tier I capital	$	353,537		$	333,163		$	333,216		$	337,238		$	332,737
Qualifying allowance for loan losses	20,179			20,150			20,487			20,536			21,044
Unrealized gain on securities	704			560			630			605			786
Total risk-based capital	$	374,420		$	353,873		$	354,333		$	358,379		$	354,567
Net risk-weighted assets	$	2,404,331		$	2,493,078		$	2,493,938		$	2,464,081		$	2,450,949
Ratios:
Average stockholders' equity to average assets	11.48		%	11.40		%	11.78		%	11.71		%	11.64		%
Tangible capital ratio	9.60		%	9.35		%	9.58		%	9.80		%	9.60		%
Risk-based capital ratios:
CET I capital	14.04		%	*			*			*			*
Tier I capital	14.70		%	13.36		%	13.36		%	13.69		%	13.58		%
Total risk-based capital	15.57		%	14.19		%	14.21		%	14.54		%	14.47		%
Leverage capital	10.23		%	9.89		%	10.07		%	10.15		%	10.07		%
(a) March 31, 2015 risk-based capital ratios are estimated.
(*) Basel III CET 1 ratio requirements are effective beginning January 1, 2015 and are not required prior periods.

CITY HOLDING COMPANY AND SUBSIDIARIES

Intangibles

(Unaudited) ($ in 000s)

	As of and for the Quarter Ended
	March 31		December 31		September 30		June 30		March 31
	2015		2014		2014		2014		2014
Intangibles, net	$	70,964	$	74,198	$	74,434	$	74,670	$	74,906
Intangibles amortization expense	214		236		236		236		236

CITY HOLDING COMPANY AND SUBSIDIARIES

Summary of Loan Loss Experience

(Unaudited) ($ in 000s)

	Quarter Ended
	March 31			December 31			September 30			June 30			March 31
	2015			2014			2014			2014			2014
Balance at beginning of period	$	20,150		$	20,487		$	20,536		$	21,044		$	20,575
Charge-offs:
Commercial and industrial	94			(7		)	325			1			4
Commercial real estate	337			260			696			587			382
Residential real estate	257			414			605			316			427
Home equity	91			21			142			38			108
Consumer	74			17			49			38			84
DDA overdrafts	311			363			390			321			341
Total charge-offs	1,164			1,068			2,207			1,301			1,346
Recoveries:
Commercial and industrial	18			4			4			18			63
Commercial real estate	8			19			11			53			30
Residential real estate	10			96			28			39			24
Home equity	—			—			—			—			—
Consumer	28			32			43			53			76
DDA overdrafts	241			196			200			195			259
Total recoveries	305			347			286			358			452
Net charge-offs	859			721			1,921			943			894
Provision for (recovery of) acquired loans	246			148			(3		)	150			(12		)
Provision for loan losses	642			236			1,875			285			1,375
Balance at end of period	$	20,179		$	20,150		$	20,487		$	20,536		$	21,044
Loans outstanding	$	2,632,471		$	2,652,066		$	2,630,742		$	2,577,777		$	2,557,035
Average loans outstanding	2,636,400			2,639,106			2,600,142			2,563,601			2,570,719
Allowance as a percent of loans outstanding	0.77		%	0.76		%	0.78		%	0.80		%	0.82		%
Allowance as a percent of non-performing loans	121.81		%	128.10		%	112.61		%	106.86		%	100.09		%
Net charge-offs (annualized) as a
percent of average loans outstanding	0.13		%	0.11		%	0.30		%	0.15		%	0.14		%
Net charge-offs, excluding overdraft deposit
accounts, (annualized) as a percent of average
loans outstanding	0.12		%	0.08		%	0.27		%	0.13		%	0.13		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Summary of Non-Performing Assets

(Unaudited) ($ in 000s)

	March 31			December 31			September 30			June 30			March 31
	2015			2014			2014			2014			2014
Nonaccrual loans	$	16,182		$	15,307		$	17,384		$	18,423		$	20,593
Accruing loans past due 90 days or more	384			423			809			794			432
Total non-performing loans	16,566			15,730			18,193			19,217			21,025
Other real estate owned	8,771			8,180			9,162			9,129			9,538
Total non-performing assets	$	25,337		$	23,910		$	27,355		$	28,346		$	30,563
Non-performing assets as a percent of loans
and other real estate owned	0.96		%	0.90		%	1.04		%	1.10		%	1.19		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Summary of Total Past Due Loans

(Unaudited) ($ in 000s)

	Originated
	March 31			December 31			September 30			June 30			March 31
	2015			2014			2014			2014			2014
Residential real estate	$	4,326		$	5,164		$	5,276		$	5,794		$	4,118
Home equity - junior liens	543			746			751			926			638
Commercial and industrial	113			310			188			25			77
Commercial real estate	299			479			938			443			789
Consumer	122			197			58			80			63
DDA overdrafts	215			318			592			281			196
Total past due loans	$	5,618		$	7,214		$	7,803		$	7,549		$	5,881
	Acquired
	March 31			December 31			September 30			June 30			March 31
	2015			2014			2014			2014			2014
Residential real estate	$	1,792		$	714		$	500		$	873		$	813
Home equity - junior liens	86			2			16			3			21
Commercial and industrial	490			143			96			58			127
Commercial real estate	2,018			2,372			2,972			2,110			3,789
Consumer	150			221			162			374			397
DDA overdrafts	—			—			—			—			—
Total past due loans	$	4,536		$	3,452		$	3,746		$	3,418		$	5,147
	Total
	March 31			December 31			September 30			June 30			March 31
	2015			2014			2014			2014			2014
Residential real estate	$	6,118		$	5,878		$	5,776		$	6,667		$	4,931
Home equity - junior liens	629			748			767			929			659
Commercial and industrial	603			453			284			83			204
Commercial real estate	2,317			2,851			3,910			2,553			4,578
Consumer	272			418			220			454			460
DDA overdrafts	215			318			592			281			196
Total past due loans	$	10,154		$	10,666		$	11,549		$	10,967		$	11,028
Total past due loans as a percent of loans outstanding	0.39		%	0.40		%	0.44		%	0.43		%	0.43		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Summary of Troubled Debt Restructurings

(Unaudited) ($ in 000s)

	March 31		December 31		September 30		June 30		March 31
	2015		2014		2014		2014		2014
Residential real estate	$	19,067	$	18,492	$	18,040	$	19,212	$	18,940
Home equity - junior liens	2,741		2,688		2,821		2,858		2,866
Commercial and industrial	70		73		77		86		84
Commercial real estate	1,894		2,263		2,270		2,281		1,854
Consumer	—		—		—		—		—
Total	$	23,772	$	23,516	$	23,208	$	24,437	$	23,744

CITY HOLDING COMPANY AND SUBSIDIARIES

Summary of Purchased Credit Impaired Loans

(Unaudited) ($ in 000s)

	Virginia Savings Acquisition
	March 31		December 31		September 30		June 30		March 31
	2015		2014		2014		2014		2014
Contractual required principal and interest	$	2,419	$	2,407	$	3,481	$	3,735	$	3,821
Carrying value	1,979		1,964		2,987		3,098		3,102
	Community Acquisition
	March 31		December 31		September 30		June 30		March 31
	2015		2014		2014		2014		2014
Contractual required principal and interest	$	20,189	$	23,277	$	24,147	$27,394		$	30,476
Carrying value	14,627		15,365		15,518		17,902		19,986