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City Holding Company Announces Third Quarter Results

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City Holding Company, “the Company” (NASDAQ:CHCO) , a $3.4 billion bank holding company headquartered in Charleston, today announced third quarter net income per diluted share of $0.76 and net income of $11.9 million. For the third quarter of 2014, the Company achieved a return on assets of 1.40%, a return on tangible equity of 14.7%, a net interest margin of 3.95%, and an efficiency ratio of 54.7%. For the nine months ended September 30, 2014, the Company achieved a return on assets of 1.51%, a return on tangible equity of 15.9%, a net interest margin of 4.02%, and an efficiency ratio of 54.2%.

Balance Sheet Trends

Loans increased $53.0 million (2.1%) from June 30, 2014 to $2.63 billion at September 30, 2014. Residential real estate loans increased $31.0 million (2.5%), commercial real estate loans increased $23.2 million (2.3%), and home equity loans increased $1.5 million (1.0%). These increases were partially offset by decreases in consumer loans $1.8 million (4.2%) and commercial and industrial (“C&I”) loans $1.2 million (0.9%).

Total average depository balances decreased $16.7 million, or 0.6%, from the quarter ended June 30, 2014 to the quarter ended September 30, 2014. Decreases in time deposits ($15.4 million) and noninterest-bearing deposits ($5.6 million) were partially offset by an increase in interest-bearing deposits of $5.3 million.

Net Interest Income

The Company’s tax equivalent net interest income increased $0.6 million, or 2.1%, from $29.0 million during the second quarter of 2014 to $29.6 million during the third quarter of 2014. This is primarily due to an increase in interest income from residential real estate loans which increased outstanding balances by $31.0 million during the third quarter. The Company’s reported net interest margin remained at 3.95% for the both the second and third quarters of 2014. Excluding the favorable impact of the accretion from the fair value adjustments related to the acquisitions of Virginia Savings and Community Bank, the net interest margin would have been 3.71% for the quarter ended September 30, 2014 and 3.75% for the quarter ended June 30, 2014. This decrease was primarily due to loan yields compressing from 4.27% for the second quarter of 2014 to 4.22% for the third quarter of 2014.

Credit Quality – Asset Quality Continues to Improve

The Company’s ratio of nonperforming assets to total loans and other real estate owned improved from 1.10% at June 30, 2014 to 1.04% at September 30, 2014. Excluded from this ratio are purchased credit-impaired loans which continue to perform in accordance with the estimated expectations. Such loans would be considered nonperforming loans if the loan’s performance deteriorates below the initial expectations. Total past due loans increased modestly from $11.0 million at June 30, 2014 to $11.5 million, or 0.44% of total loans outstanding, at September 30, 2014. Acquired past due loans represent approximately 32% of total past due loans and have declined $12.7 million, or 77%, since March 31, 2013.

As a result of the Company’s quarterly analysis of the adequacy of the Allowance for Loan Losses (“ALLL”), the Company recorded a provision for loan losses of $1.9 million in the third quarter of 2014, compared to $1.2 for the comparable period in 2013 and $0.4 million for the second quarter of 2014. The provision for loan losses recorded in the third quarter of 2014 reflects the growth in the loan portfolio and changes in the quality of the portfolio. For the nine months ended September 30, 2014, the Company recorded provision for loan losses of $3.7 million and net charge offs for the same period were approximately $3.8 million. 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.

Non-interest Income

During the third quarter of 2014, the Company realized investment gains of $0.1 million from the sale of certain equity positions related to community banks and bank holding companies. Excluding investment security transactions, non-interest income was $14.5 million for both the third quarter of 2014 and the third quarter of 2013. Bankcard revenues increased $0.3 million, or 9.5%, to $3.8 million and trust and investment management fee income increased $0.2 million, or 17.5%, to $1.1 million. These increases were partially offset by lower service charges ($0.2 million or 3.3%) and other income ($0.2 million due to a decline in fixed rate mortgage lending activity).

Non-interest Expenses

Non-interest expenses decreased $0.3 million, from $24.6 million in the third quarter of 2013 to $24.3 million in the third quarter of 2014. This decrease was primarily due to a decrease in repossessed asset losses ($0.9 million) due to valuation adjustments on certain properties in the third quarter of 2013. This decrease was partially offset by an increase in salaries and employee benefits ($0.2 million) and bankcard expenses ($0.2 million).

Income Tax Expense

The Company’s effective income tax rate for the third quarter of 2014 was 33.6% compared to 34.4% for the year ended December 31, 2013, and 33.6% for the quarter ended September 30, 2013. The effective rate is based upon the Company’s expected tax rate for the year ending December 31, 2014.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 94.2% and the loan to asset ratio was 77.7% at September 30, 2014. The Company maintained investment securities totaling 10.6% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 52.0% of assets at September 30, 2014. Time deposits fund 30.5% of assets at September 30, 2014, 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 continues to be strongly capitalized. The Company’s tangible equity ratio was 9.6% at September 30, 2014 compared to 9.5% at December 31, 2013. The Company was able to increase its tangible capital from December 31, 2013 despite the repurchase of approximately 457,000 shares of its common stock and increasing the quarterly cash dividend by over 8%. At September 30, 2014, City National Bank’s Leverage Ratio is 9.46%, its Tier I Capital ratio is 12.57%, and its Total Risk-Based Capital ratio is 13.40%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On September 24, 2014, the Board approved a quarterly cash dividend of $0.40 cents per share payable October 31, 2014, to shareholders of record as of October 15, 2014. During the quarter ended September 30, 2014, the Company repurchased 262,205 common shares at a weighted average price of $42.60. On September 24, 2014, the Company announced that the Board of Directors authorized the Company to buy back up to 1,000,000 shares of its common shares (approximately 7% of outstanding shares) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders. No time limit was placed on the duration of the share repurchase program. As part of this authorization, the Company rescinded repurchases of additional shares under a repurchase program plan approved in July 2011. The Company had repurchased 980,076 shares under the July 2011 Stock Repurchase Plan.

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; and (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. 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 September 30, 2014 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary September 30, 2014 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Three Months Ended September 30, Percent
2014 2013 Change
Earnings ($000s, except per share data):
Net Interest Income (FTE) $ 29,622 $ 32,531 (8.94)%
Net Income available to common shareholders 11,872 13,975 (15.05)%
Earnings per Basic Share 0.76 0.89 (13.83)%
Earnings per Diluted Share 0.76 0.88 (13.28)%
Key Ratios (percent):
Return on Average Assets 1.40% 1.65% (14.92)%
Return on Average Tangible Equity 14.65% 18.53% (20.93)%
Net Interest Margin 3.95% 4.47% (11.59)%
Efficiency Ratio 54.74% 52.09% 5.08%
Average Shareholders’ Equity to Average Assets 11.78% 11.14% 5.75%
Consolidated Risk Based Capital Ratios (a):
Tier I 13.36% 12.66% 5.53%
Total 14.21% 13.52% 5.10%
Tangible Equity to Tangible Assets 9.58% 9.08% 5.52%
Common Stock Data:
Cash Dividends Declared per Share $ 0.40 $ 0.37 8.11%
Book Value per Share 25.52 24.03 6.19%
Tangible Book Value per Share 20.67 19.17 7.81%
Market Value per Share:
High 46.44 46.13 0.67%
Low 41.20 40.04 2.90%
End of Period 42.13 43.24 (2.57)%
Price/Earnings Ratio (b) 13.78 12.18 13.07%
Nine Months Ended September 30, Percent
2014 2013 Change
Earnings ($000s, except per share data):
Net Interest Income (FTE) $ 88,817 $ 93,740 (5.25)%
Net Income available to common shareholders 38,432 34,969 9.90%
Earnings per Basic Share 2.45 2.23 10.00%
Earnings per Diluted Share 2.44 2.21 10.59%
Key Ratios (percent):
Return on Average Assets 1.51% 1.38% 9.28%
Return on Average Tangible Equity 15.90% 15.87% 0.20%
Net Interest Margin 4.02% 4.33% (7.33)%
Efficiency Ratio 54.24% 56.71% (4.36)%
Average Shareholders’ Equity to Average Assets 11.71% 10.94% 7.02%
Common Stock Data:
Cash Dividends Declared per Share $ 1.20 $ 1.11 8.11%
Market Value per Share:
High 46.69 46.13 1.21%
Low 41.20 36.07 14.22%
Price/Earnings Ratio (b) 12.89 14.55 (11.43)%
(a) September 30, 2014 risk-based capital ratios are estimated.
(b) September 30, 2014 price/earnings ratio computed based on annualized third quarter 2014 earnings.
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
2010 19.71 20.02 20.31 20.31 26.87 38.03
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 41.20 46.69
Earnings per Basic Share
Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date
2010 0.59 0.68 0.58 0.64 2.48
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 2.45
Earnings per Diluted Share
Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date
2010 0.58 0.68 0.58 0.64 2.47
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 2.44
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Three Months Ended September 30,
2014 2013
Interest Income
Interest and fees on loans $ 29,292 $ 32,983
Interest on investment securities:
Taxable 2,864 2,392
Tax-exempt 282 299
Total Interest Income 32,438 35,674
Interest Expense
Interest on deposits 2,730 3,068
Interest on short-term borrowings 86 82
Interest on long-term debt 152 154
Total Interest Expense 2,968 3,304
Net Interest Income 29,470 32,370
Provision for loan losses 1,872 1,154
Net Interest Income After Provision for Loan Losses 27,598 31,216
Non-Interest Income
Gains on sale of investment securities 71
Service charges 6,934 7,169
Bankcard revenue 3,796 3,468
Insurance commissions 1,396 1,365
Trust and investment management fee income 1,103 939
Bank owned life insurance 771 805
Other income 538 734
Total Non-Interest Income 14,609 14,480
Non-Interest Expense
Salaries and employee benefits 13,144 12,930
Occupancy and equipment 2,531 2,409
Depreciation 1,542 1,437
FDIC insurance expense 432 500
Advertising 799 712
Bankcard expenses 843 680
Postage, delivery, and statement mailings 557 541
Office supplies 405 416
Legal and professional fees 476 591
Telecommunications 510 721
Repossessed asset losses, net of expenses 31 896
Merger related expenses (150)
Other expenses 3,055 2,982
Total Non-Interest Expense 24,325 24,665
Income Before Income Taxes 17,882 21,031
Income tax expense 6,010 7,056
Net Income Available to Common Shareholders $ 11,872 $ 13,975
Distributed earnings allocated to common shareholders $ 6,073 $ 5,767
Undistributed earnings allocated to common shareholders 5,673 8,081
Net earnings allocated to common shareholders $ 11,746 $ 13,848
Average common shares outstanding 15,363 15,608
Effect of dilutive securities:
Employee stock options and warrants 82 182
Shares for diluted earnings per share 15,445 15,790
Basic earnings per common share $ 0.76 $ 0.89
Diluted earnings per common share $ 0.76 $ 0.88
Dividends declared per common share $ 0.40 $ 0.37
Comprehensive Income $ 11,460 $ 13,342
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Nine months ended September 30,
2014 2013
Interest Income
Interest and fees on loans $ 87,647 $ 94,693
Interest on investment securities:
Taxable 8,797 7,774
Tax-exempt 840 935
Interest on federal funds sold 22
Total Interest Income 97,284 103,424
Interest Expense
Interest on deposits 8,220 9,490
Interest on short-term borrowings 246 232
Interest on long-term debt 453 464
Total Interest Expense 8,919 10,186
Net Interest Income 88,365 93,238
Provision for loan losses 3,670 4,903
Net Interest Income After Provision for Loan Losses 84,695 88,335
Non-Interest Income
Gains on sale of investment securities 972 93
Service charges 19,833 20,601
Bankcard revenue 11,319 10,117
Insurance commissions 4,740 4,563
Trust and investment management fee income 3,251 2,893
Bank owned life insurance 2,292 2,416
Other income 1,646 2,376
Total Non-Interest Income 44,053 43,059
Non-Interest Expense
Salaries and employee benefits 39,260 38,519
Occupancy and equipment 7,541 7,381
Depreciation 4,553 4,289
FDIC insurance expense 1,199 1,352
Advertising 2,548 2,266
Bankcard expenses 2,482 2,173
Postage, delivery, and statement mailings 1,662 1,698
Office supplies 1,235 1,320
Legal and professional fees 1,497 1,561
Telecommunications 1,354 1,631
Repossessed asset losses, net of expenses 552 718
Merger related expenses 5,455
Other expenses 8,123 9,664
Total Non-Interest Expense 72,006 78,027
Income Before Income Taxes 56,742 53,367
Income tax expense 18,310 18,398
Net Income Available to Common Shareholders $ 38,432 $ 34,969
Distributed earnings allocated to common shareholders $ 18,220 $ 17,302
Undistributed earnings allocated to common shareholders 19,809 17,349
Net earnings allocated to common shareholders $ 38,029 $ 34,651
Average common shares outstanding 15,509 15,545
Effect of dilutive securities:
Employee stock options and warrants 85 168
Shares for diluted earnings per share 15,594 15,713
Basic earnings per common share $ 2.45 $ 2.23
Diluted earnings per common share $ 2.44 $ 2.21
Dividends declared per common share $ 1.20 $ 1.11
Comprehensive Income $ 40,501 $ 30,217
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited) ($ in 000s)
Three Months Ended
September 30, 2014 September 30, 2013
Balance at July 1 $ 397,231 $ 368,891
Net income 11,872 13,975
Other comprehensive income:
Change in unrealized (loss) gainon securities available-for-sale (412) (633)
Cash dividends declared ($0.40/share) and ($0.37/share), respectively (6,169) (5,820)
Issuance of stock award shares, net 321 260
Exercise of 44,455 stock options 1,369
Purchase of 262,205 common shares of treasury (11,170)
Balance at September 30 $ 391,673 $ 378,042
Nine Months Ended
September 30, 2014 September 30, 2013
Balance at January 1 $ 387,623 $ 333,274
Net income 38,432 34,969
Other comprehensive income:

Change in unrealized gain (loss) on securities available-for-sale

2,069 (4,752)
Cash dividends declared ($1.20/share) and ($1.11/share), respectively (18,681) (17,686)
Issuance of stock award shares, net 1,210 963
Acquisition of Community Financial Corporation 28,508
Exercise of 19,000 stock options 553
Exercise of 107,140 stock options 2,766
Purchase of 456,856 common shares of treasury (19,533)
Balance at September 30 $ 391,673 $ 378,042
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
Quarter Ended
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Interest income $ 32,438 $ 31,828 $ 33,018 $ 35,116 $ 35,674
Taxable equivalent adjustment 152 151 153 158 161
Interest income (FTE) 32,590 31,979 33,171 35,274 35,835
Interest expense 2,968 2,973 2,978 3,115 3,304
Net interest income 29,622 29,006 30,193 32,159 32,531
Provision for loan losses 1,872 435 1,363 1,945 1,154
Net interest income after provision
for loan losses 27,750 28,571 28,830 30,214 31,377

Noninterest income 14,609 15,139 14,305 14,948 14,480
Noninterest expense 24,325 24,305 23,376 24,881 24,665
Income before income taxes 18,034 19,405 19,759 20,281 21,192
Income tax expense 6,010 6,497 5,803 6,877 7,056
Taxable equivalent adjustment 152 151 153 158 161
Net income available to common shareholders $ 11,872 $ 12,757 $ 13,803 $ 13,246 $ 13,975
Distributed earnings allocated to common shareholders $ 6,073 $ 6,178 $ 6,224 $ 5,775 $ 5,767
Undistributed earnings allocated to common shareholders 5,673 6,448 7,439 7,352 8,081
Net earnings allocated to common shareholders $ 11,746 $ 12,626 $ 13,663 $ 13,127 $ 13,848
Average common shares outstanding 15,363 15,556 15,631 15,636 15,608
Effect of dilutive securities:
Employee stock options and warrants 82 150 165 163 182
Shares for diluted earnings per share 15,445 15,706 15,796 15,799 15,790
Basic earnings per common share $ 0.76 $ 0.81 $ 0.87 $ 0.84 $ 0.89
Diluted earnings per common share 0.76 0.80 0.86 0.83 0.88
Cash dividends declared per share 0.40 0.40 0.40 0.37 0.37
Net Interest Margin 3.95% 3.95% 4.15% 4.33% 4.47%
Interest Income from Accretion Related to Fair Value Adjustments Recorded as a Result of Acquisition $ 1,836 $ 1,494 $ 2,151 $ 3,899 $ 5,046
Net Interest Margin (excluding accretion) 3.71% 3.75% 3.85% 3.81% 3.78%
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)
Quarter Ended
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Non-Interest Income:
Service charges $ 6,934 $ 6,739 $ 6,160 $ 6,995 $ 7,169
Bankcard revenue 3,796 3,838 3,685 3,403 3,468
Insurance commissions 1,396 1,319 2,025 1,269 1,365
Trust and investment management fee income 1,103 1,111 1,037 1,093 939
Bank owned life insurance 771 765 756 976 805
Other income 538 549 559 541 734

Subtotal

14,538 14,321 14,222 14,277 14,480
Gain (loss) on sale of investment securities 71 818 83 671
Total Non-Interest Income $ 14,609 $ 15,139 $ 14,305 $ 14,948 $ 14,480
Non-Interest Expense:
Salaries and employee benefits $ 13,144 $ 12,977 $ 13,139 $ 12,910 $ 12,930
Occupancy and equipment 2,531 2,395 2,615 2,529 2,409
Depreciation 1,542 1,533 1,478 1,468 1,437
FDIC insurance expense 432 357 410 500 500
Advertising 799 925 824 408 712
Bankcard expenses 843 833 806 697 680
Postage, delivery and statement mailings 557 530 575 521 541
Office supplies 405 420 410 408 416
Legal and professional fees 476 612 409 1,469 591
Telecommunications 510 506 338 581 721
Repossessed asset (gains) losses, net of expenses 31 142 379 (72) 896
Merger related expenses 72 (150)
Other expenses 3,055 3,075 1,993 3,390 2,982
Total Non-Interest Expense $ 24,325 $ 24,305 $ 23,376 $ 24,881 $ 24,665
Employees (Full Time Equivalent) 908 912 925 923 924
Branch Locations 82 82 82 83 83
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
September 30 December 31
2014 2013
(Unaudited)
Assets
Cash and due from banks $ 79,836 $ 75,999
Interest-bearing deposits in depository institutions 11,656 9,877
Cash and cash equivalents 91,492 85,876
Investment securities available-for-sale, at fair value 250,481 352,660
Investment securities held-to-maturity, at amortized cost 93,089 4,117
Other securities 14,234 13,343
Total investment securities 357,804 370,120
Gross loans 2,630,742 2,606,197
Allowance for loan losses (20,487) (20,575)
Net loans 2,610,255 2,585,622
Bank owned life insurance 94,338 92,047
Premises and equipment, net 78,999 82,548
Accrued interest receivable 7,751 6,866
Net deferred tax assets 36,654 42,165
Intangible assets 74,434 75,142
Other assets 33,580 27,852
Total Assets $ 3,385,307 $ 3,368,238
Liabilities
Deposits:
Noninterest-bearing $ 498,491 $ 493,228
Interest-bearing:
Demand deposits 620,880 601,527
Savings deposits 640,009 612,772
Time deposits 1,034,015 1,077,606

Total deposits

2,793,395 2,785,133
Short-term borrowings
Customer repurchase agreements 146,115 137,798
Long-term debt 16,495 16,495
Other liabilities 37,629 41,189
Total Liabilities 2,993,634 2,980,615
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 September 30, 2014 and December 31, 2013
less 3,152,647 and 2,748,922 shares in treasury, respectively 46,249 46,249
Capital surplus 107,062 107,596
Retained earnings 353,721 333,970
Cost of common stock in treasury (112,438) (95,202)
Accumulated other comprehensive loss:
Unrealized gain on securities available-for-sale (41) (2,110)
Underfunded pension liability (2,880) (2,880)
Total Accumulated Other Comprehensive Loss (2,921) (4,990)
Total Stockholders’ Equity 391,673 387,623
Total Liabilities and Stockholders’ Equity $ 3,385,307 $ 3,368,238
CITY HOLDING COMPANY AND SUBSIDIARIES
Investment Portfolio
(Unaudited) ($ in 000s)
Original Cost

Credit-Related
Net Investment
Impairment
Losses through
September 30,
2014

Unrealized Gains
(Losses)

Carrying Value
US Government Agencies $ 1,924 $ $ 20 $ 1,944
Mortgage Backed Securities 274,430 (161) 274,269
Municipal Bonds 41,096 716 41,812
Pooled Bank Trust Preferreds 22,697 (20,171) (1,154) 1,372
Single Issuer Bank Trust Preferreds,
Subdebt of Financial Institutions, and
Bank Holding Company Preferred Stocks 20,574 (1,015) (591) 18,968
Money Markets and Mutual Funds 1,525 (17) 1,508
Federal Reserve Bank and FHLB stock 14,234 14,234
Community Bank Equity Positions 4,894 (2,447) 1,250 3,697
Total Investments $ 381,374 $ (23,633) $ 63 $ 357,804
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Residential real estate (1) $ 1,274,062 $ 1,242,972 $ 1,212,232 $ 1,204,450 $ 1,186,000
Home equity – junior liens 146,965 145,452 144,482 146,090 143,728
Commercial and industrial 130,462 131,627 126,569 148,302 135,483
Commercial real estate (2) 1,034,593 1,011,367 1,027,431 1,057,048 1,037,980
Consumer 41,042 42,858 42,320 46,402 50,757
DDA overdrafts 3,618 3,501 4,001 3,905 4,508
Gross Loans $ 2,630,742 $ 2,577,777 $ 2,557,035 $ 2,606,197 $ 2,558,456
Construction loans included in:
(1) – Residential real estate loans $ 22,426 $ 20,078 $ 17,697 $ 17,337 $ 14,808
(2) – Commercial real estate loans $ 24,875 $ 24,608 $ 28,894 $ 24,026 $ 17,391
CITY HOLDING COMPANY AND SUBSIDIARIES
Acquisition Activity – Accretion
(Unaudited) ($ in millions)
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) Deposit(a) Accretion(a) Deposit(a) Total
1Q 2014 $ 299 $ 131 $ 1,628 $ 93 $ 2,151
2Q 2014 $ 284 $ 135 $ 1,023 $ 52 $ 1,494
3Q 2014 $ 315 $ 135 $ 1,334 $ 52 $ 1,836
Remainder 2014 174 135 598 52 959
2015 441 518 1,998 160 3,117
2016 266 497 1,449 48 2,260
a – 1Q, 2Q & 3Q 2014 amounts are based on actual results. Remainder 2014, 2015 and 2016 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 estimated above.
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
Three Months Ended September 30,
2014 2013
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Assets:
Loan portfolio (1):
Residential real estate (2) $ 1,397,306 $ 14,146 4.02% $ 1,315,848 $ 13,931 4.20%
Commercial, financial, and agriculture (2) 1,148,997 13,671 4.72% 1,157,285 16,910 5.80%
Installment loans to individuals (2), (3) 53,839 988 7.28% 63,409 1,538 9.62%
Previously securitized loans (4) *** 487 *** *** 604 ***
Total loans 2,600,142 29,292 4.47% 2,536,542 32,983 5.16%
Securities:
Taxable 335,760 2,864 3.38% 312,786 2,392 3.03%
Tax-exempt (5) 28,199 434 6.11% 29,396 460 6.21%

Total securities

363,959 3,298 3.60% 342,182 2,852 3.31%
Deposits in depository institutions 8,924 7,798
Federal funds sold 0.00%
Total interest-earning assets 2,973,025 32,590 4.35% 2,886,522 35,835 4.93%
Cash and due from banks 107,550 191,116
Bank premises and equipment 79,865 82,708
Other assets 246,357 251,353
Less: Allowance for loan losses (20,893) (20,519)
Total assets $ 3,385,904 $ 3,391,180
Liabilities:
Interest-bearing demand deposits 615,830 138 0.09% 603,592 179 0.12%
Savings deposits 633,690 192 0.12% 602,827 216 0.14%
Time deposits (2) 1,036,370 2,400 0.92% 1,106,352 2,673 0.96%
Short-term borrowings 132,484 86 0.26% 127,263 82 0.26%
Long-term debt 16,495 152 3.66% 16,495 154 3.70%
Total interest-bearing liabilities 2,434,869 2,968 0.48% 2,456,529 3,304 0.53%
Noninterest-bearing demand deposits 522,083 521,114
Other liabilities 30,188 35,854
Stockholders’ equity 398,764 377,683
Total liabilities and

stockholders’ equity

$ 3,385,904 $ 3,391,180
Net interest income $ 29,622 $ 32,531
Net yield on earning assets 3.95% 4.47%
(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 September 30, 2014 Three Months Ended September 30, 2013
Virginia Savings Community Total Virginia Savings Community Total
Residential real estate 103 105 208 297 264 561
Commercial, financial, and agriculture 169 1,110 1,279 303 3,478 3,781
Installment loans to individuals 43 119 162 32 377 409
Time deposits 135 52 187 121 174 295
450 1,386 1,836 753 4,293 5,046
(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 $0.
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%.
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
Nine Months Ended September 30,
2014 2013
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Assets:
Loan portfolio (1):
Residential real estate (2) $ 1,371,620 $ 41,587 4.05% $ 1,294,671 $ 41,215 4.26%
Commercial, financial, and agriculture (2) 1,153,133 41,166 4.77% 1,145,286 46,755 5.46%
Installment loans to individuals (2), (3) 53,508 3,264 8.16% 65,557 4,755 9.70%
Previously securitized loans (4) *** 1,630 *** *** 1,968 ***
Total loans 2,578,261 87,647 4.55% 2,505,514 94,693 5.05%
Securities:
Taxable 342,349 8,797 3.44% 329,918 7,774 3.15%
Tax-exempt (5) 27,685 1,292 6.24% 31,378 1,437 6.12%

Total securities

370,034 10,089 3.65% 361,296 9,211 3.41%
Deposits in depository institutions 8,955 8,090
Federal funds sold 0.00% 17,450 22 0.17%
Total interest-earning assets 2,957,250 97,736 4.42% 2,892,350 103,926 4.80%
Cash and due from banks 127,229 159,942
Bank premises and equipment 81,038 81,976
Other assets 246,655 257,384

Less: Allowance for loan losses

(21,195) (20,030)
Total assets $ 3,390,977 $ 3,371,622
Liabilities:
Interest-bearing demand deposits 612,720 479 0.10% 606,076 537 0.12%
Savings deposits 628,996 597 0.13% 596,895 645 0.14%
Time deposits (2) 1,052,625 7,144 0.91% 1,109,895 8,308 1.00%
Short-term borrowings 128,230 246 0.26% 121,677 232 0.25%
Long-term debt 16,495 453 3.67% 16,495 464 3.76%
Total interest-bearing liabilities 2,439,066 8,919 0.49% 2,451,038 10,186 0.56%
Noninterest-bearing demand deposits 522,341 512,993
Other liabilities 32,526 38,698
Stockholders’ equity 397,044 368,893
Total liabilities and
stockholders’ equity $ 3,390,977 $ 3,371,622
Net interest income $ 88,817 $ 93,740
Net yield on earning assets 4.02% 4.33%
(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”):
Nine Ended September 30, 2014 Nine Months Ended September 30, 2013
Virginia Savings Community Total Virginia Savings Community Total
Residential real estate 361 363 724 816 507 1,323
Commercial, financial, and agriculture 424 3,149 3,573 2,023 5,401 7,424
Installment loans to individuals 113 473 586 112 956 1,068
Time deposits 401 197 598 421 508 929
1,299 4,182 5,481 3,372 7,372 10,744
(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)
September 30 June 30 March 31 December 31 September 30
2014 (a) 2014 2014 2013 2013
Tier I Capital:
Stockholders’ equity $ 391,673 $ 397,231 $ 393,750 $ 387,623 $ 378,042
Goodwill and other intangibles (74,247) (74,483) (74,719) (74,955) (76,233)
Accumulated other comprehensive loss 2,921 2,509 4,214 4,990 6,173
Qualifying trust preferred stock 16,000 16,000 16,000 16,000 16,000
Unrealized loss on AFS securities (18)
Excess deferred tax assets (3,131) (4,019) (6,508) (8,800) (12,495)
Total tier I capital $ 333,216 $ 337,238 $ 332,737 $ 324,859 $ 311,470
Total Risk-Based Capital:
Tier I capital $ 333,216 $ 337,238 $ 332,737 $ 324,859 $ 311,470
Qualifying allowance for loan losses 20,487 20,536 21,044 20,575 20,606
Unrealized gain on securities 630 605 786 606 722
Total risk-based capital $ 354,333 $ 358,379 $ 354,567 $ 346,040 $ 332,798
Net risk-weighted assets $ 2,493,938 $ 2,464,081 $ 2,450,949 $ 2,499,591 $ 2,460,895
Ratios:
Average stockholders’ equity to average assets 11.78% 11.71% 11.64% 11.35% 11.14%
Tangible capital ratio 9.58% 9.80% 9.60% 9.49% 9.08%
Risk-based capital ratios:
Tier I capital 13.36% 13.69% 13.58% 13.00% 12.66%
Total risk-based capital 14.21% 14.54% 14.47% 13.84% 13.52%
Leverage capital 10.07% 10.15% 10.07% 9.80% 9.43%
(a) September 30, 2014 risk-based capital ratios are estimated.
CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(Unaudited) ($ in 000s)
As of and for the Quarter Ended
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Intangibles, net $ 74,434 $ 74,670 $ 74,906 $ 75,142 $ 76,420
Intangibles amortization expense 236 236 236 260 260
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
Quarter Ended
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Balance at beginning of period $ 20,536 $ 21,044 $ 20,575 $ 20,606 $ 20,069
Charge-offs:
Commercial and industrial 325 1 4 268 380
Commercial real estate 696 587 382 1,384 181
Residential real estate 605 316 427 583 487
Home equity 142 38 108 17 8
Consumer 49 38 84 128 102
DDA overdrafts 390 321 341 381 415
Total charge-offs 2,207 1,301 1,346 2,761 1,573
Recoveries:
Commercial and industrial 4 18 63 33 30
Commercial real estate 11 53 30 116 635
Residential real estate 28 39 24 97 69
Home equity
Consumer 43 53 76 85 25
DDA overdrafts 200 195 259 454 197

Total recoveries

286 358 452 785 956
Net charge-offs 1,921 943 894 1,976 617
Provision for loan losses 1,875 285 1,375 1,438 1,241
Provision for (recovery of) acquired loans (3) 150 (12) 507 (87)
Balance at end of period $ 20,487 $ 20,536 $ 21,044 $ 20,575 $ 20,606
Loans outstanding $ 2,630,742 $ 2,577,777 $ 2,557,035 $ 2,606,197 $ 2,558,456
Average loans outstanding 2,600,142 2,563,601 2,570,719 2,577,902 2,536,542
Allowance as a percent of loans outstanding 0.78% 0.80% 0.82% 0.79% 0.81%
Allowance as a percent of non-performing loans 112.61% 106.86% 100.09% 90.25% 93.86%
Net charge-offs (annualized) as a
percent of average loans outstanding 0.30% 0.15% 0.14% 0.31% 0.10%
Net charge-offs, excluding overdraft deposit
accounts, (annualized) as a percent of average loans outstanding 0.27% 0.13% 0.13% 0.32% 0.06%
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Nonaccrual loans $ 17,384 $ 18,423 $ 20,593 $ 22,363 $ 21,535
Accruing loans past due 90 days or more 809 794 432 436 418
Total non-performing loans 18,193 19,217 21,025 22,799 21,953
Other real estate owned 9,162 9,129 9,538 8,470 7,518
Total non-performing assets $ 27,355 $ 28,346 $ 30,563 $ 31,269 $ 29,471
Non-performing assets as a percent of loans and
other real estate owned 1.04% 1.10% 1.19% 1.20% 1.15%
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Total Past Due Loans
(Unaudited) ($ in 000s)
Originated
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Residential real estate $ 5,276 $ 5,794 $ 4,118 $ 4,850 $ 5,414
Home equity – junior liens 751 926 638 921 732
Commercial and industrial 188 25 77 0 5
Commercial real estate 938 443 789 668 612
Consumer 58 80 63 182 96
DDA overdrafts 592 281 196 393 280
Total past due loans $ 7,803 $ 7,549 $ 5,881 $ 7,014 $ 7,139
Acquired
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Residential real estate $ 500 $ 873 $ 813 $ 1,014 $ 1,032
Home equity – junior liens 16 3 21 23
Commercial and industrial 96 58 127 80 2,166
Commercial real estate 2,972 2,110 3,789 10,689 7,324
Consumer 162 374 397 695 703
DDA overdrafts
Total past due loans $ 3,746 $ 3,418 $ 5,147 $ 12,478 $ 11,248
Total
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Residential real estate $ 5,776 $ 6,667 $ 4,931 $ 5,864 $ 6,446
Home equity – junior liens 767 929 659 921 755
Commercial and industrial 284 83 204 80 2,171
Commercial real estate 3,910 2,553 4,578 11,357 7,936
Consumer 220 454 460 877 799
DDA overdrafts 592 281 196 393 280
Total past due loans $ 11,549 $ 10,967 $ 11,028 $ 19,492 $ 18,387
Total past due loans as a percent of loans outstanding 0.44% 0.43% 0.43% 0.75% 0.72%
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Troubled Debt Restructurings
(Unaudited) ($ in 000s)
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Residential real estate $ 18,040 $ 19,212 $ 18,940 $ 20,345 $ 20,380
Home equity – junior liens 2,821 2,858 2,866 2,873 2,772
Commercial and industrial 77 86 84 88 91
Commercial real estate 2,270 2,281 1,854 1,783 1,567
Consumer
Total $ 23,208 $ 24,437 $ 23,744 $ 25,089 $ 24,810
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Purchased Credit Impaired Loans
(Unaudited) ($ in 000s)
Virginia Savings Acquisition
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Contractual required principal and interest 3,481 3,735 3,821 3,932 5,253
Carrying value 2,987 3,098 3,102 3,182 4,248
Community Acquisition
September 30 June 30 March 31 December 31 September 30
2014 2014 2014 2013 2013
Contractual required principal and interest 24,147 27,394 30,476 38,566 40,896
Carrying value 15,518 17,902 19,986 26,330 24,958

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