Document

0000726854-17-000024.txt : 20170424 0000726854-17-000024.hdr.sgml : 20170424 20170424172613 ACCESSION NUMBER: 0000726854-17-000024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20170424 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170424 DATE AS OF CHANGE: 20170424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITY HOLDING CO CENTRAL INDEX KEY: 0000726854 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 550619957 STATE OF INCORPORATION: WV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11733 FILM NUMBER: 17779084 BUSINESS ADDRESS: STREET 1: 25 GATEWATER ROAD STREET 2: P O BOX 7520 CITY: CHARLESTON STATE: WV ZIP: 25313 BUSINESS PHONE: 3047691100 MAIL ADDRESS: STREET 1: 25 GATEWATER ROAD STREET 2: P O BOX 7520 CITY: CHARLESTON STATE: WV ZIP: 25313 8-K 1 chco03-31x178xk.htm 8-K, CHCO 1Q2017 EARNINGS Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported)

April 24, 2017

CITY HOLDING COMPANY

(Exact Name of Registrant as Specified in its Charter)

Commission File Number: 0-11733



West Virginia	55-0619957
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

25 Gatewater Road, Cross Lanes, WV 25313

(Address of Principal Executive Offices, Including Zip Code)

304-769-1100

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):



¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On April 24, 2017, City Holding Company (“the Company”) issued a news release, attached as Exhibit 99.1, announcing the Company’s earnings results for the first quarter ended March 31, 2017. Furnished as Exhibit 99.1 and incorporated herein by reference is the news release issued by the Company.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

99.1 News Release issued April 24, 2017

Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the Undersigned hereunto duly authorized.



	City Holding Company


By:	/s/ David L. Bumgarner
	David L. Bumgarner
	Chief Financial Officer

Date: April 24, 2017

EX-99.1 2 chco03-31x17exhibit991.htm EXHIBIT 99.1, PRESS RELEASE CHCO 1Q2017 EARNINGS Exhibit

NEWS RELEASE

For Immediate Release

April 24, 2017

For Further Information Contact:

Charles R. Hageboeck, Chief Executive Officer and President

(304) 769-1102

City Holding Company Announces First Quarter Results

Charleston, West Virginia - City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $4.1 billion bank holding company headquartered in Charleston, today announced quarterly net income of $16.0 million and diluted earnings of $1.04 per share.

Highlights of the Company’s first quarter performance and results included the following:


•	Return on assets and return on tangible equity of 1.60% and 16.5%, respectively.


•	Net interest income increased $1.9 million from the quarter ended March 31, 2016 (excluding accretion from fair value adjustments).


•	Realized $4.3 million of investment gains from the sales of pooled trust preferred securities during the quarter ended March 31, 2017.


•	Total loan growth of $27.9 million (3.7% annualized) from December 31, 2016 to March 31, 2017.


•	Average total deposit balances grew $82.7 million, or 2.6%, from the quarter ended December 31, 2016 to the quarter ended March 31, 2017.


•	Sold 441,000 shares of common stock at a weighted average price of $64.48 per share, net of broker fees.


•	Increased our quarterly dividend from $0.43 per quarter to $0.44 per quarter.

Net Interest Income

The Company’s tax equivalent net interest income increased $0.2 million, or 0.5%, from $30.6 million for the fourth quarter of 2016 to $30.8 million for the first quarter of 2017. Investment interest income increased $0.4 million from the quarter ended December 31, 2016. This increase was partially offset by increased interest expense on interest bearing liabilities ($0.3 million). The Company’s reported net interest margin increased from 3.42% for the fourth quarter of 2016 to 3.45% for the first quarter of 2017. Excluding the favorable impact of the accretion from fair value adjustments, the net interest margin would have been 3.42% for the quarter ended March 31, 2017 and 3.37% for the quarter ended December 31, 2016.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned improved from 0.61% at December 31, 2016 to 0.52% at March 31, 2017. Total nonperforming assets decreased from $18.7 million at December 31, 2016 to $15.9 million at March 31, 2017. Excluded from this ratio are purchased credit-impaired loans for 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 from $8.6 million, or 0.28% of total loans outstanding, at December 31, 2016 to $6.2 million, or 0.20% of total loans outstanding, at March 31, 2017.

As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $0.7 million in the first quarter of 2017, compared to $0.5 million for the comparable period in 2016 and $1.3 million for the fourth quarter of 2016. The provision for loan losses recorded in the first quarter of 2017 reflects the growth in the loan portfolio, changes in the quality of the portfolio, and general improvement in the Company’s historical loss rates used to compute the allowance not specifically allocated to individual credits. 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

During the first quarter of 2017, the Company realized $4.3 million of investment gains. These gains represented partial recoveries of impairment charges previously recognized on pooled trust preferred securities. As a result of these sales, the Company no longer holds any pooled trust preferred securities in its investment portfolio. Exclusive of this gain, non-interest income increased from $13.1 million for the first quarter of 2016 to $14.2 million for the first quarter of 2017. This increase was mainly due to an increase of $0.5 million in bank owned life insurance revenues due to death benefit proceeds, an increase of $0.4 million, or 6.8%, in service charges, and an increase of $0.2 million, or 4.4%, in bankcard revenues.

Non-interest Expenses

Non-interest expenses increased $0.5 million (1.9% increase), from $24.2 million in the first quarter of 2016 to $24.6 million in the first quarter of 2017. This increase was primarily due to an increase in salaries and employee benefits of $0.4 million due primarily to salary increases.

Balance Sheet Trends

Loans increased $27.9 million (0.9%) from December 31, 2016 to $3.07 billion at March 31, 2017. Commercial real estate loans increased $20.6 million (1.7%) and commercial and industrial loans increased $19.3 million (10.4%). These increases were partially offset by decreases in residential real estate loans ($6.7 million) and home equity junior lien loans ($2.8 million).

Total average depository balances increased $82.7 million, or 2.6%, from the quarter ended December 31, 2016 to the quarter ended March 31, 2017. The Company experienced increases in savings deposits ($38.3 million), interest-bearing deposits ($18.7 million), time deposits ($16.1 million) and noninterest-bearing demand deposits ($9.6 million).

Income Tax Expense

The Company’s effective income tax rate for the first quarter of 2017 was 32.3% compared to 32.5% for the year ended December 31, 2016, and 33.4% for the quarter ended March 31, 2016.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 90.6% and the loan to asset ratio was 74.5% at March 31, 2017. The Company maintained investment securities totaling 13.4% of assets as of the same date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 56.5% of assets at March 31, 2017. Time deposits fund 25.7% of assets at March 31, 2017, 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 due in part to the sale of additional common shares in the fourth quarter of 2016 and the first quarter of 2017 discussed below. The Company’s tangible equity ratio increased from 9.3% at December 31, 2016 to 10.0% at March 31, 2017. At March 31, 2017, City National Bank’s Leverage Ratio was 8.40%, its Common Equity Tier I ratio was 11.74%, its Tier I Capital ratio was 11.74%, and its Total Risk-Based Capital ratio was 12.44%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On March 29, 2017, the Board approved a quarterly cash dividend of $0.44 per share payable April 28, 2017, to shareholders of record as of April 14, 2017. This increase represented a 2.3% increase from the $0.43 per share cash dividend paid in the fourth quarter of 2016. During the quarter ended March 31, 2017, the Company sold 441,000 common shares at a weighted average price of $64.48 per share, net of broker fees pursuant to an at-the-market common stock offering. Through April 21, 2017, the Company has sold approximately 548,000 shares under the at-the-market offering at a weighted average price of $64.82 per share, net of broker fees.

City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 85 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 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, 2016. 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, 2017 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2017 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)



	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016

Earnings
Net Interest Income (FTE)	$	30,804		$	30,638		$	30,002		$	29,863		$	29,312
Net Income available to common shareholders	16,026			14,656			13,232			12,541			11,702

Per Share Data
Earnings per share available to common shareholders:
Basic	$	1.04		$	0.97		$	0.88		$	0.83		$	0.78
Diluted	1.04			0.97			0.88			0.83			0.78
Weighted average number of shares:
Basic	15,252			14,894			14,899			14,889			14,916
Diluted	15,277			14,914			14,909			14,902			14,927
Period-end number of shares	15,586			15,128			15,007			15,005			14,971
Cash dividends declared	$	0.44		$	0.43		$	0.43		$	0.43		$	0.43
Book value per share (period-end)	30.90			29.25			28.97			28.60			27.93
Tangible book value per share (period-end)	25.83			24.01			23.69			23.30			22.61
Market data:
High closing price	$	67.93		$	68.29		$	50.60		$	50.14		$	47.78
Low closing price	60.86			48.49			44.53			43.06			40.82
Period-end closing price	64.48			67.6			50.29			45.47			47.78
Average daily volume	57			57			61			63			71
Treasury share activity:
Treasury shares repurchased	—			—			—			2			229
Average treasury share repurchase price	$	—		$	—		$	—		46.65			43.31
Common share issuance:
Common shares issued (in thousands)	441			108			—			—			—
Average common share issue price (a)	$	64.48		$	66.21		—			—			—

Key Ratios (percent)
Return on average assets	1.60		%	1.49		%	1.38		%	1.31		%	1.25		%
Return on average tangible equity	16.50		%	16.10		%	14.90		%	14.50		%	13.80		%
Yield on interest earning assets	3.88		%	3.81		%	3.85		%	3.95		%	3.91		%
Cost of interest bearing liabilities	0.54		%	0.50		%	0.49		%	0.49		%	0.48		%
Net Interest Margin	3.45		%	3.42		%	3.48		%	3.56		%	3.53		%
Non-interest income as a percent of total revenue	31.90		%	32.10		%	32.10		%	31.60		%	31.10		%
Efficiency Ratio (a)	53.80		%	48.90		%	56.30		%	55.60		%	56.80		%



Price/Earnings Ratio (b)	15.51			17.38			14.33			13.66			15.4



Capital (period-end)
Average Shareholders' Equity to Average Assets	11.66		%	11.25		%	11.35		%	11.13		%	11.23		%
Tangible equity to tangible assets	9.95		%	9.30		%	9.39		%	9.38		%	9.03		%
Consolidated risk based capital ratios (c):
CET I	14.61		%	13.41		%	13.00		%	13.21		%	13.38		%
Tier I	15.18		%	13.98		%	13.59		%	13.82		%	14.00		%
Total	15.91		%	14.73		%	14.33		%	14.57		%	14.78		%
Leverage	10.83		%	10.08		%	9.92		%	9.74		%	9.78		%

Other
Branches	85			85			85			85			85
FTE	833			847			834			852			854

Assets per FTE	$	4,951		$	4,704		$	4,636		$	4,468		$	4,484
Deposits per FTE	4,073			3,815			3,812			3,688			3,732

(a) The common share issue price is presented net of commissions and excludes one-time offering costs of approximately $265,000.
(b) The price/earnings ratio is computed based on annualized quarterly earnings.
(c) March 31, 2017 risk-based capital ratios are estimated.

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

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



	Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
	2017		2016		2016		2016		2016
Interest Income
Interest and fees on loans	$	30,104	$	30,126	$	29,444	$	29,640	$	28,927
Interest on investment securities:
Taxable	3,444		3,277		3,183		2,927		3,005
Tax-exempt	663		481		419		365		357
Interest on deposits in depository institutions	3		—		—		—		—
Total Interest Income	34,214		33,884		33,046		32,932		32,289

Interest Expense
Interest on deposits	3,429		3,137		3,006		3,011		2,898
Interest on short-term borrowings	157		188		90		86		107
Interest on long-term debt	181		179		172		167		164
Total Interest Expense	3,767		3,504		3,268		3,264		3,169
Net Interest Income	30,447		30,380		29,778		29,668		29,120
Provision for loan losses	681		1,301		1,432		1,122		539
Net Interest Income After Provision for Loan Losses	29,766		29,079		28,346		28,546		28,581

Non-Interest Income
Gains on sale of investment securities	4,276		—		2,668		845		—
Service charges	6,730		6,995		6,842		6,564		6,303
Bankcard revenue	4,140		4,142		4,216		4,190		3,967
Trust and investment management fee income	1,386		1,597		1,329		1,371		1,276
Bank owned life insurance	1,229		952		846		768		760
Other income	746		685		846		843		821
Total Non-Interest Income	18,507		14,371		16,747		14,581		13,127

Non-Interest Expense
Salaries and employee benefits	13,078		12,427		12,993		12,790		12,673
Occupancy and equipment	2,838		2,792		2,759		2,708		2,836
Depreciation	1,525		1,516		1,585		1,567		1,567
FDIC insurance expense	375		137		508		512		465
Advertising	733		445		667		778		716
Bankcard expenses	943		1,011		1,188		1,016		938
Postage, delivery, and statement mailings	555		492		517		506		565
Office supplies	361		320		325		366		353
Legal and professional fees	449		515		869		437		366



Telecommunications	484		494		459		431		428
Repossessed asset losses, net of expenses	336		244		305		53		288
Other expenses	2,923		2,063		3,109		3,119		2,945
Total Non-Interest Expense	24,600		22,456		25,284		24,283		24,140
Income Before Income Taxes	23,673		20,994		19,809		18,844		17,568
Income tax expense	7,647		6,338		6,577		6,303		5,866
Net Income Available to Common Shareholders	$	16,026	$	14,656	$	13,232	$	12,541	$	11,702

Distributed earnings allocated to common shareholders	$	6,782	$	6,428	$	6,376	$	6,375	$	6,365
Undistributed earnings allocated to common shareholders	9,067		8,051		6,699		6,016		5,206
Net earnings allocated to common shareholders	$	15,849	$	14,479	$	13,075	$	12,391	$	11,571


Average common shares outstanding	15,252		14,894		14,899		14,889		14,916
Shares for diluted earnings per share	15,277		14,914		14,909		14,902		14,927

Basic earnings per common share	$	1.04	$	0.97	$	0.88	$	0.83	$	0.78
Diluted earnings per common share	$	1.04	$	0.97	$	0.88	$	0.83	$	0.78

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

($ in 000s)



	(Unaudited)						(Unaudited)			(Unaudited)			(Unaudited)
	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Assets
Cash and due from banks	$	164,887		$	62,263		$	57,233		$	69,933		$	165,134
Interest-bearing deposits in depository institutions	25,925			25,876			7,576			8,643			10,031
Cash and cash equivalents	190,812			88,139			64,809			78,576			175,165

Investment securities available-for-sale, at fair value	470,098			450,083			434,717			409,039			362,282
Investment securities held-to-maturity, at amortized cost	72,308			75,169			79,499			83,208			86,518
Other securities	10,240			14,352			11,895			10,203			9,960
Total investment securities	552,646			539,604			526,111			502,450			458,760

Gross loans	3,074,173			3,046,226			2,957,912			2,903,398			2,877,117
Allowance for loan losses	(19,209		)	(19,730		)	(19,550		)	(19,139		)	(19,315		)
Net loans	3,054,964			3,026,496			2,938,362			2,884,259			2,857,802

Bank owned life insurance	101,481			100,732			100,293			99,446			98,679
Premises and equipment, net	73,805			75,165			75,589			75,040			75,965
Accrued interest receivable	8,644			8,408			7,986			8,428			8,517
Net deferred tax assets	24,606			28,043			23,179			23,995			27,541
Intangible assets	79,000			79,135			79,284			79,433			79,581
Other assets	38,029			38,681			50,748			55,234			47,656
Total Assets	$	4,123,987		$	3,984,403		$	3,866,361		$	3,806,861		$	3,829,666

Liabilities
Deposits:
Noninterest-bearing	$	714,791		$	672,286		$	669,865		$	651,867		$	666,523
Interest-bearing:
Demand deposits	743,246			695,891			713,642			701,248			711,366
Savings deposits	874,031			822,057			765,195			758,323			780,982
Time deposits	1,060,690			1,041,419			1,030,584			1,030,841			1,028,400
Total deposits	3,392,758			3,231,653			3,179,286			3,142,279			3,187,271
Short-term borrowings
Federal Funds purchased	—			64,100			6,000			—			—
Customer repurchase agreements	186,686			184,205			173,384			153,674			156,714
Long-term debt	16,495			16,495			16,495			16,495			16,495
Other liabilities	46,402			45,512			56,412			66,054			51,068
Total Liabilities	3,642,341			3,541,965			3,431,577			3,378,502			3,411,548



Stockholders' Equity
Preferred stock	—			—			—			—			—
Common stock	47,619			46,518			46,249			46,249			46,249
Capital surplus	140,305			112,873			105,996			105,648			106,137
Retained earnings	426,126			417,017			408,823			402,044			395,963
Cost of common stock in treasury	(126,265		)	(126,958		)	(127,538		)	(127,619		)	(129,142		)
Accumulated other comprehensive loss:
Unrealized gain on securities available-for-sale	(1,479		)	(2,352		)	6,013			6,796			3,670
Underfunded pension liability	(4,660		)	(4,660		)	(4,759		)	(4,759		)	(4,759		)
Total Accumulated Other Comprehensive Loss	(6,139		)	(7,012		)	1,254			2,037			(1,089		)
Total Stockholders' Equity	481,646			442,438			434,784			428,359			418,118
Total Liabilities and Stockholders' Equity	$	4,123,987		$	3,984,403		$	3,866,361		$	3,806,861		$	3,829,666

Regulatory Capital
Total CET 1 capital	$	409,533		$	371,677		$	355,934		$	349,100		$	341,165
Total tier 1 capital	425,533			387,677			371,934			365,100			357,165
Total risk-based capital	445,938			408,406			392,258			384,855			377,003
Total risk-weighted assets	2,807,347			2,772,456			2,737,721			2,642,040			2,550,739

CITY HOLDING COMPANY AND SUBSIDIARIES

Loan Portfolio

(Unaudited) ($ in 000s)



	March 31,		December 31,		September 30,		June 30,		March 31,
	2017		2016		2016		2016		2016

Residential real estate ⁽¹⁾	$	1,444,795	$	1,451,461	$	1,445,242	$	1,417,137	$	1,395,670
Home equity - junior liens	139,165		141,965		141,616		142,827		142,694
Commercial and industrial	205,011		185,667		176,387		171,362		165,549
Commercial real estate ⁽²⁾	1,250,106		1,229,516		1,158,088		1,135,493		1,135,625
Consumer	32,043		32,545		33,614		33,799		34,754
DDA overdrafts	3,053		5,071		2,965		2,780		2,825
Gross Loans	$	3,074,173	$	3,046,225	$	2,957,912	$	2,903,398	$	2,877,117

Construction loans included in:
(1) - Residential real estate loans	$	9,777	$	14,182	$	12,284	$	12,344	$	13,966
(2) - Commercial real estate loans	18,499		12,840		7,309		2,237		15,172


Secondary Mortgage Loan Activity
Mortgage loans originated	$	3,951	$	6,444	$	5,624	$	3,103	$	2,809
Mortgage loans sold	6,118		4,936		5,836		3,183		3,107
Mortgage loans gain on loans sold	167		107		129		80		58

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information

(Unaudited) ($ in 000s)



	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Allowance for Loan Losses
Balance at beginning of period	$	19,730		$	19,550		$	19,139		$	19,315		$	19,251

Charge-offs:
Commercial and industrial	(53		)	—			(103		)	(44		)	(1		)
Commercial real estate	(180		)	(463		)	(142		)	(769		)	(302		)
Residential real estate	(626		)	(453		)	(539		)	(337		)	(405		)
Home equity	(121		)	(90		)	(125		)	(69		)	(106		)
Consumer	(6		)	(24		)	(20		)	(44		)	(38		)
DDA overdrafts	(636		)	(395		)	(378		)	(321		)	(318		)
Total charge-offs	(1,622		)	(1,425		)	(1,307		)	(1,584		)	(1,170		)

Recoveries:
Commercial and industrial	2			1			9			3			1
Commercial real estate	11			40			43			20			384
Residential real estate	25			74			23			51			39
Home equity	—			—			—			—			—
Consumer	11			9			28			52			29
DDA overdrafts	371			180			183			160			242
Total recoveries	420			304			286			286			695

Net charge-offs	(1,202		)	(1,121		)	(1,021		)	(1,298		)	(475		)
Provision for (recovery of) acquired loans	(19		)	(1		)	(4		)	128			40
Provision for loan losses	700			1,302			1,436			994			499
Balance at end of period	$	19,209		$	19,730		$	19,550		$	19,139		$	19,315

Loans outstanding	$	3,074,173		$	3,046,226		$	2,957,912		$	2,903,398		$	2,877,117
Allowance as a percent of loans outstanding	0.62		%	0.65		%	0.66		%	0.66		%	0.67		%
Allowance as a percent of non-performing loans	167.7		%	140.1		%	129		%	124		%	120.4		%

Average loans outstanding	$	3,055,979		$	3,006,426		$	2,919,756		$	2,891,292		$	2,864,943
Net charge-offs (annualized) as a percent of average loans outstanding	0.16		%	0.15		%	0.14		%	0.18		%	0.07		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information, Continued

(Unaudited) ($ in 000s)



	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Nonaccrual Loans
Residential real estate	$	2,810		$	4,302		$	3,919		$	2,531		$	2,977
Home equity	114			100			154			165			152
Commercial and industrial	1,353			1,958			2,441			2,724			2,967
Commercial real estate	7,141			7,341			8,077			9,779			9,718
Consumer	—			—			—			—			—
Total nonaccrual loans	11,418			13,701			14,591			15,199			15,814
Accruing loans past due 90 days or more	35			382			569			241			225
Total non-performing loans	11,453			14,083			15,160			15,440			16,039
Other real estate owned	4,405			4,588			5,435			5,868			6,054
Total non-performing assets	$	15,858		$	18,671		$	20,595		$	21,308		$	22,093

Non-performing assets as a percent of loans and other real estate owned	0.52		%	0.61		%	0.69		%	0.73		%	0.77		%

Past Due Loans
Residential real estate	$	3,876		$	6,074		$	5,713		$	5,490		$	5,045
Home equity	301			673			925			595			595
Commercial and industrial	611			94			399			304			343
Commercial real estate	1,014			1,115			1,275			1,746			2,138
Consumer	38			39			104			150			82
DDA overdrafts	330			599			554			290			514
Total past due loans	$	6,170		$	8,594		$	8,970		$	8,575		$	8,717

Total past due loans as a percent of loans outstanding	0.20		%	0.28		%	0.30		%	0.30		%	0.30		%

Troubled Debt Restructurings ("TDRs") (period-end)
Accruing:
Residential real estate	$	20,294		$	20,643		$	19,944		$	19,685		$	18,306
Home equity	3,104			3,105			3,159			2,873			2,878
Commercial and industrial	38			42			46			50			54
Commercial real estate	8,513			5,525			2,718			2,743			523
Consumer	—			—			—			—			—
Total accruing TDRs	$	31,949		$	29,315		$	25,867		$	25,351		$	21,761



Non-Accruing
Residential real estate	$	100	$	172	452		$	390	$	36
Home equity	30		30		85		44		—
Commercial and industrial	—		—		—		—		—
Commercial real estate	—		—		—		—		—
Consumer	—		—		—		—		—
Total non-accruing TDRs	$	130	$	202	$	537	$	434	$	36

Total TDRs	$	32,079	$	29,517	$	26,404	$	25,785	$	21,797

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)



	Three Months Ended
	March 31, 2017							December 31, 2016							March 31, 2016
	Average					Yield/		Average					Yield/		Average					Yield/
	Balance			Interest		Rate		Balance			Interest		Rate		Balance			Interest		Rate
Assets:
Loan portfolio ⁽¹⁾:
Residential real estate ⁽²⁾	$	1,591,255		$	15,479	3.95	%	$	1,597,711		$	15,469	3.85	%	$	1,531,966		$	14,918	3.92	%
Commercial, financial, and agriculture ⁽²⁾	1,429,075			13,598		3.86	%	1,372,197			13,518		3.92	%	1,294,345			12,919		4.01	%
Installment loans to individuals ^{(2), (3)}	35,650			581		6.61	%	36,518			696		7.59	%	38,632			721		7.51	%
Previously securitized loans ⁽⁴⁾	***			447		***		***			443		***		***			369		***
Total loans	3,055,979			30,105		4.00	%	3,006,426			30,126		3.99	%	2,864,943			28,927		4.06	%
Securities:
Taxable	458,295			3,444		3.05	%	479,272			3,277		2.72	%	421,289			3,005		2.87	%
Tax-exempt ⁽⁵⁾	84,784			1,019		4.87	%	64,351			739		4.57	%	41,898			549		5.27	%
Total securities	543,079			4,463		3.33	%	543,623			4,016		2.94	%	463,187			3,554		3.09	%
Deposits in depository institutions	16,826			3		0.07	%	11,117			—		—		10,529			—		—
Total interest-earning assets	3,615,884			34,571		3.88	%	3,561,166			34,142		3.81	%	3,338,659			32,481		3.91	%
Cash and due from banks	81,629							68,514							81,569
Premises and equipment, net	74,768							75,744							76,945
Other assets	253,378							249,271							256,329
Less: Allowance for loan losses	(20,150		)					(20,024		)					(20,591		)
Total assets	$	4,005,509						$	3,934,671						$	3,732,911

Liabilities:
Interest-bearing demand deposits	$	708,434		$	157	0.09	%	$	689,784		$	157	0.09	%	$	677,849		$	145	0.09	%
Savings deposits	831,639			324		0.16	%	793,362			276		0.14	%	767,262			228		0.12	%
Time deposits ⁽²⁾	1,052,218			2,948		1.14	%	1,036,103			2,704		1.04	%	1,019,416			2,525		1.00	%
Short-term borrowings	195,626			157		0.33	%	233,192			188		0.32	%	162,046			107		0.27	%
Long-term debt	16,495			181		4.45	%	16,495			179		4.32	%	16,495			164		4.00	%
Total interest-bearing liabilities	2,804,412			3,767		0.54	%	2,768,936			3,504		0.50	%	2,643,068			3,169		0.48	%
Noninterest-bearing demand deposits	690,243							680,604							630,524
Other liabilities	43,655							42,354							40,198
Stockholders' equity	467,199							442,777							419,121
Total liabilities and
stockholders' equity	$	4,005,509						$	3,934,671						$	3,732,911
Net interest income				$	30,804						$	30,638						$	29,312
Net yield on earning assets						3.45	%						3.42	%						3.53	%

(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"), Community Financial Corporation ("Community") and American Founders Banks, Inc. ("AFB"):
Residential real estate	$	138	$	160	$	181
Commercial, financial, and agriculture	174		145		394
Installment loans to individuals	9		13		54
Time deposits	17		148		148
	$	338	$	466	$	777

(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

Non-GAAP Reconciliations

(Unaudited) ($ in 000s)



	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Net Interest Income/Margin
Net interest income, fully taxable equivalent	$	30,804		$	30,638		$	30,002		$	29,863		$	29,312
Taxable equivalent adjustment	(357		)	(258		)	(224		)	(195		)	(192		)
Net interest income ("GAAP")	$	30,447		$	30,380		$	29,778		$	29,668		$	29,120

Average interest earning assets	$	3,615,884		$	3,561,166		$	3,433,673		$	3,369,565		$	3,338,659
Net Interest Margin	3.45		%	3.42		%	3.48		%	3.56		%	3.53		%

Net interest income, fully taxable equivalent, excluding accretion	$	30,466		$	30,172		$	29,361		$	28,840		$	28,535
Taxable equivalent adjustment	(357		)	(258		)	(224		)	(195		)	(192		)
Accretion related to fair value adjustments	338			466			641			1,023			777
Net interest income ("GAAP")	$	30,447		$	30,380		$	29,778		$	29,668		$	29,120

Average interest earning assets	$	3,615,884		$	3,561,166		$	3,433,673		$	3,369,565		$	3,338,659
Net Interest Margin (excluding accretion)	3.42		%	3.37		%	3.40		%	3.44		%	3.44		%

Tangible Equity Ratio (period end)
Tangible common equity to tangible assets	9.95		%	9.3		%	9.39		%	9.38		%	9.03		%
Effect of goodwill and other intangibles, net	1.72		%	1.8		%	1.86		%	1.89		%	1.89		%
Equity to assets ("GAAP")	11.68		%	11.1		%	11.25		%	11.27		%	10.92		%

Income tax expense ("GAAP")	$	7,647		$	6,338		$	6,577		$	6,303		$	5,866
FIN 48	—			554			—			—			—
Income tax expense, excluding FIN 48	$	7,647		$	6,892		$	6,577		$	6,303		$	5,866

Income before income taxes	23,673			20,994			19,809			18,844			17,568

Effective tax rate, excluding FIN 48	32.3		%	32.8		%	33.2		%	33.4		%	33.4		%
Effective tax rate ("GAAP")	32.3		%	30.2		%	33.2		%	33.4		%	33.4		%

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