10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2018

OR

[  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From ____________To_____________.

Commission File Number 0-11733

CITY HOLDING COMPANY

(Exact name of registrant as specified in its charter)

West Virginia	55-0619957
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
25 Gatewater Road
Charleston, West Virginia	25313
(Address of principal executive offices)	(Zip Code)

(304) 769-1100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Name of Each Exchange on Which Registered:
Common Stock, $2.50 par value	NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act:

None 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

Yes [X] No [  ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act:

Yes [ ] No [ X ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 

Yes [X] No [   ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.  

Large accelerated filer [X]	Accelerated filer [ ]
Non-accelerated filer [   ]	Smaller reporting company [   ]
	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. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). 

Yes [   ] No [X]

As of June 30, 2018, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of the shares of common stock held by non-affiliates, based upon the closing price per share of the registrant’s common stock as reported on the Nasdaq Global Select Market, was approximately $1.1 billion.  (Registrant has assumed that all of its executive officers and directors are affiliates.  Such assumption shall not be deemed to be conclusive for any other purpose.)

As of March 7, 2019, there were 16,530,297 shares of the Company’s common stock, $2.50 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's Proxy Statement for the 2019 annual shareholders’ meeting to be held on April 17, 2019 are incorporated by reference into Part III, Items 10, 11, 12, 13, and 14.

FORM 10-K INDEX

PART I		Pages
Item 1.	Business	1
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	21
Item 2.	Properties	21
Item 3.	Legal Proceedings	21
Item 4.	Mine Safety Disclosures	21
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	22
Item 6.	Selected Financial Data	25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 8.	Financial Statements and Supplementary Data	54
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	115
Item 9A.	Controls and Procedures	115
Item 9B.	Other Information	115
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	116
Item 11.	Executive Compensation	116
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	116
Item 13.	Certain Relationships and Related Transactions and Director Independence	116
Item 14.	Principal Accounting Fees and Services	116
Part IV
Item 15.	Exhibits, Financial Statement Schedules	117
Item 16.	Form 10-K Summary	117
	Exhibit Index	118
	Signatures	120

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements express only management's beliefs regarding future results or events and are subject to inherent uncertainty, risks, and changes in circumstances, many of which are outside of management's control. Examples of forward-looking statements include, but are not limited to, information regarding our business plan and strategies, projected future financial performance, the determination of our allowance for loan losses, the carrying value of certain assets, and statements regarding our risk exposure. Words such as "anticipate," "expect," "may," "will," "should," "likely," "estimate," "intend" and other similar words and expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Uncertainty, risks, changes in circumstances and other factors could cause the Company's actual results to differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ from those discussed in such forward-looking statements include, but are not limited to those set forth in the Company’s Annual Report on Form 10-K under “Risk Factors” and the following: (1) general economic conditions, especially in the communities and markets in which we conduct our business; (2) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for loan losses may not be sufficient to absorb actual losses in our loan portfolio, and risk from concentrations within our loan portfolio; (3) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (4) changes in the interest rate environment; (5) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (6) changes in technology and increased competition, including competition from non-bank financial institutions; (7) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers' performance and creditworthiness; (8) difficulty growing loan and deposit balances; (9) our ability to effectively execute our business plan, including with respect to future acquisitions, integration of acquired companies, and liquidity needs; (10) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries; (11) 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; (12) regulatory enforcement actions and adverse legal actions; (13) difficulty attracting and retaining key employees; (14) the expected cost savings and any revenue synergies from the merger of City Holding Company, City National Bank of West Virginia, Poage Bankshares, Inc., Town Square Bank, Farmers Deposit Bancorp, Inc. and Farmers Deposit Bank may not be fully realized within the expected time frames; (15) the disruption from the merger of City Holding Company, City National Bank of West Virginia, Poage Bankshares, Inc., Town Square Bank, Farmers Deposit Bancorp, Inc. and Farmers Deposit Bank may make it more difficult to maintain relationships with clients, associates, or suppliers; and (16) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations.  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.

PART I

Item 1.Business

City Holding Company (the "Company" or "City Holding" or the "Parent Company") is a financial holding company headquartered in Charleston, West Virginia. The Company conducts its principal activities through its wholly-owned subsidiary, City National Bank of West Virginia (“City National”). City National provides banking, trust and investment management and other financial solutions through its network of 100 bank branches and 891 full-time equivalent associates located in West Virginia, Virginia, Kentucky and southeastern Ohio. The Company’s business activities are currently limited to one reportable business segment, which is community banking.

In July 2018, the Company announced that it had concurrently executed two separate definitive agreements to acquire Poage Bankshares, Inc., of Ashland, Kentucky and its principal banking subsidiary, Town Square Bank (collectively, "Poage") and Farmers Deposit Bancorp, Inc., of Cynthiana, Kentucky and its principal banking subsidiary, Farmers Deposit Bank (collectively, "Farmers Deposit"). The acquisitions were finalized in December 2018. Poage operated nine branches across northeastern Kentucky, along with a loan production office in Cincinnati, Ohio. Farmers Deposit operated three branches around the Lexington, Kentucky region. As a result of overlapping service areas, the Company plans to merge three of the Poage branches into existing City branches and two existing City branches into former Poage branches.

In September 2018, the Company opened a new branch office in Morgantown, West Virginia. In December 2018, the Company opened a new branch office in the Columbus suburb of Worthington, Ohio.

Rendition of the Company's Worthington branch.

In January 2019, the Company announced the signing of a definitive agreement to sell its Virginia Beach, Virginia, branch to Select Bancorp, Inc., the holding company for Select Bank & Trust Company. The transaction is expected to close during the second quarter of 2019.

After the Poage-City branch mergers and the Virginia Beach branch divestiture, the Company expects to have 94 bank branches in its network.

During 2018, the Company received the highest ranking in customer satisfaction in the north central region in J.D. Power's 2018 U.S. Retail Banking Satisfaction Study.

The principal products produced and services rendered by City National include:

• Commercial Banking - City National offers a full range of commercial banking services to corporations and other business customers. Loans are provided for a variety of business purposes, including financing for commercial and industrial projects, income producing commercial real estate, owner-occupied real estate and construction and land development. City National also provides deposit services for commercial customers, including treasury management, lockbox and other cash management services. City National provides merchant credit card services through an agreement with a third party vendor.

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• Consumer Banking - City National provides banking services to consumers, including checking, savings and money market accounts as well as certificates of deposit and individual retirement accounts. In addition, City National provides consumers with installment and real estate loans and lines of credit. City National also offers credit cards through an agreement with a third party vendor.

• Mortgage Banking - City National provides mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, production of conventional and government insured mortgages, secondary marketing and mortgage servicing.

• Wealth Management and Trust Services - City National offers specialized services and expertise in the areas of wealth management, trust, investment and custodial services for commercial and individual customers. These services include the administration of personal trusts and estates, as well as the management of investment accounts for individuals, employee benefit plans and charitable foundations. City National also provides corporate trust and institutional custody, financial and estate planning and retirement plan services.

City National’s customer base is diverse and no single depositor could have a material adverse effect on liquidity, capital, or other elements of financial performance. Although no portion of City National’s loan portfolio is concentrated within a single industry or group of related industries in excess of City National's internally designated limit, residential mortgage loans have historically comprised a significant portion of its loan portfolio. At December 31, 2018, approximately 50% of the Company’s loan portfolio was categorized as residential mortgage and home equity loans. However, due to the fractured nature of residential mortgage lending, there is no concentration of credits that would be considered materially detrimental to the Company’s financial position or operating results.

The Company’s business is not seasonal and has no significant foreign sources or applications of funds.  There are no anticipated material capital expenditures, or any expected material effects on earnings or the Company’s competitive position as a result of compliance with federal, state and local provisions enacted or adopted relating to environmental protection.

City National’s loan portfolio is comprised of commercial and industrial, commercial real estate, residential real estate, home equity, consumer loans and demand deposit account ("DDA") overdrafts.

City National's commercial and industrial loan portfolio consists of loans to corporate and other legal entity borrowers, primarily small to mid-size industrial and commercial companies. Commercial and industrial loans typically involve a higher level of risk than other loan types, including industry specific risks such as the pertinent economy, new technology, labor rates and cyclicality, as well as customer specific factors, such as cash flow, financial structure, operating controls and asset quality.  Collateral securing these loans includes equipment, machinery, inventory, receivables and vehicles. As of December 31, 2018, City National reported $286 million of loans classified as “Commercial and Industrial.”

Commercial real estate loans consist of commercial mortgages, which generally are secured by nonresidential and multi-family residential properties, including hotel/motel and apartment lending. Commercial real estate loans are provided to many of the same customers and carry similar industry and customer specific risks as the commercial and industrial loans, but have different collateral risks.    As of December 31, 2018, City National reported $1.43 billion of loans classified as “Commercial Real Estate.”

City National diversifies risk within the commercial and industrial and commercial real estate portfolios by closely monitoring industry concentrations (against internally established risk-based capital thresholds) and portfolios to ensure that it does not exceed established lending guidelines. Diversification is intended to limit the risk of loss from any single unexpected economic event or trend. Underwriting standards require a comprehensive credit analysis and independent evaluation of all larger balance commercial loans by the loan committee prior to approval.

City National categorizes commercial loans by industry according to the North American Industry Classification System ("NAICS") to monitor its portfolio for possible concentrations in one or more industries. Management monitors industry concentrations against internally established risk-based capital thresholds. As of December 31, 2018, City National was within its internally designated concentration limits. Further, with the exception of loans to borrowers within the "Lessors of Nonresidential Buildings", no other NAICS industry classification exceeded 10% of total loans at December 31, 2018. Loans to "Lessors of Nonresidential Buildings" were 12% of total loans at December 31, 2018. Management also monitors non-owner occupied commercial real estate as a percent of risk-based capital (based upon regulatory guidance). At December 31, 2018, the Company had $1.3 billion of commercial loans classified as non-owner occupied, which was within its designated concentration threshold.

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     Residential real estate loans represent loans to consumers that are secured by a first priority lien on residential real property. Residential real estate loans include loans for the purchase or refinance of consumers' residences and first-priority home equity loans allow consumers to borrow against the equity in their home. These loans primarily consist of single family three- and five-year adjustable rate mortgages with terms that amortize up to 30 years. City National also offers fixed-rate residential real estate loans that are sold in the secondary market; once sold these loans are not included on the Company's balance sheet and City National does not retain the servicing rights to these loans.  Residential purchase real estate loans are generally underwritten to comply with Fannie Mae guidelines, while first priority lien home equity loans are underwritten with typically less documentation, lower loan-to-value ratios and shorter maturities. As of December 31, 2018, City National reported $1.66 billion of loans classified as “Residential Real Estate.”

City National's home equity loans represent loans to consumers that are secured by a second (or junior) priority lien on residential real property. Home equity loans allow consumers to borrow against the equity in their home without paying off an existing first priority lien. These loans include home equity lines of credit ("HELOC") and amortized home equity loans that require monthly installment payments. Second priority lien home equity loans are underwritten with less documentation than first priority lien residential real estate loans but typically have similar loan-to-value ratios and other terms as first priority lien residential real estate loans. The amount of credit extended under these loans is directly related to the value of the real estate securing the loan at the time the loan is made. As of December 31, 2018, City National reported $153 million of loans classified as “Home Equity.”

All mortgage loans, whether fixed rate or adjustable rate, are originated in accordance with acceptable industry standards and comply with regulatory requirements. Fixed rate mortgage loans are processed and underwritten in accordance with Fannie Mae and Freddie Mac guidelines, while adjustable rate mortgage loans are underwritten in accordance with City National's internal loan policy.

Consumer loans may be secured by automobiles, boats, recreational vehicles, certificates of deposit and other personal property or they may be unsecured. The Company manages the risk associated with consumer loans by monitoring factors such as portfolio size and growth, internal lending policies, and pertinent economic conditions. City National's underwriting standards for consumer loans are continually evaluated and modified based upon these factors. As of December 31, 2018, City National reported $51 million of loans classified as “Consumer.”

DDA overdraft balances reflect demand deposit accounts that have been overdrawn by deposit customers and have been reclassified as loans.  As of December 31, 2018, City National reported $6 million of loans classified as “DDA Overdrafts.”

City National’s loan underwriting guidelines and standards are updated periodically with suggested revisions presented to City Holding Company's Board of Directors for approval. The purpose of the underwriting guidelines and standards is to grant loans on a sound and collectible basis; to invest available funds in a safe and profitable manner; to serve the legitimate credit needs of the communities in City National's primary market area; and to ensure that all loan applicants receive fair and equal treatment throughout the lending process. The underwriting guidelines and standards are intended to: (i) minimize loan losses by carefully investigating the credit history and creditworthiness of each applicant; (ii) verify the source of repayment and the ability of the applicant to repay; (iii) adequately collateralize those loans in which collateral is deemed to be required; (iv) exercise appropriate care in the documentation of the application, review, approval, and origination processes; and (v) administer a comprehensive loan collection program. The underwriting guidelines are adhered to by the loan officer assigned to the loan application and subject to his or her experience, background and personal judgment.

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Market Area

City National operates a network of 100 bank branches primarily along the I-64 corridor from Lexington, Kentucky through Lexington, Virginia and along the I-81 corridor through the Shenandoah Valley from Lexington, Virginia to Martinsburg, West Virginia. City National's branch network includes 58 branches in West Virginia, 24 branches in Kentucky,14 branches in Virginia and 4 branches in Ohio. City National provides credit, deposit and investment advisory products and services to a broad geographical area that includes many rural and small community markets in addition to larger cities including Charleston (WV), Huntington (WV), Martinsburg (WV), Ashland (KY), Lexington (KY), Winchester (VA) and Staunton (VA). In addition to its branch network, City National's delivery channels include automated-teller-machines ("ATMs"), interactive-teller machines ("ITMs"), mobile banking, debit cards, interactive voice response systems, and Internet technology.

City National also provides commercial products and services to customers that are outside of its branches' geographical footprint, such as the Charlotte, North Carolina and Pittsburgh, Pennsylvania markets. These loans are diversified across a broad base of industry types, including multi-family housing properties, properties leased to government agencies, nursing homes, grocery and retail stores, and other commercial and industrial loans. At December 31, 2018, the outstanding balance of commercial loans to markets outside of the geographical footprint of the bank's branches was approximately $286 million, or 17% of City National's outstanding commercial loan balances.

City National has approximately 12% of the deposit market share in the counties of West Virginia where its bank branches are located. In Kentucky, City National has approximately 3% of the deposit market share in the counties where its bank branches are located. In Virginia, City National has approximately 9% of the deposit market share in the counties along the I-81 corridor where its bank branches are located. In Ohio, City National has approximately 18% of the deposit market share in Lawrence County where its bank branches are located (excluding the recently opened branch in Worthington, Ohio).

According to the most recent U.S. Census Bureau estimates (2017), in the West Virginia counties where City National's bank branches are located, the population was approximately 1.0 million and has decreased 0.2% since 2010.  The population in the counties that City National serves in Kentucky increased 4.3% since 2010. The population in the counties City National serves in Virginia along the I-81 corridor have increased 5.4% since 2010, which is more comparable to the national average increase of approximately 5.5%, and in Lawrence County, Ohio, where City National has three bank branches located in Ohio, the population has decreased 3.5% since 2010.

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Competition

As noted previously, the Company’s principal markets are located in West Virginia and contiguous markets in the surrounding states of Kentucky, Virginia and Ohio. The majority of the Company’s bank branches are located in the areas of Charleston (WV), Huntington (WV), Beckley (WV), Lewisburg (WV), Martinsburg (WV), Lexington (KY), and along the I-81 corridor in Virginia where there is a significant presence of other financial service providers. Within its markets, the Company competes with national, regional, and local community banks for deposits, credit and trust and investment management customers. In addition to traditional banking organizations, the Company competes with credit unions, finance companies, financial technology companies, mutual funds, insurance companies, and other financial service providers, many of which are able to provide specialty financial products and services to targeted customer groups. As further discussed below, changes in laws and regulations enacted in recent years have increased the competitive environment the Company and its subsidiaries face to retain and attract customers.

Regulation and Supervision

Overview: The Company, as a registered financial holding company, and City National, as an insured depository institution, operate in a highly regulated environment and are regularly examined by federal regulators. The following description briefly discusses certain provisions of federal and state laws and regulations to which the Company and City National are subject and the potential impact of such provisions.  These federal and state laws and regulations are designed to reduce potential loss exposure to the depositors of depository institutions and to the Federal Deposit Insurance Corporation’s insurance fund; they are not intended to protect the Company’s shareholders. Proposals to change the laws and regulations governing the banking industry are frequently raised in Congress, in state legislatures, and before the various bank regulatory agencies.  The likelihood and timing of any changes and the impact such changes might have on the Company are impossible to determine with any certainty.  A change in applicable laws or regulations, or a change in the way such laws or regulations are interpreted by regulatory agencies or courts, may have a material impact on the business, operations and earnings of the Company.  To the extent that the following information describes statutory or regulatory provisions, it is qualified entirely by reference to the particular statute and/or regulation.

As a financial holding company, the Company is regulated under the Bank Holding Company Act of 1956, as amended (the “BHCA”), and is subject to inspection, examination and supervision by the Board of Governors of the Federal Reserve Board. The BHCA provides generally for “umbrella” regulation of bank holding companies such as the Company by the Federal Reserve Board, and for functional regulation of banking activities by bank regulators, securities activities by securities regulators, and insurance activities by insurance regulators. The Company is also under the jurisdiction of the Securities and Exchange Commission ("SEC") and is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as administered by the SEC. The Company is listed on the Nasdaq Global Select Market ("NASDAQ") under the trading symbol “CHCO” and is subject to the rules of the NASDAQ for listed companies.

City National is organized as a national banking association under the National Bank Act of 1863, as amended (the "National Bank Act"). It is subject to regulation and examination by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”). The OCC's supervision and regulation of banks is primarily intended to protect the interests of depositors of the banks. The National Bank Act generally requires each national bank to maintain reserves against deposits, restricts the nature and amount of loans that the bank may make and the interest the bank may charge on such loans, and restricts investments and other activities of the bank.

Bank Holding Company Activities: In general, the BHCA limits the business of bank holding companies to banking, managing or controlling banks and certain other activities that the Federal Reserve Board has determined to be so closely related to banking as to be a proper incident thereto. Under the BHCA, bank holding companies that qualify and elect to be financial holding companies may engage in any activity, or acquire and retain the equity of a company engaged in any activity, that is either (i) financial in nature or incidental to such financial activity (as determined by the Federal Reserve Board in consultation with the OCC) or (ii) complementary to a financial activity and does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally (as determined solely by the Federal Reserve Board). Activities that are financial in nature include, among other things, securities underwriting and dealing, insurance underwriting and making merchant banking investments.

The Company has elected and qualifies as a financial holding company. In order for the Company to maintain its financial holding company status, both the Company and City National must be categorized as "well-capitalized" and "well-managed" under applicable regulatory guidelines. If the Company or City National fails to meet these requirements, the Federal Reserve Board may impose corrective capital requirements or place limitations on the Company's ability to conduct the broader activities permissible for financial holding companies. The Federal Reserve Board also has the power to order any bank holding company or its subsidiaries to terminate any activity or to terminate its ownership or control of any subsidiary when the Federal

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Reserve Board has reasonable grounds to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial soundness, safety or stability of any bank subsidiary of the bank holding company.

The BHCA, the Bank Merger Act, and other federal and state laws and regulations regulate mergers and acquisitions of commercial banks and bank holding companies. The prior approval of the Federal Reserve Board is typically required for City Holding Company to acquire more than 5% of the voting shares of a commercial bank or bank holding company. Mergers and acquisitions by the Company of national banks, state-chartered banks, federal and state savings associations, and certain other types of entities require prior approval from various regulators. In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transaction, the capital position of the combined institution, and the applicant's previous adherence to various banking regulations, including the Community Reinvestment Act of 1977 and anti-money laundering requirements.

Federal Reserve Board policy and federal law require that bank holding companies must serve as a source of financial strength to their subsidiary banks. The Company is expected to commit resources to City National, even at times when the Company may not be inclined to do so. For example, if bank regulatory agencies determine that City National's capital levels are impaired, the Company may be required to restore City National's capital levels with a special assessment.

Banking Operations: The Bank Secrecy Act of 1970 ("BSA") and the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 (“Patriot Act”) require financial institutions to develop programs to help prevent them from being used for money laundering, terrorist or other illegal activities. The rules under the BSA and the Patriot Act include the following:  (a) require financial institutions to keep records and report on transactions or accounts at issue; (b) require financial institutions to obtain and retain information related to the beneficial ownership of any account opened or maintained by foreign persons; (c) require financial institutions to identify each customer who is permitted to use a payable-through or correspondent account and obtain certain information from each customer permitted to use the account; and (d) prohibit or impose conditions on the opening or maintaining of correspondent or payable-through accounts.  Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution.

The Company and its subsidiary bank and other subsidiaries are "affiliates" within the meaning of the Federal Reserve Act.  The Federal Reserve Act imposes limitations on a bank with respect to extensions of credit to, investments in, and certain other transactions with, its parent bank holding company and the holding company’s other subsidiaries.  Loans and extensions of credit from the bank to its affiliates are also subject to various collateral requirements. Further, City National's authority to extend credit to the Company's directors, executive officers and principal shareholders, including their immediate family members, corporations and other entities that they control, is subject to the restrictions and additional requirements of the Federal Reserve Act and Regulation O promulgated thereafter. These statutes and regulations impose specific limits on the amount of loans City National may make to directors and other insiders, and specify approval procedures that must be followed in making loans that exceed certain amounts.

The Community Reinvestment Act of 1977 (“CRA”) requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practice. Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low- and moderate-income individuals and communities. Depository institutions are periodically examined for compliance with the CRA and are assigned ratings. In order for a financial holding company to commence any new activity permitted by the BHCA, or to acquire any company engaged in any new activity permitted by the BHCA, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the CRA. Banking regulators also take into account CRA ratings when considering approval of a proposed merger or acquisition transaction.  Depository institutions are typically examined for CRA compliance every three years, although the frequency is at the OCC's discretion. City National received a "satisfactory" rating on its most recent CRA examination in 2018.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was enacted in July 2010 and implemented far-reaching changes across the financial regulatory landscape, including provisions that impact the Company's operations and regulation of the Company in the following ways, among others:

• Centralize responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, which has rule making authority for a wide range of consumer protection laws that apply to all banks and has broad powers to supervise and enforce consumer protection laws;

• Require the OCC to seek to make its capital requirements for national banks countercyclical so that capital requirements increase in times of economic expansion and decrease in times of economic contraction;

• Require financial holding companies, such as the Company, to be well-capitalized and well-managed;

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• Provide for an increase in the minimum reserve ratio for the FDIC deposit insurance fund from 1.15% to 1.35% and changes in the basis for determining FDIC premiums from deposits to assets;

• Repeal the federal prohibitions on the payment of interest on demand deposits;

• Amend the Electronic Fund Transfer Act ("EFTA");

• Enhance the requirements for certain transactions with affiliates under the Federal Reserve Act;

• Strengthen the existing limits on a depository institution’s credit exposure to one borrower;

• Strengthen loan restrictions to insiders; and

• Increase the authority of the Federal Reserve Board to examine the Company and its non-bank subsidiaries.

The Volcker Rule was adopted under the Dodd-Frank Act and prohibit certain entities, including the Company and its affiliates, from owning, sponsoring, or having certain relationships with hedge funds and private equity funds and engaging in short-term proprietary trading of securities, derivatives, commodity futures and options on these instruments.

Since the enactment of the Dodd-Frank Act, the Consumer Financial Protection Bureau (the "CFPB") has issued several regulations governing mainly consumer mortgage lending. These regulations include the ability to repay and qualified mortgage rule, which imposes additional requirements on banks designed to ensure borrowers' ability to repay their mortgage loans, a rule on escrow accounts for higher priced mortgage loans, a rule expanding the scope of the high-cost mortgage provision in the Truth in Lending Act, rules related to mortgage servicing, and an interagency rule on appraisals for higher-priced mortgage loans. The CFPB has also promulgated rules under the Equal Credit Opportunity Act, the Truth in Lending Act, and the Real Estate Settlement Procedures Act, all of which impact the Company's loan origination and servicing operations. The CFPB also has broad authority to supervise unfair, deceptive or abusive acts or practices related to banking.

The Company is also subject to the Gramm-Leach Bliley Act of 1999, which governs the distribution and protection of information about its customers, the Equal Credit Opportunity Act, which ensures fair and nondiscriminatory lending practicies, the Truth in Lending Act and Truth in Savings Act, which makes it easier for customers to compare products and services offered by financial institutions, the Home Mortgage Disclosure Act, which imposes additional disclosure requirements on the Company related to information about its mortgage lending, and other federal and state laws and regulations.

The Economic Growth, Regulatory Relief, and Consumer Protection Act (the "Regulatory Relief Act") was signed into law on May 24, 2018. The Regulatory Relief Act scales back certain aspects of the Dodd-Frank Act and provides other regulatory relief for financial institutions. Certain provisions affecting the Company include:

• Simplifying regulatory capital requirements by providing that banks with less than $10 billion in total consolidated assets that meet a to-be-developed community bank leverage ratio of tangible equity to average consolidated assets between eight and ten percent will be deemed to be in compliance with risk-based capital and leverage requirements.

• Reducing reporting requirements on call reports for the first and third quarters of a reporting year for banks with less than $5 billion in total consolidated assets;

• Changing how federal financial institution regulators classify certain municipal securities assets under the liquidity coverage ratio rule;

• Exempting certain reciprocal deposits from treatment as brokered deposits under the FDIC's brokered deposits rule;

• Exempting banks with less than $10 billion in total consolidated assets from certain provisions under the Volcker Rule; and

• Authorizing new banking procedures to better facilitate online transactions.

The Company is still assessing the impact that the Regulatory Relief Act will have on its financial condition and results of operations. In addition, regulatory agencies still need to issue several final rules and regulations required under the Regulatory Relief Act. The Company cannot be certain of the substance of the final rules and regulations or how they will impact the Company’s financial condition and results of operations.

Capital Adequacy: Federal banking regulations set forth capital adequacy guidelines, which are used by regulatory authorities to assess the adequacy of capital in examining and supervising a bank holding company and its insured depository institutions.

In July 2013, the Federal Reserve published the final rules that established a new comprehensive capital framework for banking organizations, commonly referred to as Basel III. These final rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions. The final rule became effective January 1, 2015 for smaller, non-complex banking organizations with full implementation by January 1, 2019.

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On January 1, 2019, the Basel III Capital Rules will require City Holding and City National to maintain minimum CET 1, Tier 1 and Total Capital ratios, along with a capital conservation buffer that will become fully phased in on that date, effectively resulting in new minimum capital ratios (which are shown in the table below). The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and was phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reached 2.5% on January 1, 2019). The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The Basel III Capital Rules also provide for a “countercyclical capital buffer” that is applicable to only certain covered institutions and does not have any current applicability to City Holding Company or City National Bank.

The Company’s regulatory capital ratios for both City Holding and City National are illustrated in the following tables (dollars in thousands):

December 31, 2018	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	492,526	15.1	%	$	208,294	6.375	%	$	228,715	7.0	%	$	212,378	6.5	%
City National Bank	423,099		13.1	%	206,676		6.375	%	226,938		7.0	%	210,728		6.5	%
Tier 1 Capital
City Holding Company	496,526		15.2	%	257,304		7.875	%	277,725		8.5	%	261,389		8.0	%
City National Bank	423,099		13.1	%	255,306		7.875	%	275,568		8.5	%	259,358		8.0	%
Total Capital
City Holding Company	512,801		15.7	%	322,651		9.875	%	343,072		10.5	%	326,736		10.0	%
City National Bank	439,374		13.6	%	320,145		9.875	%	340,408		10.5	%	324,198		10.0	%
Tier 1 Leverage Ratio
City Holding Company	496,526		11.4	%	174,833		4.000	%	174,833		4.0	%	218,542		5.0	%
City National Bank	423,099		9.8	%	172,594		4.000	%	172,594		4.0	%	215,742		5.0	%
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

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December 31, 2017	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	430,154	15.1	%	$	163,441	5.75	%	$	198,972	7.0	%	$	184,760	6.5	%
City National Bank	338,105		12.0	%	162,164		5.75	%	197,418		7.0	%	183,316		6.5	%
Tier 1 Capital
City Holding Company	446,154		15.7	%	206,078		7.25	%	241,609		8.5	%	227,397		8.0	%
City National Bank	338,105		12.0	%	204,468		7.25	%	239,721		8.5	%	225,620		8.0	%
Total Capital
City Holding Company	465,292		16.4	%	262,927		9.25	%	298,458		10.5	%	284,246		10.0	%
City National Bank	357,243		12.7	%	260,873		9.25	%	296,126		10.5	%	282,025		10.0	%
Tier 1 Leverage Ratio
City Holding Company	446,154		11.0	%	161,834		4.00	%	161,834		4.0	%	202,293		5.0	%
City National Bank	338,105		8.5	%	159,625		4.00	%	159,625		4.0	%	199,531		5.0	%
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

Management believes that, as of December 31, 2018, City Holding and City National would meet all capital adequacy requirements under Basel III on a fully phased-in basis as if such requirements had been in effect. As discussed above, the Regulatory Relief Act will likely result in changes to the minimum required capital ratios applicable to the Company once final rules are implemented.

Additionally, federal banking laws require regulatory authorities to take “prompt corrective action” with respect to depository institutions that do not satisfy minimum capital requirements. The extent of these powers depends upon whether the institutions in question are “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized,” as such terms are defined under federal banking agency regulations. Depository institutions that do not meet minimum capital requirements will face constraints on payment of dividends, equity repurchases and compensation based on the amount of shortfall. A depository institution that is not well capitalized is generally prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, may be subject to asset growth limitations, and may be required to submit capital restoration plans.

Incentive Compensation: The Company is subject to regulatory rules and guidance regarding employee incentive compensation policies intended to ensure that incentive-based compensation does not undermine the safety and soundness of the institution by encouraging excess risk-taking. The Company's incentive compensation arrangements must provide employees with incentives that appropriately balance risk and reward and do not encourage imprudent risk, be compatible with effective controls and risk managements, and be supported by strong corporate governance, including active and effective oversight by the Company's board of directors.

Dividends and Other Payments: The Company is a legal entity separate and distinct from City National. Dividends from City National are essentially the sole source of cash for the Company. The right of the Company, and the shareholders of the Company, to participate in any distribution of the assets or earnings of City National, through the payment of dividends or otherwise, is subject to the prior claims of creditors of City National, except to the extent that claims of the Company in its capacity as a creditor may be recognized.  Moreover, there are various legal limitations applicable to the payment of dividends by City National to the Company as well as the payment of dividends by the Company to its shareholders.

City National is subject to various statutory restrictions on its ability to pay dividends to the Company.  Specifically, the approval of the OCC is required prior to the payment of dividends by City National in excess of its earnings retained in the current year plus retained net profits for the preceding two years.  At December 31, 2018, City National could pay dividends up to $88.8 million without prior regulatory permission. No dividends were paid in 2018 that required regulatory approval. The payment of dividends by the Company and City National may also be limited by other factors, such as requirements to maintain adequate capital above regulatory guidelines.  The OCC also has the authority to prohibit any bank under its jurisdiction from engaging in an unsafe or unsound practice in conducting its business. Depending upon the financial condition of City National,

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the payment of dividends could be deemed to constitute such an unsafe or unsound practice.  The Federal Reserve Board and the OCC have indicated their view that it generally would be an unsafe and unsound practice to pay dividends except out of current operating earnings.  The Federal Reserve Board has stated that, as a matter of prudent banking, a bank or bank holding company should not maintain its existing rate of cash dividends on common stock unless (1) the organization’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends and (2) the prospective rate of earnings retention appears consistent with the organization’s capital needs, asset quality, and overall financial condition. Moreover, the Federal Reserve Board has indicated that bank holding companies should serve as a source of managerial and financial strength to their subsidiary banks. Accordingly, the Federal Reserve Board has stated that a bank holding company should not maintain a level of cash dividends to its shareholders that places undue pressure on the capital of its bank subsidiaries, or that can be funded only through additional borrowings or other arrangements that may undermine the bank holding company’s ability to serve as a source of financial strength.

Under federal law, City National may not, subject to certain limited exceptions, make loans or extensions of credit to, or invest in the securities of, or take securities of the Company as collateral for loans to any borrower. City National is also subject to collateral security requirements for any loans or extensions of credit permitted by such exceptions.

Governmental Policies

The Federal Reserve Board regulates money and credit and interest rates in the United States in order to influence general economic conditions. These policies have a significant influence on overall economic growth, demand and distribution of bank loans, investments and deposits, interest rates charged on loans or paid for time and savings deposits. Federal Reserve Board monetary policies have had a significant effect on the operating results of banks and bank holding companies in the past and are expected to continue to do so in the future.

In view of changing conditions in the national economy and in money markets, as well as the effect of credit policies by monetary and fiscal authorities, including the Federal Reserve Board, it is difficult to predict the impact of possible future changes in interest rates, deposit levels, and loan demand, or their effect on the Company's business and earnings or on the financial condition of the Company's various customers.

Deposit Insurance

Substantially all of the deposits of City National are insured up to applicable limits by the Deposit Insurance Fund (“DIF”) of the FDIC and are subject to deposit insurance assessments to maintain the DIF. Deposit insurance assessments are based on average total assets minus average tangible equity. In October 2010, the FDIC adopted a new DIF restoration plan to ensure that the fund reserve ratio reaches 1.35% by September 30, 2020, as required by the Dodd-Frank Act. In March 2016, the FDIC adopted a final rule permanently increasing the reserve ratio for the DIF to 1.35% of total insured deposits.

The Company's FDIC insurance expense for the past three years is shown in the table below (in thousands). The FDIC insurance expense includes deposit assessments and Financing Corporation ("FICO") assessments related to outstanding FICO bonds.

	For the year ended December 31,
	2018		2017		2016
FDIC insurance expense	$	1,251	$	1,348	$	1,622

On January 24, 2019, the Company was notified by the FDIC that it was eligible for small bank assessment credits. On September 30, 2018, the DIF reserve ratio reached 1.36%. Because the reserve ratio exceeded 1.35%, two deposit assessment changes occurred under the FDIC regulations: (i) surcharges on large banks (total consolidated assets of $10 billion or more) ended and (ii) small banks (total consolidated assets of less than $10 billion) were awarded assessment credits for the portion of their assessments that contributed to the growth in the reserve ratio from 1.15% to 1.35%, to be applied when the reserve ratio is at least 1.38%. The credit will be applied automatically each quarter that the reserve ratio is at least 1.38%, up to the full amount of the bank's credit or assessment, whichever is less.

Under the Federal Deposit Insurance Act, as amended (“FDIA") the FDIC may terminate deposit insurance upon finding that an institution has engaged in unsafe or unsound practices, is in unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

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Cybersecurity

Federal regulators issued two statements regarding cybersecurity: (i) a statement indicating that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institutions and (ii) a statement indicating the expectation of a financial institution's management to maintain a sufficient business continuity planning process to ensure rapid recovery, resumption and maintenance of the financial institution's operations after a cyber-attack involving destructive malware. A financial institution is also expected to develop appropriate processes to: (a) enable recovery of data and business operations, (b) address rebuilding network capabilities, and (c) restore data if the financial institution or any of its critical service providers fall victim to this type of cyber-attack. If the Company does not comply with this regulatory guidance, it could be subject to various regulatory sanctions, as well as financial penalties.

In October 2016, the federal banking agencies issued an advance notice of proposed rulemaking on enhanced cybersecurity risk management and resilience standards that would apply to large and interconnected banking organizations and to services provided by third parties to these firms. These enhanced standards would apply only to banks and bank holding companies with total consolidated assets of $50 billion or more; however, it is unclear as to whether any such standards would be applied, and in what form, in the future to smaller banks and bank holding companies.

Future Legislation

Various other legislative and regulatory initiatives, including proposals to overhaul the banking regulatory system and to limit the investments that a depository institution may make with insured funds, are from time to time introduced in Congress and state legislatures, as well as regulatory agencies. Such legislation may change banking statutes and the operating environment of the Company and its subsidiaries in substantial and unpredictable ways, and could increase or decrease the cost of doing business, limit or expand permissible activities, or affect the competitive balance in the financial services industry generally.  The Company cannot determine the ultimate effect that such potential legislation, if enacted, would have upon its financial condition or operations.

Executive Officers of the Registrant

At December 31, 2018, the executive officers of the Company were as follows: 

Name	Age	Positions Held with Registrant
Charles R. Hageboeck, Ph.D.	56	President and Chief Executive Officer, City Holding Company and City National Bank, since February 1, 2005.
Craig G. Stilwell	63	Executive Vice President of Retail Banking, City Holding Company and City National Bank, since February 2005.
John A. DeRito	68	Executive Vice President of Commercial Banking, City Holding Company and City National Bank, since June 2004.
David L. Bumgarner	53	Senior Vice President and Chief Financial Officer, City Holding Company and City National Bank, since February 2005.
Jeffrey D. Legge	54	Senior Vice President, Chief Administration Officer and Chief Information Officer, City Holding Company and City National Bank, since December 2005.

Employees

The Company had 891 full-time equivalent employees at December 31, 2018.

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Available Information

The Company files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any document the Company files at the SEC Public Reference Room at 100 F Street, N. E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The Company's SEC filings are also available to the public at the SEC's website at www.sec.gov.    

The Company’s Internet website address is www.bankatcity.com.  The Company makes available free of charge through its website its annual report, quarterly reports, current reports and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the Securities and Exchange Commission. The information on the Company’s website is not, and shall not be deemed to be, a part of this report or incorporated into any other filing with the Securities and Exchange Commission. Copies of the Company’s annual report will be made available, free of charge, upon written request.

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Item 1A.Risk Factors

An investment in the Company’s common stock is subject to risks inherent to the Company’s business. The material risks and uncertainties that management believes affect the Company are described below. The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair the Company’s business operations.  You should carefully consider the risks described below, as well as the other information included or incorporated by reference in this Annual Report on Form 10-K, before making an investment in the Company’s common stock.  If any of the following risks occur, the Company’s financial condition and results of operations could be materially and adversely affected, and you could lose all or part of your investment. In this section, the term "Company" includes City National unless the circumstances dictate otherwise.

Economic Conditions in the Company's Market Areas Could Negatively Impact the Company's Business and Financial Condition

The Company’s business is concentrated in West Virginia, Kentucky, Virginia and southeastern Ohio. As a result, the Company’s results of operation, cash flows and financial condition are affected by local and regional economic conditions. A downturn in the economies within the Company’s market areas, or in any one of them, could negatively impact the Company’s results of operation and financial condition. Some examples of economic deterioration include declines in economic growth, declines in consumer and business confidence, increases in inflation, increases in the cost of capital and credit, and limitations in the availability of credit. The Company’s financial performance generally, and the ability of its customers to pay interest on and repay principal of outstanding loans to City National, is highly dependent on the strength of the economic and business environment in the market areas where the Company operates and in the United States as a whole. Additionally, the value of collateral securing loans made and held by City National is impacted by the strength of the economy. Deteriorating economic conditions in the Company’s market areas could cause declines in the overall quality of the loan portfolio requiring charge-off of a greater percentage of loans and/or an increase in the allowance for loan losses, which could negatively impact the Company’s results of operations and financial condition.

While the economic and business environments in West Virginia, Kentucky, Virginia and southeastern Ohio have shown improvement since the recession of 2007 to 2009, there can be no assurance that such improvement will continue or that the economies in the Company’s market areas, or the United States as a whole, will not slip into another recession. A lack of continued economic improvement or economic recession could adversely affect the Company’s results of operation and financial condition. An economic slowdown could have the following consequences:

• Loan delinquencies may increase;

• Problem assets and foreclosures may increase;

• Demand for City National's products and services may decline; and

• Collateral (including real estate) that secures loans made by City National may decline in value, in turn reducing customers’ borrowing power and making existing loans less secure.

The oil, natural gas and coal industries, and businesses ancillary thereto, play an important role in the economies of West Virginia, Kentucky, Virginia and southeastern Ohio. The volatility in oil and gas prices since 2014 has negatively impacted oil and gas and other businesses in the Company’s market areas. Additionally, the coal industry continues to be in decline as a result of increased environmental and safety regulatory burden, increased competition from alternative energy sources and a decline in demand for coal. The Company has limited exposure (less than $10 million at December 31, 2018) to coal industry specific loans. Prolonged low oil and gas prices, and continued decline in the coal industry, could result in downward pressure on businesses in the Company’s market area which could negatively affect City National’s customers (both individuals and businesses). As a result, the Company’s operating results and financial condition could be negatively impacted.

The Value of Real Estate Collateral May Fluctuate Significantly Resulting in an Under-Collateralized Loan Portfolio

The market value of real estate, particularly real estate held for investment, can fluctuate significantly in a short period of time as a result of market conditions in the geographic area in which the real estate is located. If the value of the real estate serving as collateral for the Company's loan portfolio were to decline materially, a significant part of the Company's loan portfolio could become under-collateralized. If the loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then, in the event of foreclosure, we may not be able to realize the amount of collateral that we anticipated at the time of originating the loan. This could have a material adverse effect on the Company's provision for loan losses and the Company's operating results and financial condition.

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The Value of the Company’s Common Stock Fluctuates

The market for the Company’s common stock may experience significant price and volume fluctuations in response to a number of factors including actual or anticipated quarterly variations in operating results, changes in expectations of future financial performance, changes in estimates by securities analysts, governmental regulatory action, banking industry reform measures, customer relationship developments and other factors, many of which will be beyond the Company’s control.

Furthermore, the stock market in general, and the market for financial institutions in particular, have experienced extreme volatility that often has been unrelated to the operating performance of particular companies. These broad market and industry fluctuations may adversely affect the trading price of the Company’s common stock, regardless of actual operating performance.

The Trading Volume in the Company’s Common Stock Is Less Than That of Other Larger Financial Services Companies

Although the Company’s common stock is listed for trading on the Nasdaq Global Select Market, the trading volume in its common stock is less than that of other financial services companies. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of the Company’s common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which the Company has no control. Given the lower trading volume of the Company’s common stock, significant sales of the Company’s common stock, or the expectation of these sales, could cause the Company’s stock price to fall.

Future Sales of Shares of the Company’s Common Stock Could Negatively Affect its Market Price

Future sales of substantial amounts of the Company’s common stock, or the perception that such sales could occur, could adversely affect the market price of the Company’s common stock in the open market. We make no prediction as to the effect, if any, that future sales of shares, or the availability of shares for future sale, will have on the market price of the Company’s common stock.

Shares of the Company’s Common Stock Are Not FDIC Insured

Neither the FDIC nor any other governmental agency insures the shares of the Company’s common stock. Therefore, the value of your common stock of the Company will be based on their market value and may decline.

The Company’s Ability to Pay Dividends Is Limited

Although the Board of Directors has declared cash dividends in the past, the Company's current ability to pay dividends is largely dependent upon the receipt of dividends from City National. Federal laws impose restrictions on the ability of City National to pay dividends. Holders of shares of the Company’s common stock are entitled to dividends if, and when, they are declared by the Company’s Board of Directors out of funds legally available for that purpose. Additional restrictions are placed upon the Company by the policies of federal regulators, including the Federal Reserve Board’s November 14, 1985 policy statement, which provides that bank holding companies should pay dividends only out of the past year’s net income, and then only if their prospective rate of earnings retention appears consistent with their capital needs, asset quality, and overall financial condition. In general, future dividend policy is subject to the discretion of the Board of Directors and will depend upon a number of factors, including the Company’s and City National’s future earnings, capital requirements, regulatory constraints and financial condition. There can be no assurance that the Company will continue to pay dividends to its shareholders in the future.

The Company and City National Are Extensively Regulated

The Company operates in a highly regulated environment and is subject to supervision and regulation by a number of governmental regulatory agencies, including the Federal Reserve Board, the OCC and the FDIC. Regulations adopted by these agencies, which are generally intended to provide protection for depositors and customers rather than for the benefit of shareholders, govern a comprehensive range of matters including but not limited to (i) ownership and control of the Company's equity, (ii) acquisition of other companies and businesses, (iii) permissible activities, (iv) maintenance of adequate capital levels and (v) other operational aspects. Compliance with banking regulations is costly and restricts certain of our activities, including the payment of dividends, mergers and acquisitions, investments, loan amounts and concentrations, interest rates, opening and closing branch locations, and other activities. The bank regulatory agencies also possess broad authority to prevent or remedy unsafe or unsound practices or violations of law. These agencies have significant discretion in their ability to enforce penalties and further limit the Company's activities if the Company fails to comply with applicable regulations.

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The Dodd-Frank Act instituted major changes to the bank and financial institutions regulatory regimes, and additional changes continue to be proposed and implemented by various regulatory agencies. Other changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Company in substantial and unpredictable ways. Such changes could subject the Company to reduced revenues, additional costs, limit the types of financial services and products the Company may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things. The burden and expenses associated with regulatory compliance have been increasing and may continue to increase. Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on the Company's business, financial condition and results of operations.

Proposals to change the laws and regulations governing financial institutions are frequently raised in Congress and before bank regulatory authorities. Changes in applicable laws or regulations could materially affect the Company’s business, and the likelihood of any major changes in the future and their effects are impossible to determine. Moreover, it is impossible to predict the ultimate form any proposed legislation might take or how it might affect the Company.

The Company Is Subject to Lending Risk

There are inherent risks associated with the Company’s lending activities. These risks include, among other things, the impact of changes in interest rates and changes in the economic conditions in the markets where the Company operates. Increases in interest rates and/or weakening economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans. The Company is also subject to various laws and regulations that affect its lending activities. Failure to comply with applicable laws and regulations could subject the Company to regulatory enforcement action that could result in restrictions of the Company's activities or the assessment of significant civil money penalties against the Company.

A substantial portion of the Company's loan portfolio is comprised of residential and commercial real estate loans. The Company's concentration of real estate loans may subject the Company to additional risk, such as market fluctuations in market value of collateral, environmental liability associated with hazardous or toxic substances found on, in or around the collateral, and difficulty monitoring income-producing property serving as a source of repayment and collateral. Any of these or other risks relating to real estate loans could adversely affect the collection by the Company of the outstanding loan balances.

The Company Is Subject to Interest Rate Risk

Changes in monetary policy, including changes in interest rates, could influence not only the interest income the Company receives on loans and securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) the Company’s ability to originate loans and obtain deposits, (ii) the fair value of the Company’s financial assets and liabilities, and (iii) the average duration of the Company’s mortgage-backed securities portfolio. The Company’s earnings and cash flows are largely dependent upon its net interest income. Net interest income is the difference between interest income earned on interest-earning assets, such as loans and securities, and interest expense paid on interest-bearing liabilities, such as deposits and borrowed funds. Interest rates are highly sensitive to many factors that are beyond the Company’s control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Board of Governors of the Federal Reserve System. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, the Company’s net interest income, and therefore it's earnings and net profit, could be adversely affected. Earnings also could be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings.

Although management believes it has implemented effective asset and liability management strategies, including the use of derivatives as hedging instruments, to reduce the potential effects of changes in interest rates on the Company’s results of operations, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on the Company’s financial condition and results of operations. See the section in Item 7A. Quantitative and Qualitative Disclosures About Market Risk located elsewhere in this report for further discussion related to the Company’s management of interest rate risk.

The Company May be Adversely Affected by the Soundness of Third Parties, Including Other Financial Institutions

The Company's business is highly dependent on third party vendors, especially with respect to information technology and telecommunication systems, payment processing system, and mobile and online banking systems. Our operations rely heavily on the secure processing, storage, transmission, and monitoring of information and transactions, and many of these services are outsourced to third party vendors. The failure of these systems or the inability of a third party vendor to continue providing these services on a reliable basis could adversely affect our operations. In addition, the failure of third parties to

15

comply with applicable laws and regulations, or fraud or misconduct on the part of any of these third parties, could disrupt our operations and adversely affect our reputation. It may be difficult for us to replace some of our critical third party vendors, particularly vendors providing our core banking, debit card services and information services, in a timely manner and on terms that are favorable or acceptable to us. Any of these events could increase our expenses and have a material adverse effect on our business, financial condition, and results of operations.    

Financial services institutions are interrelated with one another as a result of trading, clearing, counterparty, and other relationships. The Company has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of these transactions expose the Company to credit risk in the event of a default by a counterparty or client. In addition, the Company’s credit risk may be exacerbated when the collateral held by the Company cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due to the Company. Any such losses could have a material adverse effect on the Company’s business, financial condition and results of operations. Further, as a result of financial entities and technology systems becoming more interdependent and complex, a cybersecurity incident, information breach or loss, or technology failure that comprises the systems or data of one financial entity could have a material impact on counterparties or other market participants, including the Company.

The Company Depends on the Accuracy and Completeness of Information About Our Customers and Counterparties

The Company relies on information provided to us by or on behalf of customers and other third parties, including financial statements, credit reports, and other financial information, in deciding whether to extend credit or enter into other transactions and in evaluating and monitoring our loan portfolio. The Company also relies on representations from our customers, counterparties, and other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate, incomplete, fraudulent or misleading financial or business information could result in loan losses, reputational damage, or other effects that could have a material adverse effect on our financial condition and results of operation.

The Company’s Allowance for Loan Losses May Not be Sufficient

The Company maintains an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense that represents management’s best estimate of probable losses in the existing loan portfolio. The allowance, in the judgment of management, is necessary to provide for estimated loan losses and risks inherent in the loan portfolio. The level of the allowance reflects management’s continuing evaluation of industry concentrations; specific credit risks; loan loss experience; current loan portfolio quality; present economic, political and regulatory conditions; and unidentified losses inherent in the current loan portfolio. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires the Company to make significant estimates of current credit risks and future trends, all of which may undergo material changes. Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of the Company’s control, may require an increase in the allowance for loan losses. In addition, bank regulatory agencies periodically review the Company’s allowance for loan losses and may require an increase in the provision for loan losses or the recognition of further loan charge-offs based on judgments different than those of management. In addition, if charge-offs in future periods exceed the allowance for loan losses, the Company will need additional provisions to increase the allowance for loan losses. Any increases in the allowance for loan losses will result in a decrease in net income and capital, and may have a material adverse effect on the Company’s financial condition and results of operations.

Management evaluates the adequacy of the allowance for loan losses at least quarterly, which includes testing certain individual loans as well as collective pools of loans for impairment. This evaluation includes an assessment of actual loss experience within each category of the portfolio; individual commercial and commercial real estate loans that exhibit credit weakness; current economic events, including employment statistics, trends in bankruptcy filings, and other pertinent factors; industry or geographic concentrations; and regulatory guidance.  See the section captioned “Allowance and Provision for Loan Losses” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations located elsewhere in this report for further discussion related to the Company’s process for determining the appropriate level of the allowance for loan losses.

Customers May Default on the Repayment of Loans

City National’s customers may default on the repayment of loans, which may negatively impact the Company’s earnings due to loss of principal and interest income. Increased operating expenses may result from management's allocation of time and resources to the collection and work-out of the loan. Collection efforts may or may not be successful causing the Company to write off the loan or repossess the collateral securing the loan, which may or may not exceed the balance of the loan.

16

Due to Increased Competition, the Company May Not be Able To Attract and Retain Banking Customers

The Company faces substantial and intense competition in all areas of its operation, including interest rates and other terms for loans and deposits and the range and quality of services provided. Competition comes from a variety of different competitors, many of which have competitive advantages over the Company. The Company faces competition from:

• local, regional and national banks;

• savings and loans associations;

• Internet banks;

• credit unions;

• mutual funds;

• mortgage banking firms;

• finance companies;

• financial technology ("fin-tech") companies;

• brokerage firms;

• investment advisory and wealth management firms;

• investment banking firms; and

• other entities.

In particular, many of City National’s competitors are larger banks and financial institutions whose greater resources may afford them a marketplace advantage by enabling them to maintain numerous banking locations and mount extensive promotional and advertising campaigns. Additionally, the Company’s competitors may have products and services not offered by the Company, which may cause current and potential customers to choose those institutions over the Company. The financial services industry could become even more competitive as a result of legislative, regulatory, and technological changes and the continued consolidation within the banking industry. Consumer preferences and expectations continue to evolve, and technology and regulatory changes have lowered barriers to entry and made it possible for banks to expand their geographic reach by providing services over the internet and for non-banks to offer products and services typically provided by banks. Many of our non-bank competitors have fewer regulatory constraints and expenses associated with regulatory compliance and may have lower cost structures, such as credit unions that are not subject to federal income tax.

The Company’s ability to compete successfully depends on a number of factors, including our ability to develop, maintain, and build long-term customer relationships; our ability to expand our market area and range of services and products offered; our ability to keep up-to-date with technological advancements, both with respect to new and existing products and with respect to cybersecurity; customer satisfaction with our products and services; and general industry and economic trends. Failure to perform successfully in any of these areas could significantly weaken our competitive position. If the Company is unable to attract new and retain current customers, loan and deposit growth could decrease, causing the Company’s results of operations and financial condition to be negatively impacted.

The Company Faces Technology Change and the Emergence of Nonbank Alternatives to the Financial System

Consumers may decide not to use banks to complete their financial transactions or invest or deposit their funds. Technology and other changes, including the emergence of fin-tech companies are allowing parties to complete financial transactions through alternative methods that historically have involved banks. For example, consumers can pay bills and transfer funds directly without the assistance of banks. The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost of deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.

The banking and financial services industry continually undergoes technological change, with frequent introductions of new technology-driven products and services. The Company’s future success depends on its ability to addresses the needs and preferences of its customers by using technology to provide products and services that enhance customer convenience and that create additional efficiencies in the Company’s operations. Many of the Company’s competitors have greater resources to invest in technological improvements, and the Company may not be able to implement new technology-driven products and services as quickly and effectively as its competitors. In addition, the necessary process of updating technology can itself lead to disruptions in the availability or function of systems. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on the Company’s business and results of operations.

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The Value of the Company's Investments Could Decline

The Company holds available-for-sale investment securities, which are carried at fair value. The determination of fair value for certain of these securities requires significant judgment of the Company’s management. Therefore, the market price the Company receives for its investment securities could be less than the carrying value for such securities. Further, the value of the Company’s investment portfolio could decline for numerous reasons, many of which are outside the Company’s control, including general market conditions, volatility in the securities market, and inflation rates or expectations of inflation. A portion of the Company’s investment portfolio consists of municipal securities. The value of these securities is subject to additional factors, including the financial condition of the government issuer and general demand for municipal securities.

The Company May Be Required to Write Down Goodwill and Other Intangible Assets, Causing Its Financial Condition and Results to Be Negatively Affected

When the Company acquires a business, a portion of the purchase price of the acquisition is allocated to goodwill and other identifiable intangible assets. The excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired determines the amount of the purchase price that is allocated to goodwill acquired. At December 31, 2018, the Company’s goodwill and other identifiable intangible assets were approximately $123 million. Under current accounting standards, if the Company determines goodwill or intangible assets are impaired, it would be required to write down the value of these assets. The Company conducts an annual review to determine whether goodwill and other identifiable intangible assets are impaired. The Company recently completed such an impairment analysis and concluded that no impairment charge was necessary for the year ended December 31, 2018. The Company cannot provide assurance whether it will be required to take an impairment charge in the future. Any impairment charge would have a negative effect on its shareholders’ equity and financial results and may cause a decline in the Company's stock price.

The Company May Be Required to Repurchase Mortgage Loans or Indemnify Mortgage Loan Purchasers

The Company sells some of the fixed rate residential mortgage loans it originates to mortgage loan purchasers in the secondary market. Purchasers of residential mortgage loans, such as government sponsored entities, often require sellers of residential mortgage loans to either repurchase loans previously sold or reimburse purchasers for losses related to loans previously sold under certain circumstances, such as failure to comply with the purchaser’s purchase criteria, breach of a representation or warranty related to the loan or its origination, or borrower fraud. There is no assurance that a purchaser of the Company’s residential mortgage loans will not demand repurchase or indemnification for losses, which could increase the Company’s expenses in defending such claims and negatively affect the Company’s financial condition and results of operation.

The Company May Require Additional Capital in the Future, But That Capital May Not Be Available or May Be Dilutive

The Company faces liquidity risk, which is the possibility that the Company may not be able to meet its obligations as they come due, both to creditors and customers, or capitalize on growth opportunities because of a lack of liquidity. Lack of liquidity can be caused by an inability to liquidate assets or obtain adequate financing on a timely basis, at a reasonable cost and on other reasonable terms, and within acceptable risk tolerances. The Company is also required by its regulators to maintain specified levels of capital to maintain its operations. The Company’s business needs and future growth, including future acquisitions or organic growth into new markets and business lines, may require it to raise additional capital.

One of the Company’s main sources for liquidity is customer deposits. Increased competition and the availability of alternative products may reduce the Company’s ability to attract and retain core deposits. If customers move money out of bank deposits into other investments, we could lose a relatively low cost source of funds. A reduction in the Company’s credit rating may also increase its funding costs.

The Company’s ability to raise additional capital, whether in the form of debt or equity, is dependent on several factors, including the condition of capital markets, investment demand, and the Company’s financial performance. We cannot assure that we will be able to raise additional capital in the future on terms that are favorable or acceptable to us, or at all.

The issuance of debt may increase our capital costs and reduce our liquidity. The issuance of equity securities, including common stock or one or more series of preferred stock, of the Company may reduce the value of our common stock and have a dilutive effect on holders of our common stock. The Company may issue debt or equity securities that are senior in priority to our common stock as to distributions and liquidation, which could negatively affect the value of our common stock.

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Acquisition and Other Growth Opportunities May Present Challenges

Any future acquisitions may result in unforeseen difficulties, which could require significant time and attention from the Company’s management that would otherwise be directed at developing its existing business, and expenses. In addition, the Company could discover undisclosed liabilities resulting from any acquisitions for which it may become responsible. Further, the benefits that the Company anticipates from these acquisitions may not develop. We may experience difficulty integrating businesses acquired through mergers and acquisitions and may fail to realize the expected revenue increases, cost savings, increases in market presence, and other projected benefits from acquisition activity. Acquisitions utilizing the Company’s common stock as consideration may dilute the value of the Company’s common stock, which dilution may not be recouped or recovered for a significant amount of time after the acquisition, if ever.

Any merger or acquisition opportunity that we decide to pursue will ultimately be subject to regulatory approval and other closing conditions. We may expend significant time and resources pursing potential acquisitions that are never consummated due to lack of regulatory approval or other issues. Competition for acquisition candidates in the banking industry is intense. We may expend significant time and resources evaluating acquisition candidates and conducting due diligence that does not lead to an acquisition opportunity.

The Company may implement new lines of business, enter new market areas, or offer new products and services from time to time. There can be substantial risks and uncertainties associated with these efforts, especially where markets are not fully developed. The Company may invest significant time and resources in developing and marketing new lines of business, but the benefits that the Company anticipates from these activities may not develop as expected. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences may impact the Company’s ability to successfully implement organic growth strategies. Failure to successfully manage these risks could have a material adverse effect on the Company’s financial condition and results of operations.

System Failure, Cybersecurity Breaches, Fraud and Employee Misconduct Could Subject the Company to Increased Operating Costs, as Well as Litigation and Other Potential Losses

The computer systems and network infrastructure that the Company uses could be vulnerable to unforeseen hardware and cybersecurity issues, including “hacking” and “identity theft.” The Company’s operations are dependent upon its ability to protect its computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. Any damage or failure that causes an interruption in the Company’s operations could have an adverse effect on its financial condition and results of operations. In addition, the Company’s operations are dependent upon its ability to protect the computer systems and network infrastructure utilized by the Company, including our mobile and Internet banking activities, against damage from physical break-ins, cybersecurity breaches, acts of vandalism, computer viruses, theft of information, misplaced or lost data, programming and/or human errors, and other disruptive problems. The Company is further exposed to the risk that its third-party service provides may be unable to fulfill their contractual obligations with respect to managing the Company’s information and systems. Any cybersecurity breach or other disruptions, whether by the Company or our third-party vendors, would jeopardize the security of information stored in and transmitted through the Company’s computer systems and network infrastructure, which may result in significant liability to the Company, damage its reputation and inhibit current and potential customers from its using Internet banking services.

Despite efforts to ensure the integrity of our systems, we will not be able to anticipate all security breaches of these types, nor will we be able to implement guaranteed preventive measures against such security breaches. Persistent attackers may succeed in penetrating defenses given enough resources, time and motive. The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations or hostile foreign governments. These risks may increase in the future as we continue to increase our mobile payment and other Internet-based product offerings and expand our internal usage of web-based products and applications.

A successful attack to our system security or the system security of one of our critical third-party vendors could cause us serious negative consequences, including significant disruption of operations, misappropriation of confidential information, and damage to our computers or systems or those of our customers and counterparties. A successful security breach could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, significant litigation exposure, and harm to our reputation, all of which could have a material adverse effect on the Company.

Criminals are committing fraud at an increasing rate and are using more sophisticated techniques. The Company faces risk of fraudulent activity in many forms, including online payment transfer fraud, debit card fraud, check fraud, mechanical devices attached to ATM machines, phishing attacks to obtain personal information, and impersonation of clients through the

19

use of falsified or stolen credentials. The Company may suffer losses as a result of fraudulent activity committed against it, its customers, and other counterparties.

The Company could be adversely affected if one of its employees causes a significant operational breakdown or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates the Company’s operations or systems. Misconduct by employees could include fraudulent, improper or unauthorized activities on behalf of customers or improper use of confidential information. Employee errors or misconduct could subject the Company to regulatory enforcement action, legal action, reputational damage, and other losses.

The Company's Risk Management Practices May Prove to be Inadequate or Not Fully Effective

The Company's risk management framework seeks to mitigate risk and appropriately balance risk and return. The Company has established policies and procedures intended to identify, monitor and manage the types of risk which it is subject to, including credit risk, market risk, liquidity risk, operational risk and reputational risk. Although the Company has devoted significant resources to develop its risk management policies and procedures and expects to continue to do so in the future, these policies and procedures, as well as its risk management techniques, may not be fully effective. In addition, as regulations and markets in which the Company operates continue to evolve, its risk management framework may not always keep sufficient pace with those changes. If the Company's risk management framework does not effectively identify or mitigate its risks, the Company could suffer unexpected losses and could be materially adversely affected. Management of the Company's risks in some cases depends upon the use of analytical and/or forecasting models. If the models the Company uses to mitigate these risks are inadequate, it may incur increased losses. In addition, there may be risks that exist, or that develop in the future, that the Company has not appropriately anticipated, identified or mitigated.

The Company’s Controls and Procedures May Fail or Be Circumvented

Any failure or circumvention of the Company’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company’s business, results of operations and financial condition.  Management regularly reviews and updates the Company’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, no matter how well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.

Significant Legal Actions Could Result in Substantial Liabilities

From time to time, the Company is subject to claims related to its operations.  These claims and legal actions, including supervisory actions by its regulators, could involve large monetary claims and cause the Company to incur significant defense expenses.  As a result, the Company may be exposed to substantial liabilities, which could negatively affect its shareholders’ equity and financial results.

The Company Faces Reputational Risk

The Company faces threats to its reputation from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver expected standards of service or quality, regulatory compliance deficiencies, and questionable or fraudulent activities of the Company’s employees and customers. Negative publicity may arise regarding the Company’s business, employees, or customers, with or without merit, and could result in the loss of customers, investors and employees, costly litigation, a decline in revenue, and increased regulatory oversight.

Changes in Tax Law and Accounting Standards Could Materially Affect the Company's Operations

Changes in tax laws, or changes in the interpretation of existing tax laws, could materially adversely affect the Company’s operations. Similarly, new accounting standards, changes to existing accounting standards, and changes to the methods of preparing financial statements could impact the Company’s reported financial condition and results of operations. These factors are outside the Company’s control and it is impossible to predict changes that may occur and the effect of such changes.

The Tax Cuts and Jobs Act went into effect on January 1, 2018 and significantly impacted the federal income taxation of the Company and its customers. While there are benefits to the Company from the new law, including a reduction of its federal income tax rate, there are also adverse consequences, including an elimination of certain deductible expenses. There is also substantial uncertainty regarding the consequences of the new law on the Company and its customer base.

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The Company Relies Heavily on Its Management Team, and the Unexpected Loss of Key Management May Adversely Affect Its Operations

The Company's success to date has been strongly influenced by its ability to attract and to retain senior management personnel experienced in banking in the markets it serves. Competition for key personnel is intense. The Company's ability to retain executive officers and the current management teams will continue to be important to the successful implementation of its strategies. The Company has employment agreements with these key employees in the event of a change of control, as well as confidentiality, non-solicitation and non-competition agreements related to its stock options. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on the Company's business and financial results.

Severe Weather, Natural Disasters, Acts of War or Terrorism, and Other External Events Could Significantly Impact the Company's Business

Severe weather, natural disasters, health emergencies, acts of war or terrorism, and other adverse external events, especially those that directly affect the Company’s market areas, could have a significant impact on the Company’s ability to conduct business. These events could adversely affect the ability of borrowers to repay outstanding loans, decrease the value of collateral securing loans, cause significant property and infrastructure damage, and affect the stability of the Company’s deposit base. The Company may experience decreased revenue, increased charge-offs, and other expenses.

Item 1B.Unresolved Staff Comments

None.

Item 2.Properties

City National owns the Company’s executive office, located at 25 Gatewater Road, Charleston, West Virginia. This facility has approximately 60,000 square feet and houses the Company's executive and administrative personnel.

City National owns eighty bank branch locations and leases twenty bank branch locations, pursuant to operating leases.  All of the properties are suitable and adequate for their current operations. City National also operates two loan production offices leased in Charlotte, North Carolina and Cincinnati, Ohio.

The Company also owns parcels of real estate for potential future branch development.

Item 3.Legal Proceedings

The Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize positive and/or negative impact to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current actions will have immaterial results, either positive or negative, or that no material actions may be presented in the future.

Item 4.Mine Safety Disclosures

None.

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PART II

Item 5.Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Common Stock Market and Dividends

The Company’s common stock trades on the NASDAQ Global Select Market under the symbol "CHCO". This table sets forth the cash dividends declared per share and information regarding the closing market prices per share of the Company’s common stock for the periods indicated. The price ranges are based on transactions as reported on the NASDAQ Global Select Market. At March 7, 2019, there were 2,757 shareholders of record.

	Cash Dividends Per Share		Market Value
			Low		High
2018
Fourth Quarter	$	0.53	$	66.36	$	77.94
Third Quarter	0.53		75.54		82.79
Second Quarter	0.46		67.95		78.44
First Quarter	0.46		65.03		72.87
2017
Fourth Quarter	$	0.46	$	65.50	$	73.98
Third Quarter	0.44		59.94		71.91
Second Quarter	0.44		61.34		72.78
First Quarter	0.44		60.86		67.93

The Company generally pays dividends on a quarterly basis. As noted in the section captioned "Dividends and Other Payments" included in Item 1. Business, the section captioned "Liquidity" included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note Nineteen of Notes to Consolidated Financial Statements, the Company’s ability to pay dividends to its shareholders is dependent upon the ability of City National to pay dividends to the Company. At December 31, 2018, City National could pay $88.8 million in dividends without prior regulatory permission.

Stock Repurchase Plan

The following table sets forth information regarding the Company's common stock repurchases transacted during the fourth quarter of 2018:

				Total	Maximum
				Number of	Number of
				Shares Purchased	Shares that May
				as Part of Publicly	Yet Be Purchased
	Total Number of	Average Price		Announced Plans	Under the Plans
Period	Shares Purchased	Paid per Share		or Programs (a)	or Programs
October 1 to October 31, 2018	57,664	$	72.51	57,664	123,257
November 1 to November 30, 2018	11,500	$	74.78	11,500	111,757
December 1 to December 31, 2018	—	—		—	111,757

(a) On September 24, 2014, the Company announced that the Board of Directors had authorized the Company to buy back up to 1,000,000 shares of its common stock, in open market transactions, at prices that are accretive to continuing shareholders. This plan was rescinded as part of the stock repurchase plan that was approved in February 2019.

(b) On February 27, 2019, the Company announced that the Board of Directors had authorized the Company to buy back up to 1,000,000 shares of its common stock (approximately 6% of the outstanding shares), in open market transactions, at prices that are accretive to continuing shareholders. No timetable was placed on the duration of this share repurchase program.

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At-The-Market Common Stock Offering

On December 19, 2016, the Company announced that it had filed a prospectus supplement to its existing shelf registration statement on Form S-3 for the sale of its common stock having an aggregate value of up to $55 million through an "at-the-market" equity offering program. Through the year ended December 31, 2018, the Company has sold approximately 548,000 common shares at a weighted average price of $64.82, net of broker fees.  The Company has sold no shares since the first quarter of 2017. To date, the Company has received $36 million in gross proceeds. Under the program, the Company has the ability to receive an additional $19 million in gross proceeds from the sale of common shares.

Stock-Based Compensation Plan

Information regarding stock-based compensation awards outstanding and available for future grants as of December 31, 2018, segregated between stock-based compensation plans approved by shareholders and stock-based compensation plans not approved by shareholders, is presented in the table below.  Additional information regarding stock-based compensation plans is presented in Note Fifteen, Employee Benefit Plans, of Notes to Consolidated Financial Statements.

Plan Category	Number of Shares to be Issued Upon Exercise of Outstanding Awards (a)	Weighted-average exercise price of outstanding awards (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Plans approved by shareholders	57,972	$	51.15	532,552
Plans not approved by shareholders	—	—		—
Total	57,972	$	51.15	532,552

Stock Performance

The following graph sets forth the cumulative total shareholder return (assuming reinvestment of dividends) to the Company’s shareholders during the five-year period ended December 31, 2018, as well as an overall stock market index (The Nasdaq Stock Market Index) and the Company’s Peer Group ("Peer Group"). The Peer Group consists of twenty-one banking institutions that (i) are over $2 billion but less than $8.5 billion in assets, (ii) have a return on average assets and a return on average equity performance ratios greater than 0%, (iii) derive at least fifteen percent of their total revenues from non-interest income, (iv) have a loan portfolio comprised of less than eighty-five percent commercial loans, (v) have more than thirty branches, and (vi) are headquartered in Illinois, Indiana, Kentucky, Maryland, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and New York (excluding New York City), excluding: companies in top 5 metro areas (MSAs), thrifts and thinly traded companies. The trading symbols for such financial institutions include: AROW, BUSE, CTBI, FBK, FBNC, FCBC, FCF, FISI, FMBH, GABC, PEBO, PRK, RBCAA, SASR, SRCE, STBA, SYBT, THFF, TMP, UCFC and UVSP.  The stock performance shown on the graph below is not necessarily indicative of future price performance.

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	2013	2014	2015	2016	2017	2018
City Holding Company	$100.00	$104.11	$105.76	$162.50	$166.46	$171.22
NASDAQ Composite	$100.00	$114.75	$122.74	$133.62	$173.22	$168.30
Peer Group	$100.00	$107.90	$114.03	$172.90	$174.07	$155.24

This graph shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless the Company specifically incorporates this report by reference. It will not be otherwise filed under such Acts.

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Item 6.Selected Financial Data

Table One

Five-Year Financial Summary

(in thousands, except per share data)

	2018(1)			2017			2016			2015(2)			2014
Summary of Operations
Total interest income	$	163,901		$	142,930		$	132,152		$	127,074		$	129,566
Total interest expense	25,692			16,805			13,207			11,830			11,960
Net interest income	138,209			126,125			118,945			115,244			117,606
(Recovery of) provision for loan losses	(2,310		)	3,006			4,395			6,988			4,054
Total non-interest income	60,564			63,607			58,825			67,206			58,722
Total non-interest expenses	113,066			95,981			96,164			92,951			95,041
Income before income taxes	88,017			90,745			77,211			82,511			77,233
Income tax expense	18,015			36,435			25,083			28,414			24,271
Net income available to common  shareholders	70,002			54,310			52,128			54,097			52,962
Per Share Data
Net income basic	$	4.50		$	3.49		$	3.46		$	3.54		$	3.40
Net income diluted	4.49			3.48			3.45			3.53			3.38
Cash dividends declared	1.98			1.78			1.72			1.68			1.60
Book value per share	36.29			32.17			29.25			27.62			25.79
Selected Average Balances
Total loans	$	3,168,827		$	3,082,448		$	2,920,837		$	2,691,304		$	2,593,597
Securities	650,697			582,124			495,206			383,685			365,904
Interest-earning assets	3,942,285			3,691,714			3,426,158			3,084,722			2,968,706
Deposits	3,460,306			3,298,385			3,166,817			2,947,543			2,824,985
Long-term debt	16,053			16,495			16,495			16,495			16,495
Total shareholders’ equity	514,083			492,668			431,031			415,051			395,940
Total assets	4,303,364			4,079,674			3,835,081			3,564,730			3,404,818
Selected Year-End Balances
Net loans	$	3,571,642		$	3,108,574		$	3,026,496		$	2,843,283		$	2,631,916
Securities	812,891			628,985			539,604			471,318			354,686
Interest-earning assets	4,468,474			3,784,453			3,611.706			3,345,136			3,016,477
Deposits	3,975,559			3,315,634			3,231,653			3,083,975			2,872,787
Long-term debt	4,053			16,495			16,495			16,495			16,495
Total shareholders’ equity	600,764			502,507			442,438			419,272			390,853
Total assets	4,899,012			4,132,281			3,984,403			3,714,059			3,461,633
Performance Ratios
Return on average assets	1.63		%	1.33		%	1.36		%	1.52		%	1.56		%
Return on average equity	13.6			11.0			12.1			13.0			13.4
Return on average tangible common equity	16.2			13.1			14.8			15.8			16.5
Net interest margin	3.52			3.46			3.50			3.76			3.98
Efficiency ratio	50.0			51.5			54.8			53.7			53.7
Dividend payout ratio	44.0			51.0			49.7			47.5			47.1

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Asset Quality
Net charge-offs to average loans	0.02	%	0.13	%	0.13	%	0.29	%	0.18	%
(Recovery of) provision for loan losses to average loans	(0.07	)	0.10		0.15		0.26		0.16
Allowance for loan losses to nonperforming loans	107.82		178.39		140.10		110.37		127.62
Allowance for loan losses to total loans	0.45		0.60		0.65		0.67		0.76
Consolidated Capital Ratios
CET 1 Capital	15.1	%	15.1	%	13.3	%	13.7	%	*
Tier 1 Capital	15.2		15.7		13.9		14.3		13.4
Total Capital	15.7		16.4		14.7		15.1		14.2
Tier 1 Leverage	11.4		11.0		10.2		10.2		9.9
Average equity to average assets	12.0		12.1		11.2		11.6		11.6
Tangible equity to tangible assets (end of period)	10.0		10.5		9.3		9.3		9.3
Full-time equivalent employees	891		839		847		853		889
*Basel III CET 1 ratio requirements were effective beginning January 1, 2015 and were not required for prior periods.
(1) - In December 2018, the Company acquired Poage Bankshares, Inc. and its principal banking subsidiary, Town Square Bank (collectively, "Poage") and Farmers Deposit Bancorp, Inc. and its principal banking subsidiary, Farmers Deposit Bank (collectively, "Farmers Deposit").
(2) - In January 2015, the Company sold its insurance operations, CityInsurance. In November 2015, the Company acquired three branches in Lexington, Kentucky from American Founder's Bank.

26

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations

Statistical Information

The information noted below is provided pursuant to Guide 3 -- Statistical Disclosure by Bank Holding Companies.

Description of Information			Page Reference
1.	Distribution of Assets, Liabilities and Stockholders'
	Equity; Interest Rates and Interest Differential
	a.	Average Balance Sheets	31
	b.	Analysis of Net Interest Earnings	32
	c.	Rate Volume Analysis of Changes in Interest Income and Expense	33
2.	Investment Portfolio
	a.	Book Value of Investments	38
	b.	Maturity Schedule of Investments	38
	c.	Securities of Issuers Exceeding 10% of Stockholders’ Equity	38
3.	Loan Portfolio
	a.	Types of Loans	40
	b.	Maturities and Sensitivity to Changes in Interest Rates	40
	c.	Risk Elements	44
	d.	Other Interest Bearing Assets	None
4.	Summary of Loan Loss Experience		43
5.	Deposits
	a.	Breakdown of Deposits by Categories, Average Balance and Average Rate Paid	31
	b.	Maturity Schedule of Time Certificates of Deposit and Other Time Deposits of $100,000 or More	48
6.	Return on Equity and Assets		25
7.	Short-term Borrowings		48

27

CITY HOLDING COMPANY

City Holding Company (the “Company”), a West Virginia corporation headquartered in Charleston, West Virginia, is a registered financial holding company under the Bank Holding Company Act and conducts its principal activities through its wholly owned subsidiary, City National Bank of West Virginia ("City National"). City National is a retail and consumer-oriented community bank with 100 bank branches in West Virginia (58), Kentucky (24), Virginia (14) and Ohio (4). City National provides credit, deposit, and trust and investment management services to its customers in a broad geographical area that includes many rural and small community markets in addition to larger cities including Charleston (WV), Huntington (WV), Martinsburg (WV), Ashland (KY), Lexington (KY), Winchester (VA) and Staunton (VA). In the Company's key markets, the Company's primary subsidiary, City National, generally ranks in the top three relative to deposit market share and the top two relative to branch share (Charleston/Huntington MSA, Beckley/Lewisburg counties, Staunton MSA and Winchester, VA/WV Eastern Panhandle counties). In addition to its branch network, City National's delivery channels include automated-teller-machines ("ATMs"), interactive-teller-machines ("ITMs"), mobile banking, debit cards, interactive voice response systems, and Internet technology. The Company’s business activities are currently limited to one reportable business segment, which is community banking. 

In July 2018, the Company announced that it had concurrently executed two separate definitive agreements to acquire Poage Bankshares, Inc., of Ashland, Kentucky and its principal banking subsidiary, Town Square Bank (collectively, "Poage") and Farmers Deposit Bancorp, Inc., of Cynthiana, Kentucky and its principal banking subsidiary, Farmers Deposit Bank (collectively, "Farmers Deposit"). The acquisitions were finalized in December 2018. Poage operated nine branches across northeastern Kentucky, along with a loan production office in Cincinnati, Ohio. Farmers Deposit operated three branches around the Lexington, Kentucky region. As a result of overlapping service areas, the Company plans to merge three of the Poage branches into existing City branches and two existing City branches into former Poage branches.

In January 2019, the Company announced the signing of a definitive agreement to sell its Virginia Beach, Virginia, branch to Select Bancorp, Inc., the holding company for Select Bank & Trust Company. The transaction is expected to close during the second quarter of 2019.

After the Poage-City branch mergers and the Virginia Beach branch divestiture, the Company expects to have 94 bank branches in its network.

CRITICAL ACCOUNTING POLICIES

The accounting policies of the Company conform to U.S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. These estimates and assumptions are based on information available to management as of the date of the financial statements. Actual results could differ significantly from management’s estimates. As this information changes, management’s estimates and assumptions used to prepare the Company’s financial statements and related disclosures may also change. The most significant accounting policies followed by the Company are presented in Note One of the Notes to Consolidated Financial Statements included herein. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified: (i) the determination of the allowance for loan losses and (ii) income taxes to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new information becomes available.

The Allowance and Provision for Loan Losses section of this Annual Report on Form 10-K provides management’s analysis of the Company’s allowance for loan losses and related provision. The allowance for loan losses is maintained at a level that represents management’s best estimate of probable losses in the loan portfolio. Management’s determination of the appropriateness of the allowance for loan losses is based upon an evaluation of individual credits in the loan portfolio, historical loan loss experience, current economic conditions, and other relevant factors. This determination is inherently subjective, as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. The allowance for loan losses related to loans considered to be impaired is generally evaluated based on the discounted cash flows using the impaired loan’s initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. The allowance not specifically allocated to individual credits is generally determined by analyzing potential exposure and other qualitative factors that could negatively impact the overall credit risk of the loan portfolio. Loans not individually evaluated for impairment are grouped by pools with similar risk characteristics and the related historical loss rates are adjusted to reflect current inherent risk factors, such as unemployment, overall economic conditions, concentrations of credit, loan growth, classified and impaired loan trends, staffing, adherence to lending policies, and loss trends.

28

The Income Taxes section of this Annual Report on Form 10-K provides management’s analysis of the Company’s income taxes.  The Company is subject to federal and state income taxes in the jurisdictions in which it conducts business.  In computing the provision for income taxes, management must make judgments regarding interpretation of laws in those jurisdictions.  Because the application of tax laws and regulations for many types of transactions is susceptible to varying interpretations, amounts reported in the financial statements could be changed at a later date upon final determinations by taxing authorities.  On a quarterly basis, the Company estimates its annual effective tax rate for the year and uses that rate to provide for income taxes on a year-to-date basis.  The Company's unrecognized tax benefits could change over the next twelve months as a result of various factors. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and various state taxing authorities for the years ended December 31, 2015 through 2017. 

FINANCIAL SUMMARY

The Company’s financial performance over the previous three years is summarized in the following table:

	2018			2017			2016
Net income available to common shareholders (in thousands)	$	70,002		$	54,310		$	52,128
Earnings per common share, basic	$	4.50		$	3.49		$	3.46
Earnings per common share, diluted	$	4.49		$	3.48		$	3.45
ROA*	1.63		%	1.33		%	1.36		%
ROE*	13.6		%	11.0		%	12.1		%
ROATCE*	16.2		%	13.1		%	14.8		%

*ROA (Return on Average Assets) is a measure of the effectiveness of asset utilization. ROE (Return on Average Equity) is a measure of the return on shareholders’ investment. ROATCE (Return on Average Tangible Common Equity) is a measure of the return on shareholders’ equity less intangible assets.

BALANCE SHEET ANALYSIS

Selected balance sheet fluctuations are summarized in the following table (in millions):

	December 31,
	2018		2017		$ Change			% Change
Cash and cash equivalents	$	123.0	$	82.5	$	40.5		49.1	%
Investment securities	812.9		629.0		183.9			29.2
Gross loans	3,587.6		3,127.4		460.2			14.7
Goodwill and other intangible assets, net	122.8		78.6		44.2			56.2
Total deposits	3,975.6		3,315.6		660.0			19.9
Long-term debt	4.1		16.5		(12.4		)	(75.2	)
Shareholders' equity	600.8		502.5		98.3			19.6

Cash and cash equivalents increased $41 million, from $83 million at December 31, 2017 to $123 million at December 31, 2018, as the Company elected to improve its on-balance sheet liquidity during 2018.

Investment securities increased $184 million, from $629 million at December 31, 2017, to $813 million at December 31, 2018. The acquisitions of Poage and Farmers Deposit contributed approximately $119 million to this increase. In addition, in conjunction with its interest rate risk management strategy, the Company elected to grow investment balances to enhance net interest income.

Gross loans increased $460 million, from $3.13 billion at December 31, 2017 to $3.59 billion at December 31, 2018. The acquisitions of Poage and Farmers Deposit contributed approximately $362 million to this increase. Excluding the impact of the two acquisitions, commercial loans increased $57 million and residential real estate loans increased $33 million from December 31, 2017 to December 31, 2018.

29

Goodwill and other intangible assets, net increased $44 million, from $79 million at December 31, 2017 to $123 million at December 31, 2018. The acquisitions of Poage and Farmers Deposit contributed approximately $33 million in goodwill and $11 million in core deposit intangibles in 2018.

Total deposits increased $660 million, from $3.32 billion at December 31, 2017 to $3.98 billion at December 31, 2018. The acquisitions of Poage and Farmers Deposit contributed approximately $472 million to this increase. Excluding the impact of the two acquisitions, the Company grew time deposits ($90 million), interest-bearing demand deposits ($46 million), noninterest-bearing deposits ($32 million) and savings deposits ($20 million).

Long-term debt decreased $12.4 million as the Company repaid its $16.5 million of Junior Subordinated Deferrable Interest Debentures issued by the Company and held by City Holding Company Trust III at a price of 100% of principal. As part of its Poage acquisition, the Company assumed Poage's subordinated debentures of $4.1 million.

Shareholders' equity increased $98 million from December 31, 2017 to December 31, 2018, as the Company issued approximately $83 million of common shares in conjunction with the Poage acquisition. The issuance of these shares, along with net income of $70 million, were partially offset by cash dividends declared of $31 million and common share repurchases of $20 million.

30

TABLE TWO

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME

(In thousands)

	2018							2017							2016
	Average Balance			Interest		Yield/ Rate		Average Balance			Interest		Yield/ Rate		Average Balance			Interest		Yield/ Rate
Assets
Loan portfolio(1):
Residential real estate(2),(3)	$	1,629,950		$	69,765	4.28	%	$	1,598,579		$	63,649	3.98	%	$	1,565,079		$	60,736	3.88	%
Commercial, financial, and agriculture(3),(4)	1,501,667			68,981		4.59		1,450,144			58,243		4.02		1,318,094			52,812		4.01
Installment loans to individuals(3),(5)	37,210			2,349		6.31		33,725			2,514		7.45		37,664			2,917		7.75
Previously securitized loans(6)	—			960		—		—			1,346		—		—			1,673		—
Total loans	3,168,827			142,055		4.48		3,082,448			125,752		4.08		2,920,837			118,138		4.04
Securities:
Taxable	559,125			17,337		3.10		492,783			14,387		2.92		444,110			12,392		2.79
Tax-exempt(7)	91,572			3,598		3.93		89,341			4,163		4.66		51,096			2,494		4.88
Total securities	650,697			20,935		3.22		582,124			18,550		3.19		495,206			14,886		3.01
Deposits in depository institutions	122,761			1,666		1.36		27,142			85		0.31		10,115			—		—
Total interest-earning assets	3,942,285			164,656		4.18		3,691,714			144,387		3.91		3,426,158			133,024		3.88
Cash and due from banks	47,562							85,473							95,295
Bank premises and equipment	73,196							73,540							76,056
Goodwill and intangible assets	82,117							78,881							79,456
Other assets	176,110							170,312							178,069
Less: allowance for loan losses	(17,906		)					(20,246		)					(19,953		)
Total assets	$	4,303,364						$	4,079,674						$	3,835,081
Liabilities
Interest-bearing demand deposits	$	792,765		2,114		0.27	%	$	705,412		643		0.09	%	$	685,399		615		0.09	%
Savings deposits	820,474			2,133		0.26		832,512			1,311		0.16		772,296			975		0.13
Time deposits(3)	1,142,629			17,150		1.50		1,067,181			12,872		1.21		1,029,172			10,462		1.02
Short-term borrowings	265,157			3,415		1.29		230,529			1,214		0.53		176,065			472		0.27
Long-term debt	16,053			880		5.48		16,495			765		4.64		16,495			683		4.14
Total interest-bearing liabilities	3,037,078			25,692		0.85		2,852,129			16,805		0.59		2,679,427			13,207		0.49
Noninterest-bearing demand deposits	704,438							693,280							679,950
Other liabilities	47,765							41,597							44,673
Total shareholders’ equity	514,083							492,668							431,031
Total liabilities and shareholders’ equity	$	4,303,364						$	4,079,674						$	3,835,081
Net interest income				$	138,964						$	127,582						$	119,817
Net yield on earning assets						3.52	%						3.46	%						3.50	%

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

	2018		2017		2016
Loan fees	$	1,856	$	558	$	1,048

2.Includes the Company's residential real estate and home equity loan categories.

31

3. Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's recent acquisitions:

	2018		2017		2016
Residential real estate	$	407	$	530	$	698
Commercial, financial, and agriculture	994		1,345		1,505
Installment loans to individuals	19		44		112
Time deposits	—		16		592
Total	$	1,420	$	1,935	$	2,907

4.Includes the Company’s commercial and industrial and commercial real estate loan categories.

5.Includes the Company’s consumer and DDA overdrafts loan categories.

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

7. Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21% for the year ended December 31, 2018 and 35% for the years ended December 31, 2017 and 2016.

NET INTEREST INCOME

2018 vs. 2017

The Company's net interest income increased from $126.1 million for the year ended December 31, 2017 to $138.2 million for the year ended December 31, 2018. The Company’s tax equivalent net interest income increased $11.4 million or 8.9%, from $127.6 million in 2017 to $139.0 million in 2018. Exclusive of the impact of the acquisitions of Poage and Farmers Deposit, increased yields on commercial and residential real estate loans increased net interest income $7.8 million and $4.8 million, respectively, while higher average balances on commercial loans ($40.0 million) and residential real estate loans ($20.4 million) increased interest income by $1.6 million and $0.8 million, respectively, as compared to the year ended December 31, 2017. In addition, higher average investment balances ($68.6 million) increased investment income by $2.0 million, while interest income from deposits in depository institutions also increased $1.6 million as the Company elected to improve its on-balance sheet liquidity during the year ended December 31, 2018. These increases were partially offset by increased interest expense on interest bearing liabilities ($7.7 million), primarily due to an increase in the cost of funds. The Company’s reported net interest margin increased from 3.46% for the year ended December 31, 2017 to 3.52% for the year ended December 31, 2018. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.49% for the year ended December 31, 2018 and 3.40% for the year ended December 31, 2017.

Excluding the impact of the Poage and Farmers Deposit acquisitions, average interest-earning assets increased $219 million from 2017 to 2018, due to increases in deposits with depository institutions ($96 million), investment securities ($61 million), commercial, financial, and agriculture loans ($40 million) and residential real estate loans ($20 million).   Average interest-bearing liabilities increased $159 million from 2017 as increases in interest bearing deposits ($82 million), time deposits ($64 million) and short-term borrowings ($34 million) were partially offset by a decrease in savings deposits ($20 million).

2017 vs. 2016

The Company's net interest income increased from $118.9 million for the year ended December 31, 2016 to $126.1 million for the year ended December 31, 2017. The Company’s tax equivalent net interest income increased $7.8 million, or 6.5%, from $119.8 million in 2016 to $127.6 million in 2017. This increase was due primarily to higher average balances on commercial loans ($132.0 million) which increased interest income by $5.1 million, and residential real estate loans ($33.5 million) which increased interest income by $1.3 million as compared to the year ended December 31, 2016. Increased interest yields on residential real estate loans also increased net interest income by $1.8 million compared to the year ended December 31, 2016. In addition, higher average investment balances ($86.9 million) increased investment income by $3.2 million. These increases were partially offset by increased interest expense on interest bearing deposits ($3.0 million), primarily due to an increase in the cost of funds, and lower accretion from fair value adjustments ($1.0 million). The Company's reported net interest margin decreased from 3.50% for the year ended December 31, 2016 to 3.46% for the year ended December 31, 2017. Excluding the favorable impact of the accretion from fair value adjustments, the net interest margin would have been 3.40% for the year ended December 31, 2017 and 3.41% for the year ended December 31, 2016.

Average interest-earning assets increased $266 million from 2016 to 2017, due to increases in commercial, financial,

and agriculture loans ($132 million), investment securities ($87 million) and residential real estate loans ($34 million). Average

32

interest-bearing liabilities increased $173 million from 2016 due to increases in savings deposits ($60 million), short-term borrowings ($54 million), time deposits ($38 million) and interest-bearing demand deposits ($20 million).

TABLE THREE

RATE/VOLUME ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE

(In thousands)

	2018 vs. 2017 Increase (Decrease) Due to Change In:									2017 vs. 2016 Increase (Decrease) Due to Change In:
	Volume			Rate			Net			Volume			Rate			Net
Interest-earning assets:
Loan portfolio
Residential real estate	$	1,249		$	4,867		$	6,116		$	1,300		$	1,613		$	2,913
Commercial, financial, and agriculture	2,078			8,421			10,499			5,291			140			5,431
Installment loans to individuals	235			(161		)	74			(305		)	(98		)	(403		)
Previously securitized loans	—			(386		)	(386		)	—			(327		)	(327		)
Total loans	3,562			12,741			16,303			6,286			1,328			7,614
Securities:
Taxable	1,937			1,013			2,950			1,358			637			1,995
Tax-exempt(1)	104			(669		)	(565		)	1,867			(198		)	1,669
Total securities	2,041			344			2,385			3,225			439			3,664
Deposits in depository institutions	299			1,282			1,581			—			85			85
Total interest-earning assets	$	5,902		$	14,367		$	20,269		$	9,511		$	1,852		$	11,363
Interest-bearing liabilities:
Interest-bearing demand deposits	$	80		$	1,391		$	1,471		$	18		$	10		$	28
Savings deposits	(19		)	841			822			76			260			336
Time deposits	910			3,367			4,277			386			2,024			2,410
Short-term borrowings	182			2,019			2,201			146			596			742
Long-term debt	(20		)	135			115			—			82			82
Total interest-bearing liabilities	1,133			7,753			8,886			626			2,972			3,598
Net Interest Income	$	4,769		$	6,614		$	11,383		$	8,885		$	(1,120	)	$	7,765

1. Fully federal taxable equivalent using a tax rate of approximately 21% for 2018 and 35% for 2017 and 2016.

33

Non-GAAP Financial Measures

Management of the Company uses measures in its analysis of the Company's performance other than those in accordance with generally accepted accounting principals in the United States of America ("GAAP"). These measures are useful when evaluating the underlying performance of the Company's operations. The Company's management believes that these non-GAAP measures enhance comparability of results with prior periods and demonstrate the effects of significant gains and charges in the current period. The Company's management believes that investors may use these non-GAAP financial measures to evaluate the Company's financial performance without the impact of those items that may obscure trends in the Company's performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they comparable to non-GAAP financial measures that may be presented by other companies.

TABLE FOUR

NON-GAAP FINANCIAL MEASURES

(In thousands)

	2018			2017			2016
Net interest income ("GAAP")	$	138,209		$	126,125		$	118,945
Taxable equivalent adjustment	756			1,457			872
Net interest income, fully taxable equivalent	$	138,965		$	127,582		$	119,817
Average total interest earning assets	$	3,942,285		$	3,691,714		$	3,426,158
Net interest margin	3.52		%	3.46		%	3.50		%
Accretion related to fair value adjustments	(0.03		)	(0.06		)	(0.09		)
Net interest margin (excluding accretion)	3.49		%	3.40		%	3.41		%
Equity to assets ("GAAP")	12.30		%	12.16		%	11.10		%
Effect of goodwill and other intangibles, net	(2.29		)	(1.70		)	(1.80		)
Tangible common equity to tangible assets	10.01		%	10.46		%	9.30		%
Return on tangible equity ("GAAP")	16.2		%	13.1		%	14.8		%
Impact of effect tax rate decrease on deferred taxes	—			1.6			—
Impact of merger related expenses	2.4			—			—
Return on tangible equity, excluding the above items	18.6		%	14.7		%	14.8		%
Return on assets ("GAAP")	1.63		%	1.33		%	1.36		%
Impact of effect tax rate decrease on deferred taxes	—			0.17			—
Impact of merger related expenses	0.24			—			—
Return on assets, excluding the above items	1.87		%	1.50		%	1.36		%
Effective tax rate ("GAAP")	20.5		%	40.2		%	32.5		%
Impact of FIN 48 reserve adjustments	0.4			0.4			0.7
Impact of effect tax rate decrease on deferred taxes	(0.2		)	(7.9		)	—
Effective tax rate, excluding the above items	20.7		%	32.7		%	33.2		%

34

NON-INTEREST INCOME AND NON-INTEREST EXPENSE

2018 vs. 2017

Selected income statement fluctuations are summarized in the following table (dollars in millions):

	For the year ended December 31,
	2018			2017		$ Change			% Change
Net investment security (losses) gains	$	(0.1	)	$	4.5	$	(4.6	)	(102.0	)%
Non-interest income, excluding net investment securities (losses) gains	60.7			59.1		1.6			2.7
Merger related expenses	13.3			—		13.3			100.0
Non-interest expense, excluding merger related expenses	99.8			96.0		3.8			4.0

During 2017, the Company realized investment gains of $4.5 million that represented partial recoveries of impairment charges previously recognized on pools of trust preferred securities. During 2018, the Company recognized $0.1 million of unrealized investment losses related to its equity and perpetual preferred securities. As a result of the adoption of ASU No. 2016-02, effective January 1, 2018, unrealized gains and losses on equity and equity-like securities are now required to be recognized in the Company's Consolidated Statements of Income.

Exclusive of these gains and losses, non-interest income increased from $59.1 million for the year ended December 31, 2017 to $60.7 million for the year ended December 31, 2018. This increase was primarily attributable to an increase of $1.2 million, or 7.3%, in bankcard revenues and an increase of $1.1 million, or 4.0%, in service charges. These increases were partially offset by a decrease of $1.1 million in bank owned life insurance revenues due to lower death benefit proceeds received during 2018 as compared to 2017.

During 2018, the Company recognized $13.3 million of merger related expenses associated with the completed acquisitions of Poage and Farmers Deposit. Excluding these expenses, non-interest expenses increased from $96.0 million for 2017 to $99.8 million for 2018. This increase was primarily due to an increase in salaries and employee benefits of $3.3 million that was largely attributable to annual salary adjustments, including an adjustment to wages for approximately 50% of the Company's employees late in the first quarter of 2018 to make salaries more competitive in the current employment environment. Additionally, the Company experienced increases in bankcard expenses of $0.6 million and other expenses of $0.5 million.

2017 vs. 2016

Selected income statement fluctuations are summarized in the following table (dollars in millions):

	For the year ended December 31,
	2017		2016		$ Change			% Change
Net investment security gains	$	4.5	$	3.5	$	1.0		28.6	%
Non-interest income, excluding net investment securities gains	59.1		55.3		3.8			6.9
Non-interest expense	96.0		96.2		(0.2		)	(0.2	)

During the years ended December 31, 2017 and 2016, the Company realized investment gains of $4.5 million and $3.5 million, respectively, from the sale of pools of trust preferred securities, which represented a partial recovery of impairment charges previously recognized.

Exclusive of these gains, non-interest income increased $3.8 million to $59.1 million for the year ended December 31, 2017, as compared to $55.3 million for the year ended December 31, 2016. This is primarily due to increases in service charges of $1.9 million, or 7.0%, bank owned life insurance of $0.9 million, or 26.6% (primarily due to death benefit proceeds), trust revenues of $0.7 million, or 12.5%, and bankcard revenues of $0.6 million, or 3.7%.

Non-interest expenses decreased $0.2 million from $96.2 million for the year ended December 31, 2016 to $96.0 million for the year ended December 31, 2017. This is primarily due to decreases in occupancy related expenses of $0.6 million, or 5.6%, bankcard expenses of $0.5 million, or 12.0%, FDIC insurance of $0.3 million and repossessed asset losses, net of expenses of $0.2 million. These decreases were partially offset by increases in equipment and software related expenses of $0.5 million,

35

or 7.2%, advertising of $0.3 million, or 11.8%, salaries and employee benefits of $0.2 million and telecommunication expenses of $0.2 million, or 9.7%.

INCOME TAXES

Selected information regarding the Company's income taxes is presented in the table below (dollars in millions):

	For the year ended December 31,
	2018			2017			2016
Income tax expense	$	18.0		$	36.4		$	25.1
Effective tax rate	20.5		%	40.2		%	32.5		%
Recognition of previously unrecognized tax positions	0.4			0.4			0.7
Impact of TCJA	(0.2		)	(7.9		)	—
Effective tax rate, excluding above items	20.7		%	32.7		%	33.2		%

A reconciliation of the effective tax rate to the statutory rate is included in Note Fourteen of the Notes to Consolidated Financial Statements. On December 22, 2017, the President signed the Tax Cut and Jobs Act ("TCJA") into law. Among other things, the TCJA reduced the corporate income tax rate from 35% to 21%, effective January 1, 2018. The Company recorded a provisional amount of $7.1 million at December 31, 2017 related to the re-measurement of net deferred tax balances. Upon final analysis of available information and refinement of the Company's calculations during 2018, the Company increased its provisional amount by $0.1 million, which is included as a component of income tax expense. The Company considers the TCJA re-measurement of its deferred taxes and its accounting for the income tax effects of TCJA to be complete.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s net deferred tax assets increased from $11.9 million at December 31, 2017 to $17.3 million at December 31, 2018. The increase in the Company's net deferred tax assets was primarily the result of accounting for the acquisitions that were completed during the year, along with realized and unrealized security losses that are not includable in current taxable income.

The components of the Company’s net deferred tax assets are disclosed in Note Fourteen of the Notes to Consolidated Financial Statements. Realization of the most significant net deferred tax assets is primarily dependent on future events taking place that will reverse the current deferred tax assets. The deferred tax asset and/or liability associated with unrealized securities losses and/or gains is the tax impact of the unrealized gains and/or losses on the Company’s available-for-sale security portfolio.  The impact of the Company’s unrealized losses is noted in the Company’s Consolidated Statements of Changes in Shareholders’ Equity as an adjustment to Accumulated Other Comprehensive Income (Loss).  This deferred tax asset would be realized if the unrealized securities losses on the Company's securities were realized from either the sales or maturities of the related securities. The deferred tax asset associated with the allowance for loan losses is expected to be realized as additional loan charge-offs, which have already been provided for within the Company’s financial statements, are recognized for tax purposes.  The Company believes that it is more likely than not that each of the deferred tax assets will be realized and that no valuation allowance was necessary as of December 31, 2018 or 2017.

LIQUIDITY

The Company evaluates the adequacy of liquidity at both the Parent Company level and at the banking subsidiary level. At the Parent Company level, the principal source of cash is dividends from its banking subsidiary, City National. Dividends paid by City National to the Parent Company are subject to certain legal and regulatory limitations. Generally, any dividends in amounts that exceed the earnings retained by City National in the current year plus retained net profits for the preceding two years must be approved by regulatory authorities. At December 31, 2018, City National could pay dividends up to $88.8 million without prior regulatory permission.

During 2018, the Parent Company used cash obtained from the dividends received primarily to: (1) acquire Farmers Deposit, (2) pay common dividends to shareholders, (3) repay the Company's Junior Subordinated Deferrable Interest Debentures, (4) remit interest payments on those debentures prior to payoff and (5) fund repurchases of the Company's common shares.

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Additional information concerning sources and uses of cash by the Parent Company is discussed in Note Twenty-One of the Notes to Consolidated Financial Statements.

On December 19, 2016, the Company announced that it had filed a prospectus supplement to its existing shelf registration statement on Form S-3 for the sale of its common stock having an aggregate value of up to $55 million through an “at-the-market” equity offering program. Through the year ended December 31, 2018, the Company has sold approximately 548,000 common shares at a weighted average price of $64.82, net of broker fees. The Company has sold no shares since the first quarter of 2017. To date, the Company has received $36.4 million in gross proceeds. Under the program, the Company has the ability to receive an additional $18.6 million in gross proceeds from the sale of common shares.

Over the next 12 months, the Parent Company has an obligation to remit interest payments approximating $0.2 million on the Junior Subordinated Deferrable Interest Debentures held by Town Square Statutory Trust I. However, interest payments on the debentures can be deferred for up to five years under certain circumstances. During 2018, the Parent Company repaid $16.5 million of Junior Subordinated Deferrable Interest Debentures issued by the Company and held by City Holding Capital Trust III at a price of 100% of principal.

Additionally, the Parent Company anticipates continuing the payment of dividends, which are expected to approximate $35.1 million on an annualized basis for 2019 based on common shareholders of record at December 31, 2018 at a dividend rate of $2.12 per share for 2019.  However, dividends to shareholders can, if necessary, be suspended. In addition to these anticipated cash needs, the Parent Company has operating expenses and other contractual obligations, which are estimated to require $1.3 million of additional cash over the next 12 months. As of December 31, 2018, the Parent Company reported a cash balance of $20.6 million and management believes that the Parent Company’s available cash balance, together with cash dividends from City National, will be adequate to satisfy its funding and cash needs over the next twelve months.

Excluding the interest and dividend payments discussed above, the Parent Company has no significant commitments or obligations in years after 2019 other than the repayment of its $4.1 million obligation under the debentures held by Town Square Statutory Trust I. However, this obligation does not mature until June 2036, or earlier at the option of the Parent Company. It is expected that the Parent Company will be able to obtain the necessary cash, either through dividends obtained from City National or the issuance of other debt, to fully repay the debentures at their maturity.

City National manages its liquidity position in an effort to effectively and economically satisfy the funding needs of its customers and to accommodate the scheduled repayment of borrowings. Funds are available to City National from a number of sources, including depository relationships, sales and maturities within the investment securities portfolio, and borrowings from the Federal Home Loan Bank ("FHLB") and other financial institutions. As of December 31, 2018, City National’s assets are significantly funded by deposits and capital. City National maintains borrowing facilities with the FHLB and other financial institutions that can be accessed as necessary to fund operations and to provide contingency funding mechanisms. As of December 31, 2018, City National had the capacity to borrow an additional $1.9 billion from the FHLB and other financial institutions under existing borrowing facilities. City National maintains a contingency funding plan, incorporating these borrowing facilities, to address liquidity needs in the event of an institution-specific or systemic financial industry crisis. Also, although it has no current intention to do so, City National could liquidate its unpledged securities, if necessary, to provide an additional funding source.  City National also segregates certain mortgage loans, mortgage-backed securities, and other investment securities in a separate subsidiary so that it can separately monitor the asset quality of these primarily mortgage-related assets, which could be used to raise cash through securitization transactions or obtain additional equity or debt financing if necessary.

 The Company manages its asset and liability mix to balance its desire to maximize net interest income against its desire to minimize risks associated with capitalization, interest rate volatility, and liquidity. With respect to liquidity, the Company has chosen a conservative posture and believes that its liquidity position is strong. As illustrated in the Consolidated Statements of Cash Flows, the Company generated $73 million of cash from operating activities during 2018, primarily from interest income received on loans and investments, net of interest expense paid on deposits and borrowings.

The Company has obligations to extend credit, but these obligations are primarily associated with existing home equity loans that have predictable borrowing patterns across the portfolio. The Company has investment security balances with carrying values that totaled $813 million at December 31, 2018, and that greatly exceeded the Company’s non-deposit sources of borrowing, which totaled $266 million.

The Company’s net loan to asset ratio is 72.9% as of December 31, 2018 and deposit balances fund 81.2% of total assets as compared to 70.2% for its peers (Bank Holding Company Peer Group, as of the most recent data available of September 30, 2018, which includes commercial banks with assets ranging from $3 billion to $10 billion). Further, the Company’s deposit mix has a very high proportion of transaction and savings accounts that fund 53.5% of the Company’s total assets and the

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Company uses time deposits over $250,000 to fund 3.3% of total assets compared to its peers, which fund 13.1% of total assets with such deposits.

INVESTMENTS

The Company’s investment portfolio increased $184 million from $629 million at December 31, 2017, to $813 million at December 31, 2018. The acquisitions of Poage and Farmers Deposit contributed approximately $119 million to this increase. In addition, in conjunction with its interest rate risk management strategy, the Company elected to grow investment balances to enhance net interest income.

The investment portfolio is structured to provide flexibility in managing liquidity needs and interest rate risk, while providing acceptable rates of return.

The majority of the Company’s investment securities continue to be mortgage-backed securities. The mortgage-backed securities in which the Company has invested are predominantly underwritten to the standards of, and guaranteed by government-sponsored agencies such as Fannie Mae ("FNMA"), Freddie Mac ("FHLMC") and Ginnie Mae ("GNMA").

The Company's municipal bond portfolio of $128 million as of December 31, 2018 has an average tax equivalent yield of 3.70% with an average maturity of 11.5 years. The average dollar amount invested in each security is $0.5 million. The portfolio has 74% rated "A" or better and the remaining portfolio is unrated, as the issuances represented small issuances of revenue bonds. Additional credit support has been purchased by the issuer for 40% of the portfolio, while 60% has no additional credit support. Management re-underwrites 100% of the portfolio on an annual basis, using the same guidelines that are used to underwrite its commercial loans. Revenue bonds were 68% of the portfolio, while the remaining 32% were general obligation bonds. Geographically, the portfolio supports the Company's footprint, with 47% of the portfolio being from municipalities throughout West Virginia, and the remainder from communities in Kentucky, Texas, Ohio and various other states.

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TABLE FIVE

INVESTMENT PORTFOLIO

The carrying value of the Company's securities are presented in the following table (in thousands):

	Carrying Values as of December 31,
	2018		2017		2016
Securities available-for-sale:
Obligations of states and political subdivisions	$	128,070	$	96,196	$	82,368
U.S. Treasuries and U.S. government agencies	5,733		2		3
Mortgage-backed securities:
U.S. government agencies	550,758		419,347		330,814
Private label	12,043		652		942
Trust preferred securities	4,799		4,736		6,662
Corporate securities	16,658		22,268		23,574
Total Debt Securities available-for-sale	718,061		543,201		444,363
Marketable equity  securities	—		5,699		4,231
Certificates of deposit	3,735		—		—
Investment funds	1,458		1,489		1,489
Total Securities Available-for-Sale	723,254		550,389		450,083
Securities held-to-maturity:
Mortgage backed securities	56,827		60,449		71,169
Trust preferred securities	4,000		4,000		4,000
Total Securities Held-to-Maturity	60,827		64,449		75,169
Other investment securities:
Marketable equity securities	10,313		—		—
Non-marketable equity securities	18,497		14,147		14,352
Total Other Investment Securities	28,810		14,147		14,352
Total Securities	$	812,891	$	628,985	$	539,604

The Company's mortgage-backed U.S. government agency securities consist of both residential and commercial securities, all of which are guaranteed by Fannie Mae ("FNMA"), Freddie Mac ("FHLMC"), or Ginnie Mae ("GNMA"). Marketable equity securities consist of investments made by the Company in equity positions of various community banks. Non-marketable equity securities consist of Federal Home Loan Bank ("FHLB") stock and Federal Reserve Bank ("FRB") stock. The Company's certificates of deposit consist of domestically issued certificates of deposits in denominations of less than the FDIC insurance limit of $250,000.

At December 31, 2018, there were no securities of any non-governmental issuers whose aggregate carrying or estimated fair value exceeded 10% of shareholders’ equity.

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The weighted average yield of the Company's investment portfolio is presented in the following table (dollars in thousands):

	Within				After One But				After Five But				After
	One Year				Within Five Years				Within Ten Years				Ten Years
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Securities available-for-sale:
Obligations of states and political subdivisions	$	4,493	2.07	%	$	15,263	3.01	%	$	31,432	3.19	%	$	76,882	3.16	%
U.S. Treasuries and U.S. government agencies	991		2.73		4,239		3.02		503		3.37		—		—
Mortgage-backed securities:
U.S. government agencies	88		2.95		5,376		2.65		82,684		2.72		462,610		2.96
Private label	—		—		—		—		—		—		12,043		3.99
Trust preferred securities	—		—		—		—		—		—		4,799		4.07
Corporate securities	—		—		—		—		15,951		5.04		707		5.99
Total Debt Securities available-for-sale	5,572		2.20		24,878		2.93		130,570		3.12		557,041		3.03
Certificates of deposit	1,494		1.98		2,241		2.54		—		—		—		—
Total Securities available-for-sale	7,066		2.16		27,119		2.90		130,570		3.12		557,041		3.03
Securities held-to-maturity:
U.S. government agencies	—		—		—		—		4,927		3.90		51,900		2.98
Trust preferred securities	—		—		—		—		—		—		4,000		9.30
Total Securities Held-to-Maturity	—		—		—		—		4,927		3.90		55,900		3.44
Total Debt Securities	$	7,066	2.16	%	$	27,119	2.90	%	$	135,497	3.00	%	$	612,941	3.06	%

Weighted-average yields on tax-exempt obligations of states and political subdivisions have been computed on a taxable-equivalent basis using the federal statutory tax rate of 21%.  Average yields on investments available-for-sale are computed based on amortized cost. Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

TABLE SIX

LOAN PORTFOLIO

The composition of the Company’s loan portfolio as of the dates indicated follows (in thousands):

	2018			2017			2016			2015			2014
Residential real estate	$	1,656,989		$	1,468,278		$	1,451,462		$	1,383,133		$	1,294,576
Home equity	153,496			139,499			141,965			147,036			145,604
Commercial and industrial	286,314			208,484			185,667			165,340			140,548
Commercial real estate	1,433,291			1,277,576			1,229,516			1,127,581			1,028,755
Consumer	51,190			29,162			32,545			36,083			39,705
DDA overdrafts	6,328			4,411			5,071			3,361			2,802
Gross loans	$	3,587,608		$	3,127,410		$	3,046,226		$	2,862,534		$	2,651,990
$ change from the preceding year	$	460,198		$	81,184		$	183,692		$	210,544		$	45,793
% change from the preceding year	14.7		%	2.7		%	6.4		%	7.9		%	1.8		%

Residential real estate loans increased $189 million from December 31, 2017 to $1.66 billion at December 31, 2018. The acquisitions of Poage and Farmers Deposit accounted for $156 million of the increase. Residential real estate loans include loans for the purchase or refinance of consumers' residence and first-priority home equity loans allow consumers to borrow against the equity in their home.  These loans primarily consist of single family three- and five-year adjustable rate mortgages

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with terms that amortize up to 30 years. City National also offers fixed-rate residential real estate loans that are sold in the secondary market; once sold these loans are not included on the Company's balance sheet and City National does not retain the servicing rights to these loans.  Residential purchase real estate loans are generally underwritten to comply with Fannie Mae guidelines, while first priority home equity loans are underwritten with typically less documentation, lower loan-to-value ratios and shorter maturities. At December 31, 2018, $22 million of the residential real estate loans were for properties under construction.

Home equity loans increased $14 million from December 31, 2017 to $153 million at December 31, 2018. The acquisitions of Poage and Farmers Deposit accounted for $10 million of the increase. City National's home equity loans represent loans to consumers that are secured by a second (or junior) priority lien on a residential property.  Home equity loans allow consumers to borrow against the equity in their home without paying off an existing first priority lien.  These loans include home equity lines of credit ("HELOC") and amortized home equity loans that require monthly installment payments.  Second priority lien home equity loans are underwritten with less documentation than first priority lien residential real estate loans but typically have similar loan-to-value ratios and other terms as first priority lien residential real estate loans.  The amount of credit extended is directly related to the value of the real estate securing the loan at the time the loan is made.

All mortgage loans, whether fixed rate or adjustable rate, are originated in accordance with acceptable industry standards and comply with regulatory requirements. Fixed rate mortgage loans are processed and underwritten in accordance with Fannie Mae and Freddie Mac guidelines, while adjustable rate mortgage loans are underwritten in accordance with City National's internal loan policy.

The commercial and industrial ("C&I") loan portfolio consists of loans to corporate and other legal entity borrowers, primarily small to mid-size industrial and commercial companies. C&I loans typically involve a higher level of risk than other loan types, including industry specific risks such as the pertinent economy, new technology, labor rates and cyclicality, as well as customer specific factors, such as cash flow, financial structure, operating controls and asset quality. Collateral securing these loans includes equipment, machinery, inventory, receivables and vehicles. C&I loans increased $78 million to $286 million at December 31, 2018, with the acquisitions of Poage and Farmers Deposit accounting for $37 million of the increase.

Commercial real estate loans consist of commercial mortgages, which generally are secured by nonresidential and multi-family residential properties, including hotel/motel and apartment lending. Commercial real estate loans are to many of the same customers and carry similar industry risks as C&I loans, but have different collateral risk. Commercial real estate loans increased $156 million to $1.43 billion at December 31, 2018, with the acquisitions of Poage and Farmers Deposit accounting for $139 million of the increase.  At December 31, 2018, $38 million of the commercial real estate loans were for commercial properties under construction. 

The Company categorizes commercial loans by industry according to the North American Industry Classification System ("NAICS") to monitor the portfolio for possible concentrations in one or more industries. Management monitors industry concentrations against internally established risk-based capital thresholds. As of December 31, 2018, City National was within its internally designated concentration limits. As of December 31, 2018, City National's loans to borrowers within the Lessors of Nonresidential Buildings categories exceeded 10% of total loans (12%). No other NAICS industry classification exceeded 10% of total loans as of December 31, 2018. Management also monitors non-owner occupied commercial real estate as a percent of risk based capital (based upon regulatory guidance). At December 31, 2018, the Company had $1.30 billion of commercial loans classified as non-owner occupied and was within its designated concentration threshold.

Consumer loans may be secured by automobiles, boats, recreational vehicles, certificates of deposit and other personal property or they may be unsecured. The Company manages the risk associated with consumer loans by monitoring such factors as portfolio size and growth, internal lending policies and pertinent economic conditions. City National's underwriting standards are continually evaluated and modified based upon these factors. Consumer loans increased $22 million from 2017 to $51 million at December 31, 2018, with the acquisitions of Poage and Farmers Deposit accounting for $19 million of the increase.

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The following table shows the scheduled maturity of loans outstanding as of December 31, 2018 (in thousands):

	Within One Year		After One But Within Five Years		After Five Years		Total
Residential real estate	$	172,657	$	575,054	$	909,278	$	1,656,989
Home equity	16,432		57,009		80,055		153,496
Commercial and industrial	114,544		133,030		38,740		286,314
Commercial real estate	329,554		628,032		475,705		1,433,291
Consumer	25,724		29,245		2,549		57,518
Total loans	$	658,911	$	1,422,370	$	1,506,327	$	3,587,608
Loans maturing after one year with interest rates that are:
Fixed until maturity	$	421,905
Variable or adjustable	2,506,792
Total	$	2,928,697

ALLOWANCE AND PROVISION FOR LOAN LOSSES

Management systematically monitors the loan portfolio and the appropriateness of the allowance for loan losses (“ALLL”) on a quarterly basis to provide for probable losses incurred in the portfolio. Management assesses the risk in each loan type based on historical delinquency and loss trends, the general economic environment of its local markets, individual loan performance, and other relevant factors. Individual credits in excess of $1 million are selected at least annually for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the appropriateness of the allowance. Due to the nature of commercial lending, evaluation of the appropriateness of the allowance as it relates to these loan types is often based more upon specific credit review, with consideration given to the potential impairment of certain credits and historical loss rates, adjusted for general economic conditions and other inherent risk factors. Conversely, due to the homogeneous nature of the real estate and installment portfolios, the portions of the allowance allocated to those portfolios are primarily based on prior loss history of each portfolio, adjusted for general economic conditions and other inherent risk factors. Risk factors considered by the Company in completing this analysis include: (1) unemployment and economic trends in the Company’s markets, (2) concentrations of credit, if any, among any industries, (3) trends in loan growth, loan mix, delinquencies, losses or credit impairment, (4) adherence to lending policies and others. Each risk factor is designated as low, moderate/increasing, or high based on the Company’s assessment of the risk to loss associated with each factor. Each risk factor is then weighted to consider probability of occurrence.

The allowance not specifically allocated to individual credits is generally determined by analyzing potential exposure and other qualitative factors that could negatively impact the overall credit risk of the loan portfolio.  Loans not individually evaluated for impairment are grouped by pools with similar risk characteristics and the related historical loss rates are adjusted to reflect current inherent risk factors, such as unemployment, overall economic conditions, concentrations of credit, loan growth, classified and impaired loan trends, staffing, adherence to lending policies, and loss trends.

Determination of the allowance for loan losses is subjective in nature and requires management to periodically reassess the validity of its assumptions. Differences between actual losses and estimated losses are assessed such that management can timely modify its assumptions model to ensure that adequate provision has been made for risk in the total loan portfolio.

The Company's (recovery of) provision for loan losses for the past three years are shown in the table below (in thousands):

	For the year ended December 31,
	2018			2017		2016
(Recovery of) provision for loan losses	$	(2,310	)	$	3,006	$	4,395

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During the year ended December 31, 2018, the Company liquidated repossessed assets associated with the Kentucky Fuels Corporate credit. As a result of the proceeds from this liquidation, the Company recovered $1.3 million related to this credit. Additionally, as a result of this recovery, the historical loss rate used to compute the allowance not specifically allocated to individual credits in the Company's commercial and industrial mining and energy sector (per the North American Industry Classification system ("NAICS")) improved and an additional release of reserve of $1.7 million was recognized during the year ended December 31, 2018. The company also received a $0.4 million recovery through a settlement from a commercial customer during the quarter ended December 31, 2018.

The provision for loan losses recorded in 2017 reflected the revisions to the regulatory rating of a previously classified shared national credit ("SNC") in which the Company is a participant, 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. This credit was for a local customer that outgrew the lending limit of the Company and involves three local banks. The reserve recorded in 2017 of $1.1 million related to this credit reflects the loss factors associated with the rating assigned to this credit as a result of the current year review by the Office of the Comptroller of the Currency ("OCC").

The provision for loan losses recorded in 2016 reflected the impact of several factors, including the growth in the loan portfolio and changes in the quality of the portfolio. Additionally, during the fourth quarter of 2016, a commercial customer of the Company with a hotel and motel related credit whose business is located in North Central West Virginia experienced a downfall in occupancy rates as a result of a slowdown in the oil and gas industry. As a result, the Company increased the allowance for loan losses in the fourth quarter in relation to this loan. Beyond this particular loan, the Company has very limited exposure to the oil and gas industry and does not have any direct loans to any oil and gas operations.

Changes in the amount of the allowance and related provision 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.

The Company's net charge-offs for the past three years are shown in the table below (in thousands):

	For the year ended December 31,
	2018		2017		2016
Net charge-offs	$	560	$	3,900	$	3,916

Net charge-offs in 2018 consisted primarily of net charge-offs on DDA overdraft loans of $1.2 million and consumer loans of $0.6 million that were partially offset by net recoveries on commercial and industrial loans of $1.4 million and commercial real estate loans of $0.4 million. Net charge-offs in 2017 consisted primarily of net charge-offs on residential real estate loans of $1.3 million, DDA overdraft loans of $1.3 million and commercial real estate loans of $0.6 million. Net charge-offs in 2016 consisted primarily of net charge-offs on residential real estate loans of $1.5 million, commercial real estate loans of $1.2 million and DDA overdraft loans of $0.6 million.

Based on the Company’s analysis of the appropriateness of the allowance for loan losses and in consideration of the known factors utilized in computing the allowance, management believes that the allowance for loan losses as of December 31, 2018 is adequate to provide for probable losses inherent in the Company’s loan portfolio. Future provisions for loan losses will be dependent upon trends in loan balances including the composition of the loan portfolio, changes in loan quality and loss experience trends, and recoveries of previously charged-off loans, among other factors.

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TABLE SEVEN

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

An analysis of changes in the Company's allowance for loan losses follows (dollars in thousands):

	2018			2017			2016			2015			2014
Balance at beginning of period	$	18,836		$	19,730		$	19,251		$	20,074		$	20,575
Charge-offs:
Commercial and industrial	(733		)	(400		)	(148		)	(5,768		)	(323		)
Commercial real estate	(369		)	(720		)	(1,676		)	(580		)	(2,001		)
Residential real estate	(682		)	(1,637		)	(1,734		)	(1,144		)	(1,762		)
Home equity	(219		)	(403		)	(390		)	(312		)	(309		)
Consumer	(769		)	(60		)	(126		)	(210		)	(188		)
DDA overdrafts	(2,701		)	(2,714		)	(1,412		)	(1,414		)	(1,415		)
Total charge-offs	(5,473		)	(5,934		)	(5,486		)	(9,428		)	(5,998		)
Recoveries:
Commercial and industrial	2,152			58			14			74			89
Commercial real estate	732			112			487			366			113
Residential real estate	367			294			187			199			187
Home equity	—			45			—			—			—
Consumer	166			63			118			186			204
DDA overdrafts	1,496			1,462			764			792			850
Total recoveries	4,913			2,034			1,570			1,617			1,443
Net charge-offs	(560		)	(3,900		)	(3,916		)	(7,811		)	(4,555		)
(Recovery of) provision for loan losses	(2,310		)	3,006			4,395			6,988			4,054
Balance at end of period	$	15,966		$	18,836		$	19,730		$	19,251		$	20,074
As a Percent of Average Total Loans:
Net charge-offs	0.02		%	0.13		%	0.13		%	0.29		%	0.18		%
(Recovery of) provision for loan losses	(0.07		)%	0.10		%	0.15		%	0.26		%	0.16		%
As a Percent of Non-Performing Loans:
Allowance for loan losses	107.82		%	178.39		%	140.10		%	110.37		%	127.62		%

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TABLE EIGHT

NON-ACCRUAL AND PAST-DUE LOANS

The Company's nonperforming assets and past-due loans were as follows (dollars in thousands):

	2018			2017			2016			2015			2014
Non-accrual loans	$	14,551		$	10,297		$	13,701		$	16,948		$	15,306
Accruing loans past due 90 days or more	257			262			382			495			423
Total non-performing loans	$	14,808		$	10,559		$	14,083		$	17,443		$	15,729
Other real estate owned ("OREO")	4,608			3,585			4,588			6,519			8,180
Total non-performing assets	$	19,416		$	14,144		$	18,671		$	23,962		$	23,909
As a Percentage of Total Loans and OREO
Non-performing assets	0.54		%	0.45		%	0.61		%	0.84		%	0.90		%
Past-due loans	$	13,131		$	10,963		$	8,594		$	9,164		$	10,666
As a Percentage of Total Loans
Past-due loans	0.37		%	0.35		%	0.28		%	0.32		%	0.40		%

The Company’s ratio of non-performing assets to total loans and other real estate owned increased from 0.45% at December 31, 2017 to 0.54% at December 31, 2018.  Excluded from this ratio are purchased credit-impaired ("PCI") 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 Company's initial expectation. Total past due loans increased from $11.0 million, or 0.35% of total loans outstanding, at December 31, 2017 to $13.1 million, or 0.37% of total loans outstanding, at December 31, 2018. Acquired past due loans from Poage and Farmers Deposit represent approximately 37% of the total past due loans at December 31, 2018.

Interest on loans is accrued and credited to operations based upon the principal amount outstanding.  The accrual of interest income is generally discontinued when a loan becomes 90 days past due as to principal or interest unless the loan is well collateralized and in the process of collection.  When interest accruals are discontinued, interest credited to income that is unpaid and deemed uncollectible is reversed and charged to operations.

TABLE NINE

IMPAIRED LOANS

Information pertaining to the Company's impaired loans is included in the following table (in thousands):

	2018		2017		2016		2015		2014
Impaired loans with a valuation allowance	$	2,985	$	5,782	$	2,832	$	—	$	1,392
Impaired loans with no valuation allowance	7,521		3,885		4,749		8,482		5,377
Total impaired loans	$	10,506	$	9,667	$	7,581	$	8,482	$	6,769
Allowance for loan losses allocated to impaired loans	$	428	$	647	$	665	$	—	$	252
Interest income forgone on non-accrual and impaired loans	$	198	$	188	$	352	$	794	$	529

Impaired loans with a valuation allowance at the end of 2018 were comprised of one commercial borrowing relationship that was evaluated during 2017 and determined that an allowance was necessary, as the present value of expected cash flows was less than the outstanding amount of the loan.

There were no commitments to provide additional funds on non-accrual, impaired, or other potential problem loans at December 31, 2018 and 2017.  

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TABLE TEN

RESTRUCTURED LOANS

The following table sets forth the Company’s troubled debt restructurings ("TDRs") (in thousands):

	2018		2017		2016		2015		2014
Accruing
Commercial and industrial	$	98	$	135	$	42	$	58	$	73
Commercial real estate	8,205		8,381		5,525		1,746		2,263
Residential real estate	22,863		21,005		20,424		17,796		17,946
Home equity	3,025		3,047		3,105		2,659		2,673
Consumer	—		—		—		—		—
	$	34,191	$	32,568	$	29,096	$	22,259	$	22,955
Non-Accruing
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate	—		—		—		—		—
Residential real estate	658		84		391		191		545
Home equity	5		50		30		34		15
Consumer	—		—		—		—		—
	$	663	$	134	$	421	$	225	$	560

Regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court and the borrower has not reaffirmed the debt.  The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of the debt by the bankruptcy court is deemed to be a concession granted to the borrower.

The Company's troubled debt restructurings ("TDRs") related to its borrowers who had filed for Chapter 7 bankruptcy protection make up 76% of the Company's total TDRs as of December 31, 2018. The average age of these TDRs was 12.1 years; the average current balance as a percentage of the original balance was 68.2%; and the average loan-to-value ratio was 65.8% as of December 31, 2018. Of the total 498 Chapter 7 related TDRs, 34 had an estimated loss exposure based on the current balance and appraised value at December 31, 2018.

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TABLE ELEVEN

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

The allocation of the allowance for loan losses by portfolio segment and the percent of loans in each category to total loans is shown in the table below (dollars in thousands). The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments.

	2018				2017				2016				2015				2014
	Amount		Percent of Loans in Each Category to Total Loans		Amount		Percent of Loans in Each Category to Total Loans		Amount		Percent of Loans in Each Category to Total Loans		Amount		Percent of Loans in Each Category to Total Loans		Amount		Percent of Loans in Each Category to Total Loans
Commercial and industrial	$	4,060	8	%	$	4,571	7	%	$	4,206	6	%	$	3,271	6	%	$	1,582	5	%
Commercial real estate	4,495		40		6,183		41		6,573		40		6,985		39		8,845		39
Residential real estate	4,116		47		5,212		47		6,680		48		6,778		48		7,208		49
Home equity	1,268		4		1,138		4		1,417		5		1,463		5		1,495		5
Consumer	319		1		62		1		82		1		97		2		85		2
DDA overdrafts	1,708		—		1,670		—		772		—		657		—		859		—
Allowance for Loan Losses	$	15,966	100	%	$	18,836	100	%	$	19,730	100	%	$	19,251	100	%	$	20,074	100	%

The allowance attributed to the commercial and industrial loan portfolio decreased $0.5 million from $4.6 million at December 31, 2017 to $4.1 million at December 31, 2018. This decrease is primarily due to proceeds resulting from the liquidation of repossessed assets and the resulting improvement in the historical loss rate used to compute the allowance in the Company's commercial and industrial mining and energy sector.

The allowance attributed to the commercial real estate loan portfolio decreased $1.7 million from $6.2 million at December 31, 2017 to $4.5 million at December 31, 2018. This decrease is primarily attributable to improvements in the historical loss rates in the portfolio and a decrease in risk-rated commercial real estate loans.

The allowance attributed to the residential real estate portfolio decreased $1.1 million from $5.2 million at December 31, 2017 to $4.1 million at December 31, 2018. The decrease is primarily attributable to improvements in the historical loss rates in the portfolio.

GOODWILL

The Company evaluates the recoverability of goodwill and indefinite lived intangible assets annually as of November 30^th, or more frequently if events or changes in circumstances warrant, such as a material adverse change in the Company's business. Goodwill is considered to be impaired when the carrying value of a reporting unit exceeds its estimated fair value. Indefinite-lived intangible assets are considered impaired if their carrying value exceeds their estimated fair value. As described in Note One of the Notes to Consolidated Financial Statements, the Company conducts its business activities through one reportable business segment – community banking. Fair values are estimated by reviewing the Company’s stock price as it compares to book value and the Company’s reported earnings.  In addition, the impact of future earnings and activities are considered in the Company’s analysis.  The Company had approximately $110 million and $76 million of goodwill at December 31, 2018 and 2017, respectively, and no impairment was required to be recognized in 2018 or 2017, as the estimated fair value of the Company has continued to exceed its book value.

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CERTIFICATES OF DEPOSIT

Scheduled maturities of time certificates of deposit of $100,000 or more at December 31, 2018 are summarized in the table below (in thousands). The Company has time certificates of deposit that meet or exceed the FDIC insurance limit of $250,000 totaling $172.2 million (approximately 13% of total time deposits).  

TABLE TWELVE

MATURITY DISTRIBUTION OF CERTIFICATES OF DEPOSIT OF $100,000 OR MORE

	Amounts		Percentage
Three months or less	$	73,172	12	%
Over three months through six months	70,343		11
Over six months through twelve months	176,152		29
Over twelve months	297,781		48
Total	$	617,448	100	%

FAIR VALUE MEASUREMENTS

The Company determines the fair value of its financial instruments based on the fair value hierarchy established in ASC Topic 820, whereby the fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC Topic 820 establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The hierarchy classification is based on whether the inputs in the methodology for determining fair value are observable or unobservable. Observable inputs reflect market-based information obtained from independent sources (Level 1 or Level 2), while unobservable inputs reflect management’s estimate of market data (Level 3). Assets and liabilities that are actively traded and have quoted prices or observable market data require a minimal amount of subjectivity concerning fair value. Management’s judgment is necessary to estimate fair value when quoted prices or observable market data are not available.

            At December 31, 2018, approximately 15% of total assets, or $751 million, consisted of financial instruments recorded at fair value. Most of these financial instruments used valuation methodologies involving observable market data, collectively Level 1 and Level 2 measurements, to determine fair value. At December 31, 2018, approximately $17 million of derivative liabilities were recorded at fair value using methodologies involving observable market data. The Company does not believe that any changes in the unobservable inputs used to value the financial instruments mentioned above would have a material impact on the Company’s results of operations, liquidity, or capital resources. See Note Twenty of the Notes to Consolidated Financial Statements for additional information regarding ASC Topic 820 and its impact on the Company’s financial statements.

CONTRACTUAL OBLIGATIONS

The Company has various financial obligations that may require future cash payments according to the terms of the obligations. Demand, both noninterest- and interest-bearing, and savings deposits are, generally, payable immediately upon demand at the request of the customer. Therefore, the contractual maturity of these obligations is presented in the following table as “less than one year.” Time deposits, typically certificates of deposit, are customer deposits that are evidenced by an agreement between the Company and the customer that specify stated maturity dates; early withdrawals by the customer are subject to penalties assessed by the Company. Short-term borrowings and long-term debt represent borrowings of the Company and have stated maturity dates. Capital and operating leases between the Company and the lessor have stated expiration dates and renewal terms.

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TABLE THIRTEEN

CONTRACTUAL OBLIGATIONS

The composition of the Company's contractual obligations as of December 31, 2018 is presented in the following table (in thousands):

	Contractual Maturity in
	Less than One Year		Between One and Three Years		Between Three and Five Years		Greater than Five Years		Total
Noninterest-bearing demand deposits	$	789,119	$	—	$	—	$	—	$	789,119
Interest-bearing demand deposits(1)	899,608		—		—		—		899,608
Savings deposits(1)	934,260		—		—		—		934,260
Time deposits(1)	724,700		527,772		125,313		2,414		1,380,199
Short-term borrowings(1)	266,122		—		—		—		266,122
Long-term debt(1)	188		376		376		6,497		7,437
Real estate leases	1,081		1,643		915		2,697		6,336
Total Contractual Obligations	$	3,615,078	$	529,791	$	126,604	$	11,608	$	4,283,081

(1) Includes interest on both fixed- and variable-rate obligations. The interest associated with variable-rate obligations is based upon interest rates in effect at December 31, 2018. The contractual amounts to be paid on variable-rate obligations are affected by market interest rates that could materially affect the contractual amounts to be paid.

The Company’s liability for uncertain tax positions at December 31, 2018 was $1.8 million pursuant to ASC Topic 740.  This liability represents an estimate of tax positions that the Company has taken in its tax returns that may ultimately not be sustained upon examination by tax authorities.  As the ultimate amount and timing of any future cash settlements cannot be predicted with reasonable reliability, this estimated liability has been excluded from the contractual obligations table.

OFF–BALANCE SHEET ARRANGEMENTS

As disclosed in Note Seventeen of the Notes to Consolidated Financial Statements, the Company has also entered into agreements with its customers to extend credit or to provide conditional commitments to provide payment on drafts presented in accordance with the terms of the underlying credit documents (including standby and commercial letters of credit). The Company also provides overdraft protection to certain demand deposit customers that represent an unfunded commitment. As a result of the Company’s off-balance sheet arrangements for 2018 and 2017, no material revenue, expenses, or cash flows were recognized.  In addition, the Company had no other indebtedness or retained interests nor entered into agreements to extend credit or provide conditional payments pursuant to standby and commercial letters of credit.

CAPITAL RESOURCES

During 2018, Shareholders’ Equity increased $98 million, or 19.6%, from $503 million at December 31, 2017 to $601 million at December 31, 2018.  This increase was primarily due to the acquisition of Poage of $83 million and net income of $70 million, partially offset by cash dividends declared of $31 million and common share repurchases of $20 million.

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 at the time) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders. During the year ended December 31, 2017, the Company did not repurchase any common shares. During the year ended December 31, 2018, the Company repurchased approximately 290,000 common shares at a weighted average price of $69.78. On February 27, 2019, the Company announced that the Board of Directors rescinded the 2014 plan and authorized the Company to buy back up to 1,000,000 shares of its common stock (approximately 6% of the outstanding shares), in open market transactions, at prices that are accretive to continuing shareholders. No timetable was placed on the duration of this share repurchase program.

On December 19, 2016, the Company announced that it had filed a prospectus supplement to its existing shelf registration statement on Form S-3 for the sale of its common stock having an aggregate value of up to $55 million through an "at-the-market" equity offering program. Through the year ended December 31, 2018, the Company has sold approximately 548,000 common shares at a weighted average price of $64.82, net of broker fees. The Company has sold no shares since the first quarter

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of 2017. To date, the Company has received $36.4 million in gross proceeds. Under the program, the Company has the ability to receive an additional $18.6 million in gross proceeds from the sale of common shares.

In July 2013, the Federal Reserve published the final rules that established a new comprehensive capital framework for banking organizations, commonly referred to as Basel III. These final rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions. The final rule became effective January 1, 2015 for smaller, non-complex banking organizations with full implementation by January 1, 2019.

On January 1, 2019, the Basel III Capital Rules will require City Holding and City National to maintain minimum CET 1, Tier 1 and Total Capital ratios, along with a capital conservation buffer that will become fully phased in on that date, effectively resulting in new minimum capital ratios (which are shown in the table below). The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and was phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reached 2.5% on January 1, 2019). The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The Basel III Capital Rules also provide for a “countercyclical capital buffer” that is applicable to only certain covered institutions and does not have any current applicability to City Holding Company or City National Bank.

The Company’s regulatory capital ratios for both City Holding and City National are illustrated in the following tables (in thousands):

December 31, 2018	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	492,526	15.1	%	$	208,294	6.375	%	$	228,715	7.0	%	$	212,378	6.5	%
City National Bank	423,099		13.1	%	206,676		6.375	%	226,938		7.0	%	210,728		6.5	%
Tier 1 Capital
City Holding Company	496,526		15.2	%	257,304		7.875	%	277,725		8.5	%	261,389		8.0	%
City National Bank	423,099		13.1	%	255,306		7.875	%	275,568		8.5	%	259,358		8.0	%
Total Capital
City Holding Company	512,801		15.7	%	322,651		9.875	%	343,072		10.5	%	326,736		10.0	%
City National Bank	439,374		13.6	%	320,145		9.875	%	340,408		10.5	%	324,198		10.0	%
Tier 1 Leverage Ratio
City Holding Company	496,526		11.4	%	174,833		4.000	%	174,833		4.0	%	218,542		5.0	%
City National Bank	423,099		9.8	%	172,594		4.000	%	172,594		4.0	%	215,742		5.0	%
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

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December 31, 2017:	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
					Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	430,154	15.1	%	$	163,441	5.75	%	$	198,972	7.0	%	$	184,760	6.5	%
City National Bank	338,105		12.0	%	162,164		5.75	%	197,418		7.0	%	183,316		6.5	%
Tier 1 Capital
City Holding Company	446,154		15.7	%	206,078		7.25	%	241,609		8.5	%	227,397		8.0	%
City National Bank	338,105		12.0	%	204,468		7.25	%	239,721		8.5	%	225,620		8.0	%
Total Capital
City Holding Company	465,292		16.4	%	262,927		9.25	%	298,458		10.5	%	284,246		10.0	%
City National Bank	357,243		12.7	%	260,873		9.25	%	296,126		10.5	%	282,025		10.0	%
Tier 1 Leverage Ratio
City Holding Company	446,154		11.0	%	161,834		4.00	%	161,834		4.0	%	202,293		5.0	%
City National Bank	338,105		8.5	%	159,625		4.00	%	159,625		4.0	%	199,531		5.0	%

As of December 31, 2018, management believes that City Holding Company, and its banking subsidiary, City National, were “well capitalized.”  City Holding is subject to regulatory capital requirements administered by the Federal Reserve, while City National is subject to regulatory capital requirements administered by the OCC and the FDIC.  Regulatory agencies can initiate certain mandatory actions if either City Holding or City National fails to meet the minimum capital requirements, as shown above.  As of December 31, 2018, management believes that City Holding and City National meet all capital adequacy requirements.

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the "Regulatory Relief Act") went into effect. The Regulatory Relief Act provides for a simplification of the minimum capital level requirements applicable to the Company. The federal bank regulatory agencies have not yet issued final rules regarding this change, but it is expected that a to–be–developed community bank leverage ratio requirement of tangible equity to average consolidated assets between eight to ten percent will replace the Basel III Capital Rules applicable to the Company. There can be no assurances, however, as to the substance of the final rule or its effect on the Company.

LEGAL ISSUES

The Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize impacts to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current actions will have immaterial results, or that no material actions may be presented in the future.

RECENT ACCOUNTING PROCOUNCEMENTS AND DEVELOPMENTS

Note Two, “Recent Accounting Pronouncements,” of the Notes to Consolidated Financial Statements discusses recently issued new accounting pronouncements and their expected impact on the Company’s consolidated financial statements.

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Item 7A.Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss due to adverse changes in current and future cash flows, fair values, earnings or capital due to adverse movements in interest rates and other factors, including foreign exchange rates, underlying credit risk and commodity prices. Because the Company has no significant foreign exchange activities and holds no commodities, interest rate risk represents the primary risk factor affecting the Company’s balance sheet and net interest margin. Significant changes in interest rates by the Federal Reserve could result in similar changes in LIBOR interest rates, prime rates, and other benchmark interest rates that could materially affect the estimated fair value of the Company’s investment securities portfolio, interest paid on the Company’s short-term and long-term borrowings, interest earned on the Company’s loan portfolio and interest paid on its deposit accounts. The Company utilizes derivative instruments, primarily interest rate swaps, to help manage its interest rate risk on commercial loans.

 The Company’s Asset and Liability Committee (“ALCO”) has been delegated the responsibility of managing the Company’s interest-sensitive balance sheet accounts to maximize earnings while managing interest rate risk. ALCO, comprised of various members of executive and senior management, is also responsible for establishing policies to monitor and limit the Company’s exposure to interest rate risk and to manage the Company’s liquidity position. ALCO satisfies its responsibilities through quarterly meetings during which product pricing issues, liquidity measures and interest sensitivity positions are monitored.

In order to measure and manage its interest rate risk, the Company uses an asset/liability management simulation software model to periodically update the interest sensitivity position of the Company’s balance sheet. The model is also used to perform analyses that measure the impact on net interest income and capital as a result of various changes in the interest rate environment. Such analyses quantify the effects of various interest rate scenarios on projected net interest income.

The Company’s policy objective is to avoid negative fluctuations in net income or the economic value of equity of more than 15% within a 12-month period, assuming an immediate parallel increase of 300 points or decrease of 200 basis points. The Company measures the long-term risk associated with sustained increases and decreases in rates through analysis of the impact to changes in rates on the economic value of equity.

The following table summarizes the sensitivity of the Company’s net income to various interest rate scenarios. The results of the sensitivity analyses presented below differ from the results used internally by ALCO in that, in the analyses below, interest rates are assumed to have an immediate and sustained parallel shock. The Company recognizes that rates are volatile, but rarely move with immediate and parallel effects. Internally, the Company considers a variety of interest rate scenarios that are deemed to be possible while considering the level of risk it is willing to assume in “worst-case” scenarios such as shown by the following:

Immediate Basis Point Change in Interest Rates	Implied Federal Funds Rate Associated with Change in Interest Rates		Estimated Increase (Decrease) in Net Income Over 12 Months
December 31, 2018
+300	5.50	%	+1.6	%
+200	4.50		+2.6
+100	3.50		+2.8
-50	2.00		-3.1
-100	1.50		-6.9
-200	0.50		-16.3
December 31, 2017
+400	5.50	%	+4.0	%
+300	4.50		+5.9
+200	3.50		+6.2
+100	2.50		+4.7
-50	1.00		-6.0
-100	0.50		-12.3

These estimates are highly dependent upon assumptions made by management, including, but not limited to, assumptions regarding the manner in which interest-bearing demand deposit and savings deposit accounts reprice in different interest rate scenarios, changes in the composition of deposit balances, pricing behavior of competitors, prepayments of loans and deposits

52

under alternative rate environments, and new business volumes and pricing. As a result, there can be no assurance that the estimates above will be achieved in the event that interest rates increase or decrease during 2019 and beyond.  The estimates above do not necessarily imply that the Company will experience increases in net income if market interest rates rise.  The table above indicates how the Company’s net income and the economic value of equity behave relative to an increase or decrease in rates compared to what would otherwise occur if rates remain stable.

Based upon the estimates above, the Company believes that its net income is positively correlated with increasing rates as compared to the level of net income the Company would expect if interest rates remain flat or decrease.

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Item 8.Financial Statements and Supplementary Data

REPORT ON MANAGEMENT’S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of City Holding Company is responsible for the preparation, integrity, and fair presentation of the consolidated financial statements included in this annual report.  The consolidated financial statements of City Holding Company have been prepared in accordance with U.S. generally accepted accounting principles and necessarily include some amounts that are based on the best estimates and judgments of management.

The management of City Holding Company is responsible for establishing and maintaining adequate internal control over financial reporting that is designed to produce reliable financial statements in conformity with U.S. generally accepted accounting principles.  The system of internal control over financial reporting is evaluated for effectiveness by management and tested for reliability through a program of internal audits with actions taken to correct potential deficiencies as they are identified.  Because of inherent limitations in any internal control system, no matter how well designed, misstatements due to error or fraud may occur and not be detected, including the possibility of the circumvention or overriding of controls.  Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation.  Further, because of changes in conditions, internal control effectiveness may vary over time.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2018 based upon the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 Framework). Based on our assessment, management believes that, as of December 31, 2018, the Company's system of internal control over financial reporting is effective based on those criteria.  Ernst & Young LLP, the Company’s independent registered public accounting firm, has issued an attestation report on the effectiveness of internal control over financial reporting. This report appears on page 55.

March 11, 2019

s/ Charles R. Hageboeck	/s/ David L. Bumgarner
Charles R. Hageboeck	David L. Bumgarner
President & Chief Executive Officer	Chief Financial Officer
Principal Executive Officer	Principal Financial Officer

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REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Audit Committee of the Board of Directors and the

Shareholders of City Holding Company and Subsidiaries

Opinion on Internal Control over Financial Reporting

We have audited City Holding Company and subsidiaries’ internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, City Holding Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes of the Company and our report dated March 11, 2019, expressed an unqualified opinion thereon.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report on Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Charleston, West Virginia

March 11, 2019

55

REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Audit Committee of the Board of Directors and the

Shareholders of City Holding Company and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of City Holding Company and subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the "consolidated financial statements").  In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 11, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 1982.

Charleston, West Virginia

March 11, 2019

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FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

CITY HOLDING COMPANY AND SUBSIDIARIES

(in thousands)

	December 31, 2018			December 31, 2017
Assets
Cash and due from banks	$	55,016		$	54,450
Interest-bearing deposits in depository institutions	67,975			28,058
Cash and Cash Equivalents	122,991			82,508
Investment securities available for sale, at fair value	723,254			550,389
Investment securities held-to-maturity, at amortized cost (approximate fair value at December 31, 2018 and 2017 - $60,706 and $65,646, respectively)	60,827			64,449
Other securities	28,810			14,147
Total Investment Securities	812,891			628,985
Gross loans	3,587,608			3,127,410
Allowance for loan losses	(15,966		)	(18,836		)
Net Loans	3,571,642			3,108,574
Bank owned life insurance	113,544			103,440
Premises and equipment, net	78,383			72,682
Accrued interest receivable	12,424			9,223
Deferred tax asset, net	17,338			11,913
Goodwill and other intangible assets, net	122,848			78,595
Other assets	46,951			36,361
Total Assets	$	4,899,012		$	4,132,281
Liabilities
Deposits:
Noninterest-bearing	$	789,119		$	666,639
Interest-bearing:
Demand deposits	899,568			769,245
Savings deposits	934,218			796,275
Time deposits	1,352,654			1,083,475
Total Deposits	3,975,559			3,315,634
Short-term borrowings:
Federal Home Loan Bank advances	40,000			54,000
Securities sold under agreements to repurchase	221,911			198,219
Long-term debt	4,053			16,495
Other liabilities	56,725			45,426
Total Liabilities	4,298,248			3,629,774
Shareholders’ 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; 19,047,548 shares issued at December 31, 2018 and 2017, less 2,492,403 and 3,429,519 shares in treasury, respectively	47,619			47,619
Capital surplus	169,555			140,960
Retained earnings	485,967			444,481
Treasury stock	(87,895		)	(124,909		)
Accumulated other comprehensive loss:
Unrealized loss on securities available-for-sale	(8,611		)	(611		)
Underfunded pension liability	(5,871		)	(5,033		)
Total Accumulated Other Comprehensive Loss	(14,482		)	(5,644		)
Total Shareholders’ Equity	600,764			502,507
Total Liabilities and Shareholders’ Equity	$	4,899,012		$	4,132,281

See notes to consolidated financial statements.

57

CONSOLIDATED STATEMENTS OF INCOME

CITY HOLDING COMPANY AND SUBSIDIARIES

(in thousands, except earnings per share data)

	Year Ended December 31
	2018			2017		2016
Interest Income
Interest and fees on loans	$	142,055		$	125,752	$	118,138
Interest on investment securities:
Taxable	17,337			14,387		12,392
Tax-exempt	2,843			2,706		1,622
Interest on deposits in depository institutions	1,666			85		—
Total Interest Income	163,901			142,930		132,152
Interest Expense
Interest on deposits	21,397			14,826		12,052
Interest on short-term borrowings	3,415			1,214		472
Interest on long-term debt	880			765		683
Total Interest Expense	25,692			16,805		13,207
Net Interest Income	138,209			126,125		118,945
(Recovery of) provision for loan losses	(2,310		)	3,006		4,395
Net Interest Income After (Recovery of) Provision for Loan Losses	140,519			123,119		114,550
Non-interest Income
Gains on sale of investment securities, net	—			4,476		3,513
Unrealized gains (losses) recognized on securities still held	(90		)	—		—
Service charges	29,704			28,574		26,703
Bankcard revenue	18,369			17,120		16,515
Trust and investment management fee income	6,529			6,269		5,573
Bank owned  life insurance	3,090			4,212		3,326
Other income	2,962			2,956		3,195
Total Non-interest Income	60,564			63,607		58,825
Non-interest Expense
Salaries and employee benefits	54,385			51,057		50,883
Occupancy related expenses	9,323			9,557		10,119
Equipment and software related expenses	7,729			7,732		7,211
FDIC insurance expense	1,251			1,348		1,622
Advertising	2,974			2,914		2,606
Bankcard expenses	4,503			3,924		4,458
Postage, delivery, and statement mailings	2,157			2,094		2,080
Office supplies	1,319			1,437		1,364
Legal and professional fees	1,847			1,956		1,882
Telecommunications	1,750			1,988		1,813
Repossessed asset losses, net of expenses	845			735		890
Merger related costs	13,257			—		—
Other expenses	11,726			11,239		11,236
Total Non-interest Expense	113,066			95,981		96,164
Income Before Income Taxes	88,017			90,745		77,211

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Income tax expense	18,015		36,435		25,083
Net Income Available to Common Shareholders	$	70,002	$	54,310	$	52,128
Average shares outstanding, basic	15,421		15,412		14,900
Effect of dilutive securities	18		24		13
Average shares outstanding, diluted	15,439		15,436		14,913
Basic earnings per common share	$	4.50	$	3.49	$	3.46
Diluted earnings per common share	$	4.49	$	3.48	$	3.45
Dividends declared per common share	$	1.98	$	1.78	$	1.72

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CITY HOLDING COMPANY AND SUBSIDIARIES

(in thousands)

	Year Ended December 31
	2018			2017			2016
Net income available to common shareholders	$	70,002		$	54,310		$	52,128
Available-for-Sale Securities
Unrealized (loss) gain on available-for-sale securities arising during period	(7,054		)	7,396			(1,685		)
Reclassification adjustment for net losses (gains)	90			(4,476		)	(3,513		)
Other comprehensive (loss) income related to available-for-sale securities	(6,964		)	2,920			(5,198		)
Defined Benefit Pension Plan
Amortization of actuarial net gains	890			849			847
Recognition of unrealized losses	(1,982		)	(11		)	(690		)
Change in underfunded pension liability	(1,092		)	838			157
Other comprehensive (loss) income before income taxes	(8,056		)	3,758			(5,041		)
Tax effect	1,875			(1,391		)	1,861
Other comprehensive (loss) income, net of tax	(6,181		)	2,367			(3,180		)
Comprehensive income, net of tax	$	63,821		$	56,677		$	48,948

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

CITY HOLDING COMPANY AND SUBSIDIARIES

(dollars and shares in thousands)

	Common Stock		Capital Surplus			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balances at December 31, 2015	$	46,249	$	106,269		$	390,690		$	(120,104	)	$	(3,832	)	$	419,272
Net income	—		—			52,128			—			—			52,128
Other comprehensive income, net of tax	—		—			—			—			(3,180		)	(3,180		)
Cash dividends declared ($1.72 per share)	—		—			(25,801		)	—			—			(25,801		)
Stock-based compensation expense, net	—		1,979			—			—			—			1,979
Restricted awards granted	—		(1,706		)	—			1,745			—			39
Issuance of 108 shares of common stock	269		6,595			—			—			—			6,864
Exercise of 33 stock options	—		(264		)	—			1,419			—			1,155
Purchase of 231 treasury shares	—		—			—			(10,018		)	—			(10,018		)
Balances at December 31, 2016	$	46,518	$	112,873		$	417,017		$	(126,958	)	$	(7,012	)	$	442,438

Balances at December 31, 2016	$	46,518	$	112,873		$	417,017		$	(126,958	)	$	(7,012	)	$	442,438
Net income	—		—			54,310			—			—			54,310
Other comprehensive income, net of tax	—		—			—			—			2,367			2,367
Adoption of ASU No. 2018-02	—		—			999			—			(999		)	—
Cash dividends declared ($1.78 per share)	—		—			(27,845		)	—			—			(27,845		)
Stock-based compensation expense, net	—		2,097			—			—			—			2,097
Restricted awards granted	—		(1,351		)	—			1,351			—			—
Issuance of 441 shares of common stock	1,101		27,307			—			—			—			28,408
Exercise of 17 stock options	—		34			—			698			—			732
Balances at December 31, 2017	$	47,619	$	140,960		$	444,481		$	(124,909	)	$	(5,644	)	$	502,507

Balances at December 31, 2017	$	47,619	$	140,960		$	444,481		$	(124,909	)	$	(5,644	)	$	502,507
Net income	—		—			70,002			—			—			70,002
Other comprehensive income, net of tax	—		—			—			—			(6,181		)	(6,181		)
Adoption of ASU No. 2016-01	—		—			2,657			—			(2,657		)	—
Cash dividends declared ($1.98 per share)	—		—			(31,173		)	—			—			(31,173		)
Stock-based compensation expense, net	—		2,151			—			—			—			2,151
Restricted awards granted	—		(1,585		)	—			1,585			—			—
Exercise of 30 stock options	—		(736		)	—			1,900			—			1,164
Purchase of 290 treasury shares	—		—			—			(20,271		)	—			(20,271		)
Acquisition of Poage (1,142 shares)	—		28,765			—			53,800			—			82,565
Balances at December 31, 2018	$	47,619	$	169,555		$	485,967		$	(87,895	)	$	(14,482	)	$	600,764

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

CITY HOLDING COMPANY AND SUBSIDIARIES

(in thousands)

	Year Ended December 31
	2018			2017			2016
Net income available to common shareholders	$	70,002		$	54,310		$	52,128
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and accretion, net	1,281			1,005			838
(Recovery of) provision for loan losses	(2,310		)	3,006			4,395
Depreciation of premises and equipment	5,087			5,884			6,235
Deferred income tax (benefit) expense	(1,244		)	14,909			3,817
Net periodic employee benefit cost	471			298			515
Pension contributions	(1,509		)	—			—
Unrealized and realized investment securities losses (gains)	90			(4,476		)	(3,513		)
Stock-based compensation expense	2,151			2,097			2,018
Excess tax benefit from stock-compensation expense	(506		)	(558		)	—
Increase in value of bank-owned life insurance	(3,090		)	(2,708		)	(3,071		)
Proceeds from life insurance	425			1,717			258
Originations of loans held for sale	(15,196		)	(16,451		)	(17,981		)
Proceeds from loans held for sale	13,993			19,290			16,572
Gain on sale of loans	(351		)	(516		)	(374		)
Asset write down	491			—			444
Change in accrued interest receivable	(1,500		)	(815		)	(976		)
Change in other assets	(836		)	1,277			(1,556		)
Change in other liabilities	5,624			(426		)	5,581
Net Cash Provided by Operating Activities	73,073			77,843			65,330
Proceeds from sales of securities available-for-sale	—			5,776			30,850
Proceeds from maturities and calls of securities available-for-sale	88,112			86,276			78,720
Proceeds from maturities and calls of securities held-to-maturity	8,439			10,580			13,479
Purchases of securities available-for-sale	(166,226		)	(187,031		)	(196,150		)
Purchases of securities held-to-maturity	(4,925		)	—			—
Net increase in loans	(95,284		)	(85,489		)	(183,511		)
Purchases of premises and equipment	(10,192		)	(6,574		)	(5,517		)
Disposals of premises and equipment	3,884			3,057			836
Acquisition of Farmers Deposit Bancorp, Inc., net of cash acquired of $4,209	(20,691		)	—			—
Acquisition of Poage Bankshares, Inc., net of cash acquired of $34,288	32,917			—			—
Net Cash Used in Investing Activities	(163,966		)	(173,405		)	(261,293		)
Net increase (decrease) in noninterest-bearing deposits	32,097			(5,647		)	200,984
Net increase (decrease) in interest-bearing deposits	156,302			89,644			(52,714		)
Net increase in short-term borrowings	7,667			3,914			93,436
Repayment of long-term debt	(16,495		)	—			—
Proceeds from sale of capital securities	495			—			—
Issuance of common stock	—			28,408			6,864
Purchases of treasury stock	(20,271		)	—			(10,018		)
Proceeds from exercise of stock options	1,164			732			1,155
Dividends paid	(29,583		)	(27,120		)	(25,718		)
Net Cash Provided by Financing Activities	131,376			89,931			213,989
Increase (Decrease) in Cash and Cash Equivalents	40,483			(5,631		)	18,026
Cash and cash equivalents at beginning of period	82,508			88,139			70,113
Cash and Cash Equivalents at End of Period	$	122,991		$	82,508		$	88,139

See notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE ONE – SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Summary of Significant Accounting and Reporting Policies: The accounting and reporting policies of City Holding Company and its subsidiaries (the “Company”) conform with U. S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. Actual results could differ from management’s estimates. The following is a summary of the more significant policies.

Principles of Consolidation: The consolidated financial statements include the accounts of City Holding Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity in conformity with U. S. generally accepted accounting principles. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. The Company consolidates voting interest entities in which it has all, or at least a majority of, the voting interest. As defined in applicable accounting standards, variable interest entities (VIEs) are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE. The Company’s wholly owned subsidiaries, City Holding Capital Trust III and Town Square Statutory Trust I, are VIEs for which the Company is not the primary beneficiary. Accordingly, the accounts of these entities are not included in the Company’s consolidated financial statements.

       Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. Such reclassifications had no impact on total shareholders’ equity or net income for any period. The Company adopted Accounting Standards Update ("ASU") No. 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" in 2017.This amendment permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act ("TCJA") to retained earnings. The reduction in the corporate tax rate from 35% to 21% resulted in $1.0 million reclassified from other comprehensive income to retained earnings on the consolidated balance sheet at December 31, 2017. The Company also adopted ASU No. 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" in 2018. This standard makes several modifications to Subtopic 825-10 including the elimination of the available-for-sale classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. During the year ended December 31, 2018, a $0.1 million loss was recognized in non-interest income in the consolidated statements of income as a result of the change in the fair value of equity and perpetual preferred securities due to the adoption of ASU 2016-01.  Additionally, $2.7 million, net of deferred taxes, was reclassified from other comprehensive income to retained earnings on the consolidated balance sheets to recognize the prior period unrealized gain position of these securities.

Description of Principal Markets and Services: The Company is a registered financial holding company under the Bank Holding Company Act headquartered in Charleston, West Virginia, and conducts its principal activities through its wholly-owned subsidiary, City National Bank of West Virginia (“City National”). City National is a retail and consumer-oriented community bank with 100 banking offices in West Virginia, Kentucky, Virginia and southeastern Ohio. City National provides credit, deposit, and trust and investment management services to its customers. In addition to its branch network, City National's delivery channels include automated-teller-machines ("ATMs"), interactive-teller-machines ("ITMs"), mobile banking, debit cards, interactive voice response systems and Internet technology. The Company conducts its business activities through one reportable business segment - community banking.

Cash and Due from Banks: The Company considers cash, due from banks, and interest-bearing deposits in depository institutions as cash and cash equivalents. City National is required to maintain an average reserve balance with the Federal Reserve Bank of Richmond to compensate for services provided by the Federal Reserve and to meet statutory required reserves for demand deposits.

Securities: Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Company has the ability at the time of purchase to hold debt securities to maturity, they are classified as

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investment securities held-to-maturity and are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts. Debt securities which the Company may not hold to maturity are classified as investment securities available-for-sale along with the Company’s investment in equity securities. Securities available-for-sale are carried at fair value, with the unrealized gains and losses, net of tax, reported in comprehensive income. Securities classified as available-for-sale include securities that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk, and other factors.

       The Company utilizes a third party pricing service provider to value its investment portfolio.  Annually, the Company obtains an independent auditor’s report from its third party pricing service provider regarding its controls over valuation of investment securities.  Although an unqualified opinion regarding the design and operating effectiveness of controls was issued, the report did contain caveats and disclaimers regarding the pricing information, such as the Company should review market values for reasonableness.  On a quarterly basis, the Company reprices its debt securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values.

       Also, on a quarterly basis, the Company performs a review of investment securities to determine if any unrealized losses are indicative that investment securities are other than temporarily impaired.  Management considers the following, among other things, in its determination of the nature of the unrealized losses: (i) the length of time and the extent to which the fair value has been less than cost; (ii) the financial condition, capital strength, and near–term (within 12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; and (v) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  The Company continues to actively monitor the market value of these investments along with the financial strength of the issuers behind these securities, as well as its entire investment portfolio.

The specific identification method is used to determine the cost basis of securities sold. Certain investment securities that do not have readily determinable fair values and for which the Company does not exercise significant influence are carried at cost and classified as other investment securities on the Consolidated Balance Sheets.  These cost-method investments are reviewed for impairment at least annually or sooner if events or changes in circumstances indicate the carrying value may not be recoverable.

       Loans: Loans, excluding previously securitized loans, which are discussed separately below, are reported at the principal amount outstanding, net of unearned income.  Portfolio loans include those for which management has the intent and the Company has the ability to hold for the foreseeable future, or until maturity or payoff.  The foreseeable future is based upon management’s judgment of current business strategies and market conditions, the type of loan, asset/liability management, and liquidity.

       Interest income on loans is accrued and credited to operations based upon the principal amount outstanding, using methods that generally result in level rates of return. Loan origination fees, and certain direct costs, are deferred and amortized as an adjustment to the yield over the term of the loan. The accrual of interest income generally is discontinued when a loan becomes 90 days past due as to principal or interest for all loan types.  However, any loan may be placed on non-accrual status if the Company receives information that indicates that it is probable a borrower will be unable to meet the contractual terms of their respective loan agreement. Other indicators considered for placing a loan on non-accrual status include the borrower’s involvement in bankruptcies, foreclosures, repossessions, litigation and any other situation resulting in doubt as to whether full collection of contractual principal and interest is attainable. When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and interest accrued in prior years is charged to the allowance for loan losses. Management may elect to continue the accrual of interest when the estimated net realizable value of collateral exceeds the principal balance and related accrued interest, and the loan is in process of collection.

Generally for all loan classes, payments during the period the loan is non-performing are recorded on a cash basis. Payments received on nonperforming loans are typically applied directly against the outstanding principal balance until the loan is fully repaid. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Generally, all loan types are considered past due when the contractual terms of a loan are not met and the borrower is 30 days or more past due on a payment.  Furthermore, residential and home equity loans are generally subject to charge-off when the loan becomes 120 days past due, depending on the estimated fair value of the collateral less cost to dispose, versus the outstanding loan balance. Commercial loans are generally charged off when the loan becomes 120 days past due and consumer loans are generally charged off when the loan becomes 120 days past due.

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Acquired Loans: In determining the estimated fair value of the acquired loans, management considered several factors, such as estimated future credit losses, estimated prepayments, remaining lives of the acquired loans, estimated value of the underlying collateral and the present value of the cash flows expected to be received.  For smaller loans not specifically reviewed, management grouped the loans into their respective homogeneous loan pool and applied a loss estimate accordingly.

Acquired loans are accounted for using one of the two following accounting standards:

(1) ASC Topic 310-20 is used to value loans that do not have evidence of credit quality deterioration.  For these loans, the difference between the fair value of the loan and the amortized cost of the loan is amortized or accreted into income using the interest method.

(2) ASC Topic 310-30 is used to value loans that have evidence of credit quality deterioration.  For these loans, the expected cash flows that exceed the fair value of the loan represent the accretable yield, which is recognized as interest income on a level-yield basis over the expected cash flow periods of the loans.  The non-accretable difference represents the difference between the contractually required principal and interest payments and the cash flows expected to be collected based upon management’s estimation.  Subsequent decreases in the expected cash flows will require the Company to evaluate the need for additions to the Company’s allowance for loan losses.  Subsequent increases in the expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges with a corresponding adjustment to the accretable yield, which will result in the recognition of additional interest income over the remaining lives of the loans. 

Allowance for Loan Losses: The allowance for loan losses is maintained at a level that represents management’s best estimate of probable losses in the loan portfolio. Management’s determination of the appropriateness of the allowance for loan losses is based upon an evaluation of individual credits in the loan portfolio, historical loan loss experience, current economic conditions, and other relevant factors. This determination is inherently subjective, as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. These evaluations are conducted at least quarterly and more frequently if deemed necessary.  The allowance for loan losses related to loans considered to be impaired is generally evaluated based on the discounted cash flows using the impaired loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. Loan losses are charged against the allowance and recoveries of amounts previously charged off are credited to the allowance. A provision for loan losses is charged to operations based on management’s periodic evaluation of the appropriateness of the allowance after considering factors noted above, among others.

In evaluating the appropriateness of its allowance for loan losses, the Company stratifies the loan portfolio into six major groupings, including commercial real estate, commercial and industrial, residential real estate, home equity, consumer and DDA overdrafts. Historical loss experience, as adjusted, is applied to the then outstanding balance of loans in each classification to estimate probable losses inherent in each segment of the portfolio. Historical loss experience is adjusted using a systematic weighted probability of potential risk factors that could result in actual losses deviating from prior loss experience. Risk factors considered by the Company in completing this analysis include: (1) unemployment and economic trends in the Company’s markets, (2) concentrations of credit, if any, among any industries, (3) trends in loan growth, loan mix, delinquencies, losses or credit impairment, (4) adherence to lending policies and others. Each risk factor is designated as low, moderate/increasing, or high based on the Company’s assessment of the risk of loss associated with each factor. Each risk factor is then weighted to consider inherent risk in the portfolio.

Additionally, all commercial loans within the portfolio are subject to internal risk grading. Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process. Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of probable loss.

Bank Owned Life Insurance: The Company has purchased life insurance on certain executive officers and employees. The Company receives the cash surrender value of each policy upon its termination or benefits are payable upon the death of the insured. These policies are recorded on the Consolidated Balance Sheets at their net cash surrender value. Changes in the net cash surrender value are recognized in Bank Owned Life Insurance in the Consolidated Statements of Income.

Premises and Equipment: Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily by the straight-line method over the estimated useful lives of the assets. Depreciation of leasehold improvements is computed using the straight-line method over the lesser of the term of the respective lease or the estimated useful life of the respective asset. Maintenance and repairs are charged to expense as incurred, while improvements that extend the useful life of premises and equipment are capitalized and depreciated over the estimated remaining life of the asset.

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Other Real Estate Owned:  Other real estate owned (“OREO”) is comprised principally of commercial and residential real estate properties obtained in partial or total satisfaction of loan obligations.  OREO acquired in settlement of indebtedness is included in Other Assets at the lower of estimated fair value of the asset, less estimated selling costs or the carrying amount of the loan.  Changes to the value subsequent to transfer are recorded in non-interest expense, along with direct operating expenses.  Gains or losses not previously recognized from sales of OREO are recognized in non-interest expense on the date of the sale.  As of December 31, 2018 and 2017, the amount of OREO included in Other Assets was $4.6 million and $3.6 million, respectively.

Goodwill and OtherIntangible Assets: Goodwill is the excess of the cost of an acquisition over the fair value of tangible and intangible assets acquired.  Goodwill is not amortized.  Intangible assets represent purchased assets that also lack physical substance, but can be separately distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability.  Intangible assets with determinable useful lives, such as core deposits, are amortized over their estimated useful lives.

The Company performs an annual review for impairment in the recorded value of goodwill and indefinite lived intangible assets. Goodwill is tested for impairment between the annual tests if an event occurs or circumstances change that more than likely reduce the fair value of a reporting unit below its carrying value. An indefinite-lived intangible asset is tested for impairment between the annual tests if an event occurs or circumstances change indicating that the asset might be impaired.

Securities Sold Under Agreements to Repurchase:  Securities sold under agreements to repurchase are accounted for as collateralized financing transactions and are recorded at the amounts at which the securities were sold plus accrued interest.  Securities sold primarily consists of U.S. government, federal agency, and municipal securities pledged as collateral under these financing arrangements and cannot be repledged or sold, unless replaced by the secured party.

Derivative Financial Instruments: Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is determined by whether it has been designated and qualifies as part of a hedging relationship, and further, by the type of hedging relationship. The Company primarily utilizes derivatives with commercial banking customers to facilitate their interest rate management strategies and the changes in fair value of those instruments are recognized in other non-interest income during the period of the change.

Trust Assets:  Assets held in a fiduciary or agency capacity for customers are not included in the accompanying financial statements since such items are not assets of the Company.

Income Taxes: The consolidated provision for income taxes is based upon reported income and expense. Deferred income taxes are provided for temporary differences between financial reporting and tax bases of assets and liabilities, computed using enacted tax rates. The income tax effects related to settlements of share-based compensation awards are reported in earnings as an increase (or decrease) to income tax expense. The Company files a consolidated income tax return. The respective subsidiaries generally provide for income taxes on a separate return basis and remit amounts determined to be currently payable to the Parent Company.

The Company and its subsidiaries are subject to examinations and challenges from federal and state taxing authorities regarding positions taken in returns.  Uncertain tax positions are initially recognized in the consolidated financial statements when it is more likely than not the position will be sustained upon examination.  These positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the taxing authority and assuming full knowledge of the position and all relevant facts by the taxing authority.

The Company invests in certain limited partnerships that operate qualified low-income housing tax credit developments.  These investments are considered variable interest entities for which the Company is not the primary beneficiary.  The tax credits are reflected in the Consolidated Statements of Income as a reduction in income tax expense.  The unamortized amount of the investments is recorded within Other Assets within the Consolidated Balance Sheets.  The Company’s investments in affordable housing limited partnerships were $5.4 million and $1.3 million at December 31, 2018 and 2017, respectively.

Advertising Costs: Advertising costs are expensed as incurred.

Stock-Based Compensation: Compensation expense related to stock options and restricted stock awards issued to employees is based upon the fair value of the award at the date of grant.  The fair value of stock options is estimated utilizing a Black Scholes pricing model, while the fair value of restricted stock awards is based upon the stock price at the date of

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grant.  Compensation expense is recognized on a straight line basis over the vesting period for options and the respective period for stock awards. Forfeitures are recognized as they occur, rather than estimated over the life of the award.

Basic and Diluted Earnings per Common Share: Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding, excluding participating securities. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares outstanding, excluding participating securities, increased by the number of shares of common stock which would be issued assuming the exercise of stock options and other common stock equivalents.

Statements of Cash Flows: Cash paid for interest, including interest paid on long-term debt and trust preferred securities, was $24.8 million, $16.4 million, and $13.1 million in 2018, 2017, and 2016, respectively. During 2018, 2017 and 2016, the Company paid $20.8 million, $22.6 million, and $16.3 million, respectively, for income taxes.

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NOTE TWO – RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted:

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." This standard clarifies the principles for recognizing revenue and developed a common revenue standard. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract or contracts with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The FASB also issued several amendments to the standard. In April 2016, the FASB issued ASU No. 2016-10 which clarifies identifying performance obligations and the licensing implementation guidance aspects of Topic 606 while retaining the related principles for those areas. In September 2017, the FASB issued ASU No. 2017-13 which reflects the SEC staff announcement that it would not object when certain public business entities (PBEs) elect to use the non-PBE effective dates solely to adopt the new standards on revenue (ASC 606) and leases (ASC 842). The Company adopted these standards effective January 1, 2018 using the modified retrospective approach, but did not record a cumulative effect adjustment to opening retained earnings given the immaterial impact. As part of the adoption, the Company evaluated the terms of the contracts that supported each of the revenue streams that were within the scope of ASU 2014-09 and determined that the adoption did not significantly change the way the Company recognizes revenue from each stream. See Note Twenty Four.

Others

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." This amendment clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU became effective for the Company on January 1, 2018. The adoption of ASU No. 2017-01 did not have a material impact on the Company's financial statements.

In March 2017, the FASB issued ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." This amendment requires that an employer disaggregate the service cost component from the other components of net benefit cost and also provides explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement. This ASU became effective for the Company on January 1, 2018. The adoption of ASU No. 2017-07 did not have a material impact on the Company's financial statements.

In May 2017, the FASB issued ASU No. 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting." This amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASU No. 2016-09. This ASU became effective for the Company on January 1, 2018. The adoption of ASU No. 2017-09 did not have a material impact on the Company’s financial statements.

Pending Adoption:

Leases

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standardrequires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing requirements for leases that were historically classified as operating leases under previous generally accepted accounting principals. In July 2018, the FASB issued ASU No. 2018-10, "Codification Improvements to Topic 842, Leases." This amendment provides improvements to specific sections of previously issued lease guidance, including a package of three practical expedients regarding the reassessment of prior period leases. In July 2018, the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements." This amendment offers a practical expedient that allows the Company to recognize the prior period balance sheet impacts in the period of adoption and will not require adjustments to the prior period financial statements when adopting ASU No. 2016-02 described above. In December 2018, the FASB issued ASU No. 2018-20, “Leases (Topic 842): Narrow-Scope Improvements for Lessors.” This ASU clarifies sales taxes and other taxes collected from lessees, certain lessor costs, and recognition of variable payments for contracts with lease and nonlease components. These ASUs became effective for the

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Company for interim and annual periods on January 1, 2019. The Company's evaluation indicates that the adoption of these ASUs had an immaterial impact on the Company's consolidated balance sheet.

CECL

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The new current expected credit losses model ("CECL") will apply to the allowance for loan losses, available-for-sale and held-to-maturity debt securities, purchased financial assets with credit deterioration and certain off-balance sheet credit exposures. In November 2018, the FASB issued ASU No. 2018-19, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses." This amendment clarifies the scope of the guidance in ASU No. 2016-13. These ASUs will become effective for the Company for interim and annual periods on January 1, 2020. Management is currently evaluating the potential impact of these ASUs on the Company's financial statements.

Others

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." This amendment simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This ASU will become effective for the Company on January 1, 2020. The adoption of ASU No. 2017-04 is not expected to have a material impact on the Company's financial statements.

In March 2017, the FASB issued ASU No. 2017-08, "Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities." The amendments in this update shorten the amortization period for certain callable debt securities held at a premium and require the premium to be amortized to the earliest call date. This ASU became effective for the Company on January 1, 2019. The adoption of ASU No. 2017-08 is not expected to have a material impact on the Company's financial statements.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." This amendment expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU became effective for the Company on January 1, 2019. The adoption of ASU No. 2017-12 is not expected to have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement." This amendment removes, modifies, and clarifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU will become effective for the Company on January 1, 2020. The adoption of ASU No. 2018-13 is not expected to have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans." This amendment removes, modifies, and clarifies certain disclosure requirements for defined benefit plans and other post-employment benefit plans. This ASU will become effective for the Company on January 1, 2021. The adoption of ASU No. 2018-14 is not expected to have a material impact on the Company's financial statements.

In October 2018, the FASB issued ASU No. 2018-17, "Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities." This amendment simplifies the analysis of fees paid to decision makers or service providers in determining variable interest entities. This ASU will become effective for the Company on January 1, 2020. The adoption of ASU No. 2018-17 is not expected to have a material impact on the Company's financial statements.

In October 2018, the FASB issued ASU No. 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes." This amendment permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the UST, the LIBOR swap rate, the OIS rate based on the Federal Funds Effective Rate, and the SIFMA Municipal Swap Rate. This ASU became effective for the Company on January 1, 2019. The adoption of ASU No. 2017-12 is not expected to have a material impact on the Company's financial statements.

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NOTE THREE – ACQUISITIONS AND PRELIMINARY PURCHASE PRICE ALLOCATION

On December 7, 2018, the Company acquired 100% of the outstanding common stock of Poage Bankshares, Inc., the parent company of Town Square Bank (collectively, "Poage"). The acquisition of Poage was structured as a stock transaction in which the Company issued approximately 1.1 million shares, valued at approximately $82.6 million, or $24.22 per share of Poage common stock.

On December 7, 2018, the Company acquired 100% of the outstanding common stock of Farmers Deposit Bancorp, Inc., the parent company of Farmers Deposit Bank (collectively, "Farmers Deposit"). The acquisition of Farmers Deposit was structured as a cash transaction valued at $24.9 million, or $1,174.14 per share of Farmers Deposit common stock.

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The Company accounted for both acquisitions using the acquisition method pursuant to "Topic 805 Business Combinations" of the FASB Accounting Standards Codification. The acquisition method requires the acquirer to recognize the assets acquired and the liabilities assumed at their fair values as of the acquisition date. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands):

	Farmers
	Deposit			Poage		Total
Consideration:
Cash	$	24,900		$	16	$	24,916
Common stock	—			82,565		82,565
Stock option buyout	—			1,355		1,355
	24,900			83,936		108,836
Identifiable assets:
Cash and cash equivalents	4,209			34,288		38,497
Investment securities	46,235			72,321		118,556
Loans	58,477			304,023		362,500
Bank owned life insurance	—			7,439		7,439
Premises and equipment	768			4,547		5,315
Deferred tax assets, net	(188		)	2,300		2,112
Other assets	2,302			8,799		11,101
Total identifiable assets	111,803			433,717		545,520
Identifiable liabilities:
Deposits	92,241			379,285		471,526
Short-term borrowings	2,025			—		2,025
Long-term debt	—			4,053		4,053
Other liabilities	709			3,130		3,839
Total identifiable liabilities	94,975			386,468		481,443
Net identifiable assets	16,828			47,249		64,077
Goodwill	4,738			28,633		33,371
Core deposit intangible	3,334			8,054		11,388
	$	24,900		$	83,936	$	108,836

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Acquired Loans

The following table presents information regarding the purchased credit-impaired and noncredit-impaired loans acquired in conjunction with both acquisitions (in thousands):

	Farmers
	Deposit			Poage			Total
Acquired Credit-Impaired
Contractually required principal and interest	$	—		$	25,315		$	25,315
Contractual cash flows not expected to be collected (non-accretable difference)	—			(13,977		)	(13,977		)
Expected cash flows	—			11,338			11,338
Interest component of expected cash flows (accretable difference)	—			(2,375		)	(2,375		)
Estimated fair value of purchased credit impaired loans acquired	$	—		$	8,963		$	8,963
Acquired NonCredit-Impaired
Outstanding balance	$	58,949		$	295,425		$	354,374
Less: fair value adjustment	(472		)	(365		)	(837		)
Fair value of acquired noncredit-impaired loans	$	58,477		$	295,060		$	353,537

Acquired Deposits

The fair values of non-time deposits approximated their carrying value at the acquisition date. For time deposits, the fair values were estimated based on discounted cash flows, using interest rates that are currently being offered compared to the contractual interest rates. Based on this analysis, management recorded a premium on time deposits acquired of $0.1 million and $1.7 million for the Farmers Deposit and Poage acquisitions, respectively, each of which is being amortized over 5 years.

Core Deposit Intangible

The Company believes that the customer relationships with the deposits acquired have an intangible value. In connection with the acquisitions, the Company recorded a core deposit intangible asset of $3.3 million and $8.1 million for Farmers Deposit and Poage, respectively. Each of the core deposit intangible assets represent the value that the acquiree had with their deposit customers. The fair value was estimated based on a discounted cash flow methodology that considered type of deposit, deposit retention and the cost of the deposit base. The core deposit intangibles are being amortized over 10 years.

Goodwill

Under GAAP, management has up to twelve months following the date of the acquisition to finalize the fair value of acquired assets and liabilities. The measurement period ends as soon as the Company receives information it was seeking about facts and circumstances that existed as of the acquisition date or learns more information is not obtainable. Any subsequent adjustments to the fair value of the acquired assets and liabilities, intangible assets or other purchase accounting adjustments will result in adjustments to the goodwill recorded. Given the form of the respective transactions, the $4.7 million goodwill preliminarily recorded in conjunction with the Farmers Deposit acquisition is expected to be deductible for tax purposes, while the $28.6 million goodwill preliminarily recorded in conjunction with the Poage acquisition is not expected to be deductible for tax purposes.

Merger Related Costs

During the year ended December 31, 2018, the Company incurred $13.3 million of merger-related costs in connection with the acquisitions of Farmers Deposit and Poage. These costs were primarily for severance ($3.2 million), professional fees ($3.7 million) and data processing costs ($5.2 million).

Also included in merger related costs were asset write-down charges of $0.5 million, pertaining to the two existing City National branches that will be merged into existing former Poage branches during 2019.

NOTE FOUR – RESTRICTIONS ON CASH AND DUE FROM BANKS

City National is required to maintain an average reserve balance with the Federal Reserve Bank of Richmond to compensate for services provided by the Federal Reserve and to meet statutory required reserves for demand deposits. The average amounts of the reserve balances for the years ended December 31, 2018 and 2017 were approximately $40.6 million and $37.8 million, respectively.

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NOTE FIVE – INVESTMENTS

The aggregate carrying and approximate market values of investment securities follow (in thousands).  Fair values are based on quoted market prices, where available.  If quoted market prices are not available, fair values are based on quoted market prices of comparable financial instruments.

	December 31, 2018								December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	5,713	$	20	$	—	$	5,733	$	2	$	—	$	—	$	2
Obligations of states and
political subdivisions	128,089		1,033		1,052		128,070		94,552		2,051		407		96,196
Mortgage-backed securities:
U.S. government agencies	561,799		1,950		12,991		550,758		425,559		1,093		7,305		419,347
Private label	11,948		95		—		12,043		649		3		—		652
Trust preferred securities	4,774		25		—		4,799		4,764		26		54		4,736
Corporate securities	16,795		30		167		16,658		21,916		475		123		22,268
Total Debt Securities	729,118		3,153		14,210		718,061		547,442		3,648		7,889		543,201
Marketable equity  securities	—		—		—		—		2,136		3,563		—		5,699
Certificates of deposit held for investment	3,735		—		—		3,735		—		—		—		—
Investment funds	1,525		—		67		1,458		1,525		—		36		1,489
Total Securities
Available-for-Sale	$	734,378	$	3,153	$	14,277	$	723,254	$	551,103	$	7,211	$	7,925	$	550,389

Securities held-to-maturity:
U.S. government agencies	$	56,827	$	173	$	294	$	56,706	$	60,449	$	1,222	$	25	$	61,646
Trust preferred securities	4,000		—		—		4,000		4,000		—		—		4,000
Total Securities
Held-to-Maturity	$	60,827	$	173	$	294	$	60,706	$	64,449	$	1,222	$	25	$	65,646
Other investment securities:
Marketable equity  securities	$	10,313	$	—	$	—	$	10,313	$	—	$	—	$	—	$	—
Non-marketable equity securities	$	18,497	$	—	$	—	$	18,497	$	14,147	$	—	$	—	$	14,147
Total Other Investment
Securities	$	28,810	$	—	$	—	$	28,810	$	14,147	$	—	$	—	$	14,147

The Company's mortgage-backed U.S. government agency securities consist of both residential and commercial securities, all of which are guaranteed by Fannie Mae ("FNMA"), Freddie Mac ("FHLMC"), or Ginnie Mae ("GNMA"). Marketable equity securities consist of investments made by the Company in equity positions of various community banks. Included within this portfolio are ownership positions in the following community bank holding companies: First National Corporation (FXNC) (4%) and Eagle Financial Services, Inc. (EFSI) (1.5%). Securities with limited marketability, such as stock in the Federal Reserve Bank ("FRB") or the Federal Home Loan Bank ("FHLB"), are carried at cost and are reported as non-marketable equity securities in the table above. The Company's certificates of deposit consist of domestically issued certificates of deposits in denominations of less than the FDIC insurance limit of $250,000.

At December 31, 2018 and 2017, there were no securities of any non-governmental issuer whose aggregate carrying value or estimated fair value exceeded 10% of shareholders' equity.

Certain investment securities owned by the Company were in an unrealized loss position (i.e., amortized cost basis exceeded the estimated fair value of the securities) as of December 31, 2018 and 2017.  The following table shows the gross

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unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	December 31, 2018
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	11,837	$	272	$	22,068	$	780	$	33,905	$	1,052
Mortgage-backed securities:
U.S. Government agencies	84,975		1,593		282,560		11,398		367,535		12,991
Corporate securities	12,995		167		—		—		12,995		167
Investment funds	1,500		67		—		—		1,500		67
Total available-for-sale	$	111,307	$	2,099	$	304,628	$	12,178	$	415,935	$	14,277
Securities held-to-maturity:
Mortgage-backed securities:
U.S. Government agencies	$	28,274	$	126	$	5,960	$	168	$	34,234	$	294
Total held-to-maturity	$	28,274	$	126	$	5,960	$	168	$	34,234	$	294

	December 31, 2017
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	4,913	$	28	$	19,440	$	379	$	24,353	$	407
Mortgage-backed securities:
U.S. Government agencies	172,807		1,887		140,226		5,418		313,033		7,305
Trust preferred securities	4,475		54		—		—		4,475		54
Corporate securities	3,357		49		2,350		74		5,707		123
Investment funds	1,500		36		—		—		1,500		36
Total available-for-sale	$	187,052	$	2,054	$	162,016	$	5,871	$	349,068	$	7,925
Securities held-to-maturity:
Mortgage-backed securities:
U.S. Government agencies	$	7,182	$	25	$	—	$	—	$	7,182	$	25
Total held-to-maturity	$	7,182	$	25	$	—	$	—	$	7,182	$	25

During the years ended December 31, 2018 and 2017, the Company had no credit-related net investment impairment losses. During the year ended December 31, 2016, the Company recorded $0.5 million in credit-related net investment impairment losses. The charges deemed to be other-than-temporary were related to pooled bank trust preferred securities and were based on the Company’s quarterly reviews of its investment securities for indications of losses considered to be other-than-temporary. At December 31, 2018, the cumulative amount of credit-related investment impairment losses that have been recognized by the Company on investments that remain in the Company's investment portfolio as of that date was $1.6 million.

Declines in the fair value of held-to-maturity and available-for-sale securities below their respective cost that are deemed to be other-than-temporary would be reflected in earnings as realized losses.  In estimating other-than-temporary

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impairment losses, management considers, among other things (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition, capital strength, and near-term (within 12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; or (v) the intent to sell the investment security and if it’s more likely than not that the Company will not have to sell the security before recovery of its cost basis.  In addition, management also employs a continuous monitoring process in regards to its marketable equity securities, specifically its portfolio of regional community bank holdings.  Although the regional community bank stocks that are owned by the Company are publicly traded, the trading activity for these stocks is minimal, with trading volumes of less than 0.2% of each respective company being traded on a daily basis.  As part of management’s review process for these securities, management reviews the financial condition of each respective regional community bank for any indications of financial weakness.

Management has the ability and intent to hold the securities classified as held-to-maturity until they mature, at which time the Company expects to receive full value for the securities.  Furthermore, as of December 31, 2018, management does not intend to sell an impaired security and it is not more than likely that it will be required to sell the security before the recovery of its amortized cost basis.  The unrealized losses on debt securities are primarily the result of interest rate changes, credit spread fluctuations on agency-issued mortgage related securities, general financial market uncertainty and unprecedented market volatility.  These conditions should not prohibit the Company from receiving its contractual principal and interest payments on its debt securities.  The fair value is expected to recover as the securities approach their maturity date or repricing date.   As of December 31, 2018, management believes the unrealized losses detailed in the table above are temporary and no additional impairment loss has been recognized in the Company’s consolidated income statement.  Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss will be recognized in net income in the period the other-than-temporary impairment is identified, while any noncredit loss will be recognized in other comprehensive income.

The amortized cost and estimated fair value of debt securities at December 31, 2018, by contractual maturity, are shown in the following table (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.  Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

	Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	5,592	$	5,572
Due after one year through five years	24,793		24,879
Due after five years through ten years	132,761		130,569
Due after ten years	565,972		557,041
	$	729,118	$	718,061
Securities Held-to-Maturity
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	4,927		5,053
Due after ten years	55,900		55,653
	$	60,827	$	60,706

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Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands): 

	For the year ended December 31,
	2018			2017		2016
Gross unrealized gains recognized on securities still held	$	208		—		—
Gross unrealized losses recognized on securities still held	(298		)	—		—
Net unrealized (losses) gains recognized on securities still held	$	(90	)	$	—	$	—
Gross realized gains	—			$	4,476	$	3,978
Gross realized losses	—			—		(465		)
Net realized investment security gains	$	—		$	4,476	$	3,513

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $510 million and $429 million at December 31, 2018 and 2017, respectively.

NOTE SIX – LOANS

The following summarizes the Company’s major classifications for loans (in thousands):

	December 31, 2018			December 31, 2017
Residential real estate	$	1,656,989		$	1,468,278
Home equity	153,496			139,499
Commercial and industrial	286,314			208,484
Commercial real estate	1,433,291			1,277,576
Consumer	51,190			29,162
DDA overdrafts	6,328			4,411
Gross loans	3,587,608			3,127,410
Allowance for loan losses	(15,966		)	(18,836		)
Net loans	$	3,571,642		$	3,108,574
Construction loans included in:
Residential real estate	$	21,834		$	25,270
Commercial real estate	37,869			28,871

The Company's commercial and residential real estate construction loans are primarily secured by real estate within the Company's principal markets. These loans were originated under the Company's loan policy, which is focused on the risk characteristics of the loan portfolio, including construction loans. In the judgment of the Company's management, adequate consideration has been given to these loans in establishing the Company's allowance for loan losses.

NOTE SEVEN – ALLOWANCE FOR LOAN LOSSES

Management systematically monitors the loan portfolio and the appropriateness of the allowance for loan losses on a quarterly basis to provide for probable losses inherent in the portfolio.  Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors.

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Individual credits in excess of $1 million are selected at least annually for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the appropriateness of the allowance.  Due to the nature of commercial lending, evaluation of the appropriateness of the allowance as it relates to these types of loan types is often based more upon specific credit reviews, with consideration given to the potential impairment of certain credits and historical loss rates, adjusted for economic conditions and other inherent risk factors.

The following summarizes the activity in the allowance for loan loss, by portfolio segment (in thousands).  The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments. The following also presents the balance in the allowance for loan loss disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans, by portfolio segment (in thousands). 

	Commercial and industrial			Commercial real estate			Residential real estate			Home equity			Consumer			DDA overdrafts			Total
December 31, 2018
Allowance for loan loss
Beginning balance	$	4,571		$	6,183		$	5,212		$	1,138		$	62		$	1,670		$	18,836
Charge-offs	(733		)	(369		)	(682		)	(219		)	(769		)	(2,701		)	(5,473		)
Recoveries	2,152			732			367			—			166			1,496			4,913
Provision	(1,930		)	(2,011		)	(781		)	349			860			1,243			(2,270		)
Provision for acquired loans with deteriorated credit quality	—			(40		)	—			—			—			—			(40		)
Ending balance	$	4,060		$	4,495		$	4,116		$	1,268		$	319		$	1,708		$	15,966
	Commercial and industrial			Commercial real estate			Residential real estate			Home equity			Consumer			DDA overdrafts			Total
December 31, 2017
Allowance for loan loss
Beginning balance	$	4,206		$	6,573		$	6,680		$	1,417		$	82		$	772		$	19,730
Charge-offs	(400		)	(720		)	(1,637		)	(403		)	(60		)	(2,714		)	(5,934		)
Recoveries	58			112			294			45			63			1,462			2,034
Provision	707			57			(125		)	79			(23		)	2,150			2,845
Provision for acquired loans with deteriorated credit quality	—			161			—			—			—			—			161
Ending balance	$	4,571		$	6,183		$	5,212		$	1,138		$	62		$	1,670		$	18,836
As of December 31, 2018
Allowance for loan loss
Evaluated for impairment:
Individually	$	—		$	428		$	—		$	—		$	—		$	—		$	428
Collectively	4,059			4,015			4,116			1,268			312			1,708			15,478
Acquired with deteriorated credit quality	1			52			—			—			7			—			60
Total	$	4,060		$	4,495		$	4,116		$	1,268		$	319		$	1,708		$	15,966
Loans
Evaluated for impairment:
Individually	$	651		$	9,855		$	—		$	—		$	—		$	—		$	10,506
Collectively	284,018			1,412,023			1,654,892			153,496			51,077			6,328			3,561,834
Acquired with deteriorated credit quality	1,645			11,413			2,097			—			113			—			15,268
Total	$	286,314		$	1,433,291		$	1,656,989		$	153,496		$	51,190		$	6,328		$	3,587,608

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As of December 31, 2017
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	647	$	—	$	—	$	—	$	—	$	647
Collectively	4,567		5,313		5,112		1,138		58		1,670		17,858
Acquired with deteriorated credit quality	4		223		100		—		4		—		331
Total	$	4,571	$	6,183	$	5,212	$	1,138	$	62	$	1,670	$	18,836
Loans
Evaluated for impairment:
Individually	$	849	$	8,818	$	—	$	—	$	—	$	—	$	9,667
Collectively	207,429		1,263,076		1,465,685		139,499		29,046		4,411		3,109,146
Acquired with deteriorated credit quality	206		5,682		2,593		—		116		—		8,597
Total	$	208,484	$	1,277,576	$	1,468,278	$	139,499	$	29,162	$	4,411	$	3,127,410

Credit Quality Indicators

All non-commercial loans are evaluated based on payment history.  A performing loan is a loan to a borrower that has and is expected to fulfill the contractual terms of the loan agreement. The borrower generally makes the contractual payments on the due date, is expected to continue to pay timely, is not in default and has not been placed on nonaccrual. A non-performing loan is a loan that is generally past due 90 days or greater and/or is classified as non-accrual. All commercial loans within the portfolio are subject to internal risk grading. The Company’s internal risk ratings for commercial loans are:  Exceptional, Good, Acceptable, Pass/Watch, Special Mention, Substandard and Doubtful.  Each internal risk rating is defined in the loan policy using the following criteria:  balance sheet yields, ratios and leverage, cash flow spread and coverage, prior history, capability of management, market position/industry, potential impact of changing economic, legal, regulatory or environmental conditions, purpose, structure, collateral support, and guarantor support.  Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process.  Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of probable loss.

The Company categorizes loans into risk categories based on relevant information regarding the customer’s debt service ability, capacity, overall collateral position along with other economic trends, and historical payment performance.  The risk grades for each credit are updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review/credit administration departments, or the loan becomes delinquent or impaired.  The risk grades are updated a minimum of annually for loans rated Exceptional, Good, Acceptable, or Pass/Watch.  Loans rated Special Mention, Substandard or Doubtful are reviewed at least quarterly.  The Company uses the following definitions for its risk ratings:

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Risk Rating	Description
Pass Ratings:
(a) Exceptional	Loans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank and the risk grade within this pool of loans is generally updated on an annual basis.
(b) Good	Loans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles.  Loans within this category are generally reviewed on an annual basis.  Loans in this category generally have a low chance of loss to the bank.
(c) Acceptable	Loans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
(d) Pass/watch	Loans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mention	Loans classified as special mention have a potential weakness(es) that deserves management's close attention.  The potential weakness could result in deterioration of the loan repayment or the bank's credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
Substandard	Loans classified as substandard reflect a customer with a well defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected or the bank's collateral value is weakened by the financial deterioration of the borrower.
Doubtful	Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.

The following table presents the Company's commercial loans by credit quality indicators, by class (in thousands):

	Commercial and industrial		Commercial real estate		Total
December 31, 2018
Pass	$	250,856	$	1,381,170	$	1,632,026
Special mention	27,886		5,696		33,582
Substandard	7,572		46,425		53,997
Doubtful	—		—		—
Total	$	286,314	$	1,433,291	$	1,719,605
December 31, 2017
Pass	$	175,951	$	1,231,256	$	1,407,207
Special mention	25,872		8,068		33,940
Substandard	6,661		38,252		44,913
Doubtful	—		—		—
Total	$	208,484	$	1,277,576	$	1,486,060

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The following table presents the Company's non-commercial loans by payment performance, by class (in thousands):

	Performing		Non-Performing		Total
December 31, 2018
Residential real estate	$	1,652,543	$	4,446	$	1,656,989
Home equity	153,334		162		153,496
Consumer	51,188		2		51,190
DDA overdrafts	6,322		6		6,328
Total	$	1,863,387	$	4,616	$	1,868,003
December 31, 2017
Residential real estate	$	1,465,445	$	2,833	$	1,468,278
Home equity	139,239		260		139,499
Consumer	29,162		—		29,162
DDA overdrafts	4,411		—		4,411
Total	$	1,638,257	$	3,093	$	1,641,350

Aging Analysis of Accruing and Non-Accruing Loans

The following presents an aging analysis of the Company’s accruing and non-accruing loans, by class (in thousands):

	December 31, 2018
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Non-accrual		Total
Residential real estate	$	1,642,724	$	8,607	$	1,213	$	170	$	4,275	$	1,656,989
Home equity	152,083		1,240		11		24		138		153,496
Commercial and industrial	284,140		397		49		52		1,676		286,314
Commercial real estate	1,424,245		487		94		4		8,461		1,433,291
Consumer	50,894		253		41		1		1		51,190
DDA overdrafts	5,840		467		15		6		—		6,328
Total	$	3,559,926	$	11,451	$	1,423	$	257	$	14,551	$	3,587,608
	December 31, 2017
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Non-accrual		Total
Residential real estate	$	1,458,746	$	5,990	$	709	$	19	$	2,814	$	1,468,278
Home equity	138,480		671		88		92		168		139,499
Commercial and industrial	206,447		549		1		142		1,345		208,484
Commercial real estate	1,269,520		1,841		245		—		5,970		1,277,576
Consumer	29,108		39		13		2		—		29,162
DDA overdrafts	3,849		541		14		7		—		4,411
Total	$	3,106,150	$	9,631	$	1,070	$	262	$	10,297	$	3,127,410

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The following presents the Company’s impaired loans, by class (in thousands):

	December 31, 2018						December 31, 2017
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial and industrial	$	651	$	651	$	—	$	849	$	3,013	$	—
Commercial real estate	6,870		6,895		—		3,036		4,861		—
Total	$	7,521	$	7,546	$	—	$	3,885	$	7,874	$	—
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate	2,985		2,985		428		5,782		5,782		647
Total	$	2,985	$	2,985	$	428	$	5,782	$	5,782	$	647

The following table presents information related to the average recorded investment and interest income recognized on the Company’s impaired loans, by class (in thousands):

	For the year ended
	December 31, 2018				December 31, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	845	$	—	$	1,086	$	—
Commercial real estate	4,623		39		4,534		69
Total	$	5,468	$	39	$	5,620	$	69
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate	5,043		220		4,307		149
Total	$	5,043	$	220	$	4,307	$	149

If the Company's non-accrual and impaired loans had been current in accordance with their original terms, approximately $0.2 million, $0.2 million and $0.4 million of interest income would have been recognized during the years ended December 31, 2018, 2017 and 2016, respectively.  There were no commitments to provide additional funds on non-accrual, impaired or other potential problem loans at December 31, 2018.

Loan Modifications

The Company’s policy on loan modifications typically does not allow for modifications that would be considered a concession from the Company.  However, when there is a modification, the Company evaluates each modification to determine if the modification constitutes a troubled debt restructuring (“TDR”) in accordance with ASU 2011-02, whereby a modification of a loan would be considered a TDR when both of the following conditions are met: (1) a borrower is experiencing financial difficulty and (2) the modification constitutes a concession.  When determining whether the borrower is experiencing financial difficulties, the Company reviews whether the debtor is currently in payment default on any of its debt or whether it is probable that the debtor would be in payment default in the foreseeable future without the modification.  Other indicators of financial difficulty include whether the debtor has declared or is in the process of declaring bankruptcy, the debtor’s ability to continue as a going concern, or the debtor’s projected cash flow to service its debt (including principal and interest) in accordance with the contractual terms for the foreseeable future, without a modification.

Regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court and the borrower has not reaffirmed the debt.  The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of the debt by the bankruptcy court is deemed to be a concession granted to the borrower.

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The following tables set forth the Company’s TDRs (in thousands):

	December 31, 2018						December 31, 2017
			Non-						Non-
	Accruing		Accruing		Total		Accruing		Accruing		Total
Commercial and industrial	$	98	$	—	$	98	$	135	$	—	$	135
Commercial real estate	8,205		—		8,205		8,381		—		8,381
Residential real estate	22,863		658		23,521		21,005		84		21,089
Home equity	3,025		5		3,030		3,047		50		3,097
Consumer	—		—		—		—		—		—
	$	34,191	$	663	$	34,854	$	32,568	$	134	$	32,702

	New TDRs					New TDRs
	For the year ended					For the year ended
	December 31, 2018					December 31, 2017
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	—	$	—	$	—
Commercial real estate	—	—		—		2	3,098		3,003
Residential real estate	33	2,326		2,326		33	3,987		3,987
Home equity	10	274		274		13	271		271
Consumer	—	—		—		—	—		—
	43	$	2,600	$	2,600	48	$	7,356	$	7,261

NOTE EIGHT – PREMISES AND EQUIPMENT

A summary of premises and equipment and related accumulated depreciation is summarized as follows (in thousands):

	Estimated Useful Life	2018			2017
Land		$	34,538		$	32,647
Buildings and improvements	10 to 30 yrs.	95,873			90,261
Equipment	3 to 7 yrs.	41,856			39,763
		172,267			162,671
Less: accumulated depreciation		(93,884		)	(89,989		)
		$	78,383		$	72,682

The depreciation expense for the years ended December 31, 2018, 2017, and 2016 was $5.1 million, $5.9 million, and $6.2 million, respectively.

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NOTE NINE – GOODWILL AND OTHER INTANGIBLE ASSETS

The Company completed its annual assessment of the carrying value of goodwill during 2018 and concluded that its carrying value was not impaired. The following table presents a roll forward of the Company's goodwill activity (in thousands):

	2018		2017
Beginning balance	$	76,196	$	76,196
Goodwill acquired in conjunction with the acquisition of Poage (preliminary)	28,633		—
Goodwill acquired in conjunction with the acquisition of Farmers Deposit (preliminary)	4,738		—
Ending balance	$	109,567	$	76,196

The Company believes that the customer relationships with the deposits acquired have an intangible value. In connection with acquisitions, the Company recorded a core deposit intangible, which represented the value that the acquiree had with their deposit customers. The fair value was estimated based on a discounted cash flow methodology that considered the type of deposit, estimated deposit retention, the cost of the deposit base and an alternate cost of funds. The following tables present the details of the Company's core deposit intangibles (in thousands):

	2018			2017
Gross carrying amount	$	21,190		$	9,802
Accumulated amortization	(7,909		)	(7,403		)
	$	13,281		$	2,399
Beginning balance	$	2,399		$	2,939
Core deposit intangible acquired in conjunction with the acquisition of Poage	8,054			—
Core deposit intangible acquired in conjunction with the acquisition of Farmers Deposit	3,334			—
Amortization expense	(506		)	(540		)
Ending balance	$	13,281		$	2,399

The core deposit intangible amortization expense for the year ended December 31, 2018 was $0.5 million. The core deposit intangibles are being amortized over ten years. The estimated amortization expense for core deposit intangible assets for each of the next five years is as follows (in thousands):

2019	$	1,868
2020	1,697
2021	1,635
2022	1,515
2023	1,311
Thereafter	5,255
	$	13,281

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NOTE TEN – SCHEDULED MATURITIES OF TIME DEPOSITS

Scheduled maturities of the Company's time deposits outstanding at December 31, 2018 are summarized as follows (in thousands):

2019	$	709,519
2020	406,443
2021	112,872
2022	99,203
2023	24,047
Over five years	570
	$	1,352,654

The Company's time deposits that meet or exceed the FDIC insurance limit of $250,000 were $172.2 million and $122.4 million at December 31, 2018 and 2017, respectively.

NOTE ELEVEN – SHORT-TERM DEBT

A summary of the Company's short-term borrowings are as follows (dollars in thousands):

	2018			2017			2016
Balance at end of year:
Federal Home Loan Bank advances	$	40,000		$	54,000		$	64,100
Securities sold under agreements to repurchase	221,911			198,219			184,205
Federal Funds purchased	—			—			—
Avg. outstanding during the year:
Federal Home Loan Bank advances	$	74,102		$	46,639		$	18,850
Securities sold under agreements to repurchase	190,702			183,890			157,215
Federal Funds purchased	353			—			—
Max. outstanding at any month end:
Federal Home Loan Bank advances	$	185,000		$	126,500		$	88,600
Securities sold under agreements to repurchase	221,911			257,034			184,205
Federal Funds purchased	10,000			—			—
Weighted-average interest rate:
During the year:
Federal Home Loan Bank advances	2.21		%	1.30		%	0.66		%
Securities sold under agreements to repurchase	0.93			0.33			0.22
Federal Funds purchased	2.10			—			—
End of the year:
Federal Home Loan Bank advances	2.76		%	1.57		%	0.77		%
Securities sold under agreements to repurchase	0.80			0.31			0.19
Federal Funds purchased	—			—			—

Through City National, the Company has approximately 64,000 shares of Federal Home Loan Bank (“FHLB”) stock at par value as of December 31, 2018. Purchases of FHLB stock are required based on City National’s maximum borrowing capacity with the FHLB.  Additionally, FHLB stock entitles the Company to dividends declared by the FHLB and provides an

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additional source of short-term and long-term funding, in the form of collateralized advances. Financing obtained from the FHLB is based, in part, on the amount of qualifying collateral available, specifically 1-4 family residential mortgages, other residential mortgages, and commercial real estate and other non-residential mortgage loans. Collateral pledged to the FHLB included approximately $2.1 billion at December 31, 2018 and $2.0 billion at December 31, 2017 in investment securities and 1-4 family residential property loans.  In addition to the short-term financing discussed above and long-term financing (see Note Eleven) City National had an additional $1.9 billion and $1.6 billion available from unused portions of lines of credit with the FHLB and other financial institutions at December 31, 2018 and 2017, respectively.

NOTE TWELVE – LONG-TERM DEBT

The components of the Company's long-term debt are summarized below (dollars in thousands): 

	2018			2017
Junior subordinated debentures owed to City Holding Capital Trust III, interest at a rate of 5.09% at December 31, 2017.	$	—		$	16,495
Subordinated debentures owed to Town Square Statutory Trust I, due 2036, interest at a rate of 4.64% at December 31, 2018.	4,124			—
Fair value adjustment of subordinated debentures	(71		)	—
	$	4,053		$	16,495

City Holding Capital Trust III

On September 26, 2018, the Board of Directors of the Company authorized repayment of its Junior Subordinated Deferrable Interest Debentures issued by the Company and held by City Holding Capital Trust III at a price of 100% of the principal amount. The Company received all required regulatory approvals and on December 17, 2018, City Holding Capital Trust III repaid its Capital Securities at a price of 100% of the principal amount. These securities were issued on March 27, 2008, and were callable in whole any time after June 15, 2013.

Town Square Statutory Trust I

As a part of its Poage acquisition, the Company assumed Poage's subordinated debentures. In December 2006, Town Square Statutory Trust I, a trust formed by the Town Square Financial Corporation, closed a pooled private offering of 4,000 trust preferred securities with a liquidation amount of $1,000 per security. Poage issued $4,124,000 of subordinated debentures to the trust in exchange for ownership of all the common security of the trust and the proceeds of the preferred securities sold by the trust.

The Company may redeem the subordinated debentures, in whole or in part, in a principal amount with integral multiples of $1,000, on or after December 22, 2012 at 100% of the principal amount, plus accrued and unpaid interest. The subordinated debentures mature on December 22, 2036. The subordinated debentures are also redeemable in whole or in part from time to time, upon the occurrence of specific events defined within the trust indenture. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.

The subordinated debentures may be included in Tier I capital (with certain limitations applicable) under current regulatory guidelines and interpretations. The subordinated debentures have a variable rate of interest equal to the three month LIBOR rate plus 1.83%.

Payments of distributions on the trust preferred securities and payments on redemption of the trust preferred securities are guaranteed by the Company. The Company also entered into an agreement as to expenses and liabilities with the trust pursuant to which it agreed, on a subordinated basis, to pay any cost, expenses or liabilities of the trust other than those arising under the trust preferred securities. The obligations of the Company under the junior subordinated debentures, the related indentures, the trust agreement establishing the trust and the guarantees, and the agreements as to expenses and liabilities, in the aggregate, constitute a full and unconditional guarantee by the Company of the trust’s obligations under the trust preferred securities. The trust preferred securities issued by the statutory business trusts qualify as Tier 1 capital for the Company under current Federal Reserve Board guidelines.

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NOTE THIRTEEN – DERIVATIVE INSTRUMENTS

As of December 31, 2018 and 2017, the Company primarily utilizes non-hedging derivative financial instruments with commercial banking customers to facilitate their interest rate management strategies. For these instruments, the Company acts as an intermediary for its customers and has offsetting contracts with financial institution counterparties. Changes in the fair value of these underlying derivative contracts generally offset each other and do not significantly impact the Company's results of operations.

The following table summarizes the notional and fair value of these derivative instruments (in thousands):

	December 31, 2018				December 31, 2017
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Customer counterparties:
Loan interest rate swap - assets	$	132,146	$	3,131	$	225,480	$	4,877
Loan interest rate swap - liabilities	372,223		13,774		314,450		9,513
Non-hedging interest rate derivatives:
Financial institution counterparties:
Loan interest rate swap - assets	403,500		13,902		320,949		9,591
Loan interest rate swap - liabilities	132,146		3,131		218,924		4,877

The following table summarizes the change in fair value of these derivative instruments (in thousands): 

	Year Ended December 31,
	2018			2017			2016
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative assets	$	1,316		$	(3,379	)	$	3,904
Other income - derivative liabilities	(1,316		)	3,379			(3,904		)
Other expense - derivative liabilities	50			86			(52		)

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with financial institution counterparties are generally executed under International Swaps and Derivative Association ("ISDA") master agreements which include "right of setoff" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset financial instruments for financial reporting purposes. Information about financial instruments that are eligible for offset in the consolidated balance sheet as of December 31, 2018 is presented in the following tables (in thousands):

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Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Gross

Net Amounts

Adjustment

Applicable

Amounts

Amounts

of Assets

per

Netting

Recognized in

Offset in the

presented in

Applicable

Agreement

Statement of

Statement of

the Statement

Master

Fair Value

and Fair

Financial

Financial

of Financial

Netting

of Financial

Value of

Description

Position

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)*

Non-hedging derivative assets:

Interest rate swap agreements - customer counterparties(a)

$

3,131

$

—

$

3,131

$

—

$

3,131

$

3,131

$

—

Interest rate swap agreements - financial institution counterparties(b)

10,771

—

10,771

—

10,771

10,771

—

Non-hedging derivative liabilities:
Interest rate swap agreements - customer counterparties(a)	$	13,774	$	—	$	13,774	$	—	$	13,774	$	13,774	$	—
Interest rate swap agreements -financial institution counterparties(c)	—		—		—		—		—		—		—
* For instances where the fair value of financial collateral meets or exceeds the amounts presented in the Statement of Financial Position, a value of zero is displayed to represent full collateralization.
(a) The underlying collateral on the loan serves as collateral for the derivative financial instrument.
(b) The financial institution counterparty posts collateral to the Company.
(c) The Company posts collateral to the financial institution counterparty.

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NOTE FOURTEEN – INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	2018		2017
Allowance for loan losses	$	3,742	$	4,385
Deferred compensation payable	2,734		2,517
Underfunded pension liability	1,794		1,527
Accrued expenses	2,276		1,057
Impaired asset losses	1,201		607
Unrealized securities losses	1,871		166
Intangible assets	783		438
Other	6,492		3,577
Total Deferred Tax Assets	20,893		14,274
Other	3,555		2,361
Total Deferred Tax Liabilities	3,555		2,361
Net Deferred Tax Assets	$	17,338	$	11,913

No valuation allowance for deferred tax assets was recorded at December 31, 2018 and 2017 as the Company believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by recoverable taxes paid in prior years.

On December 22, 2017, the President signed the Tax Cut and Jobs Act ("TCJA") into law. Among other things, the TCJA reduced the corporate income tax rate from 35% to 21%, effective January 1, 2018. As a result of this decrease in the corporate income tax, the Company re-measured its deferred tax assets and liabilities, which resulted in a provisional charge to earnings of $7.1 million in 2017,which is included in total deferred tax expense in the table below. Upon final analysis of available information and refinement of the Company's calculations during 2018, the Company increased its provisional amount by $0.1 million,which is included as a component of income tax expense. Significant components of the provision for income taxes are as follows (in thousands): 

	2018			2017		2016
Current:
Federal	$	16,846		$	20,090	$	20,100
State	2,413			1,436		1,166
Total current tax expense	19,259			21,526		21,266
Total deferred tax expense	(1,244		)	14,909		3,817
Income tax expense	$	18,015		$	36,435	$	25,083

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A reconciliation of the significant differences between the federal statutory income tax rate and the Company’s effective income tax rate is as follows (in thousands):

	2018			2017			2016
Computed federal taxes at statutory rate	$	18,483		$	31,761		$	27,025
State income taxes, net of federal tax benefit	1,730			1,321			888
Tax effects of:
Tax-exempt interest income	(694		)	(1,098		)	(708		)
Bank-owned life insurance	(649		)	(1,474		)	(1,164		)
Change in statutory tax rate	—			7,070			—
Other items, net	(855		)	(1,145		)	(958		)
Income tax expense	$	18,015		$	36,435		$	25,083

The entire amount of the Company’s unrecognized tax benefits, if recognized, would favorably affect the Company’s effective tax rate.   The Company anticipates that it will release $0.5 million over the next 12 months.  A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):

	2018			2017
Beginning balance	$	1,889		$	1,847
Additions for current year tax positions	184			325
Additions for prior year tax positions	241			226
Decreases related to lapse of applicable statute of limitation	(503		)	(509		)
Ending balance	$	1,811		$	1,889

Interest and penalties on income tax uncertainties are included in income tax expense.  During 2018, 2017 and 2016, the provision related to interest and penalties was less than $0.2 million in each period.  The balance of accrued interest and penalties at December 31, 2018 and 2017 was less than $0.5 million.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2015 and forward.

NOTE FIFTEEN – EMPLOYEE BENEFIT PLANS

Pursuant to the terms of the City Holding Company 2013 Incentive Plan (the "2013 Plan"), the Compensation Committee of the Board of Directors, or its delegate, may, from time-to-time, grant stock options, stock appreciation rights (“SARs”), or stock awards to employees, directors and individuals who provide service to the Company (collectively, "Plan Participants").  The 2013 Plan was approved by the shareholders in April 2013. A maximum of 750,000 shares of the Company’s common stock may be issued under the 2013 Plan upon the exercise of stock options, SARs and stock awards, subject to certain limitations.  These limitations may be adjusted in the event of a change in the number of outstanding shares of common stock by reason of a stock dividend, stock split or other similar event.  Specific terms of options and SARs awarded, including vesting periods, exercise prices (stock price at date of grant) and expiration dates are determined at the date of grant and are evidenced by agreements between the Company and the awardee.  The exercise price of the option grants equals the market price of the Company’s stock on the date of grant.  All incentive stock options and SARs will be exercisable up to 10 years from the date granted and all options and SARs are exercisable for the period specified in the individual agreement.  As of December 31, 2018, 532,552 shares were still available to be issued under the 2013 Plan.

Each award from the 2013 Plan is evidenced by an award agreement that specifies the option price, the duration of the option, the number of shares to which the option pertains, and such other provisions as the Compensation Committee, or its delegate, determines. Upon a change-in-control of the Company, as defined in the 2013 Plan, all outstanding options and awards shall immediately vest.

Certain stock options and restricted stock awards granted pursuant to the 2013 Plan have performance-based vesting requirements. These shares will vest in three separate annual installments of approximately 33.33% per installment on the third,

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fourth and fifth anniversaries of the grant date, subject further to performance-based vesting requirements. To meet the performance-based vesting requirement, the Company's mean return on average assets of the three, four and five year period prior to the respective vesting date must meet or exceed the median return on average assets over the 20 year period immediately preceding the vesting date of all FDIC insured depository institutions. The mean return on average assets excludes merger and acquisition expenses and other nonrecurring items as determined by the Board of Directors of the Company.

In 2018, the Board of Directors granted the named executive officers ("NEOs") of the Company restricted stock units ("RSUs") and performance share units ("PSUs"). The RSUs will vest in three separate annual installments of approximately 33.33% per installment on the first, second and third anniversaries of the grant date, subject to a two-year holding period. The PSUs will vest on the third anniversary of the grant date. The payout for the PSUs will be determined based on two factors:

(1) The Company's three-year average return on assets ("ROA") during the three-year performance period relative to the ROA for the selected peer companies.

(a) For the three-year performance at or below the 25th percentile, 0%of the grant will vest;at the 50th percentile, 100% of the grant will vest; at the 100th percentile, 200% of the grant will vest.

(b) The amount vested will be interpolated accordingly for performance between the 25th and 50th percentile and the 50th and 100th percentile.

(2) The Company's total shareholder return ("TSR") during the three-year performance period relative to the TSR of the selected peer companies.

(a) The ultimate vesting of PSUs will be increased or decreased as determined by a modifier based on the Company's TSR relative to the selected peer companies.

(b) For relative TSR at or below the 25th percentile, the number of PSUs vested will be reduced by 25%; at the 50th percentile the vesting will not be adjusted; at or above the 75th percentile, the vesting will be increased by 25%.

(b) The amount vested will be interpolated accordingly for performance between the 25th and 50th percentile and the 50th and 75th percentile.

Stock Options

A summary of the Company’s stock option activity and related information is presented below: 

	2018					2017				2016
	Options		Weighted-Average Exercise Price			Options		Weighted-Average Exercise Price		Options		Weighted-Average Exercise Price
Outstanding at January 1	87,605		$	47.15		86,613		$	41.08	95,015		$	38.38
Granted	—		—			17,631		66.32		24,348		43.73
Exercised	(29,633	)	(39.31		)	(16,639	)	35.91		(32,750	)	35.28
Forfeited	—		—			—		—		—		—
Outstanding at December 31	57,972		$	51.15		87,605		$	47.15	86,613		$	41.08
Exercisable at end of year	2,697		$	45.13		7,887		$	37.37	3,000		$	29.45
Nonvested at beginning of year	79,718		48.08			83,613		41.47		75,265		39.38
Granted during the year	—		—			17,631		66.32		24,348		43.73
Vested during the year	(24,443	)	40.58			(21,526	)	37.31		(16,000	)	35.09
Forfeited during the year	—		—			—		—		—		—
Nonvested at end of year	55,275		$	51.40		79,718		$	48.08	83,613		$	41.47

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Information regarding stock option exercises and stock-based compensation expense associated with stock options is provided in the following table (in thousands):

	For the year ended December 31,
	2018		2017		2016
Proceeds from stock option exercises	$	1,164	$	597	$	1,155
Intrinsic value of stock options exercised	944		481		551
Stock-based compensation expense associated with stock options	$	178	$	246	$	240
Income tax benefit recognized related to stock-based compensation	19		42		36
At period-end:	2018
Unrecognized stock-based compensation expense	$	204
Weighted average period in which the above amount is expected to be recognized	2.0		years

Shares issued in connection with stock option exercises are issued from available treasury shares. If no treasury shares are available, new shares would be issued from available authorized shares. During 2018, 2017 and 2016, all shares issued in connection with stock option exercises and restricted stock awards were issued from available treasury stock. For the stock options that have performance-based criteria, management has evaluated those criteria and has determined that, as of December 31, 2018, the criteria were probable of being met.

Additional information regarding the Company's stock options outstanding and exercisable at December 31, 2018, is provided in the following table:  

Ranges of Exercise Prices	No. of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Months)	Aggregate Intrinsic Value (in thousands)		No. of Options Currently Exercisable	Weighted-Average Exercise Price of Options Currently Exercisable		Weighted-Average Remaining Contractual Life (Months)	Aggregate Intrinsic Value of Options Currently Exercisable  (in thousands)
$ 35.00 - 39.99	38	$	37.74	4.2	$	1	38	$	37.74	4.2	$	1
40.00 - 44.99	30,676	43.87		6.8	728		1,675	44.43		5.2	39
45.00 - 49.99	9,627	46.61		6.2	202		984	46.61		6.2	21
50.00 - 69.99	17,631	66.32		8.2	22		—	—		—	—
	57,972				$	953	2,697				$	61

The fair value of the options is estimated at the date of grant using a Black-Scholes option-pricing model.   The following weighted average assumptions were used to estimate the fair value of options granted by the Company:

	For the year ended December 31,
	2017		2016
Risk-free interest rate	2.12	%	1.43	%
Expected dividend yield	2.60	%	3.86	%
Volatility factor	25.80	%	30.76	%
Expected life of option	7.0 years		7.0 years

Restricted Shares

The Company measures compensation expense with respect to restricted shares in an amount equal to the fair value of the common stock covered by each award on the date of grant. The restricted shares awarded become fully vested after various periods of continued employment from the respective dates of grant. The Company is entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted shares when the restrictions are released and the shares are issued. Compensation is  charged to expense over the respective vesting periods.

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Restricted shares are generally forfeited if officers and employees terminate employment with the Company prior to the lapsing of restrictions. The Company records forfeitures of restricted stock as treasury share repurchases and any compensation cost previously recognized is reversed in the period of forfeiture.  Recipients of restricted shares do not pay any cash consideration to the Company for the shares, and have the right to vote all shares subject to such grant and receive all dividends with respect to such shares, whether or not the shares have vested.  For the restricted shares that have performance-based criteria, management has evaluated those criteria and has determined that, as of December 31, 2018, the criteria were probable of being met.

A summary of the Company’s restricted shares activity and related information is presented below:

	2018				2017				2016
	Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant
Outstanding at January 1	170,033				180,622				172,921
Granted	28,363		$	69.94	28,839		$	64.42	30,601		$	46.39
Forfeited/Vested	(48,704	)			(39,428	)			(22,900	)
Outstanding at December 31	149,692				170,033				180,622

Information regarding stock-based compensation associated with restricted shares is provided in the following table (in thousands):

	For the year ended December 31,
	2018		2017		2016
Stock-based compensation expense associated with restricted shares	$	1,609	$	1,507	$	1,371
At period-end:	2018
Unrecognized stock-based compensation expense	$	3,594
Weighted average period in which the above amount is expected to be recognized	3.1		years

401(k) Plan

The Company provides retirement benefits to its employees through the City Holding Company 401(k) Plan and Trust (the "401(k) Plan"), which is intended to be compliant with Employee Retirement Income Security Act (ERISA) section 404(c). Information regarding the Company’s 401(k) plan is provided in the following table (dollars in thousands):

	For the year ended December 31,
	2018		2017		2016
Expense associated with the Company's 401(k) Plan	$	905	$	841	$	796
At period-end:
Number of shares of the Company's common stock held by the 401(k) Plan	229,276		228,662

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Defined Benefit Plans

The Company maintains two defined benefit pension plans (the "Defined Benefit Plans"), which were inherited from the Company's acquisition of the plan sponsors (Horizon Bancorp, Inc. and Community Financial Corporation). The Horizon Defined Benefit Plan was frozen in 1999 and maintains a December 31st year-end for purposes of computing its benefit obligations. The Community Defined Benefit Plan was frozen in 2012 and was terminated during the year-ended December 31, 2018.

Primarily as a result of the interest rate environment over the past several years and mortality table revisions, the benefit obligation exceeded the estimated fair value of plan assets as of December 31, 2018 and December 31, 2017. The following table summarizes activity within the Company's Defined Benefit Plans (dollars in thousands):

	Pension Benefits
	2018			2017
Change in fair value of plan assets:
Fair value at beginning of measurement period	$	16,360		$	17,117
Actual gain (loss) on plan assets	(434		)	1,890
Contributions	1,509			—
Benefits paid	(5,394		)	(2,647		)
Fair value at end of measurement period	12,041			16,360
Change in benefit obligation:
Benefit obligation at beginning of measurement period	(18,488		)	(19,742		)
Interest cost	(590		)	(772		)
Actuarial (loss) gain	(1,488		)	(392		)
Assumption changes	825			(614		)
Benefits paid	5,394			2,647
Settlement loss	125			385
Benefit obligation at end of measurement period	(14,222		)	(18,488		)
Funded status	$	(2,181	)	$	(2,128	)
Weighted-average assumptions for benefit obligation:
Discount rate	4.10		%	3.38		%
Expected long-term rate of return	6.75		%	6.56		%
Weighted-average assumptions for net periodic pension cost:
Discount rate	3.38		%	4.02		%
Expected long-term rate of return	6.56		%	5.83		%

Based on the funding status of the Horizon Defined Benefit Plan, no contributions were required during the years ended December 31, 2018 and 2017, and no contributions are anticipated being required for the year ending December 31, 2019.

During 2017, the Company initiated the process to terminate the Community Defined Benefit plan. The Company made a $1.5 million terminal contribution in 2018 to terminate the plan.

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The following table presents the components of the net periodic pension cost of the Company's Defined Benefit Plans, which is recognized in Other Expenses in the Consolidated Statements of Income (in thousands):

	2018			2017			2016
Components of net periodic benefit:
Interest cost	$	590		$	772		$	820
Expected return on plan assets	(1,080		)	(1,219		)	(1,154		)
Settlement	71			(104		)	—
Net amortization and deferral	890			849			849
Net Periodic Pension Cost	$	471		$	298		$	515

Amounts related to the Company's Defined Benefit Pension Plans recognized as a component of other comprehensive income were as follows (in thousands):

	2018			2017			2016
Net actuarial gain (loss)	$	(1,092	)	$	838		$	157
Deferred tax (expense) benefit	254			(1,211		)	(58		)
Other comprehensive income (loss), net of tax	$	(838	)	$	(373	)	$	99

Amounts recognized as a component of accumulated other comprehensive loss as of December 31, 2018 and 2017 were as follows (in thousands):

	2018			2017
Net actuarial loss	$	7,652		$	6,560
Deferred tax benefit	(1,781		)	(1,527		)
Amounts included in accumulated other comprehensive loss, net of tax	$	5,871		$	5,033

The following table summarizes the expected benefits to be paid in each of the next five years and in the aggregate for the five years thereafter (in thousands):

Plan Year Ending December 31,	Expected Benefits to be Paid
2019	$	1,012
2020	1,016
2021	1,010
2022	1,010
2023	1,016
2024 through 2027	4,958

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The major categories of assets in the Company’s Defined Benefit Plans as of year-end are presented in the following table (in thousands).  Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 utilized to measure fair value (See Note Nineteen).

	Total		Level 1		Level 2		Level 3
2018
Cash and cash equivalents	$	12,041	$	12,041	$	—	$	—
Total	$	12,041	$	12,041	$	—	$	—
2017
Cash and cash equivalents	$	1,202	$	1,202	$	—	$	—
Mutual funds/Investment funds	5,421		5,206		215		—
Common stocks	5,575		3,763		1,812		—
Mortgage-backed securities	301		—		301		—
U.S. Treasuries	1,277		—		1,277		—
Corporate bonds	1,223		—		1,223		—
Alternative investments**	1,361		759		—		—
Total	$	16,360	$	10,930	$	4,828	$	—
** Includes an investment of $602 at December 31, 2017 that has not been categorized in the fair value hierarchy, as permitted by ASU No. 2015-07.

Horizon Defined Benefit Plan (Investment Strategy)

During the fourth quarter of 2018, the Company changed the administrator of The Horizon Defined Benefit Plan to its trust department. The Company's pension committee is in the process of revising the plan's investment strategy and it anticipates adopting a similar investment strategy, with a target allocation of 75% equity securities and 25% fixed income securities. Pending the adoption of the revised investment strategy, the plan assets are being held in a low-risk, cash and cash equivalent investment.

Previously, the overall investment return goal was to achieve a return greater than a blended mix of the S&P 500 and the Barclay's Capital Aggregate Bond Index, which is tailored to the same asset mix of the retirement plan assets, by 0.5% annualized after fees over a rolling five years moving average basis. In order to achieve a prudent level of portfolio diversification, the securities of any one company are not to exceed more than 15% of the cost and/or market value of the total retirement plan assets, and no more than 25% of the total retirement plan assets are to be invested in any one industry (other than securities of the U.S. government or agencies thereof). At December 31, 2017, the plan assets were invested in equity securities (48%), fixed income securities (25%), cash and cash equivalents (15%), and alternative investments (12%). Prior to the asset transfer in 2018, plan assets were invested in equity securities (44%), fixed income securities (21%), cash and cash equivalents (26%), and alternative investments (9%), which were in the allowable allocation range under the previous policy. The pension committee anticipates adopting a similar strategy.

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Pentegra Defined Benefit Plan

The Company and its subsidiary participate in the Pentegra Defined Benefit Plan for Financial Institutions ("The Pentegra DB Plan"), a tax-qualified defined benefit pension plan. The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. There are no collective bargaining agreements in place that require contributions to the Pentegra DB Plan. The Pentegra DB Plan is a single plan under Internal Revenue Code Section 413(c) and, as a result, all of the assets stand behind all of the liabilities. Accordingly, under the Pentegra DB Plan, contributions made by a participating employer may be used to provide benefits to participants of other participating employers. The funded statuses below are as of July 1, 2018 (the latest available valuation report). It is the policy of the Company to fund the normal cost of the Pentegra DB Plan on an annual basis.  Other than for normal plan expenses, no contributions were required for the years ended December 31, 2018, 2017 and 2016.  The benefits of the original Pentegra Defined Benefit Plan were frozen prior to the acquisition of Classic Bancshares ("Classic") in 2005, and the benefits of the Poage Pentegra Defined Benefit Plan were frozen prior to the acquisition of Poage in 2018. It is the intention of the Company to fund benefit amounts when assets of the plan are not sufficient.

Pentegra DB Plan's Employer Identification Number	13-5645888
Plan Number	333
Funded status for plan inherited with Classic acquisition	93.01%
Funded status for plan inherited with Poage acquisition	98.11%

Employment Contracts

The Company has entered into employment contracts with certain of its current executive officers. The employment contracts provide for, among other things, the payment of termination compensation in the event an executive officer either voluntarily or involuntarily terminates his employment with the Company for other than "Just Cause" as defined in the applicable employment contract. Certain of the employment contracts provide for a termination benefit that became fully vested in 2005 and is payable if and when the executive officer terminates his employment with the Company. The termination benefit grows each year at an amount equal to the one-year constant maturity treasury rate and cannot be forfeited except where the executive officer personally profits from willful fraudulent activity that materially and adversely affects the Company. The costs of this vested termination benefit have been fully accrued and expensed by the Company as of December 31, 2018. The liability was $2.1 million and $2.0 million at December 31, 2018 and 2017, respectively.

Other Post-Retirement Benefit Plans

Certain entities previously acquired by the Company had entered into individual deferred compensation and supplemental retirement agreements with certain current and former directors and officers. The Company has assumed the liabilities associated with these agreements, the cost of which is being accrued over the period of active service from the date of the respective agreement. To assist in funding these liabilities, the acquired entities had insured the lives of certain current and former directors and officers. The Company is the current owner and beneficiary of those insurance policies. The following table presents a summary of the Company's other post-retirement benefit plans (in thousands).

	For the year ended December 31
	2018		2017		2016
Cost of other post-retirement benefits	$	280	$	278	$	315
At period-end:
Other post-retirement benefit liability (included in Other Liabilities)	6,923		5,695
Cash surrender value of insurance policies (included in Other Assets)	6,807		6,954

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NOTE SIXTEEN – RELATED PARTY TRANSACTIONS

City National has granted loans to certain non-executive officers and directors of the Company and its subsidiaries, and to their associates. These loans were made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with third-party lending arrangements. 

			Principal		Principal
	December 31, 2017		Additions		Reductions			December 31, 2018
Related Party Loans	$	12,405	$	11,850	$	(2,223	)	$	22,032
Unfunded commitments	$	17,757						$	16,109

NOTE SEVENTEEN – COMMITMENTS AND CONTINGENCIES

The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  The Company has entered into agreements with its customers to extend credit or provide conditional commitment to provide payment on drafts presented in accordance with the terms of the underlying credit documents. The Company also provides overdraft protection to certain demand deposit customers that represent an unfunded commitment.  Overdraft protection commitments, which are included with other commitments below, are uncollateralized and are paid at the Company’s discretion.  Conditional commitments generally include standby and commercial letters of credit. Standby letters of credit represent an obligation of the Company to a designated third party contingent upon the failure of a customer of the Company to perform under the terms of the underlying contract between the customer and the third party. Commercial letters of credit are issued specifically to facilitate trade or commerce. Under the terms of a commercial letter of credit, drafts will be drawn when the underlying transaction is consummated, as intended, between the customer and a third party. The funded portion of these financial instruments is reflected in the Company’s balance sheet, while the unfunded portion of these commitments is not reflected in the balance sheet.  

The table below presents a summary of the contractual obligations of the Company resulting from significant commitments (in thousands):

	December 31, 2018		December 31, 2017
Commitments to extend credit:
Home equity lines	$	207,509	$	194,477
Commercial real estate	68,649		66,901
Other commitments	201,687		184,895
Standby letters of credit	7,183		7,151
Commercial letters of credit	811		831

Loan commitments and standby and commercial letters of credit have credit risks essentially the same as those involved in extending loans to customers and are subject to the Company’s standard credit policies. Collateral is obtained based on management’s credit assessment of the customer. Management does not anticipate any material losses as a result of these commitments.

In addition, the Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize positive and/or negative impact to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current actions will have immaterial results, either positive or negative, or that no material actions may be presented in the future.

The Company owns 86,605 shares of Class B common stock of Visa, Inc. ("Visa") which are convertible into Class A common stock at a conversion ratio of 1.6298 per Class B share. As of December 31, 2018, the value of the Class A shares was $131.94 per share. Utilizing the conversion ratio, the value of unredeemed Class A equivalent shares owned by the Company was $18.6 million which has not been reflected in the accompanying consolidated financial statements. The shares of Visa Class B common stock are restricted. Visa Member Banks (as defined in Visa's organizational documents) are required to fund an escrow account to cover settlements, resolution of pending litigation and related claims. If the funds in the escrow account are

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insufficient to settle the covered litigation, Visa may sell additional Class A shares, use the proceeds to settle litigation and further reduce the conversion ratio. If funds remain in the escrow account after all litigation is settled, the Class B conversion ratio will be increased to reflect that surplus.

NOTE EIGHTEEN – PREFERRED STOCK

 The Company’s Board of Directors has the authority to issue preferred stock, and to determine the designation, preferences, rights, dividends and all other attributes of such preferred stock, without any vote or action by the shareholders.  As of December 31, 2018, no such shares were outstanding, nor were any expected to be issued.

NOTE NINETEEN – REGULATORY REQUIREMENTS AND CAPITAL RATIOS

The principal source of income and cash for City Holding (the “Parent Company”) is dividends from City National. Dividends paid by City National to the Parent Company are subject to certain legal and regulatory limitations. Generally, any dividends in amounts that exceed the earnings retained by City National in the current year plus retained net profits for the preceding two years must be approved by regulatory authorities. Approval is also required if dividends declared would cause City National’s regulatory capital to fall below specified minimum levels.  At December 31, 2018, City National could pay dividends up to $88.8 million without prior regulatory permission.

During 2018, the Parent Company used cash obtained from the dividends received primarily to: (1) acquire Farmers Deposit, (2) pay common dividends to shareholders, (3) repay the Company's Junior Subordinated Deferrable Interest Debentures, (4) remit interest payments on those debentures prior to payoff and (5) fund repurchases of the Company's common shares. As of December 31, 2018, the Parent Company reported a cash balance of approximately $20.6 million.  Management believes that the Parent Company’s available cash balance, together with cash dividends from City National, is adequate to satisfy its funding and cash needs in 2019.

In July 2013, the Federal Reserve published the final rules that established a new comprehensive capital framework for banking organizations, commonly referred to as Basel III. These final rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions. The final rule became effective January 1, 2015 for smaller, non-complex banking organizations with full implementation by January 1, 2019.

On January 1, 2019, the Basel III Capital Rules will require City Holding and City National to maintain minimum CET 1, Tier 1 and Total Capital ratios, along with a capital conservation buffer that will become fully phased in on that date, effectively resulting in new minimum capital ratios (which are shown in the table below). The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and was phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reached 2.5% on January 1, 2019). The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The Basel III Capital Rules also provide for a “countercyclical capital buffer” that is applicable to only certain covered institutions and does not have any current applicability to City Holding Company or City National Bank.

The Company’s regulatory capital ratios for both City Holding and City National are illustrated in the following tables (in thousands):

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December 31, 2018	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	492,526	15.1	%	$	208,294	6.375	%	$	228,715	7.0	%	$	212,378	6.5	%
City National Bank	423,099		13.1	%	206,676		6.375	%	226,938		7.0	%	210,728		6.5	%
Tier 1 Capital
City Holding Company	496,526		15.2	%	257,304		7.875	%	277,725		8.5	%	261,389		8.0	%
City National Bank	423,099		13.1	%	255,306		7.875	%	275,568		8.5	%	259,358		8.0	%
Total Capital
City Holding Company	512,801		15.7	%	322,651		9.875	%	343,072		10.5	%	326,736		10.0	%
City National Bank	439,374		13.6	%	320,145		9.875	%	340,408		10.5	%	324,198		10.0	%
Tier 1 Leverage Ratio
City Holding Company	496,526		11.4	%	174,833		4.000	%	174,833		4.0	%	218,542		5.0	%
City National Bank	423,099		9.8	%	172,594		4.000	%	172,594		4.0	%	215,742		5.0	%
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

December 31, 2017:	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	430,154	15.1	%	$	163,441	5.75	%	$	198,972	7.0	%	$	184,760	6.5	%
City National Bank	338,105		12.0	%	162,164		5.75	%	197,418		7.0	%	183,316		6.5	%
Tier 1 Capital
City Holding Company	446,154		15.7	%	206,078		7.25	%	241,609		8.5	%	227,397		8.0	%
City National Bank	338,105		12.0	%	204,468		7.25	%	239,721		8.5	%	225,620		8.0	%
Total Capital
City Holding Company	465,292		16.4	%	262,927		9.25	%	298,458		10.5	%	284,246		10.0	%
City National Bank	357,243		12.7	%	260,873		9.25	%	296,126		10.5	%	282,025		10.0	%
Tier 1 Leverage Ratio
City Holding Company	446,154		11.0	%	161,834		4.00	%	161,834		4.0	%	202,293		5.0	%
City National Bank	338,105		8.5	%	159,625		4.00	%	159,625		4.0	%	199,531		5.0	%
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

As of December 31, 2018, management believes that City Holding Company, and its banking subsidiary, City National, were “well capitalized.” City Holding is subject to regulatory capital requirements administered by the Federal Reserve, while City National is subject to regulatory capital requirements administered by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”). Regulatory agencies can initiate certain mandatory actions if either City Holding or City National fails to meet the minimum capital requirements, as shown above. As of December 31, 2018, management believes that City Holding and City National meet all capital adequacy requirements.

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the "Regulatory Relief Act") went into effect. The Regulatory Relief Act provides for a simplification of the minimum capital level requirements applicable to the Company. The federal bank regulatory agencies have not yet issued final rules regarding this change, but it is

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expected that a to–be–developed community bank leverage ratio will replace the Basel III Capital Rules applicable to the Company. There can be no assurances, however, as to the substance of the final rule or its effect on the Company

NOTE TWENTY –FAIR VALUE MEASUREMENTS

Fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are less active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company bases fair value of assets and liabilities on quoted market prices, prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.  If such information is not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.  These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters.  Any such valuation adjustments are applied consistently over time.  The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.  Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amount presented herein.  A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. 

Financial Assets and Liabilities

The Company used the following methods and significant assumptions to estimate fair value for financial assets and liabilities measured on a recurring basis.

Securities Available for Sale.  Securities available for sale are reported at fair value utilizing Level 1, Level 2, and Level 3 inputs.  The fair value of securities available for sale is determined by utilizing a market approach by obtaining quoted prices on nationally recognized securities exchanges (other than forced or distressed transactions) that occur in sufficient volume or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.  If such measurements are unavailable, the security is classified as Level 3.  Significant judgment is required to make this determination.

The Company utilizes a third party pricing service provider to value its Level 1 and Level 2 investment securities.  Annually, the Company obtains an independent auditor’s report from its third party pricing service provider regarding its controls over investment securities.  Although no control deficiencies were noted, the report did contain caveats and disclaimers regarding the pricing information, such as the Company should review fair values for reasonableness.  On a quarterly basis, the Company reprices its debt securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values.

The Company has determined that its pooled trust preferred securities are priced using Level 3 inputs in accordance with ASC Topic 820 and guidance issued by the SEC.  The Company has determined that there are few observable transactions and market quotations available for pooled trust preferred securities and they are not reliable for purposes of determining fair value of trust preferred securities held at December 31, 2018.  Due to these circumstances, the Company has elected to utilize

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an income valuation approach produced by a third party pricing source.  This third party model utilizes deferral and default probabilities for the underlying issuers, estimated prepayment rates and assumes no future recoveries of any defaults or deferrals.  The Company then compares the values provided by the third party model with other external sources.  At such time as there are observable transactions or quoted prices that are associated with an orderly and active market for pooled trust preferred securities, the Company will incorporate such market values in its estimate of fair values for these securities.

Derivatives.Derivatives are reported at fair value utilizing Level 2 inputs.  The Company utilizes a market approach by obtaining dealer quotations to value its customer interest rate swaps.  These quotes utilize the overnight indexed swap ("OIS") curve as a basis for discounting cash flows. The OIS curve is based on the Federal Funds rate. The Company’s derivatives are included within its Other Assets and Other Liabilities in the accompanying consolidated balance sheets. Derivative assets are typically secured through securities with financial counterparties or cross collateralization with a borrowing customer. Derivative liabilities are typically secured through the Company pledging securities to financial counterparties or, in the case of a borrowing customer, by the right of setoff. The Company considers such factors such as the likelihood of default by itself and its counterparties, right of setoff, and remaining maturities in determining the appropriate fair value adjustments. All derivative counterparties approved by the Company's Asset and Liability Committee ("ALCO") are regularly reviewed, and appropriate business action is taken to adjust the exposure to certain counterparties, if necessary. Counterparty exposure is evaluated by netting positions that are subject to master netting agreements, as well as considering the amount of marketable collateral securing the position. This approach used to estimate impacted exposures to counterparties is also used by the Company to estimate its own credit risk in derivative liability positions. To date, no material losses have been incurred due to a counterparty's inability to pay any undercollateralized position. There was no significant change in the value of derivative assets and liabilities attributed to credit risk during the year ended December 31, 2018.

The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis.  Financial assets measured at fair value on a nonrecurring basis include impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.  Collateral values are estimated using Level 2 inputs based on observable market data for real estate collateral or Level 3 inputs for non-real estate collateral.  The following table presents the Company's assets and liabilities measured at fair value (in thousands):

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	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
December 31, 2018
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	5,733	$	—	$	5,733	$	—
Obligations of states and political subdivisions	128,070		—		128,070		—
Mortgage-backed securities:
U.S. Government agencies	550,758		—		550,758		—
Private label	12,043		—		12,043		—
Trust preferred securities	4,799		—		4,538		261
Corporate securities	16,658		—		16,658		—
Marketable equity securities	10,313		5,907		4,406		—
Certificates of Deposit held for investment	3,735		—		3,735		—
Investment funds	1,458		1,458		—		—
Derivative assets	17,100		—		17,100		—
Financial Liabilities
Derivative liabilities	16,905		—		16,905		—
Nonrecurring fair value measurements
Financial Assets
Impaired loans	$	10,078	$	—	$	—	$	10,078	$	(428	)
Non-Financial Assets
Other real estate owned	4,608		—		—		4,608		(838		)
Other assets	600		—		—		600		(492		)

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	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
December 31, 2017
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	2	$	—	$	2	$	—
Obligations of states and political subdivisions	96,196		—		96,196		—
Mortgage-backed securities:
U.S. Government agencies	419,347		—		419,347		—
Private label	652		—		652		—
Trust preferred securities	4,736		—		4,475		261
Corporate securities	22,268		—		22,268		—
Marketable equity securities	5,699		5,699		—		—
Investment funds	1,489		1,489		—		—
Derivative assets	14,502		—		14,502		—
Financial Liabilities
Derivative liabilities	14,390		—		14,390		—
Nonrecurring fair value measurements
Financial Assets
Impaired loans	$	9,020	$	—	$	—	$	9,020	$	(647	)
Non-Financial Assets
Other real estate owned	3,585		—		—		3,585		(374		)
Other assets	—		—		—		—		(170		)

The table below presents a reconcilement of the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which consist solely of trust preferred securities (in thousands): 

	2018		2017
Beginning balance	$	261	$	2,535
Included in other comprehensive income	—		(974		)
Dispositions	—		(1,300		)
Ending Balance	$	261	$	261

The Company utilizes a third party model to compute the present value of expected cash flows which considers the

structure and term of pooled trust preferred securities and the financial condition of the underlying issuers. Specifically, the third party model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. For issuing banks that have defaulted, management generally assumes no recovery. For issuing banks that have deferred interest payments, management excludes the collateral balance associated with these banks and assumes no recoveries of such collateral balance in the future. The exclusion of such issuing banks in a current deferral position is based on such bank experiencing a certain level of financial difficulty that raises doubt about its ability to satisfy its contractual debt obligation, and accordingly, the Company excludes the associated collateral balance from its estimate of expected cash flows. Other assumptions used in the estimate of expected cash flows include expected future default rates and prepayments.

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The table below presents a reconcilement of the Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3), which solely relates to impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral (in thousands).  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows.  The significant unobservable inputs used in the fair value measurement of collateral for collateral-dependent impaired loans primarily relate to discounts applied to the customers’ reported amount of collateral.  The amount of collateral discount depends upon the marketability of the underlying collateral.  During December 31, 2018 and 2017, collateral discounts ranged from 20% to 30%. During December 31, 2018 and 2017, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

	2018			2017
Beginning balance	$	9,020		$	6,916
Loans classified as impaired during the period	2,330			3,098
Specific valuation allowance allocations	—			(94		)
	2,330			3,004
(Additional) reduction in specific valuation allowance allocations	(218		)	(19		)
Paydowns, payoffs, other activity	(1,054		)	(881		)
Ending balance	$	10,078		$	9,020

Non-Financial Assets and Liabilities

The Company has no non-financial assets or liabilities measured at fair value on a recurring basis.  Certain non-financial assets measured at fair value on a non-recurring basis include other real estate owned (“OREO”), which is measured at the lower of cost or fair value. The table below presents OREO that was remeasured and reported at fair value based on significant unobservable inputs (Level 3) (in thousands): 

	2018			2017
Beginning Balance	$	3,585		$	4,588
OREO remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	6,146			3,066
Charge-offs recognized in the allowance for loan losses	(1,951		)	(1,117		)
Fair value	4,195			1,949
OREO remeasured subsequent to initial recognition:
Carrying value of foreclosed assets prior to remeasurement	3,646			1,464
Fair value	2,808			1,090
Write-downs included in other non-interest expense	(838		)	(374		)
Disposals	(2,334		)	(2,578		)
Ending Balance	$	4,608		$	3,585

During the year ended December 31, 2018, the Company recognized a $0.5 million loss on branches that were moved to held for sale. During the year ended December 31, 2017, the Company recognized a $0.2 million gain on the sale of a facility that formerly housed certain bank operations. During the year ended December 31, 2016, the Company recognized a $0.4 million impairment on this facility. Based on the Company's annual assessment for impairment in the recorded value of goodwill and indefinite lived intangible assets, no impairment was recorded during the years ended December 31, 2018 and 2017.

ASC Topic 825“Financial Instruments,” as amended, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.  In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including discount rate and estimate of future cash flows.  In that

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regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.  ASC Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements.  Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used in estimating fair value for financial instruments:

Cash and cash equivalents: Due to their short-term nature, the carrying amounts reported in the Consolidated Balance Sheets approximate fair value.

Securities: The fair value of securities are generally based on quoted market prices or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Other securities: It is not practicable to determine the fair value of the Company's other securities, which consist of FRB and FHLB stock, due to restrictions placed on its transferability.

Net loans:  The fair value of the loan portfolio is estimated by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers for the same remaining maturities, the credit risk associated with such loans and other market factors, including liquidity. Loans were first segregated by type such as commercial, real estate and consumer, and were then further segmented into fixed, adjustable and variable rate categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates fair value.

Deposits: The fair values of demand deposits (e.g., interest and noninterest-bearing checking, regular savings, and other money market demand accounts) are, by definition, equal to their carrying values. The fair values of time deposits were estimated using discounted cash flow analyses. The discount rates used were based on rates currently offered for deposits with similar remaining maturities. The fair values of the time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Short-term debt: Securities sold under agreements to repurchase and Federal Home Loan Bank advances represent borrowings with original maturities of less than 90 days. The carrying amount of borrowings under purchase agreements approximate their fair value.

Long-term debt: The fair value of long-term borrowings is estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements and market conditions of similar debt instruments.

Commitments and letters of credit: The fair values of commitments are estimated based on fees currently charged to enter into similar agreements, taking into consideration the remaining terms of the agreements and the counterparties’ credit standing.  The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.  The amounts of fees currently charged on commitments and letters of credit are deemed insignificant, and therefore, the estimated fair values and carrying values have not been reflected in the following table.

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The following table represents the estimates of fair value of financial instruments (in thousands). This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest-bearing demand, interest-bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity. 

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
December 31, 2018
Assets:
Cash and cash equivalents	$	122,991	$	122,991	$	122,991	$	—	$	—
Securities available-for-sale	723,254		723,254		1,458		721,535		261
Securities held-to-maturity	60,827		60,706		—		60,706		—
Other securities	28,810		28,810		5,907		22,903		—
Net loans	3,571,642		3,516,557		—		—		3,516,557
Accrued interest receivable	12,424		12,424		12,424		—		—
Derivative assets	17,100		17,100		—		17,100		—
Liabilities:
Deposits	3,975,559		3,985,534		2,622,905		1,362,629		—
Short-term debt	261,911		261,911		—		261,911		—
Long-term debt	4,053		4,115		—		4,115		—
Derivative liabilities	16,906		16,906		—		16,906		—
December 31, 2017
Assets:
Cash and cash equivalents	$	82,508	$	82,508	$	82,508	$	—	$	—
Securities available-for-sale	550,389		550,389		7,188		542,940		261
Securities held-to-maturity	64,449		65,646		—		65,646		—
Other securities	14,147		14,147		—		14,147		—
Net loans	3,108,574		3,090,471		—		—		3,090,471
Accrued interest receivable	9,223		9,223		9,223		—		—
Derivative assets	14,502		14,502		—		14,502		—
Liabilities:
Deposits	3,315,634		3,309,910		2,232,159		1,077,751		—
Short-term debt	252,219		252,219		—		252,219		—
Long-term debt	16,495		16,444		—		16,444		—
Derivative liabilities	14,390		14,390		—		14,390		—

106

NOTE TWENTY-ONE – CITY HOLDING COMPANY (PARENT COMPANY ONLY) FINANCIAL INFORMATION

Condensed Balance Sheets

The following table presents the condensed balance sheets of City Holding Company, parent company only (in thousands):

	December 31
	2018		2017
Assets
Cash	$	20,621	$	59,031
Securities available-for-sale	5,908		5,699
Investment in subsidiaries	583,673		459,150
Loans	701		—
Fixed assets	5		6
Other assets	3,316		2,989
Total Assets	$	614,224	$	526,875
Liabilities
Junior subordinated debentures	$	4,053	$	16,495
Dividends payable	8,774		7,184
Deferred tax liability	366		436
Other liabilities	267		253
Total Liabilities	13,460		24,368
Total Shareholders’ Equity	600,764		502,507
Total Liabilities and Shareholders’ Equity	$	614,224	$	526,875

In 2018, the Parent Company repaid its junior subordinated debentures that were owed to City Holding Capital Trust III. In connection with the acquisition of Poage, the Parent Company assumed Poage's junior subordinated debentures that are owed to Town Square Statutory Trust I.    

On December 19, 2016, the Company announced that it had filed a prospectus supplement to its existing shelf registration statement on Form S-3 for the sale of its common stock having an aggregate value of up to $55 million through an “at-the-market” equity offering program. Through the year ended December 31, 2018, the Company has sold approximately 548,000 common shares at a weighted average price of $64.82, net of broker fees. The Company has sold no shares since the first quarter of 2017. To date the Company has received $36.4 million in gross proceeds. Under the program, the Company has the ability to receive an additional $18.6 million in gross proceeds from the sale of common shares.

107

Condensed Statements of Comprehensive Income

The following table presents the condensed statements of comprehensive income of City Holding Company, parent company only (in thousands):

	Year Ended December 31
	2018			2017			2016
Income
Dividends from subsidiaries	$	50,000		$	30,000		$	8,600
Realized investment securities gains	—			200			—
Unrealized gains recognized on securities still held	208			—			—
Other income	130			115			320
	50,338			30,315			8,920
Expenses
Interest expense	880			765			683
Merger related expenses	1,899			—			—
Other expenses	1,842			1,636			1,957
	4,621			2,401			2,640
Income Before Income Tax Benefit and Equity in Undistributed Net Income of Subsidiaries	45,717			27,914			6,280
Income tax benefit	(1,114		)	(1,197		)	(1,096		)
Income Before Equity in Undistributed Net Income of Subsidiaries	46,831			29,111			7,376
Equity in undistributed net income of subsidiaries	23,171			25,199			44,752
Net Income	$	70,002		$	54,310		$	52,128
Total Comprehensive Income	$	63,821		$	56,677		$	48,948

108

Condensed Statements of Cash Flows

The following table presents the condensed statements of cash flows of City Holding Company, parent company only (in thousands):

	Year Ended December 31
	2018			2017			2016
Operating Activities
Net income	$	70,002		$	54,310		$	52,128
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized and realized investment securities losses (gains)	(208		)	(200		)	—
(Benefit) provision for deferred income taxes	(88		)	1,347			(241		)
Depreciation, amortization and accretion, net	1			1			(4		)
Stock based compensation	2,151			2,097			2,018
Asset write down	193			—			444
Change in other assets	2,668			(405		)	260
Change in other liabilities	(1,816		)	(1,660		)	(2,288		)
Equity in undistributed net income	(23,171		)	(25,199		)	(44,752		)
Net Cash Provided by Operating Activities	49,732			30,291			7,565
Investing Activities
Proceeds from sales of available for sale securities	—			200			—
Acquisition of Farmers Deposit Bancorp, Inc., net of cash acquired of $946	(23,954		)	—			—
Acquisition of Poage Bankshares, Inc., net of cash acquired of $518	502			—			—
Net Cash (Used in) Provided by Investing Activities	(23,452		)	200			—
Financing Activities
Repayment of long-term debt	(16,495		)	—			—
Proceeds from sale of capital securities	495			—			—
Dividends paid	(29,583		)	(27,120		)	(25,718		)
Issuance of common stock	—			28,408			6,864
Purchases of treasury stock	(20,271		)	—			(10,018		)
Exercise of stock options	1,164			732			1,155
Net Cash (Used in) Provided by Financing Activities	(64,690		)	2,020			(27,717		)
(Decrease) Increase in Cash and Cash Equivalents	(38,410		)	32,511			(20,152		)
Cash and cash equivalents at beginning of year	59,031			26,520			46,672
Cash and Cash Equivalents at End of Year	$	20,621		$	59,031		$	26,520

109

NOTE TWENTY-TWO – SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

A summary of selected quarterly financial information (unaudited) is presented below (in thousands, except for per share data):

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2018
Interest income	$	37,644		$	39,180		$	42,729		$	44,348
Taxable equivalent adjustment	187			187			187			194
Interest income (FTE)	37,831			39,367			42,916			44,542
Interest expense	4,997			5,607			7,171			7,917
Net interest income	32,834			33,760			35,745			36,625
(Recovery of) provision for loan losses	181			(2,064		)	(27		)	(400		)
Unrealized gains (losses) recognized on securities still held	280			492			384			(1,246		)
Non-interest income	14,212			15,119			15,369			15,952
Non-interest expense	24,937			24,911			25,040			38,178
Income  before income tax expense	22,208			26,524			26,485			13,553
Income tax expense	4,405			5,358			5,606			2,646
Taxable equivalent adjustment	(187		)	(187		)	(187		)	(194		)
Net income available to common shareholders	$	17,616		$	20,979		$	20,692		$	10,713
Net earnings allocated to common  shareholders	$	17,421		$	20,768		$	20,491		$	10,623
Basic earnings  per common share	$	1.13		$	1.36		$	1.34		$	0.68
Diluted earnings per common share	1.13			1.35			1.33			0.68
Average common shares outstanding:
Basic	15,414			15,326			15,340			15,603
Diluted	15,436			15,345			15,358			15,618
2017
Interest income	$	34,214		$	35,298		$	36,366		$	37,053
Taxable equivalent adjustment	357			370			358			371
Interest income (FTE)	34,571			35,668			36,724			37,424
Interest expense	3,767			4,036			4,340			4,664
Net interest income	30,804			31,632			32,384			32,760
Provision for loan losses	681			510			1,393			422
Investment securities gains	4,276			—			—			200
Non-interest income	14,231			14,921			14,611			15,367
Non-interest expense	24,600			24,176			24,309			22,893
Income  before income tax expense	24,030			21,867			21,293			25,012
Income tax expense	7,647			6,812			7,003			14,972
Taxable equivalent adjustment	(357		)	(370		)	(358		)	(371		)
Net income available to common shareholders	$	16,026		$	14,685		$	13,932		$	9,669
Net earnings allocated to common  shareholders	$	15,849		$	14,531		$	13,778		$	9,560
Basic earnings  per common share	$	1.04		$	0.94		$	0.89		$	0.62

110

Diluted earnings per common share	1.04	0.94	0.89	0.62
Average common shares outstanding:
Basic	15,252	15,462	15,485	15,472
Diluted	15,277	15,487	15,505	15,497

NOTE TWENTY-THREE – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	For the Year Ended December 31,
	2018			2017			2016
Net income available to common shareholders	$	70,002		$	54,310		$	52,128
Less: earnings allocated to participating securities	(654		)	(591		)	(623		)
Net earnings allocated to common shareholders	$	69,348		$	53,719		$	51,505
Distributed earnings allocated to common shares outstanding	$	32,483		$	27,497		$	25,710
Undistributed earnings allocated to common shares outstanding	36,865			26,222			25,795
Net earnings allocated to common shareholders	$	69,348		$	53,719		$	51,505
Average shares outstanding, basic	15,421			15,412			14,900
Effect of dilutive securities	18			24			13
Average shares outstanding, diluted	15,439			15,436			14,913
Basic earnings per share	$	4.50		$	3.49		$	3.46
Diluted earnings per share	$	4.49		$	3.48		$	3.45
Antidilutive options	—			3			2

Anti-dilutive options are not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares and therefore, the effect would have been anti-dilutive.

111

NOTE TWENTY-FOUR – ACCUMULATED OTHER COMPREHENSIVE LOSS

The activity in accumulated other comprehensive loss is presented in the tables below (in thousands). The activity is shown net of tax, which is calculated using a combined Federal and state income tax rate approximating 23%.

	Accumulated Other Comprehensive Loss
				Unrealized
				Gains (Losses) on
	Defined Benefit			Securities
	Pension Plans			Available-for-Sale			Total
Balance at December 31, 2016	$	(4,660	)	$	(2,352	)	$	(7,012	)
Other comprehensive income before reclassifications	528			4,658			5,186
Amounts reclassified from other comprehensive loss	—			(2,819		)	(2,819		)
	528			1,839			2,367
Adoption of ASU No. 2018-02	(901		)	(98		)	(999		)
Balance at December 31, 2017	$	(5,033	)	$	(611	)	$	(5,644	)
Other comprehensive loss before reclassifications	(963		)	(5,343		)	(6,306		)
Amounts reclassified from other comprehensive loss	125			—			125
	(838		)	(5,343		)	(6,181		)
Adoption of ASU No. 2016-01	—			(2,657		)	(2,657		)
Balance at December 31, 2018	$	(5,871	)	$	(8,611	)	$	(14,482	)

	Amount reclassified from Other Comprehensive Loss									Affected line item
	December 31,									in the Statements
	2018			2017			2016			of Income
Securities available-for-sale:
Net securities gains reclassified into earnings	$	—		$	(4,476	)	$	(3,513	)	Gains on sale of investment securities
Related income tax expense	—			1,657			1,297			Income tax expense
Net effect on accumulated other comprehensive loss	$	—		$	(2,819	)	$	(2,216	)
Defined benefit pension plans:
Gain on termination of defined benefit plan	$	163		$	—		$	—		Other expense
Related income tax expense	(38		)	—			—			Income tax expense
Net effect on accumulated other comprehensive loss	$	125		$	—		$	—

112

NOTE TWENTY-FIVE – CONTRACTS WITH CUSTOMERS

The Company's largest source of revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), and non-interest income. The Company's significant sources of non-interest income are: service charges, bankcard revenue, trust and investment management fee income and bank owned life insurance (which is also excluded from ASC 606).

The following table shows the Company's total non-interest income segregated between those within the scope of ASC 606 and those within the scope of other GAAP topics (in thousands):

Non-interest income
Non-interest income from contracts with customers	$	57,453
Non-interest income within the scope of other GAAP topics	3,111
Total non-interest income	$	60,564

The Company's significant policies related to contracts with customers are discussed below.

Service Charges: Service charges consist of service charges on deposit accounts (monthly service fees, account analysis fees, non-sufficient funds ("NSF") fees and other deposit account related fees). For transaction based fees, the Company's performance obligation is generally satisfied, and the related revenue recognized, at a point in time. For nontransaction based fees, the Company's performance obligation is generally satisfied, and the related revenue recognized, over the period in which the service is provided (typically a month). Generally, payments are received immediately through a direct charge to the customer's account.

Bankcard Revenue: Bankcard revenue is primarily comprised of debit card income and ATM fees. Debit card income is primarily comprised of interchange fees earned whenever the Company's debit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a non-Company cardholder uses a Company ATM or when a Company cardholder uses a non-Company ATM. The Company's performance obligation for bankcard revenue is generally satisfied, and the related revenue recognized, when the services are rendered. Generally, payments are received immediately or in the following month.

Trust and Investment Management Fee Income: Trust and investment management fee income is primarily comprised of fees earned from the management and administration of customer assets. The Company's performance obligation is generally satisfied over time (typically a quarter), and the related revenue recognized, based upon the quarter-end market value of the assets under management and the applicable fee rate. Generally, payments are received a few days after quarter-end through a direct charge to the customer's account.    

The following table illustrates the disaggregation by the Company's major revenue streams (in thousands):

	Point of Revenue
	Recognition
Major revenue streams
Service charges	At a point in time and over time	$	29,704
Bankcard revenue	At a point in time	18,369
Trust and investment management fee income	Over time	6,529
Other income	At a point in time and over time	2,851
Net revenue from contracts with customers		57,453
Non-interest income within the scope of other GAAP topics		3,111
Total non-interest income		$	60,564

113

NOTE TWENTY-SIX – SUBSEQUENT EVENT

On January 30, 2019, the Company announced that it had signed a definitive agreement to sell its Virginia Beach, Virginia branch to Select Bank & Trust Company. The terms of the agreement provide for Select Bank & Trust Company to assume the majority of deposits and to acquire the equipment and other selected assets associated with the branch, while the Company retains the loans. The transaction is subject to state and federal bank regulatory approvals and other customary closing conditions and is expected to close during the second quarter of 2019.

114

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A.Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company’s periodic Securities and Exchange Commission filings.

(a) Management’s annual report on internal control over financial reporting appears on page 54 of the Annual Report on Form 10-K of City Holding Company for the year ended December 31, 2018.

(b) The attestation report of the Company's independent registered public accounting firm appears on page 55 of the Annual Report on Form 10-K of City Holding Company for the year ended December 31, 2018.

(c) The Company did not have any changes in internal control over financial reporting during its fourth quarter for the year ending December 31, 2018, that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Report of Management's Assessment of Internal Control Over Financial Reporting and the Report of Ernst & Young LLP, Independent Registered Public Accounting Firm are included in Item 8 of this Annual Report on Form 10-K.

Item 9B.Other Information

None

115

PART III

Item 10.Directors, Executive Officers and Corporate Governance

Certain information regarding executive officers is included under the section captioned “Executive Officers of the Registrant” in Part I, Item 1, elsewhere in this Annual Report on Form 10-K.  Other information required by this Item appears under the captions “ELECTION OF DIRECTORS”, “ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS”, “REPORT OF THE AUDIT COMMITTEE”, and “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE” in the Company's 2019 Proxy Statement that will be filed within 120 days of December 31, 2018 and is hereby incorporated by reference.

In December 2009, the Company adopted a new Code of Business Conduct and Ethics which applies to all employees (including its chief executive officer, chief financial officer and principal accounting officer).  Members of the Board of Directors are governed by a separate Code of Business Conduct and Ethics approved in January 2004.  Both of the Codes of Business Conduct and Ethics have been posted on the Company's website at www.bankatcity.com under the “Corporate Governance” link located at the bottom of the page.   A copy of the Company’s Code of Business Conduct and Ethics covering all employees and/or a copy of the Code of Business Conduct and Ethics covering the Board of Directors will be mailed without charge upon request to Investor Relations, City Holding Company, 25 Gatewater Road, P.O. Box 7520, Charleston, WV  25356-0520.  Any amendments to or waivers from any provision of the Code of Ethics applicable to the Company’s chief executive officer, chief financial officer, or principal accounting officer will be disclosed by timely posting such information on the Company’s Internet website.

Item 11.Executive Compensation

Certain information regarding securities authorized for issuance under equity compensation plans is included in the section captioned "STOCK-BASED COMPENSATION PLAN" in Part II, Item 5, elsewhere in this Annual Report on Form 10-K. Other information required by Item 11 of Form 10-K appears under the captions "COMPENSATION OF DIRECTORS", “COMPENSATION DISCUSSION AND ANALYSIS”, “EQUITY HOLDINGS”, “POST-EMPLOYMENT PAYMENTS”, “BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION” and "PAY RATIO DISCLOSURE" in the Company's 2019 Proxy Statement that will be filed within 120 days of the end of the fiscal year covered by this Annual Report and is hereby incorporated by reference.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 of Form 10-K appears under the caption "COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the Company's 2019 Proxy Statement that will be filed within 120 days of the end of the fiscal year covered by this Annual Report and is hereby incorporated by reference.

Item 13.Certain Relationships and Related Transactions and Director Independence

The information required by Item 13 of Form 10-K appears under the captions "CERTAIN TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS" and “ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS” in the Company's 2019 Proxy Statement that will be filed within 120 days of the end of the fiscal year covered by this Annual Report and is hereby incorporated by reference.

Item 14.Principal Accounting Fees and Services

The information required by Item 14 of Form 10-K appears under the caption "PRINCIPAL ACCOUNTING FEES AND SERVICES" in the Company's 2019 Proxy Statement that will be filed within 120 days of the end of the fiscal year covered by this Annual Report and is hereby incorporated by reference.

116

PART IV

Item 15.Exhibits, Financial Statement Schedules

(a)	(1)	Financial Statements.  Reference is made to Part II, Item 8, of this Annual Report on Form 10-K.
	(2)	Financial Statement Schedules.  These schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.
	(3)	Exhibits.  The exhibits listed in the “Exhibit Index” on pages 118-119 of this Annual Report on Form 10-K included herein are filed herewith or incorporated by reference from previous filings.
(b)	See (a) (3) above.
(c)	See (a) (1) and (2) above.

Item 16. Form 10-K Summary

None.

117

EXHIBIT INDEX

The following exhibits are filed herewith or are incorporated herein by reference.

Exhibit	Description
2(a)	Agreement and Plan of Merger, dated November 14, 2011, by and among Virginia Savings Bancorp, Inc., Virginia Savings Bank, F.S.B., City Holding Company and City National Bank of West Virginia (attached to, and incorporated by reference from, City Holding Company’s Form 8-K dated November 14, 2011, and filed with the Securities and Exchange Commission on November 14, 2011).
2(b)	Agreement and Plan of Merger, dated August 2, 2012, by and among Community Financial Corporation, Community Bank, City Holding Company and City National Bank of West Virginia (attached to, and incorporated by reference from City Holding Company’s Form 8-K dated August 7, 2012, and filed with the Securities and Exchange Commission on August 7, 2012).
2(c)	Agreement and Plan of Merger, dated July 11, 2018, Farmers Deposit Bancorp, Inc., Farmers Deposit Bank and City Holding Company (attached to, and incorporated by reference from, City Holding Company’s Form 8-K dated July 11, 2018, and filed with the Securities and Exchange Commission on July 12, 2018).
2(d)	Agreement and Plan of Merger, dated July 11, 2018, by and between Poage Bankshares, Inc. and City Holding Company (attached to, and incorporated by reference from, City Holding Company’s Form 8-K dated July 11, 2018, and filed with the Securities and Exchange Commission on July 12, 2018).
3(a)	Articles of Incorporation of City Holding Company (attached to, and incorporated by reference from, Amendment No. 1 to City Holding Company’s Registration Statement on Form S-4, Registration No. 2-86250, filed November 4, 1983 with the Securities and Exchange Commission).
3(b)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated March 6, 1984 (attached to, and incorporated by reference from, City Holding Company's Form 8-K Report dated March 7, 1984, and filed with the Securities and Exchange Commission on March 22, 1984).
3(c)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated March 4, 1986 (attached to, and incorporated by reference from, City Holding Company's Form 10-K Annual Report for the year ended December 31, 1986, filed March 31, 1987 with the Securities and Exchange Commission).
3(d)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated September 29, 1987 (attached to and incorporated by reference from, City Holding Company's Registration Statement on Form S-4, Registration No. 33-23295, filed with the Securities and Exchange Commission on August 3, 1988).
3(e)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated May 6, 1991 (attached to, and incorporated by reference from, City Holding Company's Form 10-K Annual Report for the year ended December 31, 1991, filed March 17, 1992 with the Securities and Exchange Commission).
3(f)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated May 7, 1991 (attached to, and incorporated by reference from, City Holding Company's Form 10-K Annual Report for the year ended December 31, 1991, filed March 17, 1992 with the Securities and Exchange Commission).
3(g)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated August 1, 1994 (attached to, and incorporated by reference from, City Holding Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1994, filed November 14, 1994 with the Securities and Exchange Commission).
3(h)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated December 9, 1998 (attached to, and incorporated by reference from, City Holding Company’s Form 10-K Annual Report for the year ended December 31, 1998, filed March 31, 1999 with the Securities and Exchange Commission).
3(i)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated June 13, 2001 (attached to, and incorporated by reference from, City Holding Company’s Registration Statement on Form 8-A, filed June 22, 2001 with the Securities and Exchange Commission).
3(j)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated May 10, 2006 (attached to, and incorporated by reference from, City Holding Company’s Form 10-Q, Quarterly Report for the quarter ended June 30, 2006, filed August 9, 2006 with the Securities and Exchange Commission).
3(k)	Amended and Restated Bylaws of City Holding Company, revised February 24, 2010 (attached to, and incorporated by reference from, City Holding Company’s Current Report on Form 8-K filed March 1, 2010 with the Securities and Exchange Commission).
4(a)	Rights Agreement dated as of June 22, 2001 (attached to, and incorporated by reference from City Holding Company's Form 8-A, filed June 22, 2001 with the Securities and Exchange Commission)."
4(b)	Amendment No. 1 to the Rights Agreement dated as of November 30, 2005 (attached to, and incorporated by reference from City Holding Company’s Amendment No. 1 on Form 8-A, filed December 21, 2005, with the Securities and Exchange Commission).

118

10(a)	Directors’ Deferred Compensation Plan for the Directors of the Bank of Raleigh, dated January 1987 (attached to and incorporated by reference from, City Holding Company’s Form 10-K Annual Report for the year ended December 31, 2004, filed March 2, 2005 with the Securities and Exchange Commission).
10(b)	City Holding Company’s 2003 Incentive Plan (attached to, and incorporated by reference from, City Holding Company’s Definitive Proxy Statement, filed March 21, 2003 with the Securities and Exchange Commission).
10(c)	City Holding Company’s 2013 Incentive Plan (attached to, and incorporated by reference from, City Holding Company’s Definitive Proxy Statement, filed March 22, 2013 with the Securities and Exchange Commission).
10(d)	Form of Employment Agreement, dated as of July 25, 2007, by and between City Holding Company and Charles R. Hageboeck, Ph.D. (attached to, and incorporated by reference from, City Holding Company’s Current Report on Form 8-K, filed July 31, 2007 with the Securities and Exchange Commission).
10(e)	Form of Employment Agreement, dated as of July 25, 2007, by and between City Holding Company and Craig G. Stilwell (attached to, and incorporated by reference from, City Holding Company’s Current Report on Form 8-K, filed July 31, 2007 with the Securities and Exchange Commission).
10(f)	Form of Change of Control Agreement, dated February 1, 2005, by and between City Holding Company and David L. Bumgarner (attached to and incorporated by reference from, City Holding Company’s Form 10-K Annual Report for the year ended December 31, 2004, filed March 2, 2005 with the Securities and Exchange Commission).
10(g)	Form of Change in Control and Termination Agreement, dated June 28, 2004, by and between City Holding Company and John A. DeRito (attached to, and incorporated by reference from, City Holding Company’s Form 10-K Annual Report for the year ended December 31, 2005, filed March 7, 2006 with the Securities and Exchange Commission).
10(h)	Amendment to Employment Agreement, dated December 19, 2011, by and among City Holding Company, City National Bank of West Virginia and Charles R. Hageboeck (attached to and incorporated by reference from City Holding Company’s Form 8-K filed on December 21, 2011, with the Securities and Exchange Commission).
10(i)	Amendment to Employment Agreement, dated December 19, 2011, by and among City Holding Company, City National Bank of West Virginia and Craig G. Stilwell (attached to and incorporated by reference from City Holding Company’s Form 8-K filed on December 21, 2011, with the Securities and Exchange Commission).
10(j)	Form of Change of Control Agreement, dated February 6, 2006, by and between City Holding Company and Jeffrey D. Legge (attached to and incorporated by reference from City Holding Company's Form 10K, Annual Report for the period ended December 31, 2013 filed March 7, 2014 with the Securities and Exchange Commission).
10(k)	Indenture, dated as of December 22, 2006, between Town Square Financial Corporation and Wilmington Trust Company, as Trustee.
10(l)	Second Supplemental Indenture, dated as of December 7, 2018, by and between City Holding Company, Poage Bankshares, Inc. and Wilmington Trust Company, as Trustee.
21	Subsidiaries of City Holding Company
23	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
24	Power of Attorney (included on the signature page hereof)
31(a)	Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Charles R. Hageboeck, Ph.D.
31(b)	Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by David L. Bumgarner

32(a)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Charles R. Hageboeck, Ph.D.
32(b)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by David L. Bumgarner
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase*

*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

119

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:	March 11, 2019		City Holding Company
			(Registrant)
		By:	/s/ Charles R. Hageboeck, Ph.D.
			Charles R. Hageboeck, Ph.D.
			President and Chief Executive Officer
			(Principal Executive Officer)
		By:	/s/ David L. Bumgarner
			David L. Bumgarner
			Senior Vice President, Chief Financial Officer and Principal Accounting Officer
			(Principal Financial Officer)

120

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 27, 2019. Each of the directors and/or officers of City Holding Company whose signature appears below hereby appoints C. Dallas Kayser, and/or Charles R. Hageboeck Ph.D., as his attorney-in-fact to sign in his name and behalf, in any and all capacities stated below and to file with the Securities and Exchange Commission, any and all amendments to this report on Form 10-K, making such changes in this report on Form 10-K as appropriate, and generally to do all such things in their behalf in their capacities as officers and directors to enable City Holding Company to comply with the provisions of the Securities Exchange Act of 1934, and all requirements of the Securities and Exchange Commission.

/s/ C. Dallas Kayser	/s/ Charles R. Hageboeck, Ph.D.
C. Dallas Kayser	Charles R. Hageboeck, Ph.D.
Chairman	Director, President, and Chief Executive Officer
/s/ John R. Elliot	/s/ Thomas L. Burnette
John R Elliot	Thomas L. Burnette
Director	Director
/s/ Charles W. Fairchilds	/s/ Tracy W. Hylton, II
Charles W. Fairchilds	Tracy W. Hylton, II
Director	Director
/s/ William H. File, III	/s/ J. Thomas Jones
William H. File, III	J. Thomas Jones
Director	Director
/s/ Robert D. Fisher	/s/ James L. Rossi
Robert D. Fisher	James L. Rossi
Director	Director
/s/ Jay C. Goldman	/s/ Sharon H. Rowe
Jay C. Goldman	Sharon H. Rowe
Director	Director
	/s/ Diane Strong-Treister
	Diane Strong-Treister
	Director

121

EX-10.K

TOWN SQUARE FINANCIAL CORPORATION, as Issuer INDENTURE Dated as of December 22, 2006 WILMINGTON TRUST COMPANY, as Trustee FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2037 1345236.1 Town Square Financial Corporation/Indenture

TABLE OF CONTENTS Page ARTICLE I. DEFINITIONS......................................................................................................................... 1 Section 1.1. Definitions. ............................................................................................................ 1 ARTICLE II. DEBENTURES ...................................................................................................................... 8 Section 2.1. Authentication and Dating..................................................................................... 8 Section 2.2. Form of Trustee’s Certificate of Authentication.................................................... 9 Section 2.3. Form and Denomination of Debentures................................................................. 9 Section 2.4. Execution of Debentures........................................................................................ 9 Section 2.5. Exchange and Registration of Transfer of Debentures. ....................................... 10 Section 2.6. Mutilated, Destroyed, Lost or Stolen Debentures................................................ 12 Section 2.7. Temporary Debentures. ....................................................................................... 12 Section 2.8. Payment of Interest and Additional Interest. ....................................................... 13 Section 2.9. Cancellation of Debentures Paid, etc................................................................... 14 Section 2.10. Computation of Interest. ...................................................................................... 14 Section 2.11. Extension of Interest Payment Period.................................................................. 15 Section 2.12. CUSIP Numbers. ................................................................................................. 16 ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY....................................................... 17 Section 3.1. Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures. .......................................................................................................... 17 Section 3.2. Offices for Notices and Payments, etc................................................................. 17 Section 3.3. Appointments to Fill Vacancies in Trustee’s Office............................................ 18 Section 3.4. Provision as to Paying Agent............................................................................... 18 Section 3.5. Certificate to Trustee. .......................................................................................... 19 Section 3.6. Additional Sums. ................................................................................................. 19 Section 3.7. Compliance with Consolidation Provisions......................................................... 19 Section 3.8. Limitation on Dividends. ..................................................................................... 19 Section 3.9. Covenants as to the Trust..................................................................................... 20 Section 3.10. Additional Junior Indebtedness. .......................................................................... 20 ARTICLE IV. SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE ................................................................................................................ 20 Section 4.1. Securityholders’ Lists. ......................................................................................... 20 Section 4.2. Preservation and Disclosure of Lists.................................................................... 21 ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT .................................................................................................... 22 Section 5.1. Events of Default. ................................................................................................ 22 Section 5.2. Payment of Debentures on Default; Suit Therefor............................................... 23 Section 5.3. Application of Moneys Collected by Trustee. ..................................................... 25 Section 5.4. Proceedings by Securityholders........................................................................... 25 Section 5.5. Proceedings by Trustee........................................................................................ 25 Section 5.6. Remedies Cumulative and Continuing; Delay or Omission Not a Waiver.......... 26 i 1345236.1 Town Square Financial Corporation/Indenture

Section 5.7. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders. ................................................................................................... 26 Section 5.8. Notice of Defaults................................................................................................ 26 Section 5.9. Undertaking to Pay Costs. ................................................................................... 27 ARTICLE VI. CONCERNING THE TRUSTEE ....................................................................................... 27 Section 6.1. Duties and Responsibilities of Trustee. ............................................................... 27 Section 6.2. Reliance on Documents, Opinions, etc................................................................ 28 Section 6.3. No Responsibility for Recitals, etc. ..................................................................... 29 Section 6.4. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own Debentures........................................................................... 29 Section 6.5. Moneys to be Held in Trust. ................................................................................ 29 Section 6.6. Compensation and Expenses of Trustee. ............................................................. 29 Section 6.7. Officers’ Certificate as Evidence......................................................................... 30 Section 6.8. Eligibility of Trustee............................................................................................ 30 Section 6.9. Resignation or Removal of Trustee ..................................................................... 31 Section 6.10. Acceptance by Successor Trustee........................................................................ 32 Section 6.11. Succession by Merger, etc. .................................................................................. 32 Section 6.12. Authenticating Agents. ........................................................................................ 33 ARTICLE VII. CONCERNING THE SECURITYHOLDERS ................................................................. 33 Section 7.1. Action by Securityholders. .................................................................................. 33 Section 7.2. Proof of Execution by Securityholders................................................................ 34 Section 7.3. Who Are Deemed Absolute Owners.................................................................... 34 Section 7.4. Debentures Owned by Company Deemed Not Outstanding. .............................. 34 Section 7.5. Revocation of Consents; Future Holders Bound. ................................................ 35 ARTICLE VIII. SECURITYHOLDERS’ MEETINGS ............................................................................. 35 Section 8.1. Purposes of Meetings........................................................................................... 35 Section 8.2. Call of Meetings by Trustee................................................................................. 35 Section 8.3. Call of Meetings by Company or Securityholders............................................... 36 Section 8.4. Qualifications for Voting..................................................................................... 36 Section 8.5. Regulations. ......................................................................................................... 36 Section 8.6. Voting. ................................................................................................................. 36 Section 8.7. Quorum; Actions.................................................................................................. 37 ARTICLE IX. SUPPLEMENTAL INDENTURES ................................................................................... 37 Section 9.1. Supplemental Indentures without Consent of Securityholders............................ 37 Section 9.2. Supplemental Indentures with Consent of Securityholders. ................................ 39 Section 9.3. Effect of Supplemental Indentures....................................................................... 39 Section 9.4. Notation on Debentures. ...................................................................................... 39 Section 9.5. Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee. ................................................................................................................ 40 ARTICLE X. REDEMPTION OF SECURITIES ...................................................................................... 40 Section 10.1. Optional Redemption........................................................................................... 40 Section 10.2. Special Event Redemption................................................................................... 40 Section 10.3. Notice of Redemption; Selection of Debentures. ................................................ 40 Section 10.4. Payment of Debentures Called for Redemption. ................................................. 41 ii 1345236.1 Town Square Financial Corporation/Indenture

ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE......................... 41 Section 11.1. Company May Consolidate, etc., on Certain Terms............................................ 41 Section 11.2. Successor Entity to be Substituted....................................................................... 42 Section 11.3. Opinion of Counsel to be Given to Trustee. ........................................................ 42 ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE ............................................... 42 Section 12.1. Discharge of Indenture......................................................................................... 42 Section 12.2. Deposited Moneys to be Held in Trust by Trustee. ............................................. 43 Section 12.3. Paying Agent to Repay Moneys Held.................................................................. 43 Section 12.4. Return of Unclaimed Moneys.............................................................................. 43 ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS .................................................................................................................... 43 Section 13.1. Indenture and Debentures Solely Corporate Obligations. ................................... 43 ARTICLE XIV. MISCELLANEOUS PROVISIONS................................................................................ 44 Section 14.1. Successors............................................................................................................ 44 Section 14.2. Official Acts by Successor Entity........................................................................ 44 Section 14.3. Surrender of Company Powers. ........................................................................... 44 Section 14.4. Addresses for Notices, etc. .................................................................................. 44 Section 14.5. Governing Law. ................................................................................................... 44 Section 14.6. Evidence of Compliance with Conditions Precedent........................................... 44 Section 14.7. Table of Contents, Headings, etc. ........................................................................ 45 Section 14.8. Execution in Counterparts. .................................................................................. 45 Section 14.9. Separability.......................................................................................................... 45 Section 14.10. Assignment. ......................................................................................................... 45 Section 14.11. Acknowledgment of Rights. ................................................................................ 45 ARTICLE XV. SUBORDINATION OF DEBENTURES ......................................................................... 45 Section 15.1. Agreement to Subordinate. .................................................................................. 45 Section 15.2. Default on Senior Indebtedness. .......................................................................... 46 Section 15.3. Liquidation, Dissolution, Bankruptcy.................................................................. 46 Section 15.4. Subrogation.......................................................................................................... 47 Section 15.5. Trustee to Effectuate Subordination. ................................................................... 48 Section 15.6. Notice by the Company. ...................................................................................... 48 Section 15.7. Rights of the Trustee; Holders of Senior Indebtedness........................................ 49 Section 15.8. Subordination May Not Be Impaired................................................................... 49 Exhibit A Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture Exhibit B Form of Certificate to Trustee iii 1345236.1 Town Square Financial Corporation/Indenture

THIS INDENTURE, dated as of December 22, 2006, between Town Square Financial Corporation, a Kentucky corporation (the “Company”), and Wilmington Trust Company, a Delaware banking corporation, as debenture trustee (the “Trustee”). WITNESSETH: WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due 2037 (the “Debentures”) under this Indenture to provide, among other things, for the execution and authentication, delivery and administration thereof, and the Company has duly authorized the execution of this Indenture; and WHEREAS, all acts and things necessary to make this Indenture a valid agreement according to its terms, have been done and performed; NOW, THEREFORE, This Indenture Witnesseth: In consideration of the premises, and the purchase of the Debentures by the holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective holders from time to time of the Debentures as follows: ARTICLE I. DEFINITIONS Section 1.1. Definitions. The terms defined in this Section 1.1 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.1. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles and the term “generally accepted accounting principles” means such accounting principles as are generally accepted in the United States at the time of any computation. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. “Acceleration Event of Default” means an Event of Default under Section 5.1(a), (d), (e) or (f), whatever the reason for such Acceleration Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. “Additional Interest” has the meaning set forth in Section 2.11. “Additional Junior Indebtedness” means, without duplication and other than the Debentures, any indebtedness, liabilities or obligations of the Company, or any Subsidiary of the Company, under debt securities (or guarantees in respect of debt securities) initially issued after the date of this Indenture to any trust, or a trustee of a trust, partnership or other entity affiliated with the Company that is, directly or indirectly, a finance subsidiary (as such term is defined in Rule 3a-5 under the Investment Company Act of 1940) or other financing vehicle of the Company or any Subsidiary of the Company in connection with the issuance by that entity of preferred securities or other securities that are eligible to qualify for Tier 1 capital treatment (or its then equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company (or, if the Company is not a bank holding company, such guidelines applied to the Company as if the Company were subject to such guidelines); provided, however, that the inability of the Company to treat all or any portion of the Additional Junior Indebtedness as Tier 1 capital shall not disqualify it as Additional Junior Indebtedness if such inability results from the Company having cumulative preferred stock, minority interests in consolidated 1 1345236.1 Town Square Financial Corporation/Indenture

subsidiaries, or any other class of security or interest which the Federal Reserve now or may hereafter accord Tier 1 capital treatment (including the Debentures) in excess of the amount which may qualify for treatment as Tier 1 capital under applicable capital adequacy guidelines. “Additional Sums” has the meaning set forth in Section 3.6. “Affiliate” has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder. “Authenticating Agent” means any agent or agents of the Trustee which at the time shall be appointed and acting pursuant to Section 6.12. “Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. “Board of Directors” means the board of directors or the executive committee or any other duly authorized designated officers of the Company. “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Trustee. “Business Day” means any day other than a Saturday, Sunday or any other day on which banking institutions in New York City or Wilmington, Delaware are permitted or required by any applicable law or executive order to close. “Capital Securities” means undivided beneficial interests in the assets of the Trust which rank pari passu with Common Securities issued by the Trust; provided, however, that upon the occurrence and continuance of an Event of Default (as defined in the Declaration), the rights of holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of such Capital Securities. “Capital Securities Guarantee” means the guarantee agreement that the Company enters into with Wilmington Trust Company, as guarantee trustee, or other Persons that operates directly or indirectly for the benefit of holders of Capital Securities of the Trust. “Capital Treatment Event” means the receipt by the Company and the Trust of an opinion of counsel experienced in such matters to the effect that, as a result of the occurrence of any amendment to, or change (including any announced prospective change) in, the laws, rules or regulations of the United States or any political subdivision thereof or therein, or as the result of any official or administrative pronouncement or action or decision interpreting or applying such laws, rules or regulations, which amendment or change is effective or which pronouncement, action or decision is announced on or after the date of original issuance of the Debentures, there is more than an insubstantial risk that the Company will not, within 90 days of the date of such opinion, be entitled to treat an amount equal to the aggregate liquidation amount of the Capital Securities as “Tier 1 Capital” (or its then equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company (or if the Company is not a bank holding company or is otherwise not subject to the Federal Reserve’s risk- based capital adequacy guidelines, such guidelines applied to the Company as if the Company were subject to such guidelines); provided, however, that the inability of the Company to treat all or any portion of the liquidation amount of the Capital Securities as Tier l Capital shall not constitute the basis for a Capital Treatment Event, if such inability results from the Company having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the 2 1345236.1 Town Square Financial Corporation/Indenture

Federal Reserve or OTS, as applicable, may now or hereafter accord Tier 1 Capital treatment in excess of the amount which may now or hereafter qualify for treatment as Tier 1 Capital under applicable capital adequacy guidelines; provided further, however, that the distribution of Debentures in connection with the liquidation of the Trust shall not in and of itself constitute a Capital Treatment Event unless such liquidation shall have occurred in connection with a Tax Event or an Investment Company Event. “Certificate” means a certificate signed by any one of the principal executive officer, the principal financial officer or the principal accounting officer of the Company. “Common Securities” means undivided beneficial interests in the assets of the Trust which rank pari passu with Capital Securities issued by the Trust; provided, however, that upon the occurrence and continuance of an Event of Default (as defined in the Declaration), the rights of holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of such Capital Securities. “Company” means Town Square Financial Corporation, a Kentucky corporation, and, subject to the provisions of Article XI, shall include its successors and assigns. “Comparable Treasury Issue” means with respect to any Special Redemption Date the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the Fixed Rate Period Remaining Life that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Fixed Rate Period Remaining Life. If no United States Treasury security has a maturity which is within a period from three months before to three months after the Interest Payment Date in March 2012, the two most closely corresponding fixed, non-callable United States Treasury securities, as selected by the Quotation Agent, shall be used as the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or extrapolated on a straight-line basis, rounding to the nearest month using such securities. “Comparable Treasury Price” means (a) the average of five Reference Treasury Dealer Quotations for such Special Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (b) if the Quotation Agent obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such Quotations. “Coupon Rate” has the meaning set forth in Section 2.8. “Debenture” or “Debentures” has the meaning stated in the first recital of this Indenture. “Debenture Register” has the meaning specified in Section 2.5. “Declaration” means the Amended and Restated Declaration of Trust of the Trust, as amended or supplemented from time to time. “Default” means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default. “Defaulted Interest” has the meaning set forth in Section 2.8. “Determination Date” has the meaning set forth in Section 2.10. “Distribution Period” means (i) with respect to interest paid on the first Interest Payment Date, the period beginning on (and including) the date of original issuance and ending on (but excluding) the Interest Payment Date in March 2007 and (ii) thereafter, with respect to interest paid on each successive 3 1345236.1 Town Square Financial Corporation/Indenture

Interest Payment Date, the period beginning on (and including) the preceding Interest Payment Date and ending on (but excluding) such current Interest Payment Date. “Event of Default” means any event specified in Section 5.1, continued for the period of time, if any, and after the giving of the notice, if any, therein designated. “Extension Period” has the meaning set forth in Section 2.11. “Federal Reserve” means the Board of Governors of the Federal Reserve System, or its designated district bank, as applicable, and any successor federal agency that is primarily responsible for regulating the activities of bank holding companies. “Fixed Rate Period Remaining Life” means, with respect to any Debenture, the period from the Special Redemption Date for such Debenture to the Interest Payment Date in March 2012. “Indenture” means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented, or both. “Institutional Trustee” has the meaning set forth in the Declaration. “Interest Payment Date” means March 15, June 15, September 15 and December 15 of each year during the term of this Indenture, or if such day is not a Business Day, then the next succeeding Business Day (it being understood that interest accrues for any such non-Business Day during the applicable Distribution Period, beginning on or after March 15, 2012), commencing in March 2007. “Interest Rate” means for the Distribution Period beginning on (and including) the date of original issuance and ending on (but excluding) the Interest Payment Date in March 2012 the rate per annum of 6.752%, and for each Distribution Period beginning on or after the Interest Payment Date in March 2012, the Coupon Rate for such Distribution Period. “Investment Company Event” means the receipt by the Company and the Trust of an opinion of counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation or written change (including any announced prospective change) in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or, within 90 days of the date of such opinion will be considered an “investment company” that is required to be registered under the Investment Company Act of 1940, as amended which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Debentures. “Liquidation Amount” means the stated amount of $1,000.00 per Trust Security. “Maturity Date” means March 15, 2037. “Officers’ Certificate” means a certificate signed by the Chairman of the Board, the Chief Executive Officer, the Vice Chairman, the President, any Managing Director or any Vice President, and by the Treasurer, an Assistant Treasurer, the Comptroller, an Assistant Comptroller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 14.6 if and to the extent required by the provisions of such Section. “Opinion of Counsel” means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, or may be other counsel reasonably satisfactory to the Trustee. 4 1345236.1 Town Square Financial Corporation/Indenture

Each such opinion shall include the statements provided for in Section 14.6 if and to the extent required by the provisions of such Section. “OTS” means the Office of Thrift Supervision and any successor federal agency that is primarily responsible for regulating the activities of savings and loan holding companies. The term “outstanding,” when used with reference to Debentures, means, subject to the provisions of Section 7.4, as of any particular time, all Debentures authenticated and delivered by the Trustee or the Authenticating Agent under this Indenture, except: (a) Debentures theretofore canceled by the Trustee or the Authenticating Agent or delivered to the Trustee for cancellation; (b) Debentures, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own paying agent); provided, however, that, if such Debentures, or portions thereof, are to be redeemed prior to maturity thereof, notice of such redemption shall have been given as provided in Section 10.3 or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Debentures paid pursuant to Section 2.6 or in lieu of or in substitution for which other Debentures shall have been authenticated and delivered pursuant to the terms of Section 2.6 unless proof satisfactory to the Company and the Trustee is presented that any such Debentures are held by bona fide holders in due course. “Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. “Predecessor Security” of any particular Debenture means every previous Debenture evidencing all or a portion of the same debt as that evidenced by such particular Debenture; and, for purposes of this definition, any Debenture authenticated and delivered under Section 2.6 in lieu of a lost, destroyed or stolen Debenture shall be deemed to evidence the same debt as the lost, destroyed or stolen Debenture. “Primary Treasury Dealer” means either a nationally recognized primary United States Government securities dealer or an entity of recognized standing in matters pertaining to the quotation of treasury securities that is reasonably acceptable to the Company and the Trustee. “Principal Office of the Trustee,” or other similar term, means the office of the Trustee, at which at any particular time its corporate trust business shall be principally administered, which at the time of the execution of this Indenture shall be Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration. “Quotation Agent” means a designee of the Institutional Trustee who shall be a Primary Treasury Dealer. “Redemption Date” has the meaning set forth in Section 10.1. “Redemption Price” means 100% of the principal amount of the Debentures being redeemed, plus accrued and unpaid interest (including any Additional Interest) on such Debentures to the Redemption Date. 5 1345236.1 Town Square Financial Corporation/Indenture

“Reference Treasury Dealer” means (i) the Quotation Agent and (ii) any other Primary Treasury Dealer selected by the Trustee after consultation with the Company. “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date. “Responsible Officer” means, with respect to the Trustee, any officer within the Principal Office of the Trustee, including any vice-president, any assistant vice-president, any secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or other officer of the Principal Trust Office of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject. “Securities Act” means the Securities Act of 1933, as amended from time to time or any successor legislation. “Securityholder,” “holder of Debentures,” or other similar terms, means any Person in whose name at the time a particular Debenture is registered on the register kept by the Company or the Trustee for that purpose in accordance with the terms hereof. “Senior Indebtedness” means, with respect to the Company, (i) the principal, premium, if any, and interest in respect of (A) indebtedness of the Company for all borrowed and purchased money and (B) indebtedness evidenced by securities, debentures, notes, bonds or other similar instruments issued by the Company; (ii) all capital lease obligations of the Company; (iii) all obligations of the Company issued or assumed as the deferred purchase price of property, all conditional sale obligations of the Company and all obligations of the Company under any title retention agreement; (iv) all obligations of the Company for the reimbursement of any letter of credit, any banker’s acceptance, any security purchase facility, any repurchase agreement or similar arrangement, any interest rate swap, any other hedging arrangement, any obligation under options or any similar credit or other transaction; (v) all obligations of the Company associated with derivative products such as interest and foreign exchange rate contracts, commodity contracts, and similar arrangements; (vi) all obligations of the type referred to in clauses (i) through (v) above of other Persons for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise including, without limitation, similar obligations arising from off-balance sheet guarantees and direct credit substitutes; and (vii) all obligations of the type referred to in clauses (i) through (vi) above of other Persons secured by any lien on any property or asset of the Company (whether or not such obligation is assumed by the Company), whether incurred on or prior to the date of this Indenture or thereafter incurred. Notwithstanding the foregoing, “Senior Indebtedness” shall not include (1) any Additional Junior Indebtedness, (2) Debentures issued pursuant to this Indenture and guarantees in respect of such Debentures, (3) trade accounts payable of the Company arising in the ordinary course of business (such trade accounts payable being pari passu in right of payment to the Debentures), or (4) obligations with respect to which (a) in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are pari passu, junior or otherwise not superior in right of payment to the Debentures and (b) the Company, prior to the issuance thereof, has notified (and, if then required under the applicable guidelines of the regulating entity, has received approval from) the Federal Reserve (if the Company is a bank holding company) or the OTS (if the Company is a savings and loan holding company). Senior Indebtedness shall continue to be Senior 6 1345236.1 Town Square Financial Corporation/Indenture

Indebtedness and be entitled to the subordination provisions irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness. “Special Event” means any of a Capital Treatment Event, an Investment Company Event or a Tax Event. “Special Redemption Date” has the meaning set forth in Section 10.2. “Special Redemption Price” means (a) if the Special Redemption Date occurs before the Interest Payment Date in March 2012, the greater of (i) 107.5% of the principal amount of the Debentures, plus accrued and unpaid interest (including Additional Interest) on the Debentures to the Special Redemption Date, or (ii) as determined by the Quotation Agent, (A) the sum of the present values of the scheduled payments of principal and interest on the Debentures during the Fixed Rate Period Remaining Life of the Debentures (assuming the Debentures matured on the Interest Payment Date in March 2012) discounted to the Special Redemption Date on a quarterly basis (assuming a 360-day year consisting of twelve 30- day months) at the Treasury Rate, plus (B) accrued and unpaid interest (including Additional Interest) on the Debentures to such Special Redemption Date, or (b) if the Special Redemption Date occurs on or after the Interest Payment Date in March 2012, 100% of the principal amount of the Debentures being redeemed, plus accrued and unpaid interest (including any Additional Interest) on such Debentures to the Special Redemption Date. “Subsidiary” means with respect to any Person, (i) any corporation at least a majority of the outstanding voting stock of which is owned, directly or indirectly, by such Person or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any general partnership, joint venture or similar entity, at least a majority of the outstanding partnership or similar interests of which shall at the time be owned by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii) any limited partnership of which such Person or any of its Subsidiaries is a general partner. For the purposes of this definition, “voting stock” means shares, interests, participations or other equivalents in the equity interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency. “Tax Event” means the receipt by the Company and the Trust of an opinion of counsel experienced in such matters to the effect that, as a result of any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement (including any private letter ruling, technical advice memorandum, field service advice, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations) (an “Administrative Action”) or judicial decision interpreting or applying such laws or regulations, regardless of whether such Administrative Action or judicial decision is issued to or in connection with a proceeding involving the Company or the Trust and whether or not subject to review or appeal, which amendment, clarification, change, Administrative Action or decision is enacted, promulgated or announced, in each case on or after the date of original issuance of the Debentures, there is more than an insubstantial risk that: (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Debentures; (ii) interest payable by the Company on the Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes; or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. “3-Month LIBOR” has the meaning set forth in Section 2.10. 7 1345236.1 Town Square Financial Corporation/Indenture

“Telerate Page 3750” has the meaning set forth in Section 2.10. “Treasury Rate” means (i) the yield, under the heading which represents the average for the week immediately prior to the date of calculation, appearing in the most recently published statistical release designated H.15 (519) or any successor publication which is published weekly by the Federal Reserve and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Fixed Rate Period Remaining Life (if no maturity is within three months before or after the Fixed Rate Period Remaining Life, yields for the two published maturities most closely corresponding to the Fixed Rate Period Remaining Life shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Special Redemption Date. The Treasury Rate shall be calculated by the Quotation Agent on the third Business Day preceding the Special Redemption Date. “Trust” shall mean Town Square Statutory Trust I, a Delaware statutory trust, or any other similar trust created for the purpose of issuing Capital Securities in connection with the issuance of Debentures under this Indenture, of which the Company is the sponsor. “Trust Securities” means Common Securities and Capital Securities of the Trust. “Trustee” means Wilmington Trust Company, and, subject to the provisions of Article VI hereof, shall also include its successors and assigns as Trustee hereunder. ARTICLE II. DEBENTURES Section 2.1. Authentication and Dating. Upon the execution and delivery of this Indenture, or from time to time thereafter, Debentures in an aggregate principal amount not in excess of $4,124,000.00 may be executed and delivered by the Company to the Trustee for authentication, and the Trustee, upon receipt of a written authentication order from the Company, shall thereupon authenticate and make available for delivery said Debentures to or upon the written order of the Company, signed by its Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman, the President, one of its Managing Directors or one of its Vice Presidents without any further action by the Company hereunder. Notwithstanding anything to the contrary contained herein, the Trustee shall be fully protected in relying upon the aforementioned authentication order and written order in authenticating and delivering said Debentures. In authenticating such Debentures, and accepting the additional responsibilities under this Indenture in relation to such Debentures, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon: (a) a copy of any Board Resolution or Board Resolutions relating thereto and, if applicable, an appropriate record of any action taken pursuant to such resolution, in each case certified by the Secretary or an Assistant Secretary of the Company, as the case may be; and (b) an Opinion of Counsel prepared in accordance with Section 14.6 which shall also state: (1) that such Debentures, when authenticated and delivered by the Trustee and issued by the Company in each case in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations 8 1345236.1 Town Square Financial Corporation/Indenture

of the Company, subject to or limited by applicable bankruptcy, insolvency, reorganization, conservatorship, receivership, moratorium and other statutory or decisional laws relating to or affecting creditors’ rights or the reorganization of financial institutions (including, without limitation, preference and fraudulent conveyance or transfer laws), heretofore or hereafter enacted or in effect, affecting the rights of creditors generally; and (2) that all laws and requirements in respect of the execution and delivery by the Company of the Debentures have been complied with and that authentication and delivery of the Debentures by the Trustee will not violate the terms of this Indenture. The Trustee shall have the right to decline to authenticate and deliver any Debentures under this Section if the Trustee, being advised in writing by counsel, determines that such action may not lawfully be taken or if a Responsible Officer of the Trustee in good faith shall determine that such action would expose the Trustee to personal liability to existing holders. The definitive Debentures shall be typed, printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Debentures, as evidenced by their execution of such Debentures. Section 2.2. Form of Trustee’s Certificate of Authentication. The Trustee’s certificate of authentication on all Debentures shall be in substantially the following form: This is one of the Debentures referred to in the within-mentioned Indenture. WILMINGTON TRUST COMPANY, as Trustee By Authorized Signer Section 2.3. Form and Denomination of Debentures. The Debentures shall be substantially in the form of Exhibit A attached hereto. The Debentures shall be in registered, certificated form without coupons and in minimum denominations of $100,000.00 and any multiple of $1,000.00 in excess thereof. Any attempted transfer of the Debentures in a block having an aggregate principal amount of less than $100,000.00 shall be deemed to be void and of no legal effect whatsoever. Any such purported transferee shall be deemed not to be a holder of such Debentures for any purpose, including, but not limited to the receipt of payments on such Debentures, and such purported transferee shall be deemed to have no interest whatsoever in such Debentures. The Debentures shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as the officers executing the same may determine with the approval of the Trustee as evidenced by the execution and authentication thereof. Section 2.4. Execution of Debentures. The Debentures shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman, President, one of its Managing Directors or one of its Executive Vice Presidents, Senior Vice Presidents or Vice Presidents. Only such Debentures as shall bear thereon a certificate of authentication substantially in the form herein before recited, executed by the Trustee or the Authenticating Agent by the manual signature of an authorized signer, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee or the Authenticating Agent upon any Debenture executed by the Company shall be conclusive evidence that the Debenture so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture. 9 1345236.1 Town Square Financial Corporation/Indenture

In case any officer of the Company who shall have signed any of the Debentures shall cease to be such officer before the Debentures so signed shall have been authenticated and delivered by the Trustee or the Authenticating Agent, or disposed of by the Company, such Debentures nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Debentures had not ceased to be such officer of the Company; and any Debenture may be signed on behalf of the Company by such Persons as, at the actual date of the execution of such Debenture, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such an officer. Every Debenture shall be dated the date of its authentication. Section 2.5. Exchange and Registration of Transfer of Debentures. The Company shall cause to be kept, at the office or agency maintained for the purpose of registration of transfer and for exchange as provided in Section 3.2, a register (the “Debenture Register”) for the Debentures issued hereunder in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration and transfer of all Debentures as in this Article II provided. The Debenture Register shall be in written form or in any other form capable of being converted into written form within a reasonable time. Debentures to be exchanged may be surrendered at the Principal Office of the Trustee or at any office or agency to be maintained by the Company for such purpose as provided in Section 3.2, and the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in exchange therefor the Debenture or Debentures which the Securityholder making the exchange shall be entitled to receive. Upon due presentment for registration of transfer of any Debenture at the Principal Office of the Trustee or at any office or agency of the Company maintained for such purpose as provided in Section 3.2, the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in the name of the transferee or transferees a new Debenture for a like aggregate principal amount. Registration or registration of transfer of any Debenture by the Trustee or by any agent of the Company appointed pursuant to Section 3.2, and delivery of such Debenture, shall be deemed to complete the registration or registration of transfer of such Debenture. All Debentures presented for registration of transfer or for exchange or payment shall (if so required by the Company or the Trustee or the Authenticating Agent) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee or the Authenticating Agent duly executed by the holder or his attorney duly authorized in writing. No service charge shall be made for any exchange or registration of transfer of Debentures, but the Company or the Trustee may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in connection therewith. The Company or the Trustee shall not be required to exchange or register a transfer of any Debenture for a period of 15 days next preceding the date of selection of Debentures for redemption. Notwithstanding anything herein to the contrary, Debentures may not be transferred except in compliance with the restricted securities legend set forth below, unless otherwise determined by the Company, upon the advice of counsel expert in securities law, in accordance with applicable law: THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION. 10 1345236.1 Town Square Financial Corporation/Indenture

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION. 11 1345236.1 Town Square Financial Corporation/Indenture

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS. Section 2.6. Mutilated, Destroyed, Lost or Stolen Debentures. In case any Debenture shall become mutilated or be destroyed, lost or stolen, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, a new Debenture bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Debenture, or in lieu of and in substitution for the Debenture so destroyed, lost or stolen. In every case the applicant for a substituted Debenture shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of such Debenture and of the ownership thereof. The Trustee may authenticate any such substituted Debenture and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substituted Debenture, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. In case any Debenture which has matured or is about to mature or has been called for redemption in full shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Debenture, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Debenture) if the applicant for such payment shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless and, in case of destruction, loss or theft, evidence satisfactory to the Company and to the Trustee of the destruction, loss or theft of such Debenture and of the ownership thereof. Every substituted Debenture issued pursuant to the provisions of this Section 2.6 by virtue of the fact that any such Debenture is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debenture shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debentures duly issued hereunder. All Debentures shall be held and owned upon the express condition that, to the extent permitted by applicable law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debentures and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. Section 2.7. Temporary Debentures. Pending the preparation of definitive Debentures, the Company may execute and the Trustee shall authenticate and make available for delivery temporary Debentures that are typed, printed or lithographed. Temporary Debentures shall be issuable in any authorized denomination, and substantially in the form of the definitive Debentures in lieu of which they are issued but with such omissions, insertions and variations as may be appropriate for temporary Debentures, all as may be determined by the Company. Every such temporary Debenture shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Debentures. Without unreasonable delay the Company will execute and deliver to the Trustee or the Authenticating Agent 12 1345236.1 Town Square Financial Corporation/Indenture

definitive Debentures and thereupon any or all temporary Debentures may be surrendered in exchange therefor, at the principal corporate trust office of the Trustee or at any office or agency maintained by the Company for such purpose as provided in Section 3.2, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in exchange for such temporary Debentures a like aggregate principal amount of such definitive Debentures. Such exchange shall be made by the Company at its own expense and without any charge therefor except that in case of any such exchange involving a registration of transfer the Company may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto. Until so exchanged, the temporary Debentures shall in all respects be entitled to the same benefits under this Indenture as definitive Debentures authenticated and delivered hereunder. Section 2.8. Payment of Interest and Additional Interest. Interest at the Interest Rate and any Additional Interest on any Debenture that is payable, and is punctually paid or duly provided for, on any Interest Payment Date for Debentures shall be paid to the Person in whose name said Debenture (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment except that interest and any Additional Interest payable on the Maturity Date shall be paid to the Person to whom principal is paid. Each Debenture shall bear interest for the period beginning on (and including) the date of original issuance and ending on (but excluding) the Interest Payment Date in March 2012 at a rate per annum of 6.752%, and shall bear interest for each successive Distribution Period beginning on or after the Interest Payment Date in March 2012 at a rate per annum equal to the 3-Month LIBOR, determined as described in Section 2.10, plus 1.83% (the “Coupon Rate”), applied to the principal amount thereof, until the principal thereof becomes due and payable, and on any overdue principal and to the extent that payment of such interest is enforceable under applicable law (without duplication) on any overdue installment of interest (including Additional Interest) at the Interest Rate in effect for each applicable period compounded quarterly. Interest shall be payable (subject to any relevant Extension Period) quarterly in arrears on each Interest Payment Date with the first installment of interest to be paid on the Interest Payment Date in March 2007. Any interest on any Debenture, including Additional Interest, that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered holder on the relevant regular record date by virtue of having been such holder; and such Defaulted Interest shall be paid by the Company to the Persons in whose names such Debentures (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner: the Company shall notify the Trustee in writing at least 25 days prior to the date of the proposed payment of the amount of Defaulted Interest proposed to be paid on each such Debenture and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Securityholder at its address as it appears in the Debenture Register, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in 13 1345236.1 Town Square Financial Corporation/Indenture

whose names such Debentures (or their respective Predecessor Securities) are registered on such special record date and shall be no longer payable. The Company may make payment of any Defaulted Interest on any Debentures in any other lawful manner after notice given by the Company to the Trustee of the proposed payment method; provided, however, the Trustee in its sole discretion deems such payment method to be practical. Any interest (including Additional Interest) scheduled to become payable on an Interest Payment Date occurring during an Extension Period shall not be Defaulted Interest and shall be payable on such other date as may be specified in the terms of such Debentures. The term “regular record date” as used in this Section shall mean the close of business on the 15th Business Day preceding the applicable Interest Payment Date. Subject to the foregoing provisions of this Section, each Debenture delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Debenture shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Debenture. Section 2.9. Cancellation of Debentures Paid, etc. All Debentures surrendered for the purpose of payment, redemption, exchange or registration of transfer, shall, if surrendered to the Company or any paying agent, be surrendered to the Trustee and promptly canceled by it, or, if surrendered to the Trustee or any Authenticating Agent, shall be promptly canceled by it, and no Debentures shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. All Debentures canceled by any Authenticating Agent shall be delivered to the Trustee. The Trustee shall destroy all canceled Debentures unless the Company otherwise directs the Trustee in writing. If the Company shall acquire any of the Debentures, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Debentures unless and until the same are surrendered to the Trustee for cancellation. Section 2.10. Computation of Interest. The amount of interest payable (i) for any Distribution Period commencing on or after the date of original issuance but before the Interest Payment Date in March 2012 will be computed on the basis of a 360-day year of twelve 30-day months, and (ii) for the Distribution Period commencing on the Interest Payment Date in March 2012 and each succeeding Distribution Period will be calculated by applying the Interest Rate to the principal amount outstanding at the commencement of the Distribution Period on the basis of the actual number of days in the Distribution Period concerned divided by 360. All percentages resulting from any calculations on the Debentures will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one- millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward)). (a) “3-Month LIBOR” means the London interbank offered interest rate for three-month, U.S. dollar deposits determined by the Trustee in the following order of priority: (1) the rate (expressed as a percentage per annum) for U.S. dollar deposits having a three-month maturity that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination Date (as defined below). “Telerate Page 3750” means the display designated as “Page 3750” on the Moneyline Telerate Service or such other page as may replace Page 3750 on that service or such other service or services as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying London interbank offered rates for U.S. dollar deposits; 14 1345236.1 Town Square Financial Corporation/Indenture

(2) if such rate cannot be identified on the related Determination Date, the Trustee will request the principal London offices of four leading banks in the London interbank market to provide such banks’ offered quotations (expressed as percentages per annum) to prime banks in the London interbank market for U.S. dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; (3) if fewer than two such quotations are provided as requested in clause (2) above, the Trustee will request four major New York City banks to provide such banks’ offered quotations (expressed as percentages per annum) to leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date. If at least two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and (4) if fewer than two such quotations are provided as requested in clause (3) above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the Distribution Period immediately preceding such current Distribution Period. If the rate for U.S. dollar deposits having a three-month maturity that initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination Date is superseded on the Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such Determination Date, then the corrected rate as so substituted on the applicable page will be the applicable 3-Month LIBOR for such Determination Date. (b) The Interest Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law. (c) “Determination Date” means the date that is two London Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars are transacted in the London interbank market) preceding the particular Distribution Period for which a Coupon Rate is being determined. (d) The Trustee shall notify the Company, the Institutional Trustee and any securities exchange or interdealer quotation system on which the Capital Securities are listed, of the Coupon Rate and the Determination Date for each Distribution Period, in each case as soon as practicable after the determination thereof but in no event later than the thirtieth (30th) day of the relevant Distribution Period. Failure to notify the Company, the Institutional Trustee or any securities exchange or interdealer quotation system, or any defect in said notice, shall not affect the obligation of the Company to make payment on the Debentures at the applicable Coupon Rate. Any error in the calculation of the Coupon Rate by the Trustee may be corrected at any time by notice delivered as above provided. Upon the request of a holder of a Debenture, the Trustee shall provide the Coupon Rate then in effect and, if determined, the Coupon Rate for the next Distribution Period. (e) Subject to the corrective rights set forth above, all certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions relating to the payment and calculation of interest on the Debentures and distributions on the Capital Securities by the Trustee or the Institutional Trustee will (in the absence of willful default, bad faith and manifest error) be final, conclusive and binding on the Trust, the Company and all of the holders of the Debentures and the Capital Securities, and no liability shall (in the absence of willful default, bad faith or manifest error) attach to the Trustee or the Institutional Trustee in connection with the exercise or non-exercise by either of them or their respective powers, duties and discretion. Section 2.11. Extension of Interest Payment Period. So long as no Acceleration Event of Default has occurred and is continuing, the Company shall have the right, from time to time, and without 15 1345236.1 Town Square Financial Corporation/Indenture

causing an Event of Default, to defer payments of interest on the Debentures by extending the interest payment period on the Debentures at any time and from time to time during the term of the Debentures, for up to 20 consecutive quarterly periods (each such extended interest payment period, an “Extension Period”), during which Extension Period no interest (including Additional Interest) shall be due and payable (except any Additional Sums that may be due and payable). No Extension Period may end on a date other than an Interest Payment Date. During an Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest will accrue at an annual rate equal to the Interest Rate in effect for such Extension Period, compounded quarterly from the date such interest would have been payable were it not for the Extension Period, to the extent permitted by law (such interest referred to herein as “Additional Interest”). At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Debentures (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date; provided further, however, that during any such Extension Period, the Company shall not and shall not permit any Affiliate to (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company’s or such Affiliate’s capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (i) or (ii) above, (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of any exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock, (c) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders’ rights plan, or the issuance of rights, stock or other property under any stockholders’ rights plan, or the redemption or repurchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (f) payments under the Capital Securities Guarantee). Prior to the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest to the extent permitted by applicable law. The Company must give the Trustee notice of its election to begin or extend an Extension Period by the close of business at least 15 Business Days prior to the Interest Payment Date with respect to which interest on the Debentures would have been payable except for the election to begin or extend such Extension Period. The Trustee shall give notice of the Company’s election to begin a new Extension Period to the Securityholders. Section 2.12. CUSIP Numbers. The Company in issuing the Debentures may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of 16 1345236.1 Town Square Financial Corporation/Indenture

redemption as a convenience to Securityholders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Debentures or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Debentures, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the CUSIP numbers. ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY Section 3.1. Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures. (a) The Company covenants and agrees that it will duly and punctually pay or cause to be paid the principal of and premium, if any, and interest and any Additional Interest and other payments on the Debentures at the place, at the respective times and in the manner provided in this Indenture and the Debentures. Each installment of interest on the Debentures may be paid (i) by mailing checks for such interest payable to the order of the holders of Debentures entitled thereto as they appear on the registry books of the Company if a request for a wire transfer has not been received by the Company or (ii) by wire transfer to any account with a banking institution located in the United States designated in writing by such Person to the paying agent no later than the related record date. Notwithstanding the foregoing, so long as the holder of this Debenture is the Institutional Trustee, the payment of the principal of and interest on this Debenture will be made in immediately available funds at such place and to such account as may be designated by the Institutional Trustee. (b) The Company will treat the Debentures as indebtedness, and the amounts payable in respect of the principal amount of such Debentures as interest, for all United States federal income tax purposes. All payments in respect of such Debentures will be made free and clear of United States withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W8 BEN (or any substitute or successor form) establishing its non-United States status for United States federal income tax purposes. (c) As of the date of this Indenture, the Company has no present intention to exercise its right under Section 2.11 to defer payments of interest on the Debentures by commencing an Extension Period. (d) As of the date of this Indenture, the Company believes that the likelihood that it would exercise its right under Section 2.11 to defer payments of interest on the Debentures by commencing an Extension Period at any time during which the Debentures are outstanding is remote because of the restrictions that would be imposed on the Company’s ability to declare or pay dividends or distributions on, or to redeem, purchase or make a liquidation payment with respect to, any of its outstanding equity and on the Company’s ability to make any payments of principal of or interest on, or repurchase or redeem, any of its debt securities that rank pari passu in all respects with (or junior in interest to) the Debentures. Section 3.2. Offices for Notices and Payments, etc. So long as any of the Debentures remain outstanding, the Company will maintain in Wilmington, Delaware, an office or agency where the Debentures may be presented for payment, an office or agency where the Debentures may be presented for registration of transfer and for exchange as in this Indenture provided and an office or agency where notices and demands to or upon the Company in respect of the Debentures or of this Indenture may be served. The Company will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. Until otherwise designated from time to time by the Company in a notice to the Trustee, or specified as contemplated by Section 2.5, such office or agency for all of the 17 1345236.1 Town Square Financial Corporation/Indenture

above purposes shall be the office or agency of the Trustee. In case the Company shall fail to maintain any such office or agency in Wilmington, Delaware, or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Principal Office of the Trustee. In addition to any such office or agency, the Company may from time to time designate one or more offices or agencies outside Wilmington, Delaware, where the Debentures may be presented for registration of transfer and for exchange in the manner provided in this Indenture, and the Company may from time to time rescind such designation, as the Company may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain any such office or agency in Wilmington, Delaware, for the purposes above mentioned. The Company will give to the Trustee prompt written notice of any such designation or rescission thereof. Section 3.3. Appointments to Fill Vacancies in Trustee’s Office. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.9, a Trustee, so that there shall at all times be a Trustee hereunder. Section 3.4. Provision as to Paying Agent. (a) If the Company shall appoint a paying agent other than the Trustee, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provision of this Section 3.4, (1) that it will hold all sums held by it as such agent for the payment of the principal of and premium, if any, or interest, if any, on the Debentures (whether such sums have been paid to it by the Company or by any other obligor on the Debentures) in trust for the benefit of the holders of the Debentures; (2) that it will give the Trustee prompt written notice of any failure by the Company (or by any other obligor on the Debentures) to make any payment of the principal of and premium, if any, or interest, if any, on the Debentures when the same shall be due and payable; and (3) that it will, at any time during the continuance of any Event of Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent. (b) If the Company shall act as its own paying agent, it will, on or before each due date of the principal of and premium, if any, or interest or other payments, if any, on the Debentures, set aside, segregate and hold in trust for the benefit of the holders of the Debentures a sum sufficient to pay such principal, premium, interest or other payments so becoming due and will notify the Trustee in writing of any failure to take such action and of any failure by the Company (or by any other obligor under the Debentures) to make any payment of the principal of and premium, if any, or interest or other payments, if any, on the Debentures when the same shall become due and payable. Whenever the Company shall have one or more paying agents for the Debentures, it will, on or prior to each due date of the principal of and premium, if any, or interest, if any, on the Debentures, deposit with a paying agent a sum sufficient to pay the principal, premium, interest or other payments so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto and (unless such paying agent is the Trustee) the Company shall promptly notify the Trustee in writing of its action or failure to act. 18 1345236.1 Town Square Financial Corporation/Indenture

(c) Anything in this Section 3.4 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge with respect to the Debentures, or for any other reason, pay, or direct any paying agent to pay to the Trustee all sums held in trust by the Company or any such paying agent, such sums to be held by the Trustee upon the trusts herein contained. (d) Anything in this Section 3.4 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 3.4 is subject to Sections 12.3 and 12.4. Section 3.5. Certificate to Trustee. The Company will deliver to the Trustee on or before 120 days after the end of each fiscal year, so long as Debentures are outstanding hereunder, a Certificate stating that in the course of the performance by the signers of their duties as officers of the Company they would normally have knowledge of any default during such fiscal year by the Company in the performance of any covenants contained herein, stating whether or not they have knowledge of any such default and, if so, specifying each such default of which the signers have knowledge and the nature and status thereof. A form of this Certificate is attached hereto as Exhibit B. Section 3.6. Additional Sums. If and for so long as the Trust is the holder of all Debentures and the Trust is required to pay any additional taxes (including withholding taxes), duties, assessments or other governmental charges as a result of a Tax Event, the Company will pay such additional amounts (“Additional Sums”) on the Debentures as shall be required so that the net amounts received and retained by the Trust after paying taxes (including withholding taxes), duties, assessments or other governmental charges will be equal to the amounts the Trust would have received if no such taxes, duties, assessments or other governmental charges had been imposed. Whenever in this Indenture or the Debentures there is a reference in any context to the payment of principal of or interest on the Debentures, such mention shall be deemed to include mention of payments of the Additional Sums provided for in this paragraph to the extent that, in such context, Additional Sums are, were or would be payable in respect thereof pursuant to the provisions of this paragraph and express mention of the payment of Additional Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Sums in those provisions hereof where such express mention is not made; provided, however, that the deferral of the payment of interest during an Extension Period pursuant to Section 2.11 shall not defer the payment of any Additional Sums that may be due and payable. Section 3.7. Compliance with Consolidation Provisions. The Company will not, while any of the Debentures remain outstanding, consolidate with, or merge into, or merge into itself, or sell or convey all or substantially all of its property to any other Person unless the provisions of Article XI hereof are complied with. Section 3.8. Limitation on Dividends. If Debentures are initially issued to the Trust or a trustee of such Trust in connection with the issuance of Trust Securities by the Trust (regardless of whether Debentures continue to be held by such Trust) and (i) there shall have occurred and be continuing an Event of Default, (ii) the Company shall be in default with respect to its payment of any obligations under the Capital Securities Guarantee, or (iii) the Company shall have given notice of its election to defer payments of interest on the Debentures by extending the interest payment period as provided herein and such period, or any extension thereof, shall be continuing, then the Company shall not, and shall not allow any Affiliate of the Company to, (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company’s capital stock or its Affiliates’ capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (x) and (y) above, (1) repurchases, redemptions or other acquisitions of shares of capital stock of 19 1345236.1 Town Square Financial Corporation/Indenture

the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, if any, (2) as a result of any exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock, (3) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (4) any declaration of a dividend in connection with any stockholders’ rights plan, or the issuance of rights, stock or other property under any stockholders’ rights plan, or the redemption or repurchase of rights pursuant thereto, (5) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (6) payments under the Capital Securities Guarantee). Section 3.9. Covenants as to the Trust. For so long as the Trust Securities remain outstanding, the Company shall maintain 100% ownership of the Common Securities; provided, however, that any permitted successor of the Company under this Indenture may succeed to the Company’s ownership of such Common Securities. The Company, as owner of the Common Securities, shall, except in connection with a distribution of Debentures to the holders of Trust Securities in liquidation of the Trust, the redemption of all of the Trust Securities or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, cause the Trust (a) to remain a statutory trust, (b) to otherwise continue to be classified as a grantor trust for United States federal income tax purposes, and (c) to cause each holder of Trust Securities to be treated as owning an undivided beneficial interest in the Debentures. Section 3.10. Additional Junior Indebtedness. The Company shall not, and it shall not cause or permit any Subsidiary of the Company to, incur, issue or be obligated on any Additional Junior Indebtedness, either directly or indirectly, by way of guarantee, suretyship or otherwise, other than Additional Junior Indebtedness (i) that, by its terms, is expressly stated to be either junior and subordinate or pari passu in all respects to the Debentures, and (ii) of which the Company has notified (and, if then required under the applicable guidelines of the regulating entity, has received approval from) the Federal Reserve, if the Company is a bank holding company, or the OTS, if the Company is a savings and loan holding company. ARTICLE IV. SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE Section 4.1. Securityholders’ Lists. The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee: (a) on each regular record date for the Debentures, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Securityholders of the Debentures as of such record date; and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; 20 1345236.1 Town Square Financial Corporation/Indenture

except that no such lists need be furnished under this Section 4.1 so long as the Trustee is in possession thereof by reason of its acting as Debenture registrar. Section 4.2. Preservation and Disclosure of Lists. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Debentures (1) contained in the most recent list furnished to it as provided in Section 4.1 or (2) received by it in the capacity of Debentures registrar (if so acting) hereunder. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished. (b) In case three or more holders of Debentures (hereinafter referred to as “applicants”) apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Debenture for a period of at least 6 months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Debentures with respect to their rights under this Indenture or under such Debentures and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall within 5 Business Days after the receipt of such application, at its election, either: (1) afford such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.2, or (2) inform such applicants as to the approximate number of holders of Debentures whose names and addresses appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.2, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Securityholder whose name and address appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.2 a copy of the form of proxy or other communication which is specified in such request with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Securities and Exchange Commission, if permitted or required by applicable law, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the holders of all Debentures, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If said Commission, as permitted or required by applicable law, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, said Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Each and every holder of Debentures, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any paying agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Debentures in accordance with the provisions of subsection (b) of this Section 4.2, regardless 21 1345236.1 Town Square Financial Corporation/Indenture

of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under said subsection (b). ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT Section 5.1. Events of Default. “Event of Default,” wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) the Company defaults in the payment of any interest upon any Debenture, including any Additional Interest in respect thereof, following the nonpayment of any such interest for twenty or more consecutive Distribution Periods; or (b) the Company defaults in the payment of all or any part of the principal of (or premium, if any, on) any Debentures as and when the same shall become due and payable either at maturity, upon redemption, by declaration of acceleration or otherwise; or (c) the Company defaults in the performance of, or breaches, any of its covenants or agreements in this Indenture or in the terms of the Debentures established as contemplated in this Indenture (other than a covenant or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the outstanding Debentures, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or (d) a court of competent jurisdiction shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or (e) the Company shall commence a voluntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Company or of any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or (f) the Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up its business or otherwise terminated its existence except in connection with (i) the distribution of the Debentures to holders of such Trust Securities in liquidation of their interests in the Trust, (ii) the redemption of all of the outstanding Trust Securities or (iii) certain mergers, consolidations or amalgamations, each as permitted by the Declaration. If an Acceleration Event of Default occurs and is continuing with respect to the Debentures, then, and in each and every such case, unless the principal of the Debentures shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 22 1345236.1 Town Square Financial Corporation/Indenture

Debentures then outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the entire principal of the Debentures and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. If an Event of Default under Section 5.1(b) or (c) occurs and is continuing with respect to the Debentures, then, and in each and every such case, unless the principal of the Debentures shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Debentures then outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by Securityholders), may proceed to remedy the default or breach thereunder by such appropriate judicial proceedings as the Trustee or such holders shall deem most effectual to remedy the defaulted covenant or enforce the provisions of this Indenture so breached, either by suit in equity or by action at law, for damages or otherwise. The foregoing provisions, however, are subject to the condition that if, at any time after the principal of the Debentures shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, (i) the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Debentures and the principal of and premium, if any, on the Debentures which shall have become due otherwise than by acceleration (with interest upon such principal and premium, if any, and Additional Interest) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and all other amounts due to the Trustee pursuant to Section 6.6, if any, and (ii) all Events of Default under this Indenture, other than the non-payment of the principal of or premium, if any, on Debentures which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein -- then and in every such case the holders of a majority in aggregate principal amount of the Debentures then outstanding, by written notice to the Company and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Trustee and the holders of the Debentures shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the holders of the Debentures shall continue as though no such proceeding had been taken. Section 5.2. Payment of Debentures on Default; Suit Therefor. The Company covenants that upon the occurrence of an Event of Default pursuant to Section 5.1(a) or (b) then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Debentures the whole amount that then shall have become due and payable on all Debentures for principal and premium, if any, or interest, or both, as the case may be, with Additional Interest accrued on the Debentures (to the extent that payment of such interest is enforceable under applicable law and, if the Debentures are held by the Trust or a trustee of such Trust, without duplication of any other amounts paid by the Trust or a trustee in respect thereof); and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including a reasonable compensation to the Trustee, its agents, attorneys and counsel, and any other amounts due to the Trustee under Section 6.6. In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or any other obligor on such Debentures and collect in the manner provided by law out of the property of the 23 1345236.1 Town Square Financial Corporation/Indenture

Company or any other obligor on such Debentures wherever situated the moneys adjudged or decreed to be payable. In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Debentures under Bankruptcy Law, or in case a receiver or trustee shall have been appointed for the property of the Company or such other obligor, or in the case of any other similar judicial proceedings relative to the Company or other obligor upon the Debentures, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Debentures shall then be due and payable as therein expressed or by declaration of acceleration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.2, shall be entitled and empowered, by intervention in such proceedings or otherwise, (i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Debentures, (ii) in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all other amounts due to the Trustee under Section 6.6), and of the Securityholders allowed in such judicial proceedings relative to the Company or any other obligor on the Debentures, or to the creditors or property of the Company or such other obligor, unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Debentures in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or Person performing similar functions in comparable proceedings, (iii) to collect and receive any moneys or other property payable or deliverable on any such claims, and (iv) to distribute the same after the deduction of its charges and expenses. Any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Securityholders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other amounts due to the Trustee under Section 6.6. Nothing herein contained shall be construed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Debentures or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. All rights of action and of asserting claims under this Indenture, or under any of the Debentures, may be enforced by the Trustee without the possession of any of the Debentures, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be for the ratable benefit of the holders of the Debentures. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to 24 1345236.1 Town Square Financial Corporation/Indenture

represent all the holders of the Debentures, and it shall not be necessary to make any holders of the Debentures parties to any such proceedings. Section 5.3. Application of Moneys Collected by Trustee. Any moneys collected by the Trustee pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Debentures in respect of which moneys have been collected, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: First: To the payment of costs and expenses incurred by, and reasonable fees of, the Trustee, its agents, attorneys and counsel, and of all other amounts due to the Trustee under Section 6.6; Second: To the payment of all Senior Indebtedness of the Company if and to the extent required by Article XV; Third: To the payment of the amounts then due and unpaid upon Debentures for principal (and premium, if any), and interest on the Debentures, in respect of which or for the benefit of which money has been collected, ratably, without preference or priority of any kind, according to the amounts due on such Debentures (including Additional Interest); and Fourth: The balance, if any, to the Company. Section 5.4. Proceedings by Securityholders. No holder of any Debenture shall have any right to institute any suit, action or proceeding for any remedy hereunder, unless such holder previously shall have given to the Trustee written notice of an Event of Default with respect to the Debentures and unless the holders of not less than 25% in aggregate principal amount of the Debentures then outstanding shall have given the Trustee a written request to institute such action, suit or proceeding and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action, suit or proceeding. Notwithstanding any other provisions in this Indenture, however, the right of any holder of any Debenture to receive payment of the principal of, premium, if any, and interest, on such Debenture when due, or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the consent of such holder and by accepting a Debenture hereunder it is expressly understood, intended and covenanted by the taker and holder of every Debenture with every other such taker and holder and the Trustee, that no one or more holders of Debentures shall have any right in any manner whatsoever by virtue or by availing itself of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other Debentures, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Debentures. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. Section 5.5. Proceedings by Trustee. In case of an Event of Default hereunder the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. 25 1345236.1 Town Square Financial Corporation/Indenture

Section 5.6. Remedies Cumulative and Continuing; Delay or Omission Not a Waiver. Except as otherwise provided in Section 2.6, all powers and remedies given by this Article V to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any other powers and remedies available to the Trustee or the holders of the Debentures, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to the Debentures, and no delay or omission of the Trustee or of any holder of any of the Debentures to exercise any right, remedy or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right, remedy or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 5.4, every power and remedy given by this Article V or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee (in accordance with its duties under Section 6.1) or by the Securityholders. Section 5.7. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders. The holders of a majority in aggregate principal amount of the Debentures affected (voting as one class) at the time outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to such Debentures; provided, however, that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee shall determine that the action so directed would be unjustly prejudicial to the holders not taking part in such direction or if the Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if a Responsible Officer of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability. The holders of a majority in aggregate principal amount of the Debentures at the time outstanding may on behalf of the holders of all of the Debentures waive (or modify any previously granted waiver of) any past default or Event of Default, and its consequences, except a default (a) in the payment of principal of, premium, if any, or interest on any of the Debentures, (b) in respect of covenants or provisions hereof which cannot be modified or amended without the consent of the holder of each Debenture affected, or (c) in respect of the covenants contained in Section 3.9; provided, however, that if the Debentures are held by the Trust or a trustee of such trust, such waiver or modification to such waiver shall not be effective until the holders of a majority in Liquidation Amount of Trust Securities of the Trust shall have consented to such waiver or modification to such waiver, provided, further, that if the consent of the holder of each outstanding Debenture is required, such waiver shall not be effective until each holder of the Trust Securities of the Trust shall have consented to such waiver. Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the holders of the Debentures shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Whenever any default or Event of Default hereunder shall have been waived as permitted by this Section, said default or Event of Default shall for all purposes of the Debentures and this Indenture be deemed to have been cured and to be not continuing. Section 5.8. Notice of Defaults. The Trustee shall, within 90 days after the actual knowledge by a Responsible Officer of the Trustee of the occurrence of a default with respect to the Debentures, mail to all Securityholders, as the names and addresses of such holders appear upon the Debenture Register, notice of all defaults with respect to the Debentures known to the Trustee, unless such defaults shall have been cured before the giving of such notice (the term “defaults” for the purpose of this Section 5.8 being hereby defined to be the events specified in clauses (a), (b), (c), (d), (e) and (f) of Section 5.1, not including periods of grace, if any, provided for therein); provided, however, that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the Debentures, the 26 1345236.1 Town Square Financial Corporation/Indenture

Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders. Section 5.9. Undertaking to Pay Costs. All parties to this Indenture agree, and each holder of any Debenture by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided, however, that the provisions of this Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Debentures outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debenture against the Company on or after the same shall have become due and payable. ARTICLE VI. CONCERNING THE TRUSTEE Section 6.1. Duties and Responsibilities of Trustee. With respect to the holders of Debentures issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Debentures and after the curing or waiving of all Events of Default which may have occurred, with respect to the Debentures, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants shall be read into this Indenture against the Trustee. In case an Event of Default with respect to the Debentures has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (a) prior to the occurrence of an Event of Default with respect to Debentures and after the curing or waiving of all Events of Default which may have occurred (1) the duties and obligations of the Trustee with respect to Debentures shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations with respect to the Debentures as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee, and (2) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; 27 1345236.1 Town Square Financial Corporation/Indenture

(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith, in accordance with the direction of the Securityholders pursuant to Section 5.7, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is ground for believing that the repayment of such funds or liability is not assured to it under the terms of this Indenture or indemnity satisfactory to the Trustee against such risk is not reasonably assured to it. Section 6.2. Reliance on Documents, Opinions, etc. Except as otherwise provided in Section 6.1: (a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, note, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers’ Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company; (c) the Trustee may consult with counsel of its selection and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default with respect to the Debentures (that has not been cured or waived) to exercise with respect to Debentures such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, coupon or other paper or document, unless requested in writing to do so by the holders of not less than a majority in aggregate principal amount of the outstanding Debentures affected thereby; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the 28 1345236.1 Town Square Financial Corporation/Indenture

Trustee may require reasonable indemnity against such expense or liability as a condition to so proceeding; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents (including any Authenticating Agent) or attorneys, and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed by it with due care; and (h) with the exceptions of defaults under Sections 5.1(a) or (b), the Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Debentures unless a written notice of such Default or Event of Default shall have been given to the Trustee by the Company or any other obligor on the Debentures or by any holder of the Debentures. Section 6.3. No Responsibility for Recitals, etc. The recitals contained herein and in the Debentures (except in the certificate of authentication of the Trustee or the Authenticating Agent) shall be taken as the statements of the Company, and the Trustee and the Authenticating Agent assume no responsibility for the correctness of the same. The Trustee and the Authenticating Agent make no representations as to the validity or sufficiency of this Indenture or of the Debentures. The Trustee and the Authenticating Agent shall not be accountable for the use or application by the Company of any Debentures or the proceeds of any Debentures authenticated and delivered by the Trustee or the Authenticating Agent in conformity with the provisions of this Indenture. Section 6.4. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own Debentures. The Trustee or any Authenticating Agent or any paying agent or any transfer agent or any Debenture registrar, in its individual or any other capacity, may become the owner or pledgee of Debentures with the same rights it would have if it were not Trustee, Authenticating Agent, paying agent, transfer agent or Debenture registrar. Section 6.5. Moneys to be Held in Trust. Subject to the provisions of Section 12.4, all moneys received by the Trustee or any paying agent shall, until used or applied as herein provided, be held in trust for the purpose for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee and any paying agent shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. So long as no Event of Default shall have occurred and be continuing, all interest allowed on any such moneys shall be paid from time to time upon the written order of the Company, signed by the Chairman of the Board of Directors, the Chief Executive Officer, the President, a Managing Director, a Vice President, the Treasurer or an Assistant Treasurer of the Company. Section 6.6. Compensation and Expenses of Trustee. The Company covenants and agrees to pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or willful misconduct. For purposes of clarification, this Section 6.6 does not contemplate the payment by the Company of acceptance or annual administration fees owing to the Trustee pursuant to the services to be provided by the Trustee under this Indenture or the fees and expenses of the Trustee’s counsel in connection with the closing of the transactions contemplated by this Indenture. The Company also covenants to indemnify each of the Trustee or any predecessor Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any and all loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Trustee) incurred without negligence or willful misconduct on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim of 29 1345236.1 Town Square Financial Corporation/Indenture

liability. The obligations of the Company under this Section 6.6 to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Debentures upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Debentures. Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(d), (e) or (f), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive the resignation or removal of the Trustee and the defeasance or other termination of this Indenture. Notwithstanding anything in this Indenture or any Debenture to the contrary, the Trustee shall have no obligation whatsoever to advance funds to pay any principal of or interest on or other amounts with respect to the Debentures or otherwise advance funds to or on behalf of the Company. Section 6.7. Officers’ Certificate as Evidence. Except as otherwise provided in Sections 6.1 and 6.2, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee, and such certificate, in the absence of negligence or willful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof. Section 6.8. Eligibility of Trustee. The Trustee hereunder shall at all times be a corporation organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia or a corporation or other Person authorized under such laws to exercise corporate trust powers, having (or whose obligations under this Indenture are guaranteed by an affiliate having) a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000.00) and subject to supervision or examination by federal, state, territorial, or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 6.8 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent records of condition so published. The Company may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.8, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.9. If the Trustee has or shall acquire any “conflicting interest” within the meaning of § 310(b) of the Trust Indenture Act of 1939, the Trustee shall either eliminate such interest or resign, to the extent and in the manner described by this Indenture. 30 1345236.1 Town Square Financial Corporation/Indenture

Section 6.9. Resignation or Removal of Trustee (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign by giving written notice of such resignation to the Company and by mailing notice thereof, at the Company’s expense, to the holders of the Debentures at their addresses as they shall appear on the Debenture Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee or trustees by written instrument, in duplicate, executed by order of its Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor Trustee. If no successor Trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation to the affected Securityholders, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, or any Securityholder who has been a bona fide holder of a Debenture or Debentures for at least six months may, subject to the provisions of Section 5.9, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor Trustee. (b) In case at any time any of the following shall occur -- (1) the Trustee shall fail to comply with the provisions of Section 6.8 after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Debenture or Debentures for at least 6 months, or (2) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.8 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or (3) the Trustee shall become incapable of acting, or shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee and appoint a successor Trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor Trustee, or, subject to the provisions of Section 5.9, any Securityholder who has been a bona fide holder of a Debenture or Debentures for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint successor Trustee. (c) Upon prior written notice to the Company and the Trustee, the holders of a majority in aggregate principal amount of the Debentures at the time outstanding may at any time remove the Trustee and nominate a successor Trustee, which shall be deemed appointed as successor Trustee unless within 10 Business Days after such nomination the Company objects thereto, in which case, or in the case of a failure by such holders to nominate a successor Trustee, the Trustee so removed or any Securityholder, upon the terms and conditions and otherwise as in subsection (a) of this Section 6.9 provided, may petition any court of competent jurisdiction for an appointment of a successor. (d) Any resignation or removal of the Trustee and appointment of a successor Trustee pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor Trustee as provided in Section 6.10. 31 1345236.1 Town Square Financial Corporation/Indenture

Section 6.10. Acceptance by Successor Trustee. Any successor Trustee appointed as provided in Section 6.9 shall execute, acknowledge and deliver to the Company and to its predecessor Trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations with respect to the Debentures of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the written request of the Company or of the successor Trustee, the Trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 6.6, execute and deliver an instrument transferring to such successor Trustee all the rights and powers of the Trustee so ceasing to act and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee thereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Trustee all such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such Trustee to secure any amounts then due it pursuant to the provisions of Section 6.6. If a successor Trustee is appointed, the Company, the retiring Trustee and the successor Trustee shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debentures as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the Trust hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee. No successor Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Trustee shall be eligible under the provisions of Section 6.8. In no event shall a retiring Trustee be liable for the acts or omissions of any successor Trustee hereunder. Upon acceptance of appointment by a successor Trustee as provided in this Section 6.10, the Company shall mail notice of the succession of such Trustee hereunder to the holders of Debentures at their addresses as they shall appear on the Debenture Register. If the Company fails to mail such notice within 10 Business Days after the acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Company. Section 6.11. Succession by Merger, etc. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided such corporation shall be otherwise eligible and qualified under this Article. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Debentures shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Debentures so authenticated; and in case at that time any of the Debentures shall not have been authenticated, any successor to the Trustee may authenticate such Debentures either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Debentures or in this Indenture provided that the certificate 32 1345236.1 Town Square Financial Corporation/Indenture

of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Debentures in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. Section 6.12. Authenticating Agents. There may be one or more Authenticating Agents appointed by the Trustee upon the request of the Company with power to act on its behalf and subject to its direction in the authentication and delivery of Debentures issued upon exchange or registration of transfer thereof as fully to all intents and purposes as though any such Authenticating Agent had been expressly authorized to authenticate and deliver Debentures; provided, however, that the Trustee shall have no liability to the Company for any acts or omissions of the Authenticating Agent with respect to the authentication and delivery of Debentures. Any such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States or of any state or territory thereof or of the District of Columbia authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of at least $50,000,000.00 and being subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 6.12 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect herein specified in this Section. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 6.12 without the execution or filing of any paper or any further act on the part of the parties hereto or such Authenticating Agent. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating Agent with respect to the Debentures by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 6.12, the Trustee may, and upon the request of the Company shall, promptly appoint a successor Authenticating Agent eligible under this Section 6.12, shall give written notice of such appointment to the Company and shall mail notice of such appointment to all holders of Debentures as the names and addresses of such holders appear on the Debenture Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities with respect to the Debentures of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein. The Company agrees to pay to any Authenticating Agent from time to time reasonable compensation for its services. Any Authenticating Agent shall have no responsibility or liability for any action taken by it as such in accordance with the directions of the Trustee. ARTICLE VII. CONCERNING THE SECURITYHOLDERS Section 7.1. Action by Securityholders. Whenever in this Indenture it is provided that the holders of a specified percentage in aggregate principal amount of the Debentures may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking 33 1345236.1 Town Square Financial Corporation/Indenture

of any other action) the fact that at the time of taking any such action the holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by such Securityholders in person or by agent or proxy appointed in writing, or (b) by the record of such holders of Debentures voting in favor thereof at any meeting of such Securityholders duly called and held in accordance with the provisions of Article VIII, or (c) by a combination of such instrument or instruments and any such record of such a meeting of such Securityholders or (d) by any other method the Trustee deems satisfactory. If the Company shall solicit from the Securityholders any request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, the Company may, at its option, as evidenced by an Officers’ Certificate, fix in advance a record date for such Debentures for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same may be given before or after the record date, but only the Securityholders of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of outstanding Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, and for that purpose the outstanding Debentures shall be computed as of the record date; provided, however, that no such authorization, agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than 6 months after the record date. Section 7.2. Proof of Execution by Securityholders. Subject to the provisions of Section 6.1, 6.2 and 8.5, proof of the execution of any instrument by a Securityholder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The ownership of Debentures shall be proved by the Debenture Register or by a certificate of the Debenture registrar. The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary. The record of any Securityholders’ meeting shall be proved in the manner provided in Section 8.6. Section 7.3. Who Are Deemed Absolute Owners. Prior to due presentment for registration of transfer of any Debenture, the Company, the Trustee, any Authenticating Agent, any paying agent, any transfer agent and any Debenture registrar may deem the Person in whose name such Debenture shall be registered upon the Debenture Register to be, and may treat him as, the absolute owner of such Debenture (whether or not such Debenture shall be overdue) for the purpose of receiving payment of or on account of the principal of, premium, if any, and interest on such Debenture and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any transfer agent nor any Debenture registrar shall be affected by any notice to the contrary. All such payments so made to any holder for the time being or upon his order shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Debenture. Section 7.4. Debentures Owned by Company Deemed Not Outstanding. In determining whether the holders of the requisite aggregate principal amount of Debentures have concurred in any direction, consent or waiver under this Indenture, Debentures which are owned by the Company or any other obligor on the Debentures or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Debentures shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided, 34 1345236.1 Town Square Financial Corporation/Indenture

however, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Debentures which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Debentures so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 7.4 if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Debentures and that the pledgee is not the Company or any such other obligor or Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In the case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Section 7.5. Revocation of Consents; Future Holders Bound. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the holders of the percentage in aggregate principal amount of the Debentures specified in this Indenture in connection with such action, any holder (in cases where no record date has been set pursuant to Section 7.1) or any holder as of an applicable record date (in cases where a record date has been set pursuant to Section 7.1) of a Debenture (or any Debenture issued in whole or in part in exchange or substitution therefor) the serial number of which is shown by the evidence to be included in the Debentures the holders of which have consented to such action may, by filing written notice with the Trustee at the Principal Office of the Trustee and upon proof of holding as provided in Section 7.2, revoke such action so far as concerns such Debenture (or so far as concerns the principal amount represented by any exchanged or substituted Debenture). Except as aforesaid any such action taken by the holder of any Debenture shall be conclusive and binding upon such holder and upon all future holders and owners of such Debenture, and of any Debenture issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon such Debenture or any Debenture issued in exchange or substitution therefor. ARTICLE VIII. SECURITYHOLDERS’ MEETINGS Section 8.1. Purposes of Meetings. A meeting of Securityholders may be called at any time and from time to time pursuant to the provisions of this Article VIII for any of the following purposes: (a) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article V; (b) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article VI; (c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 9.2; or (d) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of such Debentures under any other provision of this Indenture or under applicable law. Section 8.2. Call of Meetings by Trustee. The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 8.1, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders of Debentures affected at their addresses as they shall appear on the Debentures 35 1345236.1 Town Square Financial Corporation/Indenture

Register and, if the Company is not a holder of Debentures, to the Company. Such notice shall be mailed not less than 20 nor more than 180 days prior to the date fixed for the meeting. Section 8.3. Call of Meetings by Company or Securityholders. In case at any time the Company pursuant to a Board Resolution, or the holders of at least 10% in aggregate principal amount of the Debentures, as the case may be, then outstanding, shall have requested the Trustee to call a meeting of Securityholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 8.1, by mailing notice thereof as provided in Section 8.2. Section 8.4. Qualifications for Voting. To be entitled to vote at any meeting of Securityholders a Person shall (a) be a holder of one or more Debentures with respect to which the meeting is being held or (b) a Person appointed by an instrument in writing as proxy by a holder of one or more such Debentures. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. Section 8.5. Regulations. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Debentures and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 8.3, in which case the Company or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by majority vote of the meeting. Subject to the provisions of Section 7.4, at any meeting each holder of Debentures with respect to which such meeting is being held or proxy therefor shall be entitled to one vote for each $1,000.00 principal amount of Debentures held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Debenture challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Debentures held by him or instruments in writing as aforesaid duly designating him as the Person to vote on behalf of other Securityholders. Any meeting of Securityholders duly called pursuant to the provisions of Section 8.2 or 8.3 may be adjourned from time to time by a majority of those present, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice. Section 8.6. Voting. The vote upon any resolution submitted to any meeting of holders of Debentures with respect to which such meeting is being held shall be by written ballots on which shall be subscribed the signatures of such holders or of their representatives by proxy and the serial number or numbers of the Debentures held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more 36 1345236.1 Town Square Financial Corporation/Indenture

Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 8.2. The record shall show the serial numbers of the Debentures voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. Section 8.7. Quorum; Actions. The Persons entitled to vote a majority in principal amount of the Debentures then outstanding shall constitute a quorum for a meeting of Securityholders; provided, however, that if any action is to be taken at such meeting with respect to a consent, waiver, request, demand, notice, authorization, direction or other action which may be given by the holders of not less than a specified percentage in principal amount of the Debentures then outstanding, the Persons holding or representing such specified percentage in principal amount of the Debentures then outstanding will constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Securityholders, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.2, except that such notice need be given only once not less than 5 days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Debentures then outstanding which shall constitute a quorum. Except as limited by the provisos in the first paragraph of Section 9.2, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by the affirmative vote of the holders of a majority in principal amount of the Debentures then outstanding; provided, however, that, except as limited by the provisos in the first paragraph of Section 9.2, any resolution with respect to any consent, waiver, request, demand, notice, authorization, direction or other action which this Indenture expressly provides may be given by the holders of not less than a specified percentage in principal amount of the Debentures then outstanding may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid only by the affirmative vote of the holders of a not less than such specified percentage in principal amount of the Debentures then outstanding. Any resolution passed or decision taken at any meeting of holders of Debentures duly held in accordance with this Section shall be binding on all the Securityholders, whether or not present or represented at the meeting. ARTICLE IX. SUPPLEMENTAL INDENTURES Section 9.1. Supplemental Indentures without Consent of Securityholders. The Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto, without the consent of the Securityholders, for one or more of the following purposes: 37 1345236.1 Town Square Financial Corporation/Indenture

(a) to evidence the succession of another Person to the Company, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Company, pursuant to Article XI hereof; (b) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the holders of Debentures as the Board of Directors shall consider to be for the protection of the holders of such Debentures, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions or conditions a default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, however, that in respect of any such additional covenant restriction or condition such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default; (c) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture; provided that any such action shall not materially adversely affect the interests of the holders of the Debentures; (d) to add to, delete from, or revise the terms of Debentures, including, without limitation, any terms relating to the issuance, exchange, registration or transfer of Debentures, including to provide for transfer procedures and restrictions substantially similar to those applicable to the Capital Securities as required by Section 2.5 (for purposes of assuring that no registration of Debentures is required under the Securities Act); provided, however, that any such action shall not adversely affect the interests of the holders of the Debentures then outstanding (it being understood, for purposes of this proviso, that transfer restrictions on Debentures substantially similar to those that were applicable to Capital Securities shall not be deemed to materially adversely affect the holders of the Debentures); (e) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debentures and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; (f) to make any change (other than as elsewhere provided in this paragraph) that does not adversely affect the rights of any Securityholder in any material respect; or (g) to provide for the issuance of and establish the form and terms and conditions of the Debentures, to establish the form of any certifications required to be furnished pursuant to the terms of this Indenture or the Debentures, or to add to the rights of the holders of Debentures. The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to, but may in its discretion, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 9.1 may be executed by the Company and the Trustee without the consent of the holders of any of the Debentures at the time outstanding, notwithstanding any of the provisions of Section 9.2. 38 1345236.1 Town Square Financial Corporation/Indenture

Section 9.2. Supplemental Indentures with Consent of Securityholders. With the consent (evidenced as provided in Section 7.1) of the holders of not less than a majority in aggregate principal amount of the Debentures at the time outstanding affected by such supplemental indenture (voting as a class), the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the holders of the Debentures; provided, however, that no such supplemental indenture shall without the consent of the holders of each Debenture then outstanding and affected thereby (i) change the fixed maturity of any Debenture, or reduce the principal amount thereof or any premium thereon, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof or any interest or premium thereon payable in any coin or currency other than that provided in the Debentures, or impair or affect the right of any Securityholder to institute suit for payment thereof or impair the right of repayment, if any, at the option of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders of which are required to consent to any such supplemental indenture; provided further, however, that if the Debentures are held by a trust or a trustee of such trust, such supplemental indenture shall not be effective until the holders of a majority in Liquidation Amount of Trust Securities shall have consented to such supplemental indenture; provided further, however, that if the consent of the Securityholder of each outstanding Debenture is required, such supplemental indenture shall not be effective until each holder of the Trust Securities shall have consented to such supplemental indenture. Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall transmit by mail, first class postage prepaid, a notice, prepared by the Company, setting forth in general terms the substance of such supplemental indenture, to the Securityholders as their names and addresses appear upon the Debenture Register. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Section 9.3. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Debentures shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 9.4. Notation on Debentures. Debentures authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Debentures so modified as to conform, in the opinion of the Board of Directors of the 39 1345236.1 Town Square Financial Corporation/Indenture

Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Company, authenticated by the Trustee or the Authenticating Agent and delivered in exchange for the Debentures then outstanding. Section 9.5. Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee. The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall, in addition to the documents required by Section 14.6, receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article IX. The Trustee shall receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article IX is authorized or permitted by, and conforms to, the terms of this Article IX and that it is proper for the Trustee under the provisions of this Article IX to join in the execution thereof. ARTICLE X. REDEMPTION OF SECURITIES Section 10.1. Optional Redemption. The Company shall have the right (subject to the receipt by the Company of prior approval (i) if the Company is a bank holding company, from the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve or (ii) if the Company is a savings and loan holding company, from the OTS, if then required under applicable capital guidelines or policies of the OTS) to redeem the Debentures, in whole or in part, but in all cases in a principal amount with integral multiples of $1,000.00, on any Interest Payment Date on or after the Interest Payment Date in March 2012 (the “Redemption Date”), at the Redemption Price. Section 10.2. Special Event Redemption. If a Special Event shall occur and be continuing, the Company shall have the right (subject to the receipt by the Company of prior approval (i) if the Company is a bank holding company, from the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve or (ii) if the Company is a savings and loan holding company, from the OTS, if then required under applicable capital guidelines or policies of the OTS) to redeem the Debentures in whole, but not in part, at any Interest Payment Date, within 120 days following the occurrence of such Special Event (the “Special Redemption Date”) at the Special Redemption Price. If the Special Event redemption occurs prior to the Interest Payment Date in March 2012, the Company shall appoint a Quotation Agent, which shall be a designee of the Institutional Trustee, for the purpose of performing the services contemplated in, or by reference in, the definition of Special Redemption Price. Any error in the calculation of the Special Redemption Price by the Quotation Agent or the Trustee may be corrected at any time by notice delivered to the Company and the holders of the Debentures. Subject to the corrective rights set forth above, all certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions relating to the payment and calculation of the Special Redemption Price on the Debentures by the Trustee or the Quotation Agent, as the case may be, shall (in the absence of willful default, bad faith or manifest error) be final, conclusive and binding on the holders of the Debentures and the Company, and no liability shall attach (except as provided above) to the Trustee or the Quotation Agent in connection with the exercise or non-exercise by any of them of their respective powers, duties and discretion. Section 10.3. Notice of Redemption; Selection of Debentures. In case the Company shall desire to exercise the right to redeem all, or, as the case may be, any part of the Debentures, it shall cause to be mailed a notice of such redemption at least 30 and not more than 60 days prior to the Redemption Date or the Special Redemption Date to the holders of Debentures so to be redeemed as a whole or in part at their last addresses as the same appear on the Debenture Register. Such mailing shall be by first class mail. The notice if mailed in the manner herein provided shall be conclusively presumed to have been 40 1345236.1 Town Square Financial Corporation/Indenture

duly given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Debenture designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Debenture. Each such notice of redemption shall specify the CUSIP number, if any, of the Debentures to be redeemed, the Redemption Date or the Special Redemption Date, as applicable, the Redemption Price or the Special Redemption Price, as applicable, at which Debentures are to be redeemed, the place or places of payment, that payment will be made upon presentation and surrender of such Debentures, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. If less than all the Debentures are to be redeemed the notice of redemption shall specify the numbers of the Debentures to be redeemed. In case the Debentures are to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Debenture, a new Debenture or Debentures in principal amount equal to the unredeemed portion thereof will be issued. Prior to 10:00 a.m. New York City time on the Redemption Date or Special Redemption Date, as applicable, the Company will deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date or the Special Redemption Date, as applicable, all the Debentures so called for redemption at the appropriate Redemption Price or Special Redemption Price. If all, or less than all, the Debentures are to be redeemed, the Company will give the Trustee notice not less than 45 nor more than 60 days, respectively, prior to the Redemption Date or Special Redemption Date, as applicable, as to the aggregate principal amount of Debentures to be redeemed and the Trustee shall select, in such manner as in its sole discretion it shall deem appropriate and fair, the Debentures or portions thereof (in integral multiples of $1,000.00) to be redeemed. Section 10.4. Payment of Debentures Called for Redemption. If notice of redemption has been given as provided in Section 10.3, the Debentures or portions of Debentures with respect to which such notice has been given shall become due and payable on the Redemption Date or Special Redemption Date, as applicable, and at the place or places stated in such notice at the applicable Redemption Price or Special Redemption Price and on and after said date (unless the Company shall default in the payment of such Debentures at the Redemption Price or Special Redemption Price, as applicable) interest on the Debentures or portions of Debentures so called for redemption shall cease to accrue. On presentation and surrender of such Debentures at a place of payment specified in said notice, such Debentures or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price or Special Redemption Price. Upon presentation of any Debenture redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of the Company, a new Debenture or Debentures of authorized denominations, in principal amount equal to the unredeemed portion of the Debenture so presented. ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE Section 11.1. Company May Consolidate, etc., on Certain Terms. Nothing contained in this Indenture or in the Debentures shall prevent any consolidation or merger of the Company with or into any other Person (whether or not affiliated with the Company) or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other disposition of the property of the Company or its successor or successors as 41 1345236.1 Town Square Financial Corporation/Indenture

an entirety, or substantially as an entirety, to any other Person (whether or not affiliated with the Company, or its successor or successors) authorized to acquire and operate the same; provided, however, that the Company hereby covenants and agrees that, upon any such consolidation, merger (where the Company is not the surviving corporation), sale, conveyance, transfer or other disposition, the due and punctual payment of the principal of (and premium, if any) and interest on all of the Debentures in accordance with their terms, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be kept or performed by the Company, shall be expressly assumed by supplemental indenture satisfactory in form to the Trustee executed and delivered to the Trustee by the entity formed by such consolidation, or into which the Company shall have been merged, or by the entity which shall have acquired such property. Section 11.2. Successor Entity to be Substituted. In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor entity, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and premium, if any, and interest on all of the Debentures and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Company, such successor entity shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the Company, and thereupon the predecessor entity shall be relieved of any further liability or obligation hereunder or upon the Debentures. Such successor entity thereupon may cause to be signed, and may issue in its own name, any or all of the Debentures issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee or the Authenticating Agent; and, upon the order of such successor entity instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee or the Authenticating Agent shall authenticate and deliver any Debentures which previously shall have been signed and delivered by the officers of the Company, to the Trustee or the Authenticating Agent for authentication, and any Debentures which such successor entity thereafter shall cause to be signed and delivered to the Trustee or the Authenticating Agent for that purpose. All the Debentures so issued shall in all respects have the same legal rank and benefit under this Indenture as the Debentures theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Debentures had been issued at the date of the execution hereof. Section 11.3. Opinion of Counsel to be Given to Trustee. The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall receive, in addition to the Opinion of Counsel required by Section 9.5, an Opinion of Counsel as conclusive evidence that any consolidation, merger, sale, conveyance, transfer or other disposition, and any assumption, permitted or required by the terms of this Article XI complies with the provisions of this Article XI. ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE Section 12.1. Discharge of Indenture. When (a) the Company shall deliver to the Trustee for cancellation all Debentures theretofore authenticated (other than any Debentures which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.6) and not theretofore canceled, or (b) all the Debentures not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within 1 year or are to be called for redemption within 1 year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit with the Trustee, in trust, funds, which shall be immediately due and payable, 42 1345236.1 Town Square Financial Corporation/Indenture

sufficient to pay at maturity or upon redemption all of the Debentures (other than any Debentures which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.6) not theretofore canceled or delivered to the Trustee for cancellation, including principal and premium, if any, and interest due or to become due to such date of maturity or redemption date, as the case may be, but excluding, however, the amount of any moneys for the payment of principal of, and premium, if any, or interest on the Debentures (1) theretofore repaid to the Company in accordance with the provisions of Section 12.4, or (2) paid to any state or to the District of Columbia pursuant to its unclaimed property or similar laws, and if in the case of either clause (a) or clause (b) the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect except for the provisions of Sections 2.5, 2.6, 2.8, 3.1, 3.2, 3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall survive until such Debentures shall mature and be paid. Thereafter, Sections 6.6 and 12.4 shall survive, and the Trustee, on demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with, and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with this Indenture or the Debentures. Section 12.2. Deposited Moneys to be Held in Trust by Trustee. Subject to the provisions of Section 12.4, all moneys deposited with the Trustee pursuant to Section 12.1 shall be held in trust in a non-interest bearing account and applied by it to the payment, either directly or through any paying agent (including the Company if acting as its own paying agent), to the holders of the particular Debentures for the payment of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal, and premium, if any, and interest. Section 12.3. Paying Agent to Repay Moneys Held. Upon the satisfaction and discharge of this Indenture all moneys then held by any paying agent of the Debentures (other than the Trustee) shall, upon demand of the Company, be repaid to it or paid to the Trustee, and thereupon such paying agent shall be released from all further liability with respect to such moneys. Section 12.4. Return of Unclaimed Moneys. Any moneys deposited with or paid to the Trustee or any paying agent for payment of the principal of, and premium, if any, or interest on Debentures and not applied but remaining unclaimed by the holders of Debentures for 2 years after the date upon which the principal of, and premium, if any, or interest on such Debentures, as the case may be, shall have become due and payable, shall, subject to applicable escheatment laws, be repaid to the Company by the Trustee or such paying agent on written demand; and the holder of any of the Debentures shall thereafter look only to the Company for any payment which such holder may be entitled to collect, and all liability of the Trustee or such paying agent with respect to such moneys shall thereupon cease. ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS Section 13.1. Indenture and Debentures Solely Corporate Obligations. No recourse for the payment of the principal of or premium, if any, or interest on any Debenture, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture, or in any such Debenture, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, officer or director, as such, past, present or future, of the Company or of any 43 1345236.1 Town Square Financial Corporation/Indenture

successor Person of the Company, either directly or through the Company or any successor Person of the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Debentures. ARTICLE XIV. MISCELLANEOUS PROVISIONS Section 14.1. Successors. All the covenants, stipulations, promises and agreements of the Company in this Indenture shall bind its successors and assigns whether so expressed or not. Section 14.2. Official Acts by Successor Entity. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the like board, committee, officer or other authorized Person of any entity that shall at the time be the lawful successor of the Company. Section 14.3. Surrender of Company Powers. The Company by instrument in writing executed by authority of at least 2/3 (two-thirds) of its Board of Directors and delivered to the Trustee may surrender any of the powers reserved to the Company and thereupon such power so surrendered shall terminate both as to the Company, and as to any permitted successor. Section 14.4. Addresses for Notices, etc. Any notice, consent, direction, request, authorization, waiver or demand which by any provision of this Indenture is required or permitted to be given, made, furnished or served by the Trustee or by the Securityholders on or to the Company may be given or served in writing by being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Company, with the Trustee for the purpose) to the Company, 1701 Central Avenue, Suite 340, Ashland, Kentucky 41101, Attention: Jane Gilkerson. Any notice, consent, direction, request, authorization, waiver or demand by any Securityholder or the Company to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the office of the Trustee, addressed to the Trustee, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration. Any notice, consent, direction, request, authorization, waiver or demand on or to any Securityholder shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the address set forth in the Debenture Register. Section 14.5. Governing Law. This Indenture and each Debenture shall be deemed to be a contract made under the law of the State of New York, and for all purposes shall be governed by and construed in accordance with the law of said State, without regard to conflict of laws principles thereof. Section 14.6. Evidence of Compliance with Conditions Precedent. Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate stating that in the opinion of the signers all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or 44 1345236.1 Town Square Financial Corporation/Indenture

opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not in the opinion of such person, such condition or covenant has been complied with. Section 14.7. Table of Contents, Headings, etc. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. Section 14.8. Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. Section 14.9. Separability. In case any one or more of the provisions contained in this Indenture or in the Debentures shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of such Debentures, but this Indenture and such Debentures shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. Section 14.10. Assignment. The Company will have the right at all times to assign any of its rights or obligations under this Indenture to a direct or indirect wholly owned Subsidiary of the Company, provided that, in the event of any such assignment, the Company will remain liable for all such obligations. Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties hereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties hereto. Section 14.11. Acknowledgment of Rights. The Company agrees that, with respect to any Debentures held by the Trust or the Institutional Trustee of the Trust, if the Institutional Trustee of the Trust fails to enforce its rights under this Indenture as the holder of Debentures held as the assets of such Trust after the holders of a majority in Liquidation Amount of the Capital Securities of such Trust have so directed such Institutional Trustee, a holder of record of such Capital Securities may, to the fullest extent permitted by law, institute legal proceedings directly against the Company to enforce such Institutional Trustee’s rights under this Indenture without first instituting any legal proceedings against such trustee or any other Person. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest (or premium, if any) or principal on the Debentures on the date such interest (or premium, if any) or principal is otherwise payable (or in the case of redemption, on the redemption date), the Company agrees that a holder of record of Capital Securities of the Trust may directly institute a proceeding against the Company for enforcement of payment to such holder directly of the principal of (or premium, if any) or interest on the Debentures having an aggregate principal amount equal to the aggregate Liquidation Amount of the Capital Securities of such holder on or after the respective due date specified in the Debentures. ARTICLE XV. SUBORDINATION OF DEBENTURES Section 15.1. Agreement to Subordinate. The Company covenants and agrees, and each holder of Debentures by such Securityholder’s acceptance thereof likewise covenants and agrees, that all Debentures shall be issued subject to the provisions of this Article XV; and each holder of a Debenture, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. 45 1345236.1 Town Square Financial Corporation/Indenture

The payment by the Company of the principal of, and premium, if any, and interest on all Debentures shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of all Senior Indebtedness of the Company, whether outstanding at the date of this Indenture or thereafter incurred; provided, however, that the Debentures shall rank pari passu in all material respects with any current indebtedness, liabilities or obligations of the Company, or any Subsidiary of the Company, under debt securities (or guarantees in respect of debt securities) issued to any trust, or a trustee of a trust, partnership or other entity affiliated with the Company that is, directly or indirectly, a finance subsidiary (as such term is defined in Rule 3a-5 under the Investment Company Act of 1940) or other financing vehicle of the Company or any Subsidiary of the Company in connection with the issuance by that entity of preferred securities or other securities that are eligible to qualify for Tier 1 capital treatment (or its then equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company. No provision of this Article XV shall prevent the occurrence of any default or Event of Default hereunder. Section 15.2. Default on Senior Indebtedness. In the event and during the continuation of any default by the Company in the payment of principal, premium, interest or any other payment due on any Senior Indebtedness of the Company following any grace period, or in the event that the maturity of any Senior Indebtedness of the Company has been accelerated because of a default and such acceleration has not been rescinded or canceled and such Senior Indebtedness has not been paid in full, then, in either case, no payment shall be made by the Company with respect to the principal (including redemption) of, or premium, if any, or interest on the Debentures. In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 15.2, such payment shall, subject to Section 15.7, be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness (or their representative or representatives or a trustee) notify the Trustee in writing within 90 days of such payment of the amounts then due and owing on the Senior Indebtedness and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness. Section 15.3. Liquidation, Dissolution, Bankruptcy. Upon any payment by the Company or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon all Senior Indebtedness of the Company shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made by the Company, on account of the principal (and premium, if any) or interest on the Debentures. Upon any such dissolution or winding-up or liquidation or reorganization, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Securityholders or the Trustee would be entitled to receive from the Company, except for the provisions of this Article XV, shall be paid by the Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Securityholders or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness in full, in 46 1345236.1 Town Square Financial Corporation/Indenture

money or money’s worth, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness, before any payment or distribution is made to the Securityholders or to the Trustee. In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee before all Senior Indebtedness is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of such Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness, remaining unpaid to the extent necessary to pay such Senior Indebtedness in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the benefit of the holders of such Senior Indebtedness. For purposes of this Article XV, the words “cash, property or securities” shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article XV with respect to the Debentures to the payment of all Senior Indebtedness, that may at the time be outstanding, provided that (i) such Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article XI of this Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article XI of this Indenture. Nothing in Section 15.2 or in this Section shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6 of this Indenture. Section 15.4. Subrogation. Subject to the payment in full of all Senior Indebtedness, the Securityholders shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company, applicable to such Senior Indebtedness until the principal of (and premium, if any) and interest on the Debentures shall be paid in full. For the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Securityholders or the Trustee would be entitled except for the provisions of this Article XV, and no payment over pursuant to the provisions of this Article XV to or for the benefit of the holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness of the Company, and the holders of the Debentures be deemed to be a payment or distribution by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Article XV are and are intended solely for the purposes of defining the relative rights of the holders of the Securities, on the one hand, and the holders of such Senior Indebtedness, on the other hand. Nothing contained in this Article XV or elsewhere in this Indenture or in the Debentures is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the holders of the Debentures, the obligation of the Company, which is absolute and unconditional, to pay to the holders of the Debentures the principal of (and premium, if any) and interest on the Debentures as and when the same shall become due and payable in accordance with their terms, or 47 1345236.1 Town Square Financial Corporation/Indenture

is intended to or shall affect the relative rights of the holders of the Debentures and creditors of the Company, other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the holder of any Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XV of the holders of such Senior Indebtedness in respect of cash, property or securities of the Company, received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article XV, the Trustee, subject to the provisions of Article VI of this Indenture, and the Securityholders shall be entitled to conclusively rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the Securityholders, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XV. Section 15.5. Trustee to Effectuate Subordination. Each Securityholder by such Securityholder’s acceptance thereof authorizes and directs the Trustee on such Securityholder’s behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XV and appoints the Trustee such Securityholder’s attorney-in-fact for any and all such purposes. Section 15.6. Notice by the Company. The Company shall give prompt written notice to a Responsible Officer of the Trustee at the Principal Office of the Trustee of any fact known to the Company that would prohibit the making of any payment of monies to or by the Trustee in respect of the Debentures pursuant to the provisions of this Article XV. Notwithstanding the provisions of this Article XV or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of monies to or by the Trustee in respect of the Debentures pursuant to the provisions of this Article XV, unless and until a Responsible Officer of the Trustee at the Principal Office of the Trustee shall have received written notice thereof from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Article VI of this Indenture, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section at least 2 Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (or premium, if any) or interest on any Debenture), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary that may be received by it within 2 Business Days prior to such date. The Trustee, subject to the provisions of Article VI of this Indenture, shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee or representative on behalf of such holder), to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee or representative on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of such Senior Indebtedness to participate in any payment or distribution pursuant to this Article XV, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XV, and, if such evidence is 48 1345236.1 Town Square Financial Corporation/Indenture

not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 15.7. Rights of the Trustee; Holders of Senior Indebtedness. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XV in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XV, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and, subject to the provisions of Article VI of this Indenture, the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to Securityholders, the Company or any other Person money or assets to which any holder of such Senior Indebtedness shall be entitled by virtue of this Article XV or otherwise. Nothing in this Article XV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6. Section 15.8. Subordination May Not Be Impaired. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company, or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company, with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Securityholders, without incurring responsibility to the Securityholders and without impairing or releasing the subordination provided in this Article XV or the obligations hereunder of the holders of the Debentures to the holders of such Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company, and any other Person. Signatures appear on the following page 49 1345236.1 Town Square Financial Corporation/Indenture

EXHIBIT A FORM OF FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE [FORM OF FACE OF SECURITY] THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION. THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY A-1 1345236.1 Town Square Financial Corporation/Indenture

SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION. THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture of Town Square Financial Corporation December 22, 2006 Town Square Financial Corporation, a Kentucky corporation (the “Company” which term includes any successor Person under the Indenture hereinafter referred to), for value received promises to pay to Wilmington Trust Company, not in its individual capacity but solely as Institutional Trustee for Town Square Statutory Trust I (the “Holder”) or registered assigns, the principal sum of four million one hundred twenty-four thousand dollars ($4,124,000.00) on March 15, 2037, and to pay interest on said principal sum from December 22, 2006, or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 15, June 15, September 15 and December 15 of each year or if such day is not a Business Day, then the next succeeding Business Day (each such date, an “Interest Payment Date”) (it being understood that interest accrues for any such non-Business Day during the applicable Distribution Period, beginning on or after March 15, 2012), commencing on the Interest Payment Date in March 2007, at an annual rate equal to 6.752% beginning on (and including) the date of original issuance and ending on (but excluding) the Interest Payment Date in March 2012 and at an annual rate for each successive period beginning on (and including) the Interest Payment Date in March 2012, and each succeeding Interest Payment Date, and ending on (but excluding) the next succeeding Interest Payment Date (each a “Distribution Period”), equal to 3-Month LIBOR, determined as described below, plus 1.83% (the “Coupon Rate”), applied to the principal amount hereof, until the principal hereof is paid or duly provided for or made available for payment, and on any overdue principal and (without duplication and to the A-2 1345236.1 Town Square Financial Corporation/Indenture

extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest (including Additional Interest) at the Interest Rate in effect for each applicable period, compounded quarterly, from the dates such amounts are due until they are paid or made available for payment. The amount of interest payable (i) for any Distribution Period commencing on or after the date of original issuance but before the Interest Payment Date in March 2012 will be computed on the basis of a 360-day year of twelve 30-day months, and (ii) for the Distribution Period commencing on the Interest Payment Date in March 2012 and each succeeding Distribution Period will be computed on the basis of the actual number of days in the Distribution Period concerned divided by 360. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment, which shall be fifteen Business Days prior to the day on which the relevant Interest Payment Date occurs. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such regular record date and may be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on a special record date. “3-Month LIBOR” as used herein, means the London interbank offered interest rate for three- month U.S. dollar deposits determined by the Trustee in the following order of priority: (i) the rate (expressed as a percentage per annum) for U.S. dollar deposits having a three-month maturity that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination Date (“Telerate Page 3750” means the display designated as “Page 3750” on the Moneyline Telerate Service or such other page as may replace Page 3750 on that service or such other service or services as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying London interbank offered rates for U.S. dollar deposits); (ii) if such rate cannot be identified on the related Determination Date, the Trustee will request the principal London offices of four leading banks in the London interbank market to provide such banks’ offered quotations (expressed as percentages per annum) to prime banks in the London interbank market for U.S. dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; (iii) if fewer than two such quotations are provided as requested in clause (ii) above, the Trustee will request four major New York City banks to provide such banks’ offered quotations (expressed as percentages per annum) to leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date. If at least two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and (iv) if fewer than two such quotations are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the Distribution Period immediately preceding such current Distribution Period. If the rate for U.S. dollar deposits having a three-month maturity that initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination Date is superseded on the Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such Determination Date, then the corrected rate as so substituted on the applicable page will be the applicable 3-Month LIBOR for such Determination Date. As used herein, “Determination Date” means the date that is two London Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars are transacted in the London interbank market) preceding the commencement of the relevant Distribution Period. The Interest Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law. All percentages resulting from any calculations on the Debentures will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all A-3 1345236.1 Town Square Financial Corporation/Indenture

dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one- half cent being rounded upward)). The principal of and interest on this Debenture shall be payable at the office or agency of the Trustee (or other paying agent appointed by the Company) maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made by check mailed to the registered holder at such address as shall appear in the Debenture Register if a request for a wire transfer by such holder has not been received by the Company or by wire transfer to an account appropriately designated by the holder hereof. Notwithstanding the foregoing, so long as the holder of this Debenture is the Institutional Trustee, the payment of the principal of and interest on this Debenture will be made in immediately available funds at such place and to such account as may be designated by the Trustee. So long as no Acceleration Event of Default has occurred and is continuing, the Company shall have the right, from time to time, and without causing an Event of Default, to defer payments of interest on the Debentures by extending the interest payment period on the Debentures at any time and from time to time during the term of the Debentures, for up to 20 consecutive quarterly periods (each such extended interest payment period, an “Extension Period”), during which Extension Period no interest (including Additional Interest) shall be due and payable (except any Additional Sums that may be due and payable). No Extension Period may end on a date other than an Interest Payment Date. During an Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest will accrue at an annual rate equal to the Interest Rate in effect for such Extension Period, compounded quarterly from the date such interest would have been payable were it not for the Extension Period, to the extent permitted by law (such interest referred to herein as “Additional Interest”). At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Debentures (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date; provided further, however, that during any such Extension Period, the Company shall not and shall not permit any Affiliate to engage in any of the activities or transactions described on the reverse side hereof and in the Indenture. Prior to the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. The Company must give the Trustee notice of its election to begin or extend an Extension Period by the close of business at least 15 Business Days prior to the Interest Payment Date with respect to which interest on the Debentures would have been payable except for the election to begin or extend such Extension Period. The indebtedness evidenced by this Debenture is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness, and this Debenture is issued subject to the provisions of the Indenture with respect thereto. Each holder of this Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney- in-fact for any and all such purposes. Each holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. A-4 1345236.1 Town Square Financial Corporation/Indenture

This Debenture shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by or on behalf of the Trustee. The provisions of this Debenture are continued on the reverse side hereof and such provisions shall for all purposes have the same effect as though fully set forth at this place. A-5 1345236.1 Town Square Financial Corporation/Indenture

IN WITNESS WHEREOF, the Company has duly executed this certificate. TOWN SQUARE FINANCIAL CORPORATION By Name: Title: CERTIFICATE OF AUTHENTICATION This is one of the Debentures referred to in the within-mentioned Indenture. WILMINGTON TRUST COMPANY, as Trustee By: Authorized Officer A-6 1345236.1 Town Square Financial Corporation/Indenture

[FORM OF REVERSE OF DEBENTURE] This Debenture is one of the fixed/floating rate junior subordinated deferrable interest debentures of the Company, all issued or to be issued under and pursuant to the Indenture dated as of December 22, 2006 (the “Indenture”), duly executed and delivered between the Company and the Trustee, to which Indenture reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Debentures. The Debentures are limited in aggregate principal amount as specified in the Indenture. Upon the occurrence and continuation of a Special Event prior to the Interest Payment Date in March 2012, the Company shall have the right to redeem the Debentures in whole, but not in part, at any Interest Payment Date, within 120 days following the occurrence of such Special Event, at the Special Redemption Price. In addition, the Company shall have the right to redeem the Debentures, in whole or in part, but in all cases in a principal amount with integral multiples of $1,000.00, on any Interest Payment Date on or after the Interest Payment Date in March 2012, at the Redemption Price. Prior to 10:00 a.m. New York City time on the Redemption Date or Special Redemption Date, as applicable, the Company will deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date or the Special Redemption Date, as applicable, all the Debentures so called for redemption at the appropriate Redemption Price or Special Redemption Price. If all, or less than all, the Debentures are to be redeemed, the Company will give the Trustee notice not less than 45 nor more than 60 days, respectively, prior to the Redemption Date or Special Redemption Date, as applicable, as to the aggregate principal amount of Debentures to be redeemed and the Trustee shall select, in such manner as in its sole discretion it shall deem appropriate and fair, the Debentures or portions thereof (in integral multiples of $1,000.00) to be redeemed. Notwithstanding the foregoing, any redemption of Debentures by the Company shall be subject to the receipt of any and all required regulatory approvals. In case an Acceleration Event of Default shall have occurred and be continuing, upon demand of the Trustee, the principal of all of the Debentures shall become due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Debentures at the time outstanding, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the holders of the Debentures; provided, however, that no such supplemental indenture shall without the consent of the holders of each Debenture then outstanding and affected thereby (i) change the fixed maturity of any Debenture, or reduce the principal amount thereof or any premium thereon, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof or any interest or premium thereon payable in any coin or currency other than that provided in the Debentures, or impair or affect the right of any Securityholder to institute suit for payment thereof or impair the right of repayment, if any, at the option of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders of which are required to consent to any such supplemental indenture. A-7 1345236.1 Town Square Financial Corporation/Indenture

The Indenture also contains provisions permitting the holders of a majority in aggregate principal amount of the Debentures at the time outstanding on behalf of the holders of all of the Debentures to waive (or modify any previously granted waiver of) any past default or Event of Default, and its consequences, except a default (a) in the payment of principal of, premium, if any, or interest on any of the Debentures, (b) in respect of covenants or provisions hereof or of the Indenture which cannot be modified or amended without the consent of the holder of each Debenture affected, or (c) in respect of the covenants contained in Section 3.9 of the Indenture; provided, however, that if the Debentures are held by the Trust or a trustee of such trust, such waiver or modification to such waiver shall not be effective until the holders of a majority in Liquidation Amount of Trust Securities of the Trust shall have consented to such waiver or modification to such waiver, provided, further, that if the consent of the holder of each outstanding Debenture is required, such waiver shall not be effective until each holder of the Trust Securities of the Trust shall have consented to such waiver. Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of the Indenture and the Company, the Trustee and the holders of the Debentures shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Whenever any default or Event of Default hereunder shall have been waived as permitted by the Indenture, said default or Event of Default shall for all purposes of the Debentures and the Indenture be deemed to have been cured and to be not continuing. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest, including Additional Interest, on this Debenture at the time and place and at the rate and in the money herein prescribed. The Company has agreed that if Debentures are initially issued to the Trust or a trustee of such Trust in connection with the issuance of Trust Securities by the Trust (regardless of whether Debentures continue to be held by such Trust) and (i) there shall have occurred and be continuing an Event of Default, (ii) the Company shall be in default with respect to its payment of any obligations under the Capital Securities Guarantee, or (iii) the Company shall have given notice of its election to defer payments of interest on the Debentures by extending the interest payment period as provided herein and such Extension Period, or any extension thereof, shall be continuing, then the Company shall not, and shall not allow any Affiliate of the Company to, (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company’s capital stock or its Affiliates’ capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (x) and (y) above, (1) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, if any, (2) as a result of any exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock, (3) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (4) any declaration of a dividend in connection with any stockholders’ rights plan, or the issuance of rights, stock or other property under any stockholders’ rights plan, or the redemption or repurchase of rights pursuant thereto, (5) any dividend in the form of stock, warrants, options or other rights where the A-8 1345236.1 Town Square Financial Corporation/Indenture

dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (6) payments under the Capital Securities Guarantee). The Debentures are issuable only in registered, certificated form without coupons and in minimum denominations of $100,000.00 and any multiple of $1,000.00 in excess thereof. As provided in the Indenture and subject to the transfer restrictions and limitations as may be contained herein and therein from time to time, this Debenture is transferable by the holder hereof on the Debenture Register of the Company. Upon due presentment for registration of transfer of any Debenture at the Principal Office of the Trustee or at any office or agency of the Company maintained for such purpose as provided in Section 3.2 of the Indenture, the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in the name of the transferee or transferees a new Debenture for a like aggregate principal amount. All Debentures presented for registration of transfer or for exchange or payment shall (if so required by the Company or the Trustee or the Authenticating Agent) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to, the Company and the Trustee or the Authenticating Agent duly executed by the holder or his attorney duly authorized in writing. No service charge shall be made for any exchange or registration of transfer of Debentures, but the Company or the Trustee may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in connection therewith. Prior to due presentment for registration of transfer of any Debenture, the Company, the Trustee, any Authenticating Agent, any paying agent, any transfer agent and any Debenture registrar may deem the Person in whose name such Debenture shall be registered upon the Debenture Register to be, and may treat him as, the absolute owner of such Debenture (whether or not such Debenture shall be overdue) for the purpose of receiving payment of or on account of the principal of, premium, if any, and interest on such Debenture and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any transfer agent nor any Debenture registrar shall be affected by any notice to the contrary. All such payments so made to any holder for the time being or upon his order shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Debenture. No recourse for the payment of the principal of or premium, if any, or interest on any Debenture, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or in any supplemental indenture, or in any such Debenture, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, officer or director, as such, past, present or future, of the Company or of any successor Person of the Company, either directly or through the Company or any successor Person of the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of the Indenture and the issue of the Debentures. Capitalized terms used and not defined in this Debenture shall have the meanings assigned in the Indenture dated as of the date of original issuance of this Debenture between the Trustee and the Company. THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF. A-9 1345236.1 Town Square Financial Corporation/Indenture

EXHIBIT B FORM OF CERTIFICATE TO TRUSTEE Pursuant to Section 3.5 of the Indenture between Town Square Financial Corporation, as the Company (the “Company”), and Wilmington Trust Company, as Trustee, dated as of December 22, 2006 (the “Indenture”), the undersigned hereby certifies as follows: 1. In my capacity as an officer of the Company, I would normally have knowledge of any default by the Company during the last fiscal year in the performance of any covenants of the Company contained in the Indenture. 2. [To my knowledge, the Company is not in default in the performance of any covenants contained in the Indenture. or, alternatively: I am aware of the default(s) in the performance of covenants in the Indentures, as specified below.] Capitalized terms used herein, and not otherwise defined herein, have the respective meanings ascribed thereto in the Indenture. IN WITNESS WHEREOF, the undersigned has executed this Certificate. Date: ______________________________ Name: Title: B-1 1345236.1 Town Square Financial Corporation/Indenture

EX-10.L

SECOND SUPPLEMENTAL INDENTURE

THIS SECOND SUPPLEMENTAL INDENTURE dated as of December 7, 2018, is by and among Wilmington Trust Company, a Delaware trust company, as Trustee (herein, together with its successors in interest, the “Trustee”), City Holding Company, a West Virginia corporation (the “Successor Company”), and Poage Bankshares, Inc., a Maryland corporation (the “Company”), under the Indenture referred to below.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the Trustee, the Company and the Successor Company hereby agree as follows:

PRELIMINARY STATEMENTS

The Trustee and the Company, as successor by merger to Town Square Financial Corporation (“Town Square”) are parties to that certain Indenture dated as of December 22, 2006, as supplemented by that certain First Supplemental Indenture by and among the Trustee, the Company and Town Square, dated as of March 18, 2014 (the “Indenture”), pursuant to which Town Square issued U.S. $4,124,000.00 of its Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due 2037 (the “Debentures”).

As permitted by the terms of the Indenture, the Company, simultaneously with the effectiveness of this Second Supplemental Indenture, shall merge (referred to herein for purposes of Article XI of the Indenture as the “Merger”) with and into the Successor Company with the Successor Company as the surviving corporation. The parties hereto are entering into this Second Supplemental Indenture pursuant to, and in accordance with, Articles IX and XI of the Indenture.

SECTION 1. Definitions. All capitalized terms used herein that are defined in the Indenture, either directly or by reference therein, shall have the respective meanings assigned them in the Indenture except as otherwise provided herein or unless the context otherwise requires.

SECTION 2. Interpretation.

(a) In this Second Supplemental Indenture, unless a clear contrary intention appears:

(i) the singular number includes the plural number and vice versa;

(ii) reference to any gender includes the other gender;

(iii) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Second Supplemental Indenture as a whole and not to any particular Section or other subdivision;

(iv) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Second Supplemental Indenture or the Indenture, and reference to a Person in a particular capacity excludes such Person in any other capacity or

individually provided that nothing in this clause (iv) is intended to authorize any assignment not otherwise permitted by this Second Supplemental Indenture or the Indenture;

(v) reference to any agreement, document or instrument means such agreement, document or instrument as amended, supplemented or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof, as well as any substitution or replacement therefor and reference to any note includes modifications thereof and any note issued in extension or renewal thereof or in substitution or replacement therefor;

(vi) reference to any Section means such Section of this Second Supplemental Indenture; and

(vii) the word “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term.

(b) No provision in this Second Supplemental Indenture shall be interpreted or construed against any Person because that Person or its legal representative drafted such provision.

SECTION 3. Assumption of Obligations.

(a) Pursuant to, and in compliance and accordance with, Section 11.1 and Section 11.2 of the Indenture, the Successor Company hereby expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest on all of the Debentures in accordance with their terms, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be kept or performed by the Company under the Indenture.

(b) Pursuant to, and in compliance and accordance with, Section 11.2 of the Indenture, the Successor Company succeeds to and is substituted for the Company, with the same effect as if the Successor Company had originally been named in the Indenture as the Company.

(c) The Successor Company also succeeds to and is substituted for the Company with the same effect as if the Successor Company had originally been named in (i) the Amended and Restated Declaration of Trust of the Trust, dated as of December 22, 2006 (the “Declaration of Trust”), as Sponsor (as defined in the Declaration of Trust) and (ii) the Guarantee Agreement, dated as of December 22, 2006 (the “Guarantee”), as Guarantor (as defined in the Guarantee).

SECTION 4. Representations and Warranties. The Successor Company represents and warrants that (a) it has all necessary power and authority to execute and deliver this Second Supplemental Indenture and to perform the Indenture, (b) that it is the successor of the Company pursuant to the Merger effected in accordance with applicable law, (c) that it is a corporation organized and existing under the laws of West Virginia, (d) that both immediately before and after giving effect to the Merger and this Second Supplemental Indenture, no Default or Event of Default, and no event which, after notice or lapse

of time or both, would become an Event of Default, has occurred and is continuing and (e) that this Second Supplemental Indenture is executed and delivered pursuant to Section 9.1(a) and Article XI of the Indenture and does not require the consent of the Securityholders.

SECTION 5. Conditions of Effectiveness. This Second Supplemental Indenture shall become effective simultaneously with the effectiveness of the Merger, provided, however, that:

(a) the Trustee shall have executed a counterpart of this Second Supplemental Indenture and shall have received one or more counterparts of this Second Supplemental Indenture executed by the Successor Company and the Company;

(b) the Trustee shall have received an Officers’ Certificate stating that (i) this Second Supplemental Indenture complies with the requirements of Article IX of the Indenture; and (ii) in the opinion of the signers, all conditions precedent, if any, provided for in the Indenture relating to the Merger and this Second Supplemental Indenture have been complied with;

(c) the Trustee shall have received an Opinion of Counsel to the effect that (i) all conditions precedent provided for in the Indenture relating to the Merger and this Second Supplemental Indenture have been complied with; (ii) this Second Supplemental Indenture complies with the requirements of Article IX of the Indenture and is authorized or permitted by, and conforms to, the terms of Article IX of the Indenture; (iii) it is proper for the Trustee, under the provisions of Article IX of the Indenture, to join in the execution of this Second Supplemental Indenture; and (iv) the Merger and the assumption by the Successor Company under this Second Supplemental Indenture comply with the provisions of Article XI of the Indenture; and

(d) the Successor Company and the Company shall have duly executed and filed with each of the Secretary of the State of the State of West Virginia and the Maryland Department of Assessments and Taxation articles of merger in connection with the Merger.

SECTION 6. Reference to the Indenture.

(a) Upon the effectiveness of this Second Supplemental Indenture, each reference in the Indenture to “this Indenture,” “hereunder,” “herein” or words of like import shall mean and be a reference to the Indenture, as affected, amended and supplemented hereby.

(b) Upon the effectiveness of this Second Supplemental Indenture, each reference in the Debentures to the Indenture including each term defined by reference to the Indenture shall mean and be a reference to the Indenture or such term, as the case may be, as affected, amended and supplemented hereby.

(c) The Indenture, as amended and supplemented hereby shall remain in full force and effect and is hereby ratified and confirmed.

SECTION 7. Execution in Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of

which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.

SECTION 8. Governing Law; Binding Effect. This Second Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York and shall be binding upon the parties hereto and their respective successors and assigns.

SECTION 9. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or the due execution thereof by the Company or the Successor Company. The recitals of fact contained herein shall be taken as the statements solely of the Company or the Successor Company, and the Trustee assumes no responsibility for the correctness thereof.

[Signatures on following page]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the day and year first written above.

POAGE BANKSHARES, INC.

By:/s/ Bruce VanHorn

Name: Bruce VanHorn

Title: President and CEO

CITY HOLDING COMPANY

By:/s/ Charles R. Hageboeck

Name: Charles R. Hageboeck

Title: President and CEO

WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Trustee

By:/s/ Michael H. Wass

Name:Michael H. Wass

Title:Vice President

EX-21

Subsidiaries of City Holding Company

As of December 31, 2018, the subsidiaries, each wholly-owned, of City Holding Company included:

City National Bank of West Virginia
3601 MacCorkle Avenue S.E.		Insured Depository
Charleston, West Virginia	National Banking Association	Institution
City Financial Corporation		Inactive Securities
3601 MacCorkle Avenue, S.E.		Brokerage and Investment
Charleston, West Virginia	West Virginia Corporation	Advisory Company
City Mortgage Corporation		Inactive Mortgage Banking
Pittsburgh, Pennsylvania	Pennsylvania Corporation	Company
City Capital Management Company
300 Delaware Avenue		Capital Management
Wilmington, Delaware	Delaware Corporation	Company
City Holding Capital Trust
25 Gatewater Road		Special-purpose Statutory
Cross Lanes, West Virginia	Delaware Business Trust	Trust
Town Square Statutory Trust I
25 Gatewater Road		Special-purpose Statutory
Cross Lanes, West Virginia	Delaware Business Trust	Trust

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

1) Registration Statement (Form S-8 No. 333-87667) of City Holding Company pertaining to the 1993 Incentive Plan,

2) Registration Statement (Form S-8 No. 333-115282) of City Holding Company pertaining to the 2003 Incentive Plan, and

3) Registration Statement (Form S-8 No. 333-189055) of City Holding Company pertaining to the 2013 Incentive Plan;

of our reports dated March 11, 2019, with respect to the consolidated financial statements of City Holding Company and the effectiveness of internal control over financial reporting of City Holding Company included in this Annual Report (Form 10-K) of City Holding Company for the year ended December 31, 2018.

/s/ Ernst & Young LLP

Charleston, West Virginia

March 11, 2019

EX-31.A

Exhibit 31(a)

CERTIFICATION

I, Charles R. Hageboeck, certify that:

1. I have reviewed this Annual Report on Form 10-K of City Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or such persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(a) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 11, 2019

/s/ Charles R. Hageboeck

Charles R. Hageboeck

President and Chief Executive Officer

EX-31.B

Exhibit 31(b)

CERTIFICATION

I, David L. Bumgarner, certify that:

1. I have reviewed this annual report on Form 10-K of City Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or such persons performing the equivalent functions)

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(a) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 11, 2019

/s/ David L. Bumgarner

David L. Bumgarner

Senior Vice President and Chief Financial Officer and Principal Accounting Officer

EX-32.A

Exhibit 32(a)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of City Holding Company (the “Company”) for the period ending December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles R. Hageboeck, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 11, 2019

/s/ Charles R. Hageboeck

Charles R. Hageboeck

President and Chief Executive Officer

EX-32.B

Exhibit 32(b)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of City Holding Company (the “Company”) for the period ending December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David L. Bumgarner, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 11, 2019

/s/ David L. Bumgarner

David L. Bumgarner

Senior Vice President, Chief Financial Officer and Principal Accounting Officer

XML

Document And Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Mar. 07, 2019	Jun. 30, 2018
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2018
Entity Registrant Name	CITY HOLDING CO
Entity Central Index Key	0000726854
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,530,297
Trading Symbol	chco
Entity Public Float			$ 1,117.1
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Assets
Cash and due from banks	$ 55,016	$ 54,450
Interest-bearing deposits in depository institutions	67,975	28,058
Cash and Cash Equivalents	122,991	82,508
Investment securities available for sale, at fair value	723,254	550,389
Investment securities held-to-maturity, at amortized cost (approximate fair value at December 31, 2018 and 2017 - $60,706 and $65,646, respectively)	60,827	64,449
Other securities	28,810	14,147
Total Investment Securities	812,891	628,985
Gross loans	3,587,608	3,127,410
Allowance for loan losses	(15,966)	(18,836)
Net Loans	3,571,642	3,108,574
Bank owned life insurance	113,544	103,440
Premises and equipment, net	78,383	72,682
Accrued interest receivable	12,424	9,223
Deferred tax asset, net	17,338	11,913
Goodwill and other intangible assets, net	122,848	78,595
Other assets	46,951	36,361
Total Assets	4,899,012	4,132,281
Deposits:
Noninterest-bearing	789,119	666,639
Interest-bearing:
Demand deposits	899,568	769,245
Savings deposits	934,218	796,275
Time deposits	1,352,654	1,083,475
Total Deposits	3,975,559	3,315,634
Short-term borrowings:
Federal Home Loan Bank advances	40,000	54,000
Securities sold under agreements to repurchase	221,911	198,219
Long-term debt	4,053	16,495
Other liabilities	56,725	45,426
Total Liabilities	4,298,248	3,629,774
Shareholders’ Equity
Preferred stock, par value $25 per share: 500,000 shares authorized; none issued	0	0
Common stock, par value $2.50 per share: 50,000,000 shares authorized; 19,047,548 shares issued at December 31, 2018 and 2017, less 2,492,403 and 3,429,519 shares in treasury, respectively	47,619	47,619
Capital surplus	169,555	140,960
Retained earnings	485,967	444,481
Treasury stock	(87,895)	(124,909)
Accumulated other comprehensive loss:
Unrealized loss on securities available-for-sale	(8,611)	(611)
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax	5,871	5,033
Total Accumulated Other Comprehensive Loss	(14,482)	(5,644)
Total Shareholders’ Equity	600,764	502,507
Total Liabilities and Shareholders’ Equity	$ 4,899,012	$ 4,132,281

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Securities held-to-maturity, Estimated Fair Value	$ 60,706	$ 65,646
Preferred stock, par value	$ 25	$ 25
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 2.50	$ 2.50
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	19,047,548	19,047,548
Common stock, treasury shares	2,492,403	3,429,519

XML

Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Interest Income
Interest and fees on loans	$ 142,055	$ 125,752	$ 118,138
Interest on investment securities:
Taxable	17,337	14,387	12,392
Tax-exempt	2,843	2,706	1,622
Interest Income, Deposits with Financial Institutions	1,666	85	0
Total Interest Income	163,901	142,930	132,152
Interest Expense
Interest on deposits	21,397	14,826	12,052
Interest on short-term borrowings	3,415	1,214	472
Interest on long-term debt	880	765	683
Total Interest Expense	25,692	16,805	13,207
Net Interest Income	138,209	126,125	118,945
Provision for loan losses	(2,310)	3,006	4,395
Net Interest Income After Provision for Loan Losses	140,519	123,119	114,550
Non-interest Income
Gains on sale of investment securities	0	4,476	3,513
Equity Securities, FV-NI, Unrealized Gain (Loss)	(90)
Revenue from Contract with Customer, Including Assessed Tax	57,453
Bank owned life insurance	3,090	4,212	3,326
Other income	2,962	2,956	3,195
Total Non-interest Income	60,564	63,607	58,825
Non-interest Expense
Salaries and employee benefits	54,385	51,057	50,883
Occupancy related expenses	9,323	9,557	10,119
Equipment and software related expenses	7,729	7,732	7,211
FDIC insurance expense	1,251	1,348	1,622
Advertising	2,974	2,914	2,606
Bankcard expenses	4,503	3,924	4,458
Postage, delivery, and statement mailings	2,157	2,094	2,080
Office supplies	1,319	1,437	1,364
Legal and professional fees	1,847	1,956	1,882
Telecommunications	1,750	1,988	1,813
Repossessed asset losses, net of expenses	845	735	890
Merger related costs	13,257	0	0
Other expenses	11,726	11,239	11,236
Total Non-interest Expense	113,066	95,981	96,164
Income Before Income Taxes	88,017	90,745	77,211
Income tax expense	18,015	36,435	25,083
Net Income Available to Common Shareholders	$ 70,002	$ 54,310	$ 52,128
Average shares outstanding, basic	15,421	15,412	14,900
Effect of dilutive securities	18	24	13
Average shares outstanding, diluted	15,439	15,436	14,913
Basic earnings per common share	$ 4.50	$ 3.49	$ 3.46
Diluted earnings per common share	4.49	3.48	3.45
Dividends declared per common share	$ 1.98	$ 1.78	$ 1.72
Deposit Account [Member]
Non-interest Income
Revenue from Contract with Customer, Including Assessed Tax	$ 29,704	$ 28,574	$ 26,703
Debit Card [Member]
Non-interest Income
Revenue from Contract with Customer, Including Assessed Tax	18,369	17,120	16,515
Fiduciary and Trust [Member]
Non-interest Income
Revenue from Contract with Customer, Including Assessed Tax	$ 6,529	$ 6,269	$ 5,573

XML

Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net Income Available to Common Shareholders	$ 70,002	$ 54,310	$ 52,128
Available-for-Sale Securities
Unrealized (loss) gain on available-for-sale securities arising during period	(7,054)	7,396	(1,685)
Reclassification adjustment for net losses (gains)	90	(4,476)	(3,513)
Other comprehensive (loss) income related to available-for-sale securities	(6,964)	2,920	(5,198)
Defined Benefit Pension Plan
Amortization of actuarial net gains	890	849	847
Recognition of unrealized losses	(1,982)	(11)	(690)
Change in underfunded pension liability	(1,092)	838	157
Other comprehensive (loss) income before income taxes	(8,056)	3,758	(5,041)
Tax effect	1,875	(1,391)	1,861
Other comprehensive (loss) income, net of tax	(6,181)	2,367	(3,180)
Comprehensive income, net of tax	$ 63,821	$ 56,677	$ 48,948

XML

Consolidated Statements Of Changes In Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Capital Surplus[Member]	Retained Earnings [Member]	Treasury Stock, Common [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance at Dec. 31, 2015	$ 419,272	$ 46,249	$ 106,269	$ 390,690	$ (120,104)	$ (3,832)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income Available to Common Shareholders	52,128			52,128
Other comprehensive income	(3,180)					(3,180)
Cash dividends declared	(25,801)			(25,801)
Stock-based compensation expense, net	1,979		1,979
Restricted Awards Granted	39		(1,706)		1,745
Stock issued during period, value, new issues	6,864	269	6,595
Exercise of stock options	1,155		(264)		1,419
Purchase of treasury shares	(10,018)				(10,018)
Ending balance at Dec. 31, 2016	442,438	46,518	112,873	417,017	(126,958)	(7,012)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income Available to Common Shareholders	54,310			54,310
Other comprehensive income	2,367					2,367
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	0
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | Accounting Standards Update 2018-02 [Member]	999					(999)
Cash dividends declared	(27,845)			(27,845)
Stock-based compensation expense, net	2,097		2,097
Restricted Awards Granted	0		(1,351)		1,351
Stock issued during period, value, new issues	28,408	1,101	27,307
Exercise of stock options	732		34		698
Ending balance at Dec. 31, 2017	502,507	47,619	140,960	444,481	(124,909)	(5,644)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income Available to Common Shareholders	70,002			70,002
Other comprehensive income	(6,181)					(6,181)
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	0
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | Accounting Standards Update 2016-01 [Member]	2,657					(2,657)
Cash dividends declared	(31,173)			(31,173)
Stock-based compensation expense, net	2,151		2,151
Restricted Awards Granted	0		(1,585)		1,585
Exercise of stock options	1,164		(736)		1,900
Purchase of treasury shares	(20,271)				(20,271)
Stock Issued During Period, Value, Acquisitions	82,565		28,765		53,800
Ending balance at Dec. 31, 2018	$ 600,764	$ 47,619	$ 169,555	$ 485,967	$ (87,895)	$ (14,482)

XML

Consolidated Statements Of Changes In Shareholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Stockholders' Equity [Abstract]
Cash dividends declared	$ 1.98	$ 1.78	$ 1.72
Exercise of stock options	29,633	16,639	32,750
Stock Issued During Period, Shares, New Issues	0	440,604	107,662
Purchase of treasury shares	290,491	0	231,132

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating Activities
Net Income Available to Common Shareholders	$ 70,002	$ 54,310	$ 52,128
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and accretion	1,281	1,005	838
(Recovery of) provision for loan losses	(2,310)	3,006	4,395
Depreciation of premises and equipment	5,087	5,884	6,235
Deferred income tax expense	(1,244)	14,909	3,817
Net periodic employee benefit cost	471	298	515
Payment for Pension Benefits	(1,509)	0	0
Realized investment securities losses (gains)	90	(4,476)	(3,513)
Stock-based compensation expense	2,151	2,097	2,018
Excess Tax Benefit from Share-based Compensation, Operating Activities	(506)	(558)	0
Increase in value of bank-owned life insurance	(3,090)	(2,708)	(3,071)
Proceeds from life insurance	425	1,717	258
Originations of loans held for sale	(15,196)	(16,451)	(17,981)
Proceeds from loans held for sale	13,993	19,290	16,572
Gain on sale of loans	(351)	(516)	(374)
Asset write down	491	0	444
Change in accrued interest receivable	(1,500)	(815)	(976)
Change in other assets	(836)	1,277	(1,556)
Change in other liabilities	5,624	(426)	5,581
Net Cash Provided by Operating Activities	73,073	77,843	65,330
Investing Activities
Proceeds from sales of securities available-for-sale	0	5,776	30,850
Proceeds from maturities and calls of securities available-for-sale	88,112	86,276	78,720
Proceeds from maturities and calls of securities held-to-maturity	8,439	10,580	13,479
Purchases of securities available-for-sale	(166,226)	(187,031)	(196,150)
Purchases of securities held-to-maturity	(4,925)	0	0
Net increase in loans	(95,284)	(85,489)	(183,511)
Purchases of premises and equipment	(10,192)	(6,574)	(5,517)
Disposals of premises and equipment	3,884	3,057	836
Net Cash Used in Investing Activities	(163,966)	(173,405)	(261,293)
Financing Activities
Net increase (decrease) in noninterest-bearing deposits	32,097	(5,647)	200,984
Net increase (decrease) in interest-bearing deposits	156,302	89,644	(52,714)
Net increase in short-term borrowings	7,667	3,914	93,436
Repayments of Subordinated Debt	(16,495)
Proceeds from the Redemption of Capital Securities	495
Issuance of common stock	0	28,408	6,864
Purchases of treasury stock	(20,271)	0	(10,018)
Proceeds from exercise of stock options	1,164	732	1,155
Dividends paid	(29,583)	(27,120)	(25,718)
Net Cash Provided by Financing Activities	131,376	89,931	213,989
Increase (Decrease) in Cash and Cash Equivalents	40,483	(5,631)	18,026
Cash and cash equivalents at beginning of period	82,508	88,139	70,113
Cash and Cash Equivalents at End of Period	122,991	$ 82,508	$ 88,139
Farmers Deposit Bancorp, Inc. [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired	20,691
Investing Activities
Payments to Acquire Businesses, Net of Cash Acquired	(20,691)
Poage Bankshares, Inc. [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired	(32,917)
Investing Activities
Payments to Acquire Businesses, Net of Cash Acquired	$ 32,917

XML

Consolidated Statements Of Cash Flows (Parenthetical) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Farmers Deposit Bancorp, Inc. [Member]
Business Acquisition [Line Items]
Cash Acquired from Acquisition	$ 4,209
Poage Bankshares, Inc. [Member]
Business Acquisition [Line Items]
Cash Acquired from Acquisition	$ 34,288

XML

Summary Of Significant Accounting And Reporting Policies

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary Of Significant Accounting And Reporting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Summary of Significant Accounting and Reporting Policies: The accounting and reporting policies of City Holding Company and its subsidiaries (the “Company”) conform with U. S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. Actual results could differ from management’s estimates. The following is a summary of the more significant policies.

Principles of Consolidation: The consolidated financial statements include the accounts of City Holding Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity in conformity with U. S. generally accepted accounting principles. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. The Company consolidates voting interest entities in which it has all, or at least a majority of, the voting interest. As defined in applicable accounting standards, variable interest entities (VIEs) are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE. The Company’s wholly owned subsidiaries, City Holding Capital Trust III and Town Square Statutory Trust I, are VIEs for which the Company is not the primary beneficiary. Accordingly, the accounts of these entities are not included in the Company’s consolidated financial statements.

       Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. Such reclassifications had no impact on total shareholders’ equity or net income for any period. The Company adopted Accounting Standards Update ("ASU") No. 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" in 2017.This amendment permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act ("TCJA") to retained earnings. The reduction in the corporate tax rate from 35% to 21% resulted in $1.0 million reclassified from other comprehensive income to retained earnings on the consolidated balance sheet at December 31, 2017. The Company also adopted ASU No. 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" in 2018. This standard makes several modifications to Subtopic 825-10 including the elimination of the available-for-sale classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. During the year ended December 31, 2018, a $0.1 million loss was recognized in non-interest income in the consolidated statements of income as a result of the change in the fair value of equity and perpetual preferred securities due to the adoption of ASU 2016-01.  Additionally, $2.7 million, net of deferred taxes, was reclassified from other comprehensive income to retained earnings on the consolidated balance sheets to recognize the prior period unrealized gain position of these securities.

Description of Principal Markets and Services: The Company is a registered financial holding company under the Bank Holding Company Act headquartered in Charleston, West Virginia, and conducts its principal activities through its wholly-owned subsidiary, City National Bank of West Virginia (“City National”). City National is a retail and consumer-oriented community bank with 100 banking offices in West Virginia, Kentucky, Virginia and southeastern Ohio. City National provides credit, deposit, and trust and investment management services to its customers. In addition to its branch network, City National's delivery channels include automated-teller-machines ("ATMs"), interactive-teller-machines ("ITMs"), mobile banking, debit cards, interactive voice response systems and Internet technology. The Company conducts its business activities through one reportable business segment - community banking.

Cash and Due from Banks: The Company considers cash, due from banks, and interest-bearing deposits in depository institutions as cash and cash equivalents. City National is required to maintain an average reserve balance with the Federal Reserve Bank of Richmond to compensate for services provided by the Federal Reserve and to meet statutory required reserves for demand deposits.

Securities: Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Company has the ability at the time of purchase to hold debt securities to maturity, they are classified as investment securities held-to-maturity and are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts. Debt securities which the Company may not hold to maturity are classified as investment securities available-for-sale along with the Company’s investment in equity securities. Securities available-for-sale are carried at fair value, with the unrealized gains and losses, net of tax, reported in comprehensive income. Securities classified as available-for-sale include securities that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk, and other factors.

       The Company utilizes a third party pricing service provider to value its investment portfolio.  Annually, the Company obtains an independent auditor’s report from its third party pricing service provider regarding its controls over valuation of investment securities.  Although an unqualified opinion regarding the design and operating effectiveness of controls was issued, the report did contain caveats and disclaimers regarding the pricing information, such as the Company should review market values for reasonableness.  On a quarterly basis, the Company reprices its debt securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values.

       Also, on a quarterly basis, the Company performs a review of investment securities to determine if any unrealized losses are indicative that investment securities are other than temporarily impaired.  Management considers the following, among other things, in its determination of the nature of the unrealized losses: (i) the length of time and the extent to which the fair value has been less than cost; (ii) the financial condition, capital strength, and near–term (within 12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; and (v) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  The Company continues to actively monitor the market value of these investments along with the financial strength of the issuers behind these securities, as well as its entire investment portfolio.

The specific identification method is used to determine the cost basis of securities sold. Certain investment securities that do not have readily determinable fair values and for which the Company does not exercise significant influence are carried at cost and classified as other investment securities on the Consolidated Balance Sheets.  These cost-method investments are reviewed for impairment at least annually or sooner if events or changes in circumstances indicate the carrying value may not be recoverable.

       Loans: Loans, excluding previously securitized loans, which are discussed separately below, are reported at the principal amount outstanding, net of unearned income.  Portfolio loans include those for which management has the intent and the Company has the ability to hold for the foreseeable future, or until maturity or payoff.  The foreseeable future is based upon management’s judgment of current business strategies and market conditions, the type of loan, asset/liability management, and liquidity.

       Interest income on loans is accrued and credited to operations based upon the principal amount outstanding, using methods that generally result in level rates of return. Loan origination fees, and certain direct costs, are deferred and amortized as an adjustment to the yield over the term of the loan. The accrual of interest income generally is discontinued when a loan becomes 90 days past due as to principal or interest for all loan types.  However, any loan may be placed on non-accrual status if the Company receives information that indicates that it is probable a borrower will be unable to meet the contractual terms of their respective loan agreement. Other indicators considered for placing a loan on non-accrual status include the borrower’s involvement in bankruptcies, foreclosures, repossessions, litigation and any other situation resulting in doubt as to whether full collection of contractual principal and interest is attainable. When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and interest accrued in prior years is charged to the allowance for loan losses. Management may elect to continue the accrual of interest when the estimated net realizable value of collateral exceeds the principal balance and related accrued interest, and the loan is in process of collection.

Generally for all loan classes, payments during the period the loan is non-performing are recorded on a cash basis. Payments received on nonperforming loans are typically applied directly against the outstanding principal balance until the loan is fully repaid. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Generally, all loan types are considered past due when the contractual terms of a loan are not met and the borrower is 30 days or more past due on a payment.  Furthermore, residential and home equity loans are generally subject to charge-off when the loan becomes 120 days past due, depending on the estimated fair value of the collateral less cost to dispose, versus the outstanding loan balance. Commercial loans are generally charged off when the loan becomes 120 days past due and consumer loans are generally charged off when the loan becomes 120 days past due.

Acquired Loans: In determining the estimated fair value of the acquired loans, management considered several factors, such as estimated future credit losses, estimated prepayments, remaining lives of the acquired loans, estimated value of the underlying collateral and the present value of the cash flows expected to be received.  For smaller loans not specifically reviewed, management grouped the loans into their respective homogeneous loan pool and applied a loss estimate accordingly.

Acquired loans are accounted for using one of the two following accounting standards:

(1) ASC Topic 310-20 is used to value loans that do not have evidence of credit quality deterioration.  For these loans, the difference between the fair value of the loan and the amortized cost of the loan is amortized or accreted into income using the interest method.

(2) ASC Topic 310-30 is used to value loans that have evidence of credit quality deterioration.  For these loans, the expected cash flows that exceed the fair value of the loan represent the accretable yield, which is recognized as interest income on a level-yield basis over the expected cash flow periods of the loans.  The non-accretable difference represents the difference between the contractually required principal and interest payments and the cash flows expected to be collected based upon management’s estimation.  Subsequent decreases in the expected cash flows will require the Company to evaluate the need for additions to the Company’s allowance for loan losses.  Subsequent increases in the expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges with a corresponding adjustment to the accretable yield, which will result in the recognition of additional interest income over the remaining lives of the loans. 

Allowance for Loan Losses: The allowance for loan losses is maintained at a level that represents management’s best estimate of probable losses in the loan portfolio. Management’s determination of the appropriateness of the allowance for loan losses is based upon an evaluation of individual credits in the loan portfolio, historical loan loss experience, current economic conditions, and other relevant factors. This determination is inherently subjective, as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. These evaluations are conducted at least quarterly and more frequently if deemed necessary.  The allowance for loan losses related to loans considered to be impaired is generally evaluated based on the discounted cash flows using the impaired loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. Loan losses are charged against the allowance and recoveries of amounts previously charged off are credited to the allowance. A provision for loan losses is charged to operations based on management’s periodic evaluation of the appropriateness of the allowance after considering factors noted above, among others.

In evaluating the appropriateness of its allowance for loan losses, the Company stratifies the loan portfolio into six major groupings, including commercial real estate, commercial and industrial, residential real estate, home equity, consumer and DDA overdrafts. Historical loss experience, as adjusted, is applied to the then outstanding balance of loans in each classification to estimate probable losses inherent in each segment of the portfolio. Historical loss experience is adjusted using a systematic weighted probability of potential risk factors that could result in actual losses deviating from prior loss experience. Risk factors considered by the Company in completing this analysis include: (1) unemployment and economic trends in the Company’s markets, (2) concentrations of credit, if any, among any industries, (3) trends in loan growth, loan mix, delinquencies, losses or credit impairment, (4) adherence to lending policies and others. Each risk factor is designated as low, moderate/increasing, or high based on the Company’s assessment of the risk of loss associated with each factor. Each risk factor is then weighted to consider inherent risk in the portfolio.

Additionally, all commercial loans within the portfolio are subject to internal risk grading. Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process. Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of probable loss.

Bank Owned Life Insurance: The Company has purchased life insurance on certain executive officers and employees. The Company receives the cash surrender value of each policy upon its termination or benefits are payable upon the death of the insured. These policies are recorded on the Consolidated Balance Sheets at their net cash surrender value. Changes in the net cash surrender value are recognized in Bank Owned Life Insurance in the Consolidated Statements of Income.

Premises and Equipment: Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily by the straight-line method over the estimated useful lives of the assets. Depreciation of leasehold improvements is computed using the straight-line method over the lesser of the term of the respective lease or the estimated useful life of the respective asset. Maintenance and repairs are charged to expense as incurred, while improvements that extend the useful life of premises and equipment are capitalized and depreciated over the estimated remaining life of the asset.

Other Real Estate Owned:  Other real estate owned (“OREO”) is comprised principally of commercial and residential real estate properties obtained in partial or total satisfaction of loan obligations.  OREO acquired in settlement of indebtedness is included in Other Assets at the lower of estimated fair value of the asset, less estimated selling costs or the carrying amount of the loan.  Changes to the value subsequent to transfer are recorded in non-interest expense, along with direct operating expenses.  Gains or losses not previously recognized from sales of OREO are recognized in non-interest expense on the date of the sale.  As of December 31, 2018 and 2017, the amount of OREO included in Other Assets was $4.6 million and $3.6 million, respectively.

Goodwill and OtherIntangible Assets: Goodwill is the excess of the cost of an acquisition over the fair value of tangible and intangible assets acquired.  Goodwill is not amortized.  Intangible assets represent purchased assets that also lack physical substance, but can be separately distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability.  Intangible assets with determinable useful lives, such as core deposits, are amortized over their estimated useful lives.

The Company performs an annual review for impairment in the recorded value of goodwill and indefinite lived intangible assets. Goodwill is tested for impairment between the annual tests if an event occurs or circumstances change that more than likely reduce the fair value of a reporting unit below its carrying value. An indefinite-lived intangible asset is tested for impairment between the annual tests if an event occurs or circumstances change indicating that the asset might be impaired.

Securities Sold Under Agreements to Repurchase:  Securities sold under agreements to repurchase are accounted for as collateralized financing transactions and are recorded at the amounts at which the securities were sold plus accrued interest.  Securities sold primarily consists of U.S. government, federal agency, and municipal securities pledged as collateral under these financing arrangements and cannot be repledged or sold, unless replaced by the secured party.

Derivative Financial Instruments: Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is determined by whether it has been designated and qualifies as part of a hedging relationship, and further, by the type of hedging relationship. The Company primarily utilizes derivatives with commercial banking customers to facilitate their interest rate management strategies and the changes in fair value of those instruments are recognized in other non-interest income during the period of the change.

Trust Assets:  Assets held in a fiduciary or agency capacity for customers are not included in the accompanying financial statements since such items are not assets of the Company.

Income Taxes: The consolidated provision for income taxes is based upon reported income and expense. Deferred income taxes are provided for temporary differences between financial reporting and tax bases of assets and liabilities, computed using enacted tax rates. The income tax effects related to settlements of share-based compensation awards are reported in earnings as an increase (or decrease) to income tax expense. The Company files a consolidated income tax return. The respective subsidiaries generally provide for income taxes on a separate return basis and remit amounts determined to be currently payable to the Parent Company.

The Company and its subsidiaries are subject to examinations and challenges from federal and state taxing authorities regarding positions taken in returns.  Uncertain tax positions are initially recognized in the consolidated financial statements when it is more likely than not the position will be sustained upon examination.  These positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the taxing authority and assuming full knowledge of the position and all relevant facts by the taxing authority.

The Company invests in certain limited partnerships that operate qualified low-income housing tax credit developments.  These investments are considered variable interest entities for which the Company is not the primary beneficiary.  The tax credits are reflected in the Consolidated Statements of Income as a reduction in income tax expense.  The unamortized amount of the investments is recorded within Other Assets within the Consolidated Balance Sheets.  The Company’s investments in affordable housing limited partnerships were $5.4 million and $1.3 million at December 31, 2018 and 2017, respectively.

Advertising Costs: Advertising costs are expensed as incurred.

Stock-Based Compensation: Compensation expense related to stock options and restricted stock awards issued to employees is based upon the fair value of the award at the date of grant.  The fair value of stock options is estimated utilizing a Black Scholes pricing model, while the fair value of restricted stock awards is based upon the stock price at the date of grant.  Compensation expense is recognized on a straight line basis over the vesting period for options and the respective period for stock awards. Forfeitures are recognized as they occur, rather than estimated over the life of the award.

Basic and Diluted Earnings per Common Share: Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding, excluding participating securities. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares outstanding, excluding participating securities, increased by the number of shares of common stock which would be issued assuming the exercise of stock options and other common stock equivalents.

Statements of Cash Flows: Cash paid for interest, including interest paid on long-term debt and trust preferred securities, was $24.8 million, $16.4 million, and $13.1 million in 2018, 2017, and 2016, respectively. During 2018, 2017 and 2016, the Company paid $20.8 million, $22.6 million, and $16.3 million, respectively, for income taxes.

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Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2018

Recent Accounting Pronouncements [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE TWO – RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted:

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." This standard clarifies the principles for recognizing revenue and developed a common revenue standard. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract or contracts with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The FASB also issued several amendments to the standard. In April 2016, the FASB issued ASU No. 2016-10 which clarifies identifying performance obligations and the licensing implementation guidance aspects of Topic 606 while retaining the related principles for those areas. In September 2017, the FASB issued ASU No. 2017-13 which reflects the SEC staff announcement that it would not object when certain public business entities (PBEs) elect to use the non-PBE effective dates solely to adopt the new standards on revenue (ASC 606) and leases (ASC 842). The Company adopted these standards effective January 1, 2018 using the modified retrospective approach, but did not record a cumulative effect adjustment to opening retained earnings given the immaterial impact. As part of the adoption, the Company evaluated the terms of the contracts that supported each of the revenue streams that were within the scope of ASU 2014-09 and determined that the adoption did not significantly change the way the Company recognizes revenue from each stream. See Note Twenty Four.

Others

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." This amendment clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU became effective for the Company on January 1, 2018. The adoption of ASU No. 2017-01 did not have a material impact on the Company's financial statements.

In March 2017, the FASB issued ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." This amendment requires that an employer disaggregate the service cost component from the other components of net benefit cost and also provides explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement. This ASU became effective for the Company on January 1, 2018. The adoption of ASU No. 2017-07 did not have a material impact on the Company's financial statements.

In May 2017, the FASB issued ASU No. 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting." This amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASU No. 2016-09. This ASU became effective for the Company on January 1, 2018. The adoption of ASU No. 2017-09 did not have a material impact on the Company’s financial statements.

Pending Adoption:

Leases

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standardrequires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing requirements for leases that were historically classified as operating leases under previous generally accepted accounting principals. In July 2018, the FASB issued ASU No. 2018-10, "Codification Improvements to Topic 842, Leases." This amendment provides improvements to specific sections of previously issued lease guidance, including a package of three practical expedients regarding the reassessment of prior period leases. In July 2018, the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements." This amendment offers a practical expedient that allows the Company to recognize the prior period balance sheet impacts in the period of adoption and will not require adjustments to the prior period financial statements when adopting ASU No. 2016-02 described above. In December 2018, the FASB issued ASU No. 2018-20, “Leases (Topic 842): Narrow-Scope Improvements for Lessors.” This ASU clarifies sales taxes and other taxes collected from lessees, certain lessor costs, and recognition of variable payments for contracts with lease and nonlease components. These ASUs became effective for the Company for interim and annual periods on January 1, 2019. The Company's evaluation indicates that the adoption of these ASUs had an immaterial impact on the Company's consolidated balance sheet.

CECL

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The new current expected credit losses model ("CECL") will apply to the allowance for loan losses, available-for-sale and held-to-maturity debt securities, purchased financial assets with credit deterioration and certain off-balance sheet credit exposures. In November 2018, the FASB issued ASU No. 2018-19, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses." This amendment clarifies the scope of the guidance in ASU No. 2016-13. These ASUs will become effective for the Company for interim and annual periods on January 1, 2020. Management is currently evaluating the potential impact of these ASUs on the Company's financial statements.

Others

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." This amendment simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This ASU will become effective for the Company on January 1, 2020. The adoption of ASU No. 2017-04 is not expected to have a material impact on the Company's financial statements.

In March 2017, the FASB issued ASU No. 2017-08, "Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities." The amendments in this update shorten the amortization period for certain callable debt securities held at a premium and require the premium to be amortized to the earliest call date. This ASU became effective for the Company on January 1, 2019. The adoption of ASU No. 2017-08 is not expected to have a material impact on the Company's financial statements.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." This amendment expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU became effective for the Company on January 1, 2019. The adoption of ASU No. 2017-12 is not expected to have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement." This amendment removes, modifies, and clarifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU will become effective for the Company on January 1, 2020. The adoption of ASU No. 2018-13 is not expected to have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans." This amendment removes, modifies, and clarifies certain disclosure requirements for defined benefit plans and other post-employment benefit plans. This ASU will become effective for the Company on January 1, 2021. The adoption of ASU No. 2018-14 is not expected to have a material impact on the Company's financial statements.

In October 2018, the FASB issued ASU No. 2018-17, "Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities." This amendment simplifies the analysis of fees paid to decision makers or service providers in determining variable interest entities. This ASU will become effective for the Company on January 1, 2020. The adoption of ASU No. 2018-17 is not expected to have a material impact on the Company's financial statements.

In October 2018, the FASB issued ASU No. 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes." This amendment permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the UST, the LIBOR swap rate, the OIS rate based on the Federal Funds Effective Rate, and the SIFMA Municipal Swap Rate. This ASU became effective for the Company on January 1, 2019. The adoption of ASU No. 2017-12 is not expected to have a material impact on the Company's financial statements.

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Acquisitions and Preliminary Purchase Price Allocation Acquisitions and Preliminary Purchase Price Allocation

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Acquisitions and Preliminary Purchase Price Allocation

ACQUISITIONS AND PRELIMINARY PURCHASE PRICE ALLOCATION

On December 7, 2018, the Company acquired 100% of the outstanding common stock of Poage Bankshares, Inc., the parent company of Town Square Bank (collectively, "Poage"). The acquisition of Poage was structured as a stock transaction in which the Company issued approximately 1.1 million shares, valued at approximately $82.6 million, or $24.22 per share of Poage common stock.

On December 7, 2018, the Company acquired 100% of the outstanding common stock of Farmers Deposit Bancorp, Inc., the parent company of Farmers Deposit Bank (collectively, "Farmers Deposit"). The acquisition of Farmers Deposit was structured as a cash transaction valued at $24.9 million, or $1,174.14 per share of Farmers Deposit common stock.

The Company accounted for both acquisitions using the acquisition method pursuant to "Topic 805 Business Combinations" of the FASB Accounting Standards Codification. The acquisition method requires the acquirer to recognize the assets acquired and the liabilities assumed at their fair values as of the acquisition date. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands):

	Farmers
	Deposit			Poage		Total
Consideration:
Cash	$	24,900		$	16	$	24,916
Common stock	—			82,565		82,565
Stock option buyout	—			1,355		1,355
	24,900			83,936		108,836
Identifiable assets:
Cash and cash equivalents	4,209			34,288		38,497
Investment securities	46,235			72,321		118,556
Loans	58,477			304,023		362,500
Bank owned life insurance	—			7,439		7,439
Premises and equipment	768			4,547		5,315
Deferred tax assets, net	(188		)	2,300		2,112
Other assets	2,302			8,799		11,101
Total identifiable assets	111,803			433,717		545,520
Identifiable liabilities:
Deposits	92,241			379,285		471,526
Short-term borrowings	2,025			—		2,025
Long-term debt	—			4,053		4,053
Other liabilities	709			3,130		3,839
Total identifiable liabilities	94,975			386,468		481,443
Net identifiable assets	16,828			47,249		64,077
Goodwill	4,738			28,633		33,371
Core deposit intangible	3,334			8,054		11,388
	$	24,900		$	83,936	$	108,836

Acquired Loans

The following table presents information regarding the purchased credit-impaired and noncredit-impaired loans acquired in conjunction with both acquisitions (in thousands):

	Farmers
	Deposit			Poage			Total
Acquired Credit-Impaired
Contractually required principal and interest	$	—		$	25,315		$	25,315
Contractual cash flows not expected to be collected (non-accretable difference)	—			(13,977		)	(13,977		)
Expected cash flows	—			11,338			11,338
Interest component of expected cash flows (accretable difference)	—			(2,375		)	(2,375		)
Estimated fair value of purchased credit impaired loans acquired	$	—		$	8,963		$	8,963
Acquired NonCredit-Impaired
Outstanding balance	$	58,949		$	295,425		$	354,374
Less: fair value adjustment	(472		)	(365		)	(837		)
Fair value of acquired noncredit-impaired loans	$	58,477		$	295,060		$	353,537

Acquired Deposits

The fair values of non-time deposits approximated their carrying value at the acquisition date. For time deposits, the fair values were estimated based on discounted cash flows, using interest rates that are currently being offered compared to the contractual interest rates. Based on this analysis, management recorded a premium on time deposits acquired of $0.1 million and $1.7 million for the Farmers Deposit and Poage acquisitions, respectively, each of which is being amortized over 5 years.

Core Deposit Intangible

The Company believes that the customer relationships with the deposits acquired have an intangible value. In connection with the acquisitions, the Company recorded a core deposit intangible asset of $3.3 million and $8.1 million for Farmers Deposit and Poage, respectively. Each of the core deposit intangible assets represent the value that the acquiree had with their deposit customers. The fair value was estimated based on a discounted cash flow methodology that considered type of deposit, deposit retention and the cost of the deposit base. The core deposit intangibles are being amortized over 10 years.

Goodwill

Under GAAP, management has up to twelve months following the date of the acquisition to finalize the fair value of acquired assets and liabilities. The measurement period ends as soon as the Company receives information it was seeking about facts and circumstances that existed as of the acquisition date or learns more information is not obtainable. Any subsequent adjustments to the fair value of the acquired assets and liabilities, intangible assets or other purchase accounting adjustments will result in adjustments to the goodwill recorded. Given the form of the respective transactions, the $4.7 million goodwill preliminarily recorded in conjunction with the Farmers Deposit acquisition is expected to be deductible for tax purposes, while the $28.6 million goodwill preliminarily recorded in conjunction with the Poage acquisition is not expected to be deductible for tax purposes.

Merger Related Costs

During the year ended December 31, 2018, the Company incurred $13.3 million of merger-related costs in connection with the acquisitions of Farmers Deposit and Poage. These costs were primarily for severance ($3.2 million), professional fees ($3.7 million) and data processing costs ($5.2 million).

Also included in merger related costs were asset write-down charges of $0.5 million, pertaining to the two existing City National branches that will be merged into existing former Poage branches during 2019.

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Restrictions On Cash Due From Banks

12 Months Ended

Dec. 31, 2018

Restricted Cash and Investments [Abstract]

Restrictions On Cash Due From Banks

RESTRICTIONS ON CASH AND DUE FROM BANKS

City National is required to maintain an average reserve balance with the Federal Reserve Bank of Richmond to compensate for services provided by the Federal Reserve and to meet statutory required reserves for demand deposits. The average amounts of the reserve balances for the years ended December 31, 2018 and 2017 were approximately $40.6 million and $37.8 million, respectively.

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Investments

12 Months Ended

Dec. 31, 2018

Investments [Abstract]

Investments

INVESTMENTS

The aggregate carrying and approximate market values of investment securities follow (in thousands).  Fair values are based on quoted market prices, where available.  If quoted market prices are not available, fair values are based on quoted market prices of comparable financial instruments.

	December 31, 2018								December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	5,713	$	20	$	—	$	5,733	$	2	$	—	$	—	$	2
Obligations of states and
political subdivisions	128,089		1,033		1,052		128,070		94,552		2,051		407		96,196
Mortgage-backed securities:
U.S. government agencies	561,799		1,950		12,991		550,758		425,559		1,093		7,305		419,347
Private label	11,948		95		—		12,043		649		3		—		652
Trust preferred securities	4,774		25		—		4,799		4,764		26		54		4,736
Corporate securities	16,795		30		167		16,658		21,916		475		123		22,268
Total Debt Securities	729,118		3,153		14,210		718,061		547,442		3,648		7,889		543,201
Marketable equity  securities	—		—		—		—		2,136		3,563		—		5,699
Certificates of deposit held for investment	3,735		—		—		3,735		—		—		—		—
Investment funds	1,525		—		67		1,458		1,525		—		36		1,489
Total Securities
Available-for-Sale	$	734,378	$	3,153	$	14,277	$	723,254	$	551,103	$	7,211	$	7,925	$	550,389

Securities held-to-maturity:
U.S. government agencies	$	56,827	$	173	$	294	$	56,706	$	60,449	$	1,222	$	25	$	61,646
Trust preferred securities	4,000		—		—		4,000		4,000		—		—		4,000
Total Securities
Held-to-Maturity	$	60,827	$	173	$	294	$	60,706	$	64,449	$	1,222	$	25	$	65,646
Other investment securities:
Marketable equity  securities	$	10,313	$	—	$	—	$	10,313	$	—	$	—	$	—	$	—
Non-marketable equity securities	$	18,497	$	—	$	—	$	18,497	$	14,147	$	—	$	—	$	14,147
Total Other Investment
Securities	$	28,810	$	—	$	—	$	28,810	$	14,147	$	—	$	—	$	14,147

The Company's mortgage-backed U.S. government agency securities consist of both residential and commercial securities, all of which are guaranteed by Fannie Mae ("FNMA"), Freddie Mac ("FHLMC"), or Ginnie Mae ("GNMA"). Marketable equity securities consist of investments made by the Company in equity positions of various community banks. Included within this portfolio are ownership positions in the following community bank holding companies: First National Corporation (FXNC) (4%) and Eagle Financial Services, Inc. (EFSI) (1.5%). Securities with limited marketability, such as stock in the Federal Reserve Bank ("FRB") or the Federal Home Loan Bank ("FHLB"), are carried at cost and are reported as non-marketable equity securities in the table above. The Company's certificates of deposit consist of domestically issued certificates of deposits in denominations of less than the FDIC insurance limit of $250,000.

At December 31, 2018 and 2017, there were no securities of any non-governmental issuer whose aggregate carrying value or estimated fair value exceeded 10% of shareholders' equity.

Certain investment securities owned by the Company were in an unrealized loss position (i.e., amortized cost basis exceeded the estimated fair value of the securities) as of December 31, 2018 and 2017.  The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	December 31, 2018
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	11,837	$	272	$	22,068	$	780	$	33,905	$	1,052
Mortgage-backed securities:
U.S. Government agencies	84,975		1,593		282,560		11,398		367,535		12,991
Corporate securities	12,995		167		—		—		12,995		167
Investment funds	1,500		67		—		—		1,500		67
Total available-for-sale	$	111,307	$	2,099	$	304,628	$	12,178	$	415,935	$	14,277
Securities held-to-maturity:
Mortgage-backed securities:
U.S. Government agencies	$	28,274	$	126	$	5,960	$	168	$	34,234	$	294
Total held-to-maturity	$	28,274	$	126	$	5,960	$	168	$	34,234	$	294

	December 31, 2017
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	4,913	$	28	$	19,440	$	379	$	24,353	$	407
Mortgage-backed securities:
U.S. Government agencies	172,807		1,887		140,226		5,418		313,033		7,305
Trust preferred securities	4,475		54		—		—		4,475		54
Corporate securities	3,357		49		2,350		74		5,707		123
Investment funds	1,500		36		—		—		1,500		36
Total available-for-sale	$	187,052	$	2,054	$	162,016	$	5,871	$	349,068	$	7,925
Securities held-to-maturity:
Mortgage-backed securities:
U.S. Government agencies	$	7,182	$	25	$	—	$	—	$	7,182	$	25
Total held-to-maturity	$	7,182	$	25	$	—	$	—	$	7,182	$	25

During the years ended December 31, 2018 and 2017, the Company had no credit-related net investment impairment losses. During the year ended December 31, 2016, the Company recorded $0.5 million in credit-related net investment impairment losses. The charges deemed to be other-than-temporary were related to pooled bank trust preferred securities and were based on the Company’s quarterly reviews of its investment securities for indications of losses considered to be other-than-temporary. At December 31, 2018, the cumulative amount of credit-related investment impairment losses that have been recognized by the Company on investments that remain in the Company's investment portfolio as of that date was $1.6 million.

Declines in the fair value of held-to-maturity and available-for-sale securities below their respective cost that are deemed to be other-than-temporary would be reflected in earnings as realized losses.  In estimating other-than-temporary impairment losses, management considers, among other things (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition, capital strength, and near-term (within 12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; or (v) the intent to sell the investment security and if it’s more likely than not that the Company will not have to sell the security before recovery of its cost basis.  In addition, management also employs a continuous monitoring process in regards to its marketable equity securities, specifically its portfolio of regional community bank holdings.  Although the regional community bank stocks that are owned by the Company are publicly traded, the trading activity for these stocks is minimal, with trading volumes of less than 0.2% of each respective company being traded on a daily basis.  As part of management’s review process for these securities, management reviews the financial condition of each respective regional community bank for any indications of financial weakness.

Management has the ability and intent to hold the securities classified as held-to-maturity until they mature, at which time the Company expects to receive full value for the securities.  Furthermore, as of December 31, 2018, management does not intend to sell an impaired security and it is not more than likely that it will be required to sell the security before the recovery of its amortized cost basis.  The unrealized losses on debt securities are primarily the result of interest rate changes, credit spread fluctuations on agency-issued mortgage related securities, general financial market uncertainty and unprecedented market volatility.  These conditions should not prohibit the Company from receiving its contractual principal and interest payments on its debt securities.  The fair value is expected to recover as the securities approach their maturity date or repricing date.   As of December 31, 2018, management believes the unrealized losses detailed in the table above are temporary and no additional impairment loss has been recognized in the Company’s consolidated income statement.  Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss will be recognized in net income in the period the other-than-temporary impairment is identified, while any noncredit loss will be recognized in other comprehensive income.

The amortized cost and estimated fair value of debt securities at December 31, 2018, by contractual maturity, are shown in the following table (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.  Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

	Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	5,592	$	5,572
Due after one year through five years	24,793		24,879
Due after five years through ten years	132,761		130,569
Due after ten years	565,972		557,041
	$	729,118	$	718,061
Securities Held-to-Maturity
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	4,927		5,053
Due after ten years	55,900		55,653
	$	60,827	$	60,706

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands): 

	For the year ended December 31,
	2018			2017		2016
Gross unrealized gains recognized on securities still held	$	208		—		—
Gross unrealized losses recognized on securities still held	(298		)	—		—
Net unrealized (losses) gains recognized on securities still held	$	(90	)	$	—	$	—
Gross realized gains	—			$	4,476	$	3,978
Gross realized losses	—			—		(465		)
Net realized investment security gains	$	—		$	4,476	$	3,513

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $510 million and $429 million at December 31, 2018 and 2017, respectively.

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Loans

12 Months Ended

Dec. 31, 2018

Loans Receivable, Net [Abstract]

Loans

LOANS

The following summarizes the Company’s major classifications for loans (in thousands):

	December 31, 2018			December 31, 2017
Residential real estate	$	1,656,989		$	1,468,278
Home equity	153,496			139,499
Commercial and industrial	286,314			208,484
Commercial real estate	1,433,291			1,277,576
Consumer	51,190			29,162
DDA overdrafts	6,328			4,411
Gross loans	3,587,608			3,127,410
Allowance for loan losses	(15,966		)	(18,836		)
Net loans	$	3,571,642		$	3,108,574
Construction loans included in:
Residential real estate	$	21,834		$	25,270
Commercial real estate	37,869			28,871

The Company's commercial and residential real estate construction loans are primarily secured by real estate within the Company's principal markets. These loans were originated under the Company's loan policy, which is focused on the risk characteristics of the loan portfolio, including construction loans. In the judgment of the Company's management, adequate consideration has been given to these loans in establishing the Company's allowance for loan losses.

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Allowance For Loan Losses

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Allowance For Loan Losses

ALLOWANCE FOR LOAN LOSSES

Management systematically monitors the loan portfolio and the appropriateness of the allowance for loan losses on a quarterly basis to provide for probable losses inherent in the portfolio.  Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors.

Individual credits in excess of $1 million are selected at least annually for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the appropriateness of the allowance.  Due to the nature of commercial lending, evaluation of the appropriateness of the allowance as it relates to these types of loan types is often based more upon specific credit reviews, with consideration given to the potential impairment of certain credits and historical loss rates, adjusted for economic conditions and other inherent risk factors.

The following summarizes the activity in the allowance for loan loss, by portfolio segment (in thousands).  The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments. The following also presents the balance in the allowance for loan loss disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans, by portfolio segment (in thousands). 

	Commercial and industrial			Commercial real estate			Residential real estate			Home equity			Consumer			DDA overdrafts			Total
December 31, 2018
Allowance for loan loss
Beginning balance	$	4,571		$	6,183		$	5,212		$	1,138		$	62		$	1,670		$	18,836
Charge-offs	(733		)	(369		)	(682		)	(219		)	(769		)	(2,701		)	(5,473		)
Recoveries	2,152			732			367			—			166			1,496			4,913
Provision	(1,930		)	(2,011		)	(781		)	349			860			1,243			(2,270		)
Provision for acquired loans with deteriorated credit quality	—			(40		)	—			—			—			—			(40		)
Ending balance	$	4,060		$	4,495		$	4,116		$	1,268		$	319		$	1,708		$	15,966
	Commercial and industrial			Commercial real estate			Residential real estate			Home equity			Consumer			DDA overdrafts			Total
December 31, 2017
Allowance for loan loss
Beginning balance	$	4,206		$	6,573		$	6,680		$	1,417		$	82		$	772		$	19,730
Charge-offs	(400		)	(720		)	(1,637		)	(403		)	(60		)	(2,714		)	(5,934		)
Recoveries	58			112			294			45			63			1,462			2,034
Provision	707			57			(125		)	79			(23		)	2,150			2,845
Provision for acquired loans with deteriorated credit quality	—			161			—			—			—			—			161
Ending balance	$	4,571		$	6,183		$	5,212		$	1,138		$	62		$	1,670		$	18,836
As of December 31, 2018
Allowance for loan loss
Evaluated for impairment:
Individually	$	—		$	428		$	—		$	—		$	—		$	—		$	428
Collectively	4,059			4,015			4,116			1,268			312			1,708			15,478
Acquired with deteriorated credit quality	1			52			—			—			7			—			60
Total	$	4,060		$	4,495		$	4,116		$	1,268		$	319		$	1,708		$	15,966
Loans
Evaluated for impairment:
Individually	$	651		$	9,855		$	—		$	—		$	—		$	—		$	10,506
Collectively	284,018			1,412,023			1,654,892			153,496			51,077			6,328			3,561,834
Acquired with deteriorated credit quality	1,645			11,413			2,097			—			113			—			15,268
Total	$	286,314		$	1,433,291		$	1,656,989		$	153,496		$	51,190		$	6,328		$	3,587,608

As of December 31, 2017
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	647	$	—	$	—	$	—	$	—	$	647
Collectively	4,567		5,313		5,112		1,138		58		1,670		17,858
Acquired with deteriorated credit quality	4		223		100		—		4		—		331
Total	$	4,571	$	6,183	$	5,212	$	1,138	$	62	$	1,670	$	18,836
Loans
Evaluated for impairment:
Individually	$	849	$	8,818	$	—	$	—	$	—	$	—	$	9,667
Collectively	207,429		1,263,076		1,465,685		139,499		29,046		4,411		3,109,146
Acquired with deteriorated credit quality	206		5,682		2,593		—		116		—		8,597
Total	$	208,484	$	1,277,576	$	1,468,278	$	139,499	$	29,162	$	4,411	$	3,127,410

Credit Quality Indicators

All non-commercial loans are evaluated based on payment history.  A performing loan is a loan to a borrower that has and is expected to fulfill the contractual terms of the loan agreement. The borrower generally makes the contractual payments on the due date, is expected to continue to pay timely, is not in default and has not been placed on nonaccrual. A non-performing loan is a loan that is generally past due 90 days or greater and/or is classified as non-accrual. All commercial loans within the portfolio are subject to internal risk grading. The Company’s internal risk ratings for commercial loans are:  Exceptional, Good, Acceptable, Pass/Watch, Special Mention, Substandard and Doubtful.  Each internal risk rating is defined in the loan policy using the following criteria:  balance sheet yields, ratios and leverage, cash flow spread and coverage, prior history, capability of management, market position/industry, potential impact of changing economic, legal, regulatory or environmental conditions, purpose, structure, collateral support, and guarantor support.  Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process.  Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of probable loss.

The Company categorizes loans into risk categories based on relevant information regarding the customer’s debt service ability, capacity, overall collateral position along with other economic trends, and historical payment performance.  The risk grades for each credit are updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review/credit administration departments, or the loan becomes delinquent or impaired.  The risk grades are updated a minimum of annually for loans rated Exceptional, Good, Acceptable, or Pass/Watch.  Loans rated Special Mention, Substandard or Doubtful are reviewed at least quarterly.  The Company uses the following definitions for its risk ratings:

Risk Rating	Description
Pass Ratings:
(a) Exceptional	Loans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank and the risk grade within this pool of loans is generally updated on an annual basis.
(b) Good	Loans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles.  Loans within this category are generally reviewed on an annual basis.  Loans in this category generally have a low chance of loss to the bank.
(c) Acceptable	Loans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
(d) Pass/watch	Loans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mention	Loans classified as special mention have a potential weakness(es) that deserves management's close attention.  The potential weakness could result in deterioration of the loan repayment or the bank's credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
Substandard	Loans classified as substandard reflect a customer with a well defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected or the bank's collateral value is weakened by the financial deterioration of the borrower.
Doubtful	Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.

The following table presents the Company's commercial loans by credit quality indicators, by class (in thousands):

	Commercial and industrial		Commercial real estate		Total
December 31, 2018
Pass	$	250,856	$	1,381,170	$	1,632,026
Special mention	27,886		5,696		33,582
Substandard	7,572		46,425		53,997
Doubtful	—		—		—
Total	$	286,314	$	1,433,291	$	1,719,605
December 31, 2017
Pass	$	175,951	$	1,231,256	$	1,407,207
Special mention	25,872		8,068		33,940
Substandard	6,661		38,252		44,913
Doubtful	—		—		—
Total	$	208,484	$	1,277,576	$	1,486,060

The following table presents the Company's non-commercial loans by payment performance, by class (in thousands):

	Performing		Non-Performing		Total
December 31, 2018
Residential real estate	$	1,652,543	$	4,446	$	1,656,989
Home equity	153,334		162		153,496
Consumer	51,188		2		51,190
DDA overdrafts	6,322		6		6,328
Total	$	1,863,387	$	4,616	$	1,868,003
December 31, 2017
Residential real estate	$	1,465,445	$	2,833	$	1,468,278
Home equity	139,239		260		139,499
Consumer	29,162		—		29,162
DDA overdrafts	4,411		—		4,411
Total	$	1,638,257	$	3,093	$	1,641,350

Aging Analysis of Accruing and Non-Accruing Loans

The following presents an aging analysis of the Company’s accruing and non-accruing loans, by class (in thousands):

	December 31, 2018
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Non-accrual		Total
Residential real estate	$	1,642,724	$	8,607	$	1,213	$	170	$	4,275	$	1,656,989
Home equity	152,083		1,240		11		24		138		153,496
Commercial and industrial	284,140		397		49		52		1,676		286,314
Commercial real estate	1,424,245		487		94		4		8,461		1,433,291
Consumer	50,894		253		41		1		1		51,190
DDA overdrafts	5,840		467		15		6		—		6,328
Total	$	3,559,926	$	11,451	$	1,423	$	257	$	14,551	$	3,587,608
	December 31, 2017
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Non-accrual		Total
Residential real estate	$	1,458,746	$	5,990	$	709	$	19	$	2,814	$	1,468,278
Home equity	138,480		671		88		92		168		139,499
Commercial and industrial	206,447		549		1		142		1,345		208,484
Commercial real estate	1,269,520		1,841		245		—		5,970		1,277,576
Consumer	29,108		39		13		2		—		29,162
DDA overdrafts	3,849		541		14		7		—		4,411
Total	$	3,106,150	$	9,631	$	1,070	$	262	$	10,297	$	3,127,410

The following presents the Company’s impaired loans, by class (in thousands):

	December 31, 2018						December 31, 2017
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial and industrial	$	651	$	651	$	—	$	849	$	3,013	$	—
Commercial real estate	6,870		6,895		—		3,036		4,861		—
Total	$	7,521	$	7,546	$	—	$	3,885	$	7,874	$	—
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate	2,985		2,985		428		5,782		5,782		647
Total	$	2,985	$	2,985	$	428	$	5,782	$	5,782	$	647

The following table presents information related to the average recorded investment and interest income recognized on the Company’s impaired loans, by class (in thousands):

	For the year ended
	December 31, 2018				December 31, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	845	$	—	$	1,086	$	—
Commercial real estate	4,623		39		4,534		69
Total	$	5,468	$	39	$	5,620	$	69
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate	5,043		220		4,307		149
Total	$	5,043	$	220	$	4,307	$	149

If the Company's non-accrual and impaired loans had been current in accordance with their original terms, approximately $0.2 million, $0.2 million and $0.4 million of interest income would have been recognized during the years ended December 31, 2018, 2017 and 2016, respectively.  There were no commitments to provide additional funds on non-accrual, impaired or other potential problem loans at December 31, 2018.

Loan Modifications

The Company’s policy on loan modifications typically does not allow for modifications that would be considered a concession from the Company.  However, when there is a modification, the Company evaluates each modification to determine if the modification constitutes a troubled debt restructuring (“TDR”) in accordance with ASU 2011-02, whereby a modification of a loan would be considered a TDR when both of the following conditions are met: (1) a borrower is experiencing financial difficulty and (2) the modification constitutes a concession.  When determining whether the borrower is experiencing financial difficulties, the Company reviews whether the debtor is currently in payment default on any of its debt or whether it is probable that the debtor would be in payment default in the foreseeable future without the modification.  Other indicators of financial difficulty include whether the debtor has declared or is in the process of declaring bankruptcy, the debtor’s ability to continue as a going concern, or the debtor’s projected cash flow to service its debt (including principal and interest) in accordance with the contractual terms for the foreseeable future, without a modification.

Regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court and the borrower has not reaffirmed the debt.  The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of the debt by the bankruptcy court is deemed to be a concession granted to the borrower.

The following tables set forth the Company’s TDRs (in thousands):

	December 31, 2018						December 31, 2017
			Non-						Non-
	Accruing		Accruing		Total		Accruing		Accruing		Total
Commercial and industrial	$	98	$	—	$	98	$	135	$	—	$	135
Commercial real estate	8,205		—		8,205		8,381		—		8,381
Residential real estate	22,863		658		23,521		21,005		84		21,089
Home equity	3,025		5		3,030		3,047		50		3,097
Consumer	—		—		—		—		—		—
	$	34,191	$	663	$	34,854	$	32,568	$	134	$	32,702

	New TDRs					New TDRs
	For the year ended					For the year ended
	December 31, 2018					December 31, 2017
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	—	$	—	$	—
Commercial real estate	—	—		—		2	3,098		3,003
Residential real estate	33	2,326		2,326		33	3,987		3,987
Home equity	10	274		274		13	271		271
Consumer	—	—		—		—	—		—
	43	$	2,600	$	2,600	48	$	7,356	$	7,261

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Premises And Equipment

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Premises And Equipment

PREMISES AND EQUIPMENT

A summary of premises and equipment and related accumulated depreciation is summarized as follows (in thousands):

	Estimated Useful Life	2018			2017
Land		$	34,538		$	32,647
Buildings and improvements	10 to 30 yrs.	95,873			90,261
Equipment	3 to 7 yrs.	41,856			39,763
		172,267			162,671
Less: accumulated depreciation		(93,884		)	(89,989		)
		$	78,383		$	72,682

The depreciation expense for the years ended December 31, 2018, 2017, and 2016 was $5.1 million, $5.9 million, and $6.2 million, respectively.

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Goodwill And Other Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill And Other Intangible Assets

GOODWILL AND OTHER INTANGIBLE ASSETS

The Company completed its annual assessment of the carrying value of goodwill during 2018 and concluded that its carrying value was not impaired. The following table presents a roll forward of the Company's goodwill activity (in thousands):

	2018		2017
Beginning balance	$	76,196	$	76,196
Goodwill acquired in conjunction with the acquisition of Poage (preliminary)	28,633		—
Goodwill acquired in conjunction with the acquisition of Farmers Deposit (preliminary)	4,738		—
Ending balance	$	109,567	$	76,196

The Company believes that the customer relationships with the deposits acquired have an intangible value. In connection with acquisitions, the Company recorded a core deposit intangible, which represented the value that the acquiree had with their deposit customers. The fair value was estimated based on a discounted cash flow methodology that considered the type of deposit, estimated deposit retention, the cost of the deposit base and an alternate cost of funds. The following tables present the details of the Company's core deposit intangibles (in thousands):

	2018			2017
Gross carrying amount	$	21,190		$	9,802
Accumulated amortization	(7,909		)	(7,403		)
	$	13,281		$	2,399
Beginning balance	$	2,399		$	2,939
Core deposit intangible acquired in conjunction with the acquisition of Poage	8,054			—
Core deposit intangible acquired in conjunction with the acquisition of Farmers Deposit	3,334			—
Amortization expense	(506		)	(540		)
Ending balance	$	13,281		$	2,399

The core deposit intangible amortization expense for the year ended December 31, 2018 was $0.5 million. The core deposit intangibles are being amortized over ten years. The estimated amortization expense for core deposit intangible assets for each of the next five years is as follows (in thousands):

2019	$	1,868
2020	1,697
2021	1,635
2022	1,515
2023	1,311
Thereafter	5,255
	$	13,281

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Scheduled Maturities Of Time Deposits

12 Months Ended

Dec. 31, 2018

Maturities of Time Deposits [Abstract]

Scheduled Maturities Of Time Deposits

SCHEDULED MATURITIES OF TIME DEPOSITS

Scheduled maturities of the Company's time deposits outstanding at December 31, 2018 are summarized as follows (in thousands):

2019	$	709,519
2020	406,443
2021	112,872
2022	99,203
2023	24,047
Over five years	570
	$	1,352,654

The Company's time deposits that meet or exceed the FDIC insurance limit of $250,000 were $172.2 million and $122.4 million at December 31, 2018 and 2017, respectively.

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Short-Term Debt

12 Months Ended

Dec. 31, 2018

Short-term Debt [Abstract]

Short-Term Debt

SHORT-TERM DEBT

A summary of the Company's short-term borrowings are as follows (dollars in thousands):

	2018			2017			2016
Balance at end of year:
Federal Home Loan Bank advances	$	40,000		$	54,000		$	64,100
Securities sold under agreements to repurchase	221,911			198,219			184,205
Federal Funds purchased	—			—			—
Avg. outstanding during the year:
Federal Home Loan Bank advances	$	74,102		$	46,639		$	18,850
Securities sold under agreements to repurchase	190,702			183,890			157,215
Federal Funds purchased	353			—			—
Max. outstanding at any month end:
Federal Home Loan Bank advances	$	185,000		$	126,500		$	88,600
Securities sold under agreements to repurchase	221,911			257,034			184,205
Federal Funds purchased	10,000			—			—
Weighted-average interest rate:
During the year:
Federal Home Loan Bank advances	2.21		%	1.30		%	0.66		%
Securities sold under agreements to repurchase	0.93			0.33			0.22
Federal Funds purchased	2.10			—			—
End of the year:
Federal Home Loan Bank advances	2.76		%	1.57		%	0.77		%
Securities sold under agreements to repurchase	0.80			0.31			0.19
Federal Funds purchased	—			—			—

Through City National, the Company has approximately 64,000 shares of Federal Home Loan Bank (“FHLB”) stock at par value as of December 31, 2018. Purchases of FHLB stock are required based on City National’s maximum borrowing capacity with the FHLB.  Additionally, FHLB stock entitles the Company to dividends declared by the FHLB and provides an additional source of short-term and long-term funding, in the form of collateralized advances. Financing obtained from the FHLB is based, in part, on the amount of qualifying collateral available, specifically 1-4 family residential mortgages, other residential mortgages, and commercial real estate and other non-residential mortgage loans. Collateral pledged to the FHLB included approximately $2.1 billion at December 31, 2018 and $2.0 billion at December 31, 2017 in investment securities and 1-4 family residential property loans.  In addition to the short-term financing discussed above and long-term financing (see Note Eleven) City National had an additional $1.9 billion and $1.6 billion available from unused portions of lines of credit with the FHLB and other financial institutions at December 31, 2018 and 2017, respectively.

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Long-Term Debt

12 Months Ended

Dec. 31, 2018

Long-term Debt, Unclassified [Abstract]

Long-Term Debt

LONG-TERM DEBT

The components of the Company's long-term debt are summarized below (dollars in thousands): 

	2018			2017
Junior subordinated debentures owed to City Holding Capital Trust III, interest at a rate of 5.09% at December 31, 2017.	$	—		$	16,495
Subordinated debentures owed to Town Square Statutory Trust I, due 2036, interest at a rate of 4.64% at December 31, 2018.	4,124			—
Fair value adjustment of subordinated debentures	(71		)	—
	$	4,053		$	16,495

City Holding Capital Trust III

On September 26, 2018, the Board of Directors of the Company authorized repayment of its Junior Subordinated Deferrable Interest Debentures issued by the Company and held by City Holding Capital Trust III at a price of 100% of the principal amount. The Company received all required regulatory approvals and on December 17, 2018, City Holding Capital Trust III repaid its Capital Securities at a price of 100% of the principal amount. These securities were issued on March 27, 2008, and were callable in whole any time after June 15, 2013.

Town Square Statutory Trust I

As a part of its Poage acquisition, the Company assumed Poage's subordinated debentures. In December 2006, Town Square Statutory Trust I, a trust formed by the Town Square Financial Corporation, closed a pooled private offering of 4,000 trust preferred securities with a liquidation amount of $1,000 per security. Poage issued $4,124,000 of subordinated debentures to the trust in exchange for ownership of all the common security of the trust and the proceeds of the preferred securities sold by the trust.

The Company may redeem the subordinated debentures, in whole or in part, in a principal amount with integral multiples of $1,000, on or after December 22, 2012 at 100% of the principal amount, plus accrued and unpaid interest. The subordinated debentures mature on December 22, 2036. The subordinated debentures are also redeemable in whole or in part from time to time, upon the occurrence of specific events defined within the trust indenture. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.

The subordinated debentures may be included in Tier I capital (with certain limitations applicable) under current regulatory guidelines and interpretations. The subordinated debentures have a variable rate of interest equal to the three month LIBOR rate plus 1.83%.

Payments of distributions on the trust preferred securities and payments on redemption of the trust preferred securities are guaranteed by the Company. The Company also entered into an agreement as to expenses and liabilities with the trust pursuant to which it agreed, on a subordinated basis, to pay any cost, expenses or liabilities of the trust other than those arising under the trust preferred securities. The obligations of the Company under the junior subordinated debentures, the related indentures, the trust agreement establishing the trust and the guarantees, and the agreements as to expenses and liabilities, in the aggregate, constitute a full and unconditional guarantee by the Company of the trust’s obligations under the trust preferred securities. The trust preferred securities issued by the statutory business trusts qualify as Tier 1 capital for the Company under current Federal Reserve Board guidelines.

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Derivative Instruments

12 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

As of December 31, 2018 and 2017, the Company primarily utilizes non-hedging derivative financial instruments with commercial banking customers to facilitate their interest rate management strategies. For these instruments, the Company acts as an intermediary for its customers and has offsetting contracts with financial institution counterparties. Changes in the fair value of these underlying derivative contracts generally offset each other and do not significantly impact the Company's results of operations.

The following table summarizes the notional and fair value of these derivative instruments (in thousands):

	December 31, 2018				December 31, 2017
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Customer counterparties:
Loan interest rate swap - assets	$	132,146	$	3,131	$	225,480	$	4,877
Loan interest rate swap - liabilities	372,223		13,774		314,450		9,513
Non-hedging interest rate derivatives:
Financial institution counterparties:
Loan interest rate swap - assets	403,500		13,902		320,949		9,591
Loan interest rate swap - liabilities	132,146		3,131		218,924		4,877

The following table summarizes the change in fair value of these derivative instruments (in thousands): 

	Year Ended December 31,
	2018			2017			2016
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative assets	$	1,316		$	(3,379	)	$	3,904
Other income - derivative liabilities	(1,316		)	3,379			(3,904		)
Other expense - derivative liabilities	50			86			(52		)

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with financial institution counterparties are generally executed under International Swaps and Derivative Association ("ISDA") master agreements which include "right of setoff" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset financial instruments for financial reporting purposes. Information about financial instruments that are eligible for offset in the consolidated balance sheet as of December 31, 2018 is presented in the following tables (in thousands):

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Gross

Net Amounts

Adjustment

Applicable

Amounts

Amounts

of Assets

per

Netting

Recognized in

Offset in the

presented in

Applicable

Agreement

Statement of

Statement of

the Statement

Master

Fair Value

and Fair

Financial

Financial

of Financial

Netting

of Financial

Value of

Description

Position

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)*

Non-hedging derivative assets:

Interest rate swap agreements - customer counterparties(a)

$

3,131

$

—

$

3,131

$

—

$

3,131

$

3,131

$

—

Interest rate swap agreements - financial institution counterparties(b)

10,771

—

10,771

—

10,771

10,771

—

Non-hedging derivative liabilities:
Interest rate swap agreements - customer counterparties(a)	$	13,774	$	—	$	13,774	$	—	$	13,774	$	13,774	$	—
Interest rate swap agreements -financial institution counterparties(c)	—		—		—		—		—		—		—
* For instances where the fair value of financial collateral meets or exceeds the amounts presented in the Statement of Financial Position, a value of zero is displayed to represent full collateralization.
(a) The underlying collateral on the loan serves as collateral for the derivative financial instrument.
(b) The financial institution counterparty posts collateral to the Company.
(c) The Company posts collateral to the financial institution counterparty.

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Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	2018		2017
Allowance for loan losses	$	3,742	$	4,385
Deferred compensation payable	2,734		2,517
Underfunded pension liability	1,794		1,527
Accrued expenses	2,276		1,057
Impaired asset losses	1,201		607
Unrealized securities losses	1,871		166
Intangible assets	783		438
Other	6,492		3,577
Total Deferred Tax Assets	20,893		14,274
Other	3,555		2,361
Total Deferred Tax Liabilities	3,555		2,361
Net Deferred Tax Assets	$	17,338	$	11,913

No valuation allowance for deferred tax assets was recorded at December 31, 2018 and 2017 as the Company believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by recoverable taxes paid in prior years.

On December 22, 2017, the President signed the Tax Cut and Jobs Act ("TCJA") into law. Among other things, the TCJA reduced the corporate income tax rate from 35% to 21%, effective January 1, 2018. As a result of this decrease in the corporate income tax, the Company re-measured its deferred tax assets and liabilities, which resulted in a provisional charge to earnings of $7.1 million in 2017,which is included in total deferred tax expense in the table below. Upon final analysis of available information and refinement of the Company's calculations during 2018, the Company increased its provisional amount by $0.1 million,which is included as a component of income tax expense. Significant components of the provision for income taxes are as follows (in thousands): 

	2018			2017		2016
Current:
Federal	$	16,846		$	20,090	$	20,100
State	2,413			1,436		1,166
Total current tax expense	19,259			21,526		21,266
Total deferred tax expense	(1,244		)	14,909		3,817
Income tax expense	$	18,015		$	36,435	$	25,083

A reconciliation of the significant differences between the federal statutory income tax rate and the Company’s effective income tax rate is as follows (in thousands):

	2018			2017			2016
Computed federal taxes at statutory rate	$	18,483		$	31,761		$	27,025
State income taxes, net of federal tax benefit	1,730			1,321			888
Tax effects of:
Tax-exempt interest income	(694		)	(1,098		)	(708		)
Bank-owned life insurance	(649		)	(1,474		)	(1,164		)
Change in statutory tax rate	—			7,070			—
Other items, net	(855		)	(1,145		)	(958		)
Income tax expense	$	18,015		$	36,435		$	25,083

The entire amount of the Company’s unrecognized tax benefits, if recognized, would favorably affect the Company’s effective tax rate.   The Company anticipates that it will release $0.5 million over the next 12 months.  A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):

	2018			2017
Beginning balance	$	1,889		$	1,847
Additions for current year tax positions	184			325
Additions for prior year tax positions	241			226
Decreases related to lapse of applicable statute of limitation	(503		)	(509		)
Ending balance	$	1,811		$	1,889

Interest and penalties on income tax uncertainties are included in income tax expense.  During 2018, 2017 and 2016, the provision related to interest and penalties was less than $0.2 million in each period.  The balance of accrued interest and penalties at December 31, 2018 and 2017 was less than $0.5 million.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2015 and forward.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2018

Share-based Compensation [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

Pursuant to the terms of the City Holding Company 2013 Incentive Plan (the "2013 Plan"), the Compensation Committee of the Board of Directors, or its delegate, may, from time-to-time, grant stock options, stock appreciation rights (“SARs”), or stock awards to employees, directors and individuals who provide service to the Company (collectively, "Plan Participants").  The 2013 Plan was approved by the shareholders in April 2013. A maximum of 750,000 shares of the Company’s common stock may be issued under the 2013 Plan upon the exercise of stock options, SARs and stock awards, subject to certain limitations.  These limitations may be adjusted in the event of a change in the number of outstanding shares of common stock by reason of a stock dividend, stock split or other similar event.  Specific terms of options and SARs awarded, including vesting periods, exercise prices (stock price at date of grant) and expiration dates are determined at the date of grant and are evidenced by agreements between the Company and the awardee.  The exercise price of the option grants equals the market price of the Company’s stock on the date of grant.  All incentive stock options and SARs will be exercisable up to 10 years from the date granted and all options and SARs are exercisable for the period specified in the individual agreement.  As of December 31, 2018, 532,552 shares were still available to be issued under the 2013 Plan.

Each award from the 2013 Plan is evidenced by an award agreement that specifies the option price, the duration of the option, the number of shares to which the option pertains, and such other provisions as the Compensation Committee, or its delegate, determines. Upon a change-in-control of the Company, as defined in the 2013 Plan, all outstanding options and awards shall immediately vest.

Certain stock options and restricted stock awards granted pursuant to the 2013 Plan have performance-based vesting requirements. These shares will vest in three separate annual installments of approximately 33.33% per installment on the third, fourth and fifth anniversaries of the grant date, subject further to performance-based vesting requirements. To meet the performance-based vesting requirement, the Company's mean return on average assets of the three, four and five year period prior to the respective vesting date must meet or exceed the median return on average assets over the 20 year period immediately preceding the vesting date of all FDIC insured depository institutions. The mean return on average assets excludes merger and acquisition expenses and other nonrecurring items as determined by the Board of Directors of the Company.

In 2018, the Board of Directors granted the named executive officers ("NEOs") of the Company restricted stock units ("RSUs") and performance share units ("PSUs"). The RSUs will vest in three separate annual installments of approximately 33.33% per installment on the first, second and third anniversaries of the grant date, subject to a two-year holding period. The PSUs will vest on the third anniversary of the grant date. The payout for the PSUs will be determined based on two factors:

(1) The Company's three-year average return on assets ("ROA") during the three-year performance period relative to the ROA for the selected peer companies.

(a) For the three-year performance at or below the 25th percentile, 0%of the grant will vest;at the 50th percentile, 100% of the grant will vest; at the 100th percentile, 200% of the grant will vest.

(b) The amount vested will be interpolated accordingly for performance between the 25th and 50th percentile and the 50th and 100th percentile.

(2) The Company's total shareholder return ("TSR") during the three-year performance period relative to the TSR of the selected peer companies.

(a) The ultimate vesting of PSUs will be increased or decreased as determined by a modifier based on the Company's TSR relative to the selected peer companies.

(b) For relative TSR at or below the 25th percentile, the number of PSUs vested will be reduced by 25%; at the 50th percentile the vesting will not be adjusted; at or above the 75th percentile, the vesting will be increased by 25%.

(b) The amount vested will be interpolated accordingly for performance between the 25th and 50th percentile and the 50th and 75th percentile.

Stock Options

A summary of the Company’s stock option activity and related information is presented below: 

	2018					2017				2016
	Options		Weighted-Average Exercise Price			Options		Weighted-Average Exercise Price		Options		Weighted-Average Exercise Price
Outstanding at January 1	87,605		$	47.15		86,613		$	41.08	95,015		$	38.38
Granted	—		—			17,631		66.32		24,348		43.73
Exercised	(29,633	)	(39.31		)	(16,639	)	35.91		(32,750	)	35.28
Forfeited	—		—			—		—		—		—
Outstanding at December 31	57,972		$	51.15		87,605		$	47.15	86,613		$	41.08
Exercisable at end of year	2,697		$	45.13		7,887		$	37.37	3,000		$	29.45
Nonvested at beginning of year	79,718		48.08			83,613		41.47		75,265		39.38
Granted during the year	—		—			17,631		66.32		24,348		43.73
Vested during the year	(24,443	)	40.58			(21,526	)	37.31		(16,000	)	35.09
Forfeited during the year	—		—			—		—		—		—
Nonvested at end of year	55,275		$	51.40		79,718		$	48.08	83,613		$	41.47

Information regarding stock option exercises and stock-based compensation expense associated with stock options is provided in the following table (in thousands):

	For the year ended December 31,
	2018		2017		2016
Proceeds from stock option exercises	$	1,164	$	597	$	1,155
Intrinsic value of stock options exercised	944		481		551
Stock-based compensation expense associated with stock options	$	178	$	246	$	240
Income tax benefit recognized related to stock-based compensation	19		42		36
At period-end:	2018
Unrecognized stock-based compensation expense	$	204
Weighted average period in which the above amount is expected to be recognized	2.0		years

Shares issued in connection with stock option exercises are issued from available treasury shares. If no treasury shares are available, new shares would be issued from available authorized shares. During 2018, 2017 and 2016, all shares issued in connection with stock option exercises and restricted stock awards were issued from available treasury stock. For the stock options that have performance-based criteria, management has evaluated those criteria and has determined that, as of December 31, 2018, the criteria were probable of being met.

Additional information regarding the Company's stock options outstanding and exercisable at December 31, 2018, is provided in the following table:  

Ranges of Exercise Prices	No. of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Months)	Aggregate Intrinsic Value (in thousands)		No. of Options Currently Exercisable	Weighted-Average Exercise Price of Options Currently Exercisable		Weighted-Average Remaining Contractual Life (Months)	Aggregate Intrinsic Value of Options Currently Exercisable  (in thousands)
$ 35.00 - 39.99	38	$	37.74	4.2	$	1	38	$	37.74	4.2	$	1
40.00 - 44.99	30,676	43.87		6.8	728		1,675	44.43		5.2	39
45.00 - 49.99	9,627	46.61		6.2	202		984	46.61		6.2	21
50.00 - 69.99	17,631	66.32		8.2	22		—	—		—	—
	57,972				$	953	2,697				$	61

The fair value of the options is estimated at the date of grant using a Black-Scholes option-pricing model.   The following weighted average assumptions were used to estimate the fair value of options granted by the Company:

	For the year ended December 31,
	2017		2016
Risk-free interest rate	2.12	%	1.43	%
Expected dividend yield	2.60	%	3.86	%
Volatility factor	25.80	%	30.76	%
Expected life of option	7.0 years		7.0 years

Restricted Shares

The Company measures compensation expense with respect to restricted shares in an amount equal to the fair value of the common stock covered by each award on the date of grant. The restricted shares awarded become fully vested after various periods of continued employment from the respective dates of grant. The Company is entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted shares when the restrictions are released and the shares are issued. Compensation is  charged to expense over the respective vesting periods.

Restricted shares are generally forfeited if officers and employees terminate employment with the Company prior to the lapsing of restrictions. The Company records forfeitures of restricted stock as treasury share repurchases and any compensation cost previously recognized is reversed in the period of forfeiture.  Recipients of restricted shares do not pay any cash consideration to the Company for the shares, and have the right to vote all shares subject to such grant and receive all dividends with respect to such shares, whether or not the shares have vested.  For the restricted shares that have performance-based criteria, management has evaluated those criteria and has determined that, as of December 31, 2018, the criteria were probable of being met.

A summary of the Company’s restricted shares activity and related information is presented below:

	2018				2017				2016
	Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant
Outstanding at January 1	170,033				180,622				172,921
Granted	28,363		$	69.94	28,839		$	64.42	30,601		$	46.39
Forfeited/Vested	(48,704	)			(39,428	)			(22,900	)
Outstanding at December 31	149,692				170,033				180,622

Information regarding stock-based compensation associated with restricted shares is provided in the following table (in thousands):

	For the year ended December 31,
	2018		2017		2016
Stock-based compensation expense associated with restricted shares	$	1,609	$	1,507	$	1,371
At period-end:	2018
Unrecognized stock-based compensation expense	$	3,594
Weighted average period in which the above amount is expected to be recognized	3.1		years

401(k) Plan

The Company provides retirement benefits to its employees through the City Holding Company 401(k) Plan and Trust (the "401(k) Plan"), which is intended to be compliant with Employee Retirement Income Security Act (ERISA) section 404(c). Information regarding the Company’s 401(k) plan is provided in the following table (dollars in thousands):

	For the year ended December 31,
	2018		2017		2016
Expense associated with the Company's 401(k) Plan	$	905	$	841	$	796
At period-end:
Number of shares of the Company's common stock held by the 401(k) Plan	229,276		228,662

Defined Benefit Plans

The Company maintains two defined benefit pension plans (the "Defined Benefit Plans"), which were inherited from the Company's acquisition of the plan sponsors (Horizon Bancorp, Inc. and Community Financial Corporation). The Horizon Defined Benefit Plan was frozen in 1999 and maintains a December 31st year-end for purposes of computing its benefit obligations. The Community Defined Benefit Plan was frozen in 2012 and was terminated during the year-ended December 31, 2018.

Primarily as a result of the interest rate environment over the past several years and mortality table revisions, the benefit obligation exceeded the estimated fair value of plan assets as of December 31, 2018 and December 31, 2017. The following table summarizes activity within the Company's Defined Benefit Plans (dollars in thousands):

	Pension Benefits
	2018			2017
Change in fair value of plan assets:
Fair value at beginning of measurement period	$	16,360		$	17,117
Actual gain (loss) on plan assets	(434		)	1,890
Contributions	1,509			—
Benefits paid	(5,394		)	(2,647		)
Fair value at end of measurement period	12,041			16,360
Change in benefit obligation:
Benefit obligation at beginning of measurement period	(18,488		)	(19,742		)
Interest cost	(590		)	(772		)
Actuarial (loss) gain	(1,488		)	(392		)
Assumption changes	825			(614		)
Benefits paid	5,394			2,647
Settlement loss	125			385
Benefit obligation at end of measurement period	(14,222		)	(18,488		)
Funded status	$	(2,181	)	$	(2,128	)
Weighted-average assumptions for benefit obligation:
Discount rate	4.10		%	3.38		%
Expected long-term rate of return	6.75		%	6.56		%
Weighted-average assumptions for net periodic pension cost:
Discount rate	3.38		%	4.02		%
Expected long-term rate of return	6.56		%	5.83		%

Based on the funding status of the Horizon Defined Benefit Plan, no contributions were required during the years ended December 31, 2018 and 2017, and no contributions are anticipated being required for the year ending December 31, 2019.

During 2017, the Company initiated the process to terminate the Community Defined Benefit plan. The Company made a $1.5 million terminal contribution in 2018 to terminate the plan.

The following table presents the components of the net periodic pension cost of the Company's Defined Benefit Plans, which is recognized in Other Expenses in the Consolidated Statements of Income (in thousands):

	2018			2017			2016
Components of net periodic benefit:
Interest cost	$	590		$	772		$	820
Expected return on plan assets	(1,080		)	(1,219		)	(1,154		)
Settlement	71			(104		)	—
Net amortization and deferral	890			849			849
Net Periodic Pension Cost	$	471		$	298		$	515

Amounts related to the Company's Defined Benefit Pension Plans recognized as a component of other comprehensive income were as follows (in thousands):

	2018			2017			2016
Net actuarial gain (loss)	$	(1,092	)	$	838		$	157
Deferred tax (expense) benefit	254			(1,211		)	(58		)
Other comprehensive income (loss), net of tax	$	(838	)	$	(373	)	$	99

Amounts recognized as a component of accumulated other comprehensive loss as of December 31, 2018 and 2017 were as follows (in thousands):

	2018			2017
Net actuarial loss	$	7,652		$	6,560
Deferred tax benefit	(1,781		)	(1,527		)
Amounts included in accumulated other comprehensive loss, net of tax	$	5,871		$	5,033

The following table summarizes the expected benefits to be paid in each of the next five years and in the aggregate for the five years thereafter (in thousands):

Plan Year Ending December 31,	Expected Benefits to be Paid
2019	$	1,012
2020	1,016
2021	1,010
2022	1,010
2023	1,016
2024 through 2027	4,958

The major categories of assets in the Company’s Defined Benefit Plans as of year-end are presented in the following table (in thousands).  Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 utilized to measure fair value (See Note Nineteen).

	Total		Level 1		Level 2		Level 3
2018
Cash and cash equivalents	$	12,041	$	12,041	$	—	$	—
Total	$	12,041	$	12,041	$	—	$	—
2017
Cash and cash equivalents	$	1,202	$	1,202	$	—	$	—
Mutual funds/Investment funds	5,421		5,206		215		—
Common stocks	5,575		3,763		1,812		—
Mortgage-backed securities	301		—		301		—
U.S. Treasuries	1,277		—		1,277		—
Corporate bonds	1,223		—		1,223		—
Alternative investments**	1,361		759		—		—
Total	$	16,360	$	10,930	$	4,828	$	—
** Includes an investment of $602 at December 31, 2017 that has not been categorized in the fair value hierarchy, as permitted by ASU No. 2015-07.

Horizon Defined Benefit Plan (Investment Strategy)

During the fourth quarter of 2018, the Company changed the administrator of The Horizon Defined Benefit Plan to its trust department. The Company's pension committee is in the process of revising the plan's investment strategy and it anticipates adopting a similar investment strategy, with a target allocation of 75% equity securities and 25% fixed income securities. Pending the adoption of the revised investment strategy, the plan assets are being held in a low-risk, cash and cash equivalent investment.

Previously, the overall investment return goal was to achieve a return greater than a blended mix of the S&P 500 and the Barclay's Capital Aggregate Bond Index, which is tailored to the same asset mix of the retirement plan assets, by 0.5% annualized after fees over a rolling five years moving average basis. In order to achieve a prudent level of portfolio diversification, the securities of any one company are not to exceed more than 15% of the cost and/or market value of the total retirement plan assets, and no more than 25% of the total retirement plan assets are to be invested in any one industry (other than securities of the U.S. government or agencies thereof). At December 31, 2017, the plan assets were invested in equity securities (48%), fixed income securities (25%), cash and cash equivalents (15%), and alternative investments (12%). Prior to the asset transfer in 2018, plan assets were invested in equity securities (44%), fixed income securities (21%), cash and cash equivalents (26%), and alternative investments (9%), which were in the allowable allocation range under the previous policy. The pension committee anticipates adopting a similar strategy.

Pentegra Defined Benefit Plan

The Company and its subsidiary participate in the Pentegra Defined Benefit Plan for Financial Institutions ("The Pentegra DB Plan"), a tax-qualified defined benefit pension plan. The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. There are no collective bargaining agreements in place that require contributions to the Pentegra DB Plan. The Pentegra DB Plan is a single plan under Internal Revenue Code Section 413(c) and, as a result, all of the assets stand behind all of the liabilities. Accordingly, under the Pentegra DB Plan, contributions made by a participating employer may be used to provide benefits to participants of other participating employers. The funded statuses below are as of July 1, 2018 (the latest available valuation report). It is the policy of the Company to fund the normal cost of the Pentegra DB Plan on an annual basis.  Other than for normal plan expenses, no contributions were required for the years ended December 31, 2018, 2017 and 2016.  The benefits of the original Pentegra Defined Benefit Plan were frozen prior to the acquisition of Classic Bancshares ("Classic") in 2005, and the benefits of the Poage Pentegra Defined Benefit Plan were frozen prior to the acquisition of Poage in 2018. It is the intention of the Company to fund benefit amounts when assets of the plan are not sufficient.

Pentegra DB Plan's Employer Identification Number	13-5645888
Plan Number	333
Funded status for plan inherited with Classic acquisition	93.01%
Funded status for plan inherited with Poage acquisition	98.11%

Employment Contracts

The Company has entered into employment contracts with certain of its current executive officers. The employment contracts provide for, among other things, the payment of termination compensation in the event an executive officer either voluntarily or involuntarily terminates his employment with the Company for other than "Just Cause" as defined in the applicable employment contract. Certain of the employment contracts provide for a termination benefit that became fully vested in 2005 and is payable if and when the executive officer terminates his employment with the Company. The termination benefit grows each year at an amount equal to the one-year constant maturity treasury rate and cannot be forfeited except where the executive officer personally profits from willful fraudulent activity that materially and adversely affects the Company. The costs of this vested termination benefit have been fully accrued and expensed by the Company as of December 31, 2018. The liability was $2.1 million and $2.0 million at December 31, 2018 and 2017, respectively.

Other Post-Retirement Benefit Plans

Certain entities previously acquired by the Company had entered into individual deferred compensation and supplemental retirement agreements with certain current and former directors and officers. The Company has assumed the liabilities associated with these agreements, the cost of which is being accrued over the period of active service from the date of the respective agreement. To assist in funding these liabilities, the acquired entities had insured the lives of certain current and former directors and officers. The Company is the current owner and beneficiary of those insurance policies. The following table presents a summary of the Company's other post-retirement benefit plans (in thousands).

	For the year ended December 31
	2018		2017		2016
Cost of other post-retirement benefits	$	280	$	278	$	315
At period-end:
Other post-retirement benefit liability (included in Other Liabilities)	6,923		5,695
Cash surrender value of insurance policies (included in Other Assets)	6,807		6,954

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Related Party Transactions

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

City National has granted loans to certain non-executive officers and directors of the Company and its subsidiaries, and to their associates. These loans were made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with third-party lending arrangements. 

			Principal		Principal
	December 31, 2017		Additions		Reductions			December 31, 2018
Related Party Loans	$	12,405	$	11,850	$	(2,223	)	$	22,032
Unfunded commitments	$	17,757						$	16,109

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Commitments And Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

COMMITMENTS AND CONTINGENCIES

The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  The Company has entered into agreements with its customers to extend credit or provide conditional commitment to provide payment on drafts presented in accordance with the terms of the underlying credit documents. The Company also provides overdraft protection to certain demand deposit customers that represent an unfunded commitment.  Overdraft protection commitments, which are included with other commitments below, are uncollateralized and are paid at the Company’s discretion.  Conditional commitments generally include standby and commercial letters of credit. Standby letters of credit represent an obligation of the Company to a designated third party contingent upon the failure of a customer of the Company to perform under the terms of the underlying contract between the customer and the third party. Commercial letters of credit are issued specifically to facilitate trade or commerce. Under the terms of a commercial letter of credit, drafts will be drawn when the underlying transaction is consummated, as intended, between the customer and a third party. The funded portion of these financial instruments is reflected in the Company’s balance sheet, while the unfunded portion of these commitments is not reflected in the balance sheet.  

The table below presents a summary of the contractual obligations of the Company resulting from significant commitments (in thousands):

	December 31, 2018		December 31, 2017
Commitments to extend credit:
Home equity lines	$	207,509	$	194,477
Commercial real estate	68,649		66,901
Other commitments	201,687		184,895
Standby letters of credit	7,183		7,151
Commercial letters of credit	811		831

Loan commitments and standby and commercial letters of credit have credit risks essentially the same as those involved in extending loans to customers and are subject to the Company’s standard credit policies. Collateral is obtained based on management’s credit assessment of the customer. Management does not anticipate any material losses as a result of these commitments.

In addition, the Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize positive and/or negative impact to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current actions will have immaterial results, either positive or negative, or that no material actions may be presented in the future.

The Company owns 86,605 shares of Class B common stock of Visa, Inc. ("Visa") which are convertible into Class A common stock at a conversion ratio of 1.6298 per Class B share. As of December 31, 2018, the value of the Class A shares was $131.94 per share. Utilizing the conversion ratio, the value of unredeemed Class A equivalent shares owned by the Company was $18.6 million which has not been reflected in the accompanying consolidated financial statements. The shares of Visa Class B common stock are restricted. Visa Member Banks (as defined in Visa's organizational documents) are required to fund an escrow account to cover settlements, resolution of pending litigation and related claims. If the funds in the escrow account are insufficient to settle the covered litigation, Visa may sell additional Class A shares, use the proceeds to settle litigation and further reduce the conversion ratio. If funds remain in the escrow account after all litigation is settled, the Class B conversion ratio will be increased to reflect that surplus.

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Preferred Stock

12 Months Ended

Dec. 31, 2018

Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract]

Preferred Stock

PREFERRED STOCK

 The Company’s Board of Directors has the authority to issue preferred stock, and to determine the designation, preferences, rights, dividends and all other attributes of such preferred stock, without any vote or action by the shareholders.  As of December 31, 2018, no such shares were outstanding, nor were any expected to be issued.

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Regulatory Requirements And Capital Ratios

12 Months Ended

Dec. 31, 2018

Regulatory Capital Requirements [Abstract]

Regulatory Requirements And Capital Ratios

REGULATORY REQUIREMENTS AND CAPITAL RATIOS

The principal source of income and cash for City Holding (the “Parent Company”) is dividends from City National. Dividends paid by City National to the Parent Company are subject to certain legal and regulatory limitations. Generally, any dividends in amounts that exceed the earnings retained by City National in the current year plus retained net profits for the preceding two years must be approved by regulatory authorities. Approval is also required if dividends declared would cause City National’s regulatory capital to fall below specified minimum levels.  At December 31, 2018, City National could pay dividends up to $88.8 million without prior regulatory permission.

During 2018, the Parent Company used cash obtained from the dividends received primarily to: (1) acquire Farmers Deposit, (2) pay common dividends to shareholders, (3) repay the Company's Junior Subordinated Deferrable Interest Debentures, (4) remit interest payments on those debentures prior to payoff and (5) fund repurchases of the Company's common shares. As of December 31, 2018, the Parent Company reported a cash balance of approximately $20.6 million.  Management believes that the Parent Company’s available cash balance, together with cash dividends from City National, is adequate to satisfy its funding and cash needs in 2019.

In July 2013, the Federal Reserve published the final rules that established a new comprehensive capital framework for banking organizations, commonly referred to as Basel III. These final rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions. The final rule became effective January 1, 2015 for smaller, non-complex banking organizations with full implementation by January 1, 2019.

On January 1, 2019, the Basel III Capital Rules will require City Holding and City National to maintain minimum CET 1, Tier 1 and Total Capital ratios, along with a capital conservation buffer that will become fully phased in on that date, effectively resulting in new minimum capital ratios (which are shown in the table below). The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and was phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reached 2.5% on January 1, 2019). The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The Basel III Capital Rules also provide for a “countercyclical capital buffer” that is applicable to only certain covered institutions and does not have any current applicability to City Holding Company or City National Bank.

The Company’s regulatory capital ratios for both City Holding and City National are illustrated in the following tables (in thousands):

December 31, 2018	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	492,526	15.1	%	$	208,294	6.375	%	$	228,715	7.0	%	$	212,378	6.5	%
City National Bank	423,099		13.1	%	206,676		6.375	%	226,938		7.0	%	210,728		6.5	%
Tier 1 Capital
City Holding Company	496,526		15.2	%	257,304		7.875	%	277,725		8.5	%	261,389		8.0	%
City National Bank	423,099		13.1	%	255,306		7.875	%	275,568		8.5	%	259,358		8.0	%
Total Capital
City Holding Company	512,801		15.7	%	322,651		9.875	%	343,072		10.5	%	326,736		10.0	%
City National Bank	439,374		13.6	%	320,145		9.875	%	340,408		10.5	%	324,198		10.0	%
Tier 1 Leverage Ratio
City Holding Company	496,526		11.4	%	174,833		4.000	%	174,833		4.0	%	218,542		5.0	%
City National Bank	423,099		9.8	%	172,594		4.000	%	172,594		4.0	%	215,742		5.0	%
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

December 31, 2017:	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	430,154	15.1	%	$	163,441	5.75	%	$	198,972	7.0	%	$	184,760	6.5	%
City National Bank	338,105		12.0	%	162,164		5.75	%	197,418		7.0	%	183,316		6.5	%
Tier 1 Capital
City Holding Company	446,154		15.7	%	206,078		7.25	%	241,609		8.5	%	227,397		8.0	%
City National Bank	338,105		12.0	%	204,468		7.25	%	239,721		8.5	%	225,620		8.0	%
Total Capital
City Holding Company	465,292		16.4	%	262,927		9.25	%	298,458		10.5	%	284,246		10.0	%
City National Bank	357,243		12.7	%	260,873		9.25	%	296,126		10.5	%	282,025		10.0	%
Tier 1 Leverage Ratio
City Holding Company	446,154		11.0	%	161,834		4.00	%	161,834		4.0	%	202,293		5.0	%
City National Bank	338,105		8.5	%	159,625		4.00	%	159,625		4.0	%	199,531		5.0	%
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

As of December 31, 2018, management believes that City Holding Company, and its banking subsidiary, City National, were “well capitalized.” City Holding is subject to regulatory capital requirements administered by the Federal Reserve, while City National is subject to regulatory capital requirements administered by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”). Regulatory agencies can initiate certain mandatory actions if either City Holding or City National fails to meet the minimum capital requirements, as shown above. As of December 31, 2018, management believes that City Holding and City National meet all capital adequacy requirements.

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the "Regulatory Relief Act") went into effect. The Regulatory Relief Act provides for a simplification of the minimum capital level requirements applicable to the Company. The federal bank regulatory agencies have not yet issued final rules regarding this change, but it is expected that a to–be–developed community bank leverage ratio will replace the Basel III Capital Rules applicable to the Company. There can be no assurances, however, as to the substance of the final rule or its effect on the Company

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Fair Value Measurements

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are less active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company bases fair value of assets and liabilities on quoted market prices, prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.  If such information is not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.  These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters.  Any such valuation adjustments are applied consistently over time.  The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.  Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amount presented herein.  A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. 

Financial Assets and Liabilities

The Company used the following methods and significant assumptions to estimate fair value for financial assets and liabilities measured on a recurring basis.

Securities Available for Sale.  Securities available for sale are reported at fair value utilizing Level 1, Level 2, and Level 3 inputs.  The fair value of securities available for sale is determined by utilizing a market approach by obtaining quoted prices on nationally recognized securities exchanges (other than forced or distressed transactions) that occur in sufficient volume or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.  If such measurements are unavailable, the security is classified as Level 3.  Significant judgment is required to make this determination.

The Company utilizes a third party pricing service provider to value its Level 1 and Level 2 investment securities.  Annually, the Company obtains an independent auditor’s report from its third party pricing service provider regarding its controls over investment securities.  Although no control deficiencies were noted, the report did contain caveats and disclaimers regarding the pricing information, such as the Company should review fair values for reasonableness.  On a quarterly basis, the Company reprices its debt securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values.

The Company has determined that its pooled trust preferred securities are priced using Level 3 inputs in accordance with ASC Topic 820 and guidance issued by the SEC.  The Company has determined that there are few observable transactions and market quotations available for pooled trust preferred securities and they are not reliable for purposes of determining fair value of trust preferred securities held at December 31, 2018.  Due to these circumstances, the Company has elected to utilize an income valuation approach produced by a third party pricing source.  This third party model utilizes deferral and default probabilities for the underlying issuers, estimated prepayment rates and assumes no future recoveries of any defaults or deferrals.  The Company then compares the values provided by the third party model with other external sources.  At such time as there are observable transactions or quoted prices that are associated with an orderly and active market for pooled trust preferred securities, the Company will incorporate such market values in its estimate of fair values for these securities.

Derivatives.Derivatives are reported at fair value utilizing Level 2 inputs.  The Company utilizes a market approach by obtaining dealer quotations to value its customer interest rate swaps.  These quotes utilize the overnight indexed swap ("OIS") curve as a basis for discounting cash flows. The OIS curve is based on the Federal Funds rate. The Company’s derivatives are included within its Other Assets and Other Liabilities in the accompanying consolidated balance sheets. Derivative assets are typically secured through securities with financial counterparties or cross collateralization with a borrowing customer. Derivative liabilities are typically secured through the Company pledging securities to financial counterparties or, in the case of a borrowing customer, by the right of setoff. The Company considers such factors such as the likelihood of default by itself and its counterparties, right of setoff, and remaining maturities in determining the appropriate fair value adjustments. All derivative counterparties approved by the Company's Asset and Liability Committee ("ALCO") are regularly reviewed, and appropriate business action is taken to adjust the exposure to certain counterparties, if necessary. Counterparty exposure is evaluated by netting positions that are subject to master netting agreements, as well as considering the amount of marketable collateral securing the position. This approach used to estimate impacted exposures to counterparties is also used by the Company to estimate its own credit risk in derivative liability positions. To date, no material losses have been incurred due to a counterparty's inability to pay any undercollateralized position. There was no significant change in the value of derivative assets and liabilities attributed to credit risk during the year ended December 31, 2018.

The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis.  Financial assets measured at fair value on a nonrecurring basis include impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.  Collateral values are estimated using Level 2 inputs based on observable market data for real estate collateral or Level 3 inputs for non-real estate collateral.  The following table presents the Company's assets and liabilities measured at fair value (in thousands):

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
December 31, 2018
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	5,733	$	—	$	5,733	$	—
Obligations of states and political subdivisions	128,070		—		128,070		—
Mortgage-backed securities:
U.S. Government agencies	550,758		—		550,758		—
Private label	12,043		—		12,043		—
Trust preferred securities	4,799		—		4,538		261
Corporate securities	16,658		—		16,658		—
Marketable equity securities	10,313		5,907		4,406		—
Certificates of Deposit held for investment	3,735		—		3,735		—
Investment funds	1,458		1,458		—		—
Derivative assets	17,100		—		17,100		—
Financial Liabilities
Derivative liabilities	16,905		—		16,905		—
Nonrecurring fair value measurements
Financial Assets
Impaired loans	$	10,078	$	—	$	—	$	10,078	$	(428	)
Non-Financial Assets
Other real estate owned	4,608		—		—		4,608		(838		)
Other assets	600		—		—		600		(492		)

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
December 31, 2017
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	2	$	—	$	2	$	—
Obligations of states and political subdivisions	96,196		—		96,196		—
Mortgage-backed securities:
U.S. Government agencies	419,347		—		419,347		—
Private label	652		—		652		—
Trust preferred securities	4,736		—		4,475		261
Corporate securities	22,268		—		22,268		—
Marketable equity securities	5,699		5,699		—		—
Investment funds	1,489		1,489		—		—
Derivative assets	14,502		—		14,502		—
Financial Liabilities
Derivative liabilities	14,390		—		14,390		—
Nonrecurring fair value measurements
Financial Assets
Impaired loans	$	9,020	$	—	$	—	$	9,020	$	(647	)
Non-Financial Assets
Other real estate owned	3,585		—		—		3,585		(374		)
Other assets	—		—		—		—		(170		)

The table below presents a reconcilement of the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which consist solely of trust preferred securities (in thousands): 

	2018		2017
Beginning balance	$	261	$	2,535
Included in other comprehensive income	—		(974		)
Dispositions	—		(1,300		)
Ending Balance	$	261	$	261

The Company utilizes a third party model to compute the present value of expected cash flows which considers the

structure and term of pooled trust preferred securities and the financial condition of the underlying issuers. Specifically, the third party model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. For issuing banks that have defaulted, management generally assumes no recovery. For issuing banks that have deferred interest payments, management excludes the collateral balance associated with these banks and assumes no recoveries of such collateral balance in the future. The exclusion of such issuing banks in a current deferral position is based on such bank experiencing a certain level of financial difficulty that raises doubt about its ability to satisfy its contractual debt obligation, and accordingly, the Company excludes the associated collateral balance from its estimate of expected cash flows. Other assumptions used in the estimate of expected cash flows include expected future default rates and prepayments.

The table below presents a reconcilement of the Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3), which solely relates to impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral (in thousands).  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows.  The significant unobservable inputs used in the fair value measurement of collateral for collateral-dependent impaired loans primarily relate to discounts applied to the customers’ reported amount of collateral.  The amount of collateral discount depends upon the marketability of the underlying collateral.  During December 31, 2018 and 2017, collateral discounts ranged from 20% to 30%. During December 31, 2018 and 2017, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

	2018			2017
Beginning balance	$	9,020		$	6,916
Loans classified as impaired during the period	2,330			3,098
Specific valuation allowance allocations	—			(94		)
	2,330			3,004
(Additional) reduction in specific valuation allowance allocations	(218		)	(19		)
Paydowns, payoffs, other activity	(1,054		)	(881		)
Ending balance	$	10,078		$	9,020

Non-Financial Assets and Liabilities

The Company has no non-financial assets or liabilities measured at fair value on a recurring basis.  Certain non-financial assets measured at fair value on a non-recurring basis include other real estate owned (“OREO”), which is measured at the lower of cost or fair value. The table below presents OREO that was remeasured and reported at fair value based on significant unobservable inputs (Level 3) (in thousands): 

	2018			2017
Beginning Balance	$	3,585		$	4,588
OREO remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	6,146			3,066
Charge-offs recognized in the allowance for loan losses	(1,951		)	(1,117		)
Fair value	4,195			1,949
OREO remeasured subsequent to initial recognition:
Carrying value of foreclosed assets prior to remeasurement	3,646			1,464
Fair value	2,808			1,090
Write-downs included in other non-interest expense	(838		)	(374		)
Disposals	(2,334		)	(2,578		)
Ending Balance	$	4,608		$	3,585

During the year ended December 31, 2018, the Company recognized a $0.5 million loss on branches that were moved to held for sale. During the year ended December 31, 2017, the Company recognized a $0.2 million gain on the sale of a facility that formerly housed certain bank operations. During the year ended December 31, 2016, the Company recognized a $0.4 million impairment on this facility. Based on the Company's annual assessment for impairment in the recorded value of goodwill and indefinite lived intangible assets, no impairment was recorded during the years ended December 31, 2018 and 2017.

ASC Topic 825“Financial Instruments,” as amended, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.  In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including discount rate and estimate of future cash flows.  In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.  ASC Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements.  Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used in estimating fair value for financial instruments:

Cash and cash equivalents: Due to their short-term nature, the carrying amounts reported in the Consolidated Balance Sheets approximate fair value.

Securities: The fair value of securities are generally based on quoted market prices or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Other securities: It is not practicable to determine the fair value of the Company's other securities, which consist of FRB and FHLB stock, due to restrictions placed on its transferability.

Net loans:  The fair value of the loan portfolio is estimated by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers for the same remaining maturities, the credit risk associated with such loans and other market factors, including liquidity. Loans were first segregated by type such as commercial, real estate and consumer, and were then further segmented into fixed, adjustable and variable rate categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates fair value.

Deposits: The fair values of demand deposits (e.g., interest and noninterest-bearing checking, regular savings, and other money market demand accounts) are, by definition, equal to their carrying values. The fair values of time deposits were estimated using discounted cash flow analyses. The discount rates used were based on rates currently offered for deposits with similar remaining maturities. The fair values of the time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Short-term debt: Securities sold under agreements to repurchase and Federal Home Loan Bank advances represent borrowings with original maturities of less than 90 days. The carrying amount of borrowings under purchase agreements approximate their fair value.

Long-term debt: The fair value of long-term borrowings is estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements and market conditions of similar debt instruments.

Commitments and letters of credit: The fair values of commitments are estimated based on fees currently charged to enter into similar agreements, taking into consideration the remaining terms of the agreements and the counterparties’ credit standing.  The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.  The amounts of fees currently charged on commitments and letters of credit are deemed insignificant, and therefore, the estimated fair values and carrying values have not been reflected in the following table.

The following table represents the estimates of fair value of financial instruments (in thousands). This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest-bearing demand, interest-bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity. 

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
December 31, 2018
Assets:
Cash and cash equivalents	$	122,991	$	122,991	$	122,991	$	—	$	—
Securities available-for-sale	723,254		723,254		1,458		721,535		261
Securities held-to-maturity	60,827		60,706		—		60,706		—
Other securities	28,810		28,810		5,907		22,903		—
Net loans	3,571,642		3,516,557		—		—		3,516,557
Accrued interest receivable	12,424		12,424		12,424		—		—
Derivative assets	17,100		17,100		—		17,100		—
Liabilities:
Deposits	3,975,559		3,985,534		2,622,905		1,362,629		—
Short-term debt	261,911		261,911		—		261,911		—
Long-term debt	4,053		4,115		—		4,115		—
Derivative liabilities	16,906		16,906		—		16,906		—
December 31, 2017
Assets:
Cash and cash equivalents	$	82,508	$	82,508	$	82,508	$	—	$	—
Securities available-for-sale	550,389		550,389		7,188		542,940		261
Securities held-to-maturity	64,449		65,646		—		65,646		—
Other securities	14,147		14,147		—		14,147		—
Net loans	3,108,574		3,090,471		—		—		3,090,471
Accrued interest receivable	9,223		9,223		9,223		—		—
Derivative assets	14,502		14,502		—		14,502		—
Liabilities:
Deposits	3,315,634		3,309,910		2,232,159		1,077,751		—
Short-term debt	252,219		252,219		—		252,219		—
Long-term debt	16,495		16,444		—		16,444		—
Derivative liabilities	14,390		14,390		—		14,390		—

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City Holding Company (Parent Company Only) Financial Information

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

City Holding Company (Parent Company Only) Financial Information

CITY HOLDING COMPANY (PARENT COMPANY ONLY) FINANCIAL INFORMATION

Condensed Balance Sheets

The following table presents the condensed balance sheets of City Holding Company, parent company only (in thousands):

	December 31
	2018		2017
Assets
Cash	$	20,621	$	59,031
Securities available-for-sale	5,908		5,699
Investment in subsidiaries	583,673		459,150
Loans	701		—
Fixed assets	5		6
Other assets	3,316		2,989
Total Assets	$	614,224	$	526,875
Liabilities
Junior subordinated debentures	$	4,053	$	16,495
Dividends payable	8,774		7,184
Deferred tax liability	366		436
Other liabilities	267		253
Total Liabilities	13,460		24,368
Total Shareholders’ Equity	600,764		502,507
Total Liabilities and Shareholders’ Equity	$	614,224	$	526,875

In 2018, the Parent Company repaid its junior subordinated debentures that were owed to City Holding Capital Trust III. In connection with the acquisition of Poage, the Parent Company assumed Poage's junior subordinated debentures that are owed to Town Square Statutory Trust I.    

On December 19, 2016, the Company announced that it had filed a prospectus supplement to its existing shelf registration statement on Form S-3 for the sale of its common stock having an aggregate value of up to $55 million through an “at-the-market” equity offering program. Through the year ended December 31, 2018, the Company has sold approximately 548,000 common shares at a weighted average price of $64.82, net of broker fees. The Company has sold no shares since the first quarter of 2017. To date the Company has received $36.4 million in gross proceeds. Under the program, the Company has the ability to receive an additional $18.6 million in gross proceeds from the sale of common shares.

Condensed Statements of Comprehensive Income

The following table presents the condensed statements of comprehensive income of City Holding Company, parent company only (in thousands):

	Year Ended December 31
	2018			2017			2016
Income
Dividends from subsidiaries	$	50,000		$	30,000		$	8,600
Realized investment securities gains	—			200			—
Unrealized gains recognized on securities still held	208			—			—
Other income	130			115			320
	50,338			30,315			8,920
Expenses
Interest expense	880			765			683
Merger related expenses	1,899			—			—
Other expenses	1,842			1,636			1,957
	4,621			2,401			2,640
Income Before Income Tax Benefit and Equity in Undistributed Net Income of Subsidiaries	45,717			27,914			6,280
Income tax benefit	(1,114		)	(1,197		)	(1,096		)
Income Before Equity in Undistributed Net Income of Subsidiaries	46,831			29,111			7,376
Equity in undistributed net income of subsidiaries	23,171			25,199			44,752
Net Income	$	70,002		$	54,310		$	52,128
Total Comprehensive Income	$	63,821		$	56,677		$	48,948

Condensed Statements of Cash Flows

The following table presents the condensed statements of cash flows of City Holding Company, parent company only (in thousands):

	Year Ended December 31
	2018			2017			2016
Operating Activities
Net income	$	70,002		$	54,310		$	52,128
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized and realized investment securities losses (gains)	(208		)	(200		)	—
(Benefit) provision for deferred income taxes	(88		)	1,347			(241		)
Depreciation, amortization and accretion, net	1			1			(4		)
Stock based compensation	2,151			2,097			2,018
Asset write down	193			—			444
Change in other assets	2,668			(405		)	260
Change in other liabilities	(1,816		)	(1,660		)	(2,288		)
Equity in undistributed net income	(23,171		)	(25,199		)	(44,752		)
Net Cash Provided by Operating Activities	49,732			30,291			7,565
Investing Activities
Proceeds from sales of available for sale securities	—			200			—
Acquisition of Farmers Deposit Bancorp, Inc., net of cash acquired of $946	(23,954		)	—			—
Acquisition of Poage Bankshares, Inc., net of cash acquired of $518	502			—			—
Net Cash (Used in) Provided by Investing Activities	(23,452		)	200			—
Financing Activities
Repayment of long-term debt	(16,495		)	—			—
Proceeds from sale of capital securities	495			—			—
Dividends paid	(29,583		)	(27,120		)	(25,718		)
Issuance of common stock	—			28,408			6,864
Purchases of treasury stock	(20,271		)	—			(10,018		)
Exercise of stock options	1,164			732			1,155
Net Cash (Used in) Provided by Financing Activities	(64,690		)	2,020			(27,717		)
(Decrease) Increase in Cash and Cash Equivalents	(38,410		)	32,511			(20,152		)
Cash and cash equivalents at beginning of year	59,031			26,520			46,672
Cash and Cash Equivalents at End of Year	$	20,621		$	59,031		$	26,520

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Summarized Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Summarized Quarterly Financial Information (Unaudited)

SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

A summary of selected quarterly financial information (unaudited) is presented below (in thousands, except for per share data):

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2018
Interest income	$	37,644		$	39,180		$	42,729		$	44,348
Taxable equivalent adjustment	187			187			187			194
Interest income (FTE)	37,831			39,367			42,916			44,542
Interest expense	4,997			5,607			7,171			7,917
Net interest income	32,834			33,760			35,745			36,625
(Recovery of) provision for loan losses	181			(2,064		)	(27		)	(400		)
Unrealized gains (losses) recognized on securities still held	280			492			384			(1,246		)
Non-interest income	14,212			15,119			15,369			15,952
Non-interest expense	24,937			24,911			25,040			38,178
Income  before income tax expense	22,208			26,524			26,485			13,553
Income tax expense	4,405			5,358			5,606			2,646
Taxable equivalent adjustment	(187		)	(187		)	(187		)	(194		)
Net income available to common shareholders	$	17,616		$	20,979		$	20,692		$	10,713
Net earnings allocated to common  shareholders	$	17,421		$	20,768		$	20,491		$	10,623
Basic earnings  per common share	$	1.13		$	1.36		$	1.34		$	0.68
Diluted earnings per common share	1.13			1.35			1.33			0.68
Average common shares outstanding:
Basic	15,414			15,326			15,340			15,603
Diluted	15,436			15,345			15,358			15,618
2017
Interest income	$	34,214		$	35,298		$	36,366		$	37,053
Taxable equivalent adjustment	357			370			358			371
Interest income (FTE)	34,571			35,668			36,724			37,424
Interest expense	3,767			4,036			4,340			4,664
Net interest income	30,804			31,632			32,384			32,760
Provision for loan losses	681			510			1,393			422
Investment securities gains	4,276			—			—			200
Non-interest income	14,231			14,921			14,611			15,367
Non-interest expense	24,600			24,176			24,309			22,893
Income  before income tax expense	24,030			21,867			21,293			25,012
Income tax expense	7,647			6,812			7,003			14,972
Taxable equivalent adjustment	(357		)	(370		)	(358		)	(371		)
Net income available to common shareholders	$	16,026		$	14,685		$	13,932		$	9,669
Net earnings allocated to common  shareholders	$	15,849		$	14,531		$	13,778		$	9,560
Basic earnings  per common share	$	1.04		$	0.94		$	0.89		$	0.62

Diluted earnings per common share	1.04	0.94	0.89	0.62
Average common shares outstanding:
Basic	15,252	15,462	15,485	15,472
Diluted	15,277	15,487	15,505	15,497

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Earnings Per Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	For the Year Ended December 31,
	2018			2017			2016
Net income available to common shareholders	$	70,002		$	54,310		$	52,128
Less: earnings allocated to participating securities	(654		)	(591		)	(623		)
Net earnings allocated to common shareholders	$	69,348		$	53,719		$	51,505
Distributed earnings allocated to common shares outstanding	$	32,483		$	27,497		$	25,710
Undistributed earnings allocated to common shares outstanding	36,865			26,222			25,795
Net earnings allocated to common shareholders	$	69,348		$	53,719		$	51,505
Average shares outstanding, basic	15,421			15,412			14,900
Effect of dilutive securities	18			24			13
Average shares outstanding, diluted	15,439			15,436			14,913
Basic earnings per share	$	4.50		$	3.49		$	3.46
Diluted earnings per share	$	4.49		$	3.48		$	3.45
Antidilutive options	—			3			2

Anti-dilutive options are not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares and therefore, the effect would have been anti-dilutive.

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Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Accumulated Other Comprehensive Loss

ACCUMULATED OTHER COMPREHENSIVE LOSS

The activity in accumulated other comprehensive loss is presented in the tables below (in thousands). The activity is shown net of tax, which is calculated using a combined Federal and state income tax rate approximating 23%.

	Accumulated Other Comprehensive Loss
				Unrealized
				Gains (Losses) on
	Defined Benefit			Securities
	Pension Plans			Available-for-Sale			Total
Balance at December 31, 2016	$	(4,660	)	$	(2,352	)	$	(7,012	)
Other comprehensive income before reclassifications	528			4,658			5,186
Amounts reclassified from other comprehensive loss	—			(2,819		)	(2,819		)
	528			1,839			2,367
Adoption of ASU No. 2018-02	(901		)	(98		)	(999		)
Balance at December 31, 2017	$	(5,033	)	$	(611	)	$	(5,644	)
Other comprehensive loss before reclassifications	(963		)	(5,343		)	(6,306		)
Amounts reclassified from other comprehensive loss	125			—			125
	(838		)	(5,343		)	(6,181		)
Adoption of ASU No. 2016-01	—			(2,657		)	(2,657		)
Balance at December 31, 2018	$	(5,871	)	$	(8,611	)	$	(14,482	)

	Amount reclassified from Other Comprehensive Loss									Affected line item
	December 31,									in the Statements
	2018			2017			2016			of Income
Securities available-for-sale:
Net securities gains reclassified into earnings	$	—		$	(4,476	)	$	(3,513	)	Gains on sale of investment securities
Related income tax expense	—			1,657			1,297			Income tax expense
Net effect on accumulated other comprehensive loss	$	—		$	(2,819	)	$	(2,216	)
Defined benefit pension plans:
Gain on termination of defined benefit plan	$	163		$	—		$	—		Other expense
Related income tax expense	(38		)	—			—			Income tax expense
Net effect on accumulated other comprehensive loss	$	125		$	—		$	—

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Contracts With Customers (Notes)

12 Months Ended

Dec. 31, 2018

Contracts with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

NOTE TWENTY-FIVE – CONTRACTS WITH CUSTOMERS

The Company's largest source of revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), and non-interest income. The Company's significant sources of non-interest income are: service charges, bankcard revenue, trust and investment management fee income and bank owned life insurance (which is also excluded from ASC 606).

The following table shows the Company's total non-interest income segregated between those within the scope of ASC 606 and those within the scope of other GAAP topics (in thousands):

Non-interest income
Non-interest income from contracts with customers	$	57,453
Non-interest income within the scope of other GAAP topics	3,111
Total non-interest income	$	60,564

The Company's significant policies related to contracts with customers are discussed below.

Service Charges: Service charges consist of service charges on deposit accounts (monthly service fees, account analysis fees, non-sufficient funds ("NSF") fees and other deposit account related fees). For transaction based fees, the Company's performance obligation is generally satisfied, and the related revenue recognized, at a point in time. For nontransaction based fees, the Company's performance obligation is generally satisfied, and the related revenue recognized, over the period in which the service is provided (typically a month). Generally, payments are received immediately through a direct charge to the customer's account.

Bankcard Revenue: Bankcard revenue is primarily comprised of debit card income and ATM fees. Debit card income is primarily comprised of interchange fees earned whenever the Company's debit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a non-Company cardholder uses a Company ATM or when a Company cardholder uses a non-Company ATM. The Company's performance obligation for bankcard revenue is generally satisfied, and the related revenue recognized, when the services are rendered. Generally, payments are received immediately or in the following month.

Trust and Investment Management Fee Income: Trust and investment management fee income is primarily comprised of fees earned from the management and administration of customer assets. The Company's performance obligation is generally satisfied over time (typically a quarter), and the related revenue recognized, based upon the quarter-end market value of the assets under management and the applicable fee rate. Generally, payments are received a few days after quarter-end through a direct charge to the customer's account.    

The following table illustrates the disaggregation by the Company's major revenue streams (in thousands):

	Point of Revenue
	Recognition
Major revenue streams
Service charges	At a point in time and over time	$	29,704
Bankcard revenue	At a point in time	18,369
Trust and investment management fee income	Over time	6,529
Other income	At a point in time and over time	2,851
Net revenue from contracts with customers		57,453
Non-interest income within the scope of other GAAP topics		3,111
Total non-interest income		$	60,564

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Subsequent Event

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Event

NOTE TWENTY-SIX – SUBSEQUENT EVENT

On January 30, 2019, the Company announced that it had signed a definitive agreement to sell its Virginia Beach, Virginia branch to Select Bank & Trust Company. The terms of the agreement provide for Select Bank & Trust Company to assume the majority of deposits and to acquire the equipment and other selected assets associated with the branch, while the Company retains the loans. The transaction is subject to state and federal bank regulatory approvals and other customary closing conditions and is expected to close during the second quarter of 2019.

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Summary Of Significant Accounting And Reporting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Significant Accounting and Reporting Policies

Summary of Significant Accounting and Reporting Policies: The accounting and reporting policies of City Holding Company and its subsidiaries (the “Company”) conform with U. S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. Actual results could differ from management’s estimates. The following is a summary of the more significant policies.

Principles Of Consolidation

Principles of Consolidation: The consolidated financial statements include the accounts of City Holding Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity in conformity with U. S. generally accepted accounting principles. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. The Company consolidates voting interest entities in which it has all, or at least a majority of, the voting interest. As defined in applicable accounting standards, variable interest entities (VIEs) are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE. The Company’s wholly owned subsidiaries, City Holding Capital Trust III and Town Square Statutory Trust I, are VIEs for which the Company is not the primary beneficiary. Accordingly, the accounts of these entities are not included in the Company’s consolidated financial statements.

       Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. Such reclassifications had no impact on total shareholders’ equity or net income for any period.

Cash and Due from Banks

Cash and Due from Banks: The Company considers cash, due from banks, and interest-bearing deposits in depository institutions as cash and cash equivalents. City National is required to maintain an average reserve balance with the Federal Reserve Bank of Richmond to compensate for services provided by the Federal Reserve and to meet statutory required reserves for demand deposits.

Securities

Securities: Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Company has the ability at the time of purchase to hold debt securities to maturity, they are classified as investment securities held-to-maturity and are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts. Debt securities which the Company may not hold to maturity are classified as investment securities available-for-sale along with the Company’s investment in equity securities. Securities available-for-sale are carried at fair value, with the unrealized gains and losses, net of tax, reported in comprehensive income. Securities classified as available-for-sale include securities that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk, and other factors.

       The Company utilizes a third party pricing service provider to value its investment portfolio.  Annually, the Company obtains an independent auditor’s report from its third party pricing service provider regarding its controls over valuation of investment securities.  Although an unqualified opinion regarding the design and operating effectiveness of controls was issued, the report did contain caveats and disclaimers regarding the pricing information, such as the Company should review market values for reasonableness.  On a quarterly basis, the Company reprices its debt securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values.

       Also, on a quarterly basis, the Company performs a review of investment securities to determine if any unrealized losses are indicative that investment securities are other than temporarily impaired.  Management considers the following, among other things, in its determination of the nature of the unrealized losses: (i) the length of time and the extent to which the fair value has been less than cost; (ii) the financial condition, capital strength, and near–term (within 12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; and (v) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  The Company continues to actively monitor the market value of these investments along with the financial strength of the issuers behind these securities, as well as its entire investment portfolio.

The specific identification method is used to determine the cost basis of securities sold. Certain investment securities that do not have readily determinable fair values and for which the Company does not exercise significant influence are carried at cost and classified as other investment securities on the Consolidated Balance Sheets.  These cost-method investments are reviewed for impairment at least annually or sooner if events or changes in circumstances indicate the carrying value may not be recoverable.

Loans

Loans: Loans, excluding previously securitized loans, which are discussed separately below, are reported at the principal amount outstanding, net of unearned income.  Portfolio loans include those for which management has the intent and the Company has the ability to hold for the foreseeable future, or until maturity or payoff.  The foreseeable future is based upon management’s judgment of current business strategies and market conditions, the type of loan, asset/liability management, and liquidity.

       Interest income on loans is accrued and credited to operations based upon the principal amount outstanding, using methods that generally result in level rates of return. Loan origination fees, and certain direct costs, are deferred and amortized as an adjustment to the yield over the term of the loan. The accrual of interest income generally is discontinued when a loan becomes 90 days past due as to principal or interest for all loan types.  However, any loan may be placed on non-accrual status if the Company receives information that indicates that it is probable a borrower will be unable to meet the contractual terms of their respective loan agreement. Other indicators considered for placing a loan on non-accrual status include the borrower’s involvement in bankruptcies, foreclosures, repossessions, litigation and any other situation resulting in doubt as to whether full collection of contractual principal and interest is attainable. When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and interest accrued in prior years is charged to the allowance for loan losses. Management may elect to continue the accrual of interest when the estimated net realizable value of collateral exceeds the principal balance and related accrued interest, and the loan is in process of collection.

Generally for all loan classes, payments during the period the loan is non-performing are recorded on a cash basis. Payments received on nonperforming loans are typically applied directly against the outstanding principal balance until the loan is fully repaid. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Generally, all loan types are considered past due when the contractual terms of a loan are not met and the borrower is 30 days or more past due on a payment.  Furthermore, residential and home equity loans are generally subject to charge-off when the loan becomes 120 days past due, depending on the estimated fair value of the collateral less cost to dispose, versus the outstanding loan balance. Commercial loans are generally charged off when the loan becomes 120 days past due and consumer loans are generally charged off when the loan becomes 120 days past due.

Loan and Leases Receivable, Acquired Loans

Acquired Loans: In determining the estimated fair value of the acquired loans, management considered several factors, such as estimated future credit losses, estimated prepayments, remaining lives of the acquired loans, estimated value of the underlying collateral and the present value of the cash flows expected to be received.  For smaller loans not specifically reviewed, management grouped the loans into their respective homogeneous loan pool and applied a loss estimate accordingly.

Acquired loans are accounted for using one of the two following accounting standards:

(1) ASC Topic 310-20 is used to value loans that do not have evidence of credit quality deterioration.  For these loans, the difference between the fair value of the loan and the amortized cost of the loan is amortized or accreted into income using the interest method.

(2) ASC Topic 310-30 is used to value loans that have evidence of credit quality deterioration.  For these loans, the expected cash flows that exceed the fair value of the loan represent the accretable yield, which is recognized as interest income on a level-yield basis over the expected cash flow periods of the loans.  The non-accretable difference represents the difference between the contractually required principal and interest payments and the cash flows expected to be collected based upon management’s estimation.  Subsequent decreases in the expected cash flows will require the Company to evaluate the need for additions to the Company’s allowance for loan losses.  Subsequent increases in the expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges with a corresponding adjustment to the accretable yield, which will result in the recognition of additional interest income over the remaining lives of the loans. 

Allowance for Loan Losses

Allowance for Loan Losses: The allowance for loan losses is maintained at a level that represents management’s best estimate of probable losses in the loan portfolio. Management’s determination of the appropriateness of the allowance for loan losses is based upon an evaluation of individual credits in the loan portfolio, historical loan loss experience, current economic conditions, and other relevant factors. This determination is inherently subjective, as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. These evaluations are conducted at least quarterly and more frequently if deemed necessary.  The allowance for loan losses related to loans considered to be impaired is generally evaluated based on the discounted cash flows using the impaired loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. Loan losses are charged against the allowance and recoveries of amounts previously charged off are credited to the allowance. A provision for loan losses is charged to operations based on management’s periodic evaluation of the appropriateness of the allowance after considering factors noted above, among others.

In evaluating the appropriateness of its allowance for loan losses, the Company stratifies the loan portfolio into six major groupings, including commercial real estate, commercial and industrial, residential real estate, home equity, consumer and DDA overdrafts. Historical loss experience, as adjusted, is applied to the then outstanding balance of loans in each classification to estimate probable losses inherent in each segment of the portfolio. Historical loss experience is adjusted using a systematic weighted probability of potential risk factors that could result in actual losses deviating from prior loss experience. Risk factors considered by the Company in completing this analysis include: (1) unemployment and economic trends in the Company’s markets, (2) concentrations of credit, if any, among any industries, (3) trends in loan growth, loan mix, delinquencies, losses or credit impairment, (4) adherence to lending policies and others. Each risk factor is designated as low, moderate/increasing, or high based on the Company’s assessment of the risk of loss associated with each factor. Each risk factor is then weighted to consider inherent risk in the portfolio.

Additionally, all commercial loans within the portfolio are subject to internal risk grading. Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process. Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of probable loss.

Bank Owned Life Insurance Policy [Policy Text Block]

Bank Owned Life Insurance: The Company has purchased life insurance on certain executive officers and employees. The Company receives the cash surrender value of each policy upon its termination or benefits are payable upon the death of the insured. These policies are recorded on the Consolidated Balance Sheets at their net cash surrender value. Changes in the net cash surrender value are recognized in Bank Owned Life Insurance in the Consolidated Statements of Income.

Premises and Equipment

Premises and Equipment: Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily by the straight-line method over the estimated useful lives of the assets. Depreciation of leasehold improvements is computed using the straight-line method over the lesser of the term of the respective lease or the estimated useful life of the respective asset. Maintenance and repairs are charged to expense as incurred, while improvements that extend the useful life of premises and equipment are capitalized and depreciated over the estimated remaining life of the asset.

Other Real Estate Owned

Other Real Estate Owned:  Other real estate owned (“OREO”) is comprised principally of commercial and residential real estate properties obtained in partial or total satisfaction of loan obligations.  OREO acquired in settlement of indebtedness is included in Other Assets at the lower of estimated fair value of the asset, less estimated selling costs or the carrying amount of the loan.  Changes to the value subsequent to transfer are recorded in non-interest expense, along with direct operating expenses.  Gains or losses not previously recognized from sales of OREO are recognized in non-interest expense on the date of the sale. 

Goodwill and Other Intangible Assets

Goodwill and OtherIntangible Assets: Goodwill is the excess of the cost of an acquisition over the fair value of tangible and intangible assets acquired.  Goodwill is not amortized.  Intangible assets represent purchased assets that also lack physical substance, but can be separately distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability.  Intangible assets with determinable useful lives, such as core deposits, are amortized over their estimated useful lives.

The Company performs an annual review for impairment in the recorded value of goodwill and indefinite lived intangible assets. Goodwill is tested for impairment between the annual tests if an event occurs or circumstances change that more than likely reduce the fair value of a reporting unit below its carrying value. An indefinite-lived intangible asset is tested for impairment between the annual tests if an event occurs or circumstances change indicating that the asset might be impaired.

Securities Sold Under Agreements to Repurchase

Securities Sold Under Agreements to Repurchase:  Securities sold under agreements to repurchase are accounted for as collateralized financing transactions and are recorded at the amounts at which the securities were sold plus accrued interest.  Securities sold primarily consists of U.S. government, federal agency, and municipal securities pledged as collateral under these financing arrangements and cannot be repledged or sold, unless replaced by the secured party.

Derivative Financial Instruments

Derivative Financial Instruments: Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is determined by whether it has been designated and qualifies as part of a hedging relationship, and further, by the type of hedging relationship. The Company primarily utilizes derivatives with commercial banking customers to facilitate their interest rate management strategies and the changes in fair value of those instruments are recognized in other non-interest income during the period of the change.

Trust Assets

Trust Assets:  Assets held in a fiduciary or agency capacity for customers are not included in the accompanying financial statements since such items are not assets of the Company.

Income Taxes

Income Taxes: The consolidated provision for income taxes is based upon reported income and expense. Deferred income taxes are provided for temporary differences between financial reporting and tax bases of assets and liabilities, computed using enacted tax rates. The income tax effects related to settlements of share-based compensation awards are reported in earnings as an increase (or decrease) to income tax expense. The Company files a consolidated income tax return. The respective subsidiaries generally provide for income taxes on a separate return basis and remit amounts determined to be currently payable to the Parent Company.

The Company and its subsidiaries are subject to examinations and challenges from federal and state taxing authorities regarding positions taken in returns.  Uncertain tax positions are initially recognized in the consolidated financial statements when it is more likely than not the position will be sustained upon examination.  These positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the taxing authority and assuming full knowledge of the position and all relevant facts by the taxing authority.

The Company invests in certain limited partnerships that operate qualified low-income housing tax credit developments.  These investments are considered variable interest entities for which the Company is not the primary beneficiary.  The tax credits are reflected in the Consolidated Statements of Income as a reduction in income tax expense.  The unamortized amount of the investments is recorded within Other Assets within the Consolidated Balance Sheets.

Advertising Costs

Advertising Costs: Advertising costs are expensed as incurred.

Stock-Based Compensation

Stock-Based Compensation: Compensation expense related to stock options and restricted stock awards issued to employees is based upon the fair value of the award at the date of grant.  The fair value of stock options is estimated utilizing a Black Scholes pricing model, while the fair value of restricted stock awards is based upon the stock price at the date of grant.  Compensation expense is recognized on a straight line basis over the vesting period for options and the respective period for stock awards.

Basic and Diluted Earnings per Common Share

Basic and Diluted Earnings per Common Share: Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding, excluding participating securities. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares outstanding, excluding participating securities, increased by the number of shares of common stock which would be issued assuming the exercise of stock options and other common stock equivalents.

Statements of Cash Flows

Statements of Cash Flows: Cash paid for interest, including interest paid on long-term debt and trust preferred securities, was $24.8 million, $16.4 million, and $13.1 million in 2018, 2017, and 2016, respectively. During 2018, 2017 and 2016, the Company paid $20.8 million, $22.6 million, and $16.3 million, respectively, for income taxes.

Recent Accounting Pronouncements

Recently Adopted:

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." This standard clarifies the principles for recognizing revenue and developed a common revenue standard. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract or contracts with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The FASB also issued several amendments to the standard. In April 2016, the FASB issued ASU No. 2016-10 which clarifies identifying performance obligations and the licensing implementation guidance aspects of Topic 606 while retaining the related principles for those areas. In September 2017, the FASB issued ASU No. 2017-13 which reflects the SEC staff announcement that it would not object when certain public business entities (PBEs) elect to use the non-PBE effective dates solely to adopt the new standards on revenue (ASC 606) and leases (ASC 842). The Company adopted these standards effective January 1, 2018 using the modified retrospective approach, but did not record a cumulative effect adjustment to opening retained earnings given the immaterial impact. As part of the adoption, the Company evaluated the terms of the contracts that supported each of the revenue streams that were within the scope of ASU 2014-09 and determined that the adoption did not significantly change the way the Company recognizes revenue from each stream. See Note Twenty Four.

Others

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." This amendment clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU became effective for the Company on January 1, 2018. The adoption of ASU No. 2017-01 did not have a material impact on the Company's financial statements.

In March 2017, the FASB issued ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." This amendment requires that an employer disaggregate the service cost component from the other components of net benefit cost and also provides explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement. This ASU became effective for the Company on January 1, 2018. The adoption of ASU No. 2017-07 did not have a material impact on the Company's financial statements.

In May 2017, the FASB issued ASU No. 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting." This amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASU No. 2016-09. This ASU became effective for the Company on January 1, 2018. The adoption of ASU No. 2017-09 did not have a material impact on the Company’s financial statements.

Pending Adoption:

Leases

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standardrequires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing requirements for leases that were historically classified as operating leases under previous generally accepted accounting principals. In July 2018, the FASB issued ASU No. 2018-10, "Codification Improvements to Topic 842, Leases." This amendment provides improvements to specific sections of previously issued lease guidance, including a package of three practical expedients regarding the reassessment of prior period leases. In July 2018, the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements." This amendment offers a practical expedient that allows the Company to recognize the prior period balance sheet impacts in the period of adoption and will not require adjustments to the prior period financial statements when adopting ASU No. 2016-02 described above. In December 2018, the FASB issued ASU No. 2018-20, “Leases (Topic 842): Narrow-Scope Improvements for Lessors.” This ASU clarifies sales taxes and other taxes collected from lessees, certain lessor costs, and recognition of variable payments for contracts with lease and nonlease components. These ASUs became effective for the Company for interim and annual periods on January 1, 2019. The Company's evaluation indicates that the adoption of these ASUs had an immaterial impact on the Company's consolidated balance sheet.

CECL

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The new current expected credit losses model ("CECL") will apply to the allowance for loan losses, available-for-sale and held-to-maturity debt securities, purchased financial assets with credit deterioration and certain off-balance sheet credit exposures. In November 2018, the FASB issued ASU No. 2018-19, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses." This amendment clarifies the scope of the guidance in ASU No. 2016-13. These ASUs will become effective for the Company for interim and annual periods on January 1, 2020. Management is currently evaluating the potential impact of these ASUs on the Company's financial statements.

Others

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." This amendment simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This ASU will become effective for the Company on January 1, 2020. The adoption of ASU No. 2017-04 is not expected to have a material impact on the Company's financial statements.

In March 2017, the FASB issued ASU No. 2017-08, "Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities." The amendments in this update shorten the amortization period for certain callable debt securities held at a premium and require the premium to be amortized to the earliest call date. This ASU became effective for the Company on January 1, 2019. The adoption of ASU No. 2017-08 is not expected to have a material impact on the Company's financial statements.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." This amendment expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU became effective for the Company on January 1, 2019. The adoption of ASU No. 2017-12 is not expected to have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement." This amendment removes, modifies, and clarifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU will become effective for the Company on January 1, 2020. The adoption of ASU No. 2018-13 is not expected to have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans." This amendment removes, modifies, and clarifies certain disclosure requirements for defined benefit plans and other post-employment benefit plans. This ASU will become effective for the Company on January 1, 2021. The adoption of ASU No. 2018-14 is not expected to have a material impact on the Company's financial statements.

In October 2018, the FASB issued ASU No. 2018-17, "Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities." This amendment simplifies the analysis of fees paid to decision makers or service providers in determining variable interest entities. This ASU will become effective for the Company on January 1, 2020. The adoption of ASU No. 2018-17 is not expected to have a material impact on the Company's financial statements.

In October 2018, the FASB issued ASU No. 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes." This amendment permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the UST, the LIBOR swap rate, the OIS rate based on the Federal Funds Effective Rate, and the SIFMA Municipal Swap Rate. This ASU became effective for the Company on January 1, 2019. The adoption of ASU No. 2017-12 is not expected to have a material impact on the Company's financial statements.

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Contracts With Customers (Policies)

12 Months Ended

Dec. 31, 2018

Contracts with Customer [Abstract]

Revenue Recognition, Fees and Commissions, Depositor Accounts [Policy Text Block]

Service Charges: Service charges consist of service charges on deposit accounts (monthly service fees, account analysis fees, non-sufficient funds ("NSF") fees and other deposit account related fees). For transaction based fees, the Company's performance obligation is generally satisfied, and the related revenue recognized, at a point in time. For nontransaction based fees, the Company's performance obligation is generally satisfied, and the related revenue recognized, over the period in which the service is provided (typically a month). Generally, payments are received immediately through a direct charge to the customer's account.

Revenue Recognition, Fees and Commissions, Debit Cards [Policy Text Block]

Bankcard Revenue: Bankcard revenue is primarily comprised of debit card income and ATM fees. Debit card income is primarily comprised of interchange fees earned whenever the Company's debit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a non-Company cardholder uses a Company ATM or when a Company cardholder uses a non-Company ATM. The Company's performance obligation for bankcard revenue is generally satisfied, and the related revenue recognized, when the services are rendered. Generally, payments are received immediately or in the following month.

Revenue Recognition, Fees and Commissions, Fiduciary and Trust Activities [Policy Text Block]

Trust and Investment Management Fee Income: Trust and investment management fee income is primarily comprised of fees earned from the management and administration of customer assets. The Company's performance obligation is generally satisfied over time (typically a quarter), and the related revenue recognized, based upon the quarter-end market value of the assets under management and the applicable fee rate. Generally, payments are received a few days after quarter-end through a direct charge to the customer's account.    

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Acquisitions and Preliminary Purchase Price Allocation Acquisitions and Preliminary Purchase Price Allocation (Tables)

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands):

	Farmers
	Deposit			Poage		Total
Consideration:
Cash	$	24,900		$	16	$	24,916
Common stock	—			82,565		82,565
Stock option buyout	—			1,355		1,355
	24,900			83,936		108,836
Identifiable assets:
Cash and cash equivalents	4,209			34,288		38,497
Investment securities	46,235			72,321		118,556
Loans	58,477			304,023		362,500
Bank owned life insurance	—			7,439		7,439
Premises and equipment	768			4,547		5,315
Deferred tax assets, net	(188		)	2,300		2,112
Other assets	2,302			8,799		11,101
Total identifiable assets	111,803			433,717		545,520
Identifiable liabilities:
Deposits	92,241			379,285		471,526
Short-term borrowings	2,025			—		2,025
Long-term debt	—			4,053		4,053
Other liabilities	709			3,130		3,839
Total identifiable liabilities	94,975			386,468		481,443
Net identifiable assets	16,828			47,249		64,077
Goodwill	4,738			28,633		33,371
Core deposit intangible	3,334			8,054		11,388
	$	24,900		$	83,936	$	108,836

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Table Text Block]

Acquired Loans

The following table presents information regarding the purchased credit-impaired and noncredit-impaired loans acquired in conjunction with both acquisitions (in thousands):

	Farmers
	Deposit			Poage			Total
Acquired Credit-Impaired
Contractually required principal and interest	$	—		$	25,315		$	25,315
Contractual cash flows not expected to be collected (non-accretable difference)	—			(13,977		)	(13,977		)
Expected cash flows	—			11,338			11,338
Interest component of expected cash flows (accretable difference)	—			(2,375		)	(2,375		)
Estimated fair value of purchased credit impaired loans acquired	$	—		$	8,963		$	8,963
Acquired NonCredit-Impaired
Outstanding balance	$	58,949		$	295,425		$	354,374
Less: fair value adjustment	(472		)	(365		)	(837		)
Fair value of acquired noncredit-impaired loans	$	58,477		$	295,060		$	353,537

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

Core Deposit Intangible

The Company believes that the customer relationships with the deposits acquired have an intangible value. In connection with the acquisitions, the Company recorded a core deposit intangible asset of $3.3 million and $8.1 million for Farmers Deposit and Poage, respectively. Each of the core deposit intangible assets represent the value that the acquiree had with their deposit customers. The fair value was estimated based on a discounted cash flow methodology that considered type of deposit, deposit retention and the cost of the deposit base. The core deposit intangibles are being amortized over 10 years.

Schedule of Indefinite-lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

Goodwill

Under GAAP, management has up to twelve months following the date of the acquisition to finalize the fair value of acquired assets and liabilities. The measurement period ends as soon as the Company receives information it was seeking about facts and circumstances that existed as of the acquisition date or learns more information is not obtainable. Any subsequent adjustments to the fair value of the acquired assets and liabilities, intangible assets or other purchase accounting adjustments will result in adjustments to the goodwill recorded. Given the form of the respective transactions, the $4.7 million goodwill preliminarily recorded in conjunction with the Farmers Deposit acquisition is expected to be deductible for tax purposes, while the $28.6 million goodwill preliminarily recorded in conjunction with the Poage acquisition is not expected to be deductible for tax purposes.

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Investments (Tables)

12 Months Ended

Dec. 31, 2018

Investments [Abstract]

Aggregate Carrying And Approximate Market Values Of Available-For-Sale Securities

	December 31, 2018								December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	5,713	$	20	$	—	$	5,733	$	2	$	—	$	—	$	2
Obligations of states and
political subdivisions	128,089		1,033		1,052		128,070		94,552		2,051		407		96,196
Mortgage-backed securities:
U.S. government agencies	561,799		1,950		12,991		550,758		425,559		1,093		7,305		419,347
Private label	11,948		95		—		12,043		649		3		—		652
Trust preferred securities	4,774		25		—		4,799		4,764		26		54		4,736
Corporate securities	16,795		30		167		16,658		21,916		475		123		22,268
Total Debt Securities	729,118		3,153		14,210		718,061		547,442		3,648		7,889		543,201
Marketable equity  securities	—		—		—		—		2,136		3,563		—		5,699
Certificates of deposit held for investment	3,735		—		—		3,735		—		—		—		—
Investment funds	1,525		—		67		1,458		1,525		—		36		1,489
Total Securities
Available-for-Sale	$	734,378	$	3,153	$	14,277	$	723,254	$	551,103	$	7,211	$	7,925	$	550,389

Aggregate Carrying And Approximate Market Values Of Held-To-Maturity Securities

Securities held-to-maturity:
U.S. government agencies	$	56,827	$	173	$	294	$	56,706	$	60,449	$	1,222	$	25	$	61,646
Trust preferred securities	4,000		—		—		4,000		4,000		—		—		4,000
Total Securities
Held-to-Maturity	$	60,827	$	173	$	294	$	60,706	$	64,449	$	1,222	$	25	$	65,646
Other investment securities:
Marketable equity  securities	$	10,313	$	—	$	—	$	10,313	$	—	$	—	$	—	$	—
Non-marketable equity securities	$	18,497	$	—	$	—	$	18,497	$	14,147	$	—	$	—	$	14,147
Total Other Investment
Securities	$	28,810	$	—	$	—	$	28,810	$	14,147	$	—	$	—	$	14,147

Gross Unrealized Losses And Fair Value Of Investments

The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	December 31, 2018
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	11,837	$	272	$	22,068	$	780	$	33,905	$	1,052
Mortgage-backed securities:
U.S. Government agencies	84,975		1,593		282,560		11,398		367,535		12,991
Corporate securities	12,995		167		—		—		12,995		167
Investment funds	1,500		67		—		—		1,500		67
Total available-for-sale	$	111,307	$	2,099	$	304,628	$	12,178	$	415,935	$	14,277
Securities held-to-maturity:
Mortgage-backed securities:
U.S. Government agencies	$	28,274	$	126	$	5,960	$	168	$	34,234	$	294
Total held-to-maturity	$	28,274	$	126	$	5,960	$	168	$	34,234	$	294

	December 31, 2017
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	4,913	$	28	$	19,440	$	379	$	24,353	$	407
Mortgage-backed securities:
U.S. Government agencies	172,807		1,887		140,226		5,418		313,033		7,305
Trust preferred securities	4,475		54		—		—		4,475		54
Corporate securities	3,357		49		2,350		74		5,707		123
Investment funds	1,500		36		—		—		1,500		36
Total available-for-sale	$	187,052	$	2,054	$	162,016	$	5,871	$	349,068	$	7,925
Securities held-to-maturity:
Mortgage-backed securities:
U.S. Government agencies	$	7,182	$	25	$	—	$	—	$	7,182	$	25
Total held-to-maturity	$	7,182	$	25	$	—	$	—	$	7,182	$	25

Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity

The amortized cost and estimated fair value of debt securities at December 31, 2018, by contractual maturity, are shown in the following table (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.  Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

	Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	5,592	$	5,572
Due after one year through five years	24,793		24,879
Due after five years through ten years	132,761		130,569
Due after ten years	565,972		557,041
	$	729,118	$	718,061
Securities Held-to-Maturity
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	4,927		5,053
Due after ten years	55,900		55,653
	$	60,827	$	60,706

Gross Gains And Losses Realized

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands): 

	For the year ended December 31,
	2018			2017		2016
Gross unrealized gains recognized on securities still held	$	208		—		—
Gross unrealized losses recognized on securities still held	(298		)	—		—
Net unrealized (losses) gains recognized on securities still held	$	(90	)	$	—	$	—
Gross realized gains	—			$	4,476	$	3,978
Gross realized losses	—			—		(465		)
Net realized investment security gains	$	—		$	4,476	$	3,513

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Loans (Tables)

12 Months Ended

Dec. 31, 2018

Loans Receivable, Net [Abstract]

Summary Of Major Classifications For Loans

The following summarizes the Company’s major classifications for loans (in thousands):

	December 31, 2018			December 31, 2017
Residential real estate	$	1,656,989		$	1,468,278
Home equity	153,496			139,499
Commercial and industrial	286,314			208,484
Commercial real estate	1,433,291			1,277,576
Consumer	51,190			29,162
DDA overdrafts	6,328			4,411
Gross loans	3,587,608			3,127,410
Allowance for loan losses	(15,966		)	(18,836		)
Net loans	$	3,571,642		$	3,108,574
Construction loans included in:
Residential real estate	$	21,834		$	25,270
Commercial real estate	37,869			28,871

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Allowance For Loan Losses (Tables)

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Schedule Of Allowance For Loan Loss By Portfolio Segment

The following summarizes the activity in the allowance for loan loss, by portfolio segment (in thousands).  The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments. The following also presents the balance in the allowance for loan loss disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans, by portfolio segment (in thousands). 

	Commercial and industrial			Commercial real estate			Residential real estate			Home equity			Consumer			DDA overdrafts			Total
December 31, 2018
Allowance for loan loss
Beginning balance	$	4,571		$	6,183		$	5,212		$	1,138		$	62		$	1,670		$	18,836
Charge-offs	(733		)	(369		)	(682		)	(219		)	(769		)	(2,701		)	(5,473		)
Recoveries	2,152			732			367			—			166			1,496			4,913
Provision	(1,930		)	(2,011		)	(781		)	349			860			1,243			(2,270		)
Provision for acquired loans with deteriorated credit quality	—			(40		)	—			—			—			—			(40		)
Ending balance	$	4,060		$	4,495		$	4,116		$	1,268		$	319		$	1,708		$	15,966
	Commercial and industrial			Commercial real estate			Residential real estate			Home equity			Consumer			DDA overdrafts			Total
December 31, 2017
Allowance for loan loss
Beginning balance	$	4,206		$	6,573		$	6,680		$	1,417		$	82		$	772		$	19,730
Charge-offs	(400		)	(720		)	(1,637		)	(403		)	(60		)	(2,714		)	(5,934		)
Recoveries	58			112			294			45			63			1,462			2,034
Provision	707			57			(125		)	79			(23		)	2,150			2,845
Provision for acquired loans with deteriorated credit quality	—			161			—			—			—			—			161
Ending balance	$	4,571		$	6,183		$	5,212		$	1,138		$	62		$	1,670		$	18,836
As of December 31, 2018
Allowance for loan loss
Evaluated for impairment:
Individually	$	—		$	428		$	—		$	—		$	—		$	—		$	428
Collectively	4,059			4,015			4,116			1,268			312			1,708			15,478
Acquired with deteriorated credit quality	1			52			—			—			7			—			60
Total	$	4,060		$	4,495		$	4,116		$	1,268		$	319		$	1,708		$	15,966
Loans
Evaluated for impairment:
Individually	$	651		$	9,855		$	—		$	—		$	—		$	—		$	10,506
Collectively	284,018			1,412,023			1,654,892			153,496			51,077			6,328			3,561,834
Acquired with deteriorated credit quality	1,645			11,413			2,097			—			113			—			15,268
Total	$	286,314		$	1,433,291		$	1,656,989		$	153,496		$	51,190		$	6,328		$	3,587,608

As of December 31, 2017
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	647	$	—	$	—	$	—	$	—	$	647
Collectively	4,567		5,313		5,112		1,138		58		1,670		17,858
Acquired with deteriorated credit quality	4		223		100		—		4		—		331
Total	$	4,571	$	6,183	$	5,212	$	1,138	$	62	$	1,670	$	18,836
Loans
Evaluated for impairment:
Individually	$	849	$	8,818	$	—	$	—	$	—	$	—	$	9,667
Collectively	207,429		1,263,076		1,465,685		139,499		29,046		4,411		3,109,146
Acquired with deteriorated credit quality	206		5,682		2,593		—		116		—		8,597
Total	$	208,484	$	1,277,576	$	1,468,278	$	139,499	$	29,162	$	4,411	$	3,127,410

Schedule Of Credit Quality Indicators

The following table presents the Company's commercial loans by credit quality indicators, by class (in thousands):

	Commercial and industrial		Commercial real estate		Total
December 31, 2018
Pass	$	250,856	$	1,381,170	$	1,632,026
Special mention	27,886		5,696		33,582
Substandard	7,572		46,425		53,997
Doubtful	—		—		—
Total	$	286,314	$	1,433,291	$	1,719,605
December 31, 2017
Pass	$	175,951	$	1,231,256	$	1,407,207
Special mention	25,872		8,068		33,940
Substandard	6,661		38,252		44,913
Doubtful	—		—		—
Total	$	208,484	$	1,277,576	$	1,486,060

The following table presents the Company's non-commercial loans by payment performance, by class (in thousands):

	Performing		Non-Performing		Total
December 31, 2018
Residential real estate	$	1,652,543	$	4,446	$	1,656,989
Home equity	153,334		162		153,496
Consumer	51,188		2		51,190
DDA overdrafts	6,322		6		6,328
Total	$	1,863,387	$	4,616	$	1,868,003
December 31, 2017
Residential real estate	$	1,465,445	$	2,833	$	1,468,278
Home equity	139,239		260		139,499
Consumer	29,162		—		29,162
DDA overdrafts	4,411		—		4,411
Total	$	1,638,257	$	3,093	$	1,641,350

Schedule Of Aging Analysis Of Accruing And Non-Accruing Loans

The following presents an aging analysis of the Company’s accruing and non-accruing loans, by class (in thousands):

	December 31, 2018
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Non-accrual		Total
Residential real estate	$	1,642,724	$	8,607	$	1,213	$	170	$	4,275	$	1,656,989
Home equity	152,083		1,240		11		24		138		153,496
Commercial and industrial	284,140		397		49		52		1,676		286,314
Commercial real estate	1,424,245		487		94		4		8,461		1,433,291
Consumer	50,894		253		41		1		1		51,190
DDA overdrafts	5,840		467		15		6		—		6,328
Total	$	3,559,926	$	11,451	$	1,423	$	257	$	14,551	$	3,587,608
	December 31, 2017
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Non-accrual		Total
Residential real estate	$	1,458,746	$	5,990	$	709	$	19	$	2,814	$	1,468,278
Home equity	138,480		671		88		92		168		139,499
Commercial and industrial	206,447		549		1		142		1,345		208,484
Commercial real estate	1,269,520		1,841		245		—		5,970		1,277,576
Consumer	29,108		39		13		2		—		29,162
DDA overdrafts	3,849		541		14		7		—		4,411
Total	$	3,106,150	$	9,631	$	1,070	$	262	$	10,297	$	3,127,410

Schedule Of Impaired Loans

The following presents the Company’s impaired loans, by class (in thousands):

	December 31, 2018						December 31, 2017
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial and industrial	$	651	$	651	$	—	$	849	$	3,013	$	—
Commercial real estate	6,870		6,895		—		3,036		4,861		—
Total	$	7,521	$	7,546	$	—	$	3,885	$	7,874	$	—
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate	2,985		2,985		428		5,782		5,782		647
Total	$	2,985	$	2,985	$	428	$	5,782	$	5,782	$	647

The following table presents information related to the average recorded investment and interest income recognized on the Company’s impaired loans, by class (in thousands):

	For the year ended
	December 31, 2018				December 31, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	845	$	—	$	1,086	$	—
Commercial real estate	4,623		39		4,534		69
Total	$	5,468	$	39	$	5,620	$	69
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate	5,043		220		4,307		149
Total	$	5,043	$	220	$	4,307	$	149

If the Company's non-accrual and impaired loans had been current in accordance with their original terms, approximately $0.2 million, $0.2 million and $0.4 million of interest income would have been recognized during the years ended December 31, 2018, 2017 and 2016, respectively.  There were no commitments to provide additional funds on non-accrual, impaired or other potential problem loans at December 31, 2018.

Schedule Of Troubled Debt Restructurings

The following tables set forth the Company’s TDRs (in thousands):

	December 31, 2018						December 31, 2017
			Non-						Non-
	Accruing		Accruing		Total		Accruing		Accruing		Total
Commercial and industrial	$	98	$	—	$	98	$	135	$	—	$	135
Commercial real estate	8,205		—		8,205		8,381		—		8,381
Residential real estate	22,863		658		23,521		21,005		84		21,089
Home equity	3,025		5		3,030		3,047		50		3,097
Consumer	—		—		—		—		—		—
	$	34,191	$	663	$	34,854	$	32,568	$	134	$	32,702

	New TDRs					New TDRs
	For the year ended					For the year ended
	December 31, 2018					December 31, 2017
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	—	$	—	$	—
Commercial real estate	—	—		—		2	3,098		3,003
Residential real estate	33	2,326		2,326		33	3,987		3,987
Home equity	10	274		274		13	271		271
Consumer	—	—		—		—	—		—
	43	$	2,600	$	2,600	48	$	7,356	$	7,261

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Premises And Equipment (Tables)

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Summary Of Premises And Equipment

A summary of premises and equipment and related accumulated depreciation is summarized as follows (in thousands):

	Estimated Useful Life	2018			2017
Land		$	34,538		$	32,647
Buildings and improvements	10 to 30 yrs.	95,873			90,261
Equipment	3 to 7 yrs.	41,856			39,763
		172,267			162,671
Less: accumulated depreciation		(93,884		)	(89,989		)
		$	78,383		$	72,682

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Goodwill And Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The following table presents a roll forward of the Company's goodwill activity (in thousands):

	2018		2017
Beginning balance	$	76,196	$	76,196
Goodwill acquired in conjunction with the acquisition of Poage (preliminary)	28,633		—
Goodwill acquired in conjunction with the acquisition of Farmers Deposit (preliminary)	4,738		—
Ending balance	$	109,567	$	76,196

Schedule Of Core Deposit Intangibles

The Company believes that the customer relationships with the deposits acquired have an intangible value. In connection with acquisitions, the Company recorded a core deposit intangible, which represented the value that the acquiree had with their deposit customers. The fair value was estimated based on a discounted cash flow methodology that considered the type of deposit, estimated deposit retention, the cost of the deposit base and an alternate cost of funds. The following tables present the details of the Company's core deposit intangibles (in thousands):

	2018			2017
Gross carrying amount	$	21,190		$	9,802
Accumulated amortization	(7,909		)	(7,403		)
	$	13,281		$	2,399
Beginning balance	$	2,399		$	2,939
Core deposit intangible acquired in conjunction with the acquisition of Poage	8,054			—
Core deposit intangible acquired in conjunction with the acquisition of Farmers Deposit	3,334			—
Amortization expense	(506		)	(540		)
Ending balance	$	13,281		$	2,399

Schedule of Estimated Future Amortization Expense for Core Deposits

The estimated amortization expense for core deposit intangible assets for each of the next five years is as follows (in thousands):

2019	$	1,868
2020	1,697
2021	1,635
2022	1,515
2023	1,311
Thereafter	5,255
	$	13,281

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Scheduled Maturities Of Time Deposits (Tables)

12 Months Ended

Dec. 31, 2018

Maturities of Time Deposits [Abstract]

Scheduled Maturities Of Time Deposits

Scheduled maturities of the Company's time deposits outstanding at December 31, 2018 are summarized as follows (in thousands):

2019	$	709,519
2020	406,443
2021	112,872
2022	99,203
2023	24,047
Over five years	570
	$	1,352,654

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Short-Term Debt (Tables)

12 Months Ended

Dec. 31, 2018

Short-term Debt [Abstract]

Summary Of Short-Term Borrowings

A summary of the Company's short-term borrowings are as follows (dollars in thousands):

	2018			2017			2016
Balance at end of year:
Federal Home Loan Bank advances	$	40,000		$	54,000		$	64,100
Securities sold under agreements to repurchase	221,911			198,219			184,205
Federal Funds purchased	—			—			—
Avg. outstanding during the year:
Federal Home Loan Bank advances	$	74,102		$	46,639		$	18,850
Securities sold under agreements to repurchase	190,702			183,890			157,215
Federal Funds purchased	353			—			—
Max. outstanding at any month end:
Federal Home Loan Bank advances	$	185,000		$	126,500		$	88,600
Securities sold under agreements to repurchase	221,911			257,034			184,205
Federal Funds purchased	10,000			—			—
Weighted-average interest rate:
During the year:
Federal Home Loan Bank advances	2.21		%	1.30		%	0.66		%
Securities sold under agreements to repurchase	0.93			0.33			0.22
Federal Funds purchased	2.10			—			—
End of the year:
Federal Home Loan Bank advances	2.76		%	1.57		%	0.77		%
Securities sold under agreements to repurchase	0.80			0.31			0.19
Federal Funds purchased	—			—			—

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Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2018

Long-term Debt, Unclassified [Abstract]

Long-Term Debt

The components of the Company's long-term debt are summarized below (dollars in thousands): 

	2018			2017
Junior subordinated debentures owed to City Holding Capital Trust III, interest at a rate of 5.09% at December 31, 2017.	$	—		$	16,495
Subordinated debentures owed to Town Square Statutory Trust I, due 2036, interest at a rate of 4.64% at December 31, 2018.	4,124			—
Fair value adjustment of subordinated debentures	(71		)	—
	$	4,053		$	16,495

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Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value Of Derivative Instruments

The following table summarizes the notional and fair value of these derivative instruments (in thousands):

	December 31, 2018				December 31, 2017
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Customer counterparties:
Loan interest rate swap - assets	$	132,146	$	3,131	$	225,480	$	4,877
Loan interest rate swap - liabilities	372,223		13,774		314,450		9,513
Non-hedging interest rate derivatives:
Financial institution counterparties:
Loan interest rate swap - assets	403,500		13,902		320,949		9,591
Loan interest rate swap - liabilities	132,146		3,131		218,924		4,877

Change In Fair Value Of Derivative Instruments

The following table summarizes the change in fair value of these derivative instruments (in thousands): 

	Year Ended December 31,
	2018			2017			2016
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative assets	$	1,316		$	(3,379	)	$	3,904
Other income - derivative liabilities	(1,316		)	3,379			(3,904		)
Other expense - derivative liabilities	50			86			(52		)

Offsetting Assets

Information about financial instruments that are eligible for offset in the consolidated balance sheet as of December 31, 2018 is presented in the following tables (in thousands):

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Gross

Net Amounts

Adjustment

Applicable

Amounts

Amounts

of Assets

per

Netting

Recognized in

Offset in the

presented in

Applicable

Agreement

Statement of

Statement of

the Statement

Master

Fair Value

and Fair

Financial

Financial

of Financial

Netting

of Financial

Value of

Description

Position

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)*

Non-hedging derivative assets:

Interest rate swap agreements - customer counterparties(a)

$

3,131

$

—

$

3,131

$

—

$

3,131

$

3,131

$

—

Interest rate swap agreements - financial institution counterparties(b)

10,771

—

10,771

—

10,771

10,771

—

Non-hedging derivative liabilities:
Interest rate swap agreements - customer counterparties(a)	$	13,774	$	—	$	13,774	$	—	$	13,774	$	13,774	$	—
Interest rate swap agreements -financial institution counterparties(c)	—		—		—		—		—		—		—
* For instances where the fair value of financial collateral meets or exceeds the amounts presented in the Statement of Financial Position, a value of zero is displayed to represent full collateralization.
(a) The underlying collateral on the loan serves as collateral for the derivative financial instrument.
(b) The financial institution counterparty posts collateral to the Company.
(c) The Company posts collateral to the financial institution counterparty.

Offsetting Liabilities

Non-hedging derivative liabilities:
Interest rate swap agreements - customer counterparties(a)	$	13,774	$	—	$	13,774	$	—	$	13,774	$	13,774	$	—
Interest rate swap agreements -financial institution counterparties(c)	—		—		—		—		—		—		—
* For instances where the fair value of financial collateral meets or exceeds the amounts presented in the Statement of Financial Position, a value of zero is displayed to represent full collateralization.
(a) The underlying collateral on the loan serves as collateral for the derivative financial instrument.
(b) The financial institution counterparty posts collateral to the Company.
(c) The Company posts collateral to the financial institution counterparty.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Summary Of Deferred Tax Assets And Liabilities

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	2018		2017
Allowance for loan losses	$	3,742	$	4,385
Deferred compensation payable	2,734		2,517
Underfunded pension liability	1,794		1,527
Accrued expenses	2,276		1,057
Impaired asset losses	1,201		607
Unrealized securities losses	1,871		166
Intangible assets	783		438
Other	6,492		3,577
Total Deferred Tax Assets	20,893		14,274
Other	3,555		2,361
Total Deferred Tax Liabilities	3,555		2,361
Net Deferred Tax Assets	$	17,338	$	11,913

Summary Of Income Tax Expense

Significant components of the provision for income taxes are as follows (in thousands): 

	2018			2017		2016
Current:
Federal	$	16,846		$	20,090	$	20,100
State	2,413			1,436		1,166
Total current tax expense	19,259			21,526		21,266
Total deferred tax expense	(1,244		)	14,909		3,817
Income tax expense	$	18,015		$	36,435	$	25,083

Reconciliation Of The Significant Differences Between The Federal Statutory Income Tax Rate And Effective Income Tax Rate

A reconciliation of the significant differences between the federal statutory income tax rate and the Company’s effective income tax rate is as follows (in thousands):

	2018			2017			2016
Computed federal taxes at statutory rate	$	18,483		$	31,761		$	27,025
State income taxes, net of federal tax benefit	1,730			1,321			888
Tax effects of:
Tax-exempt interest income	(694		)	(1,098		)	(708		)
Bank-owned life insurance	(649		)	(1,474		)	(1,164		)
Change in statutory tax rate	—			7,070			—
Other items, net	(855		)	(1,145		)	(958		)
Income tax expense	$	18,015		$	36,435		$	25,083

Reconciliation Of The Unrecognized Tax Benefits Rollforward

A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):

	2018			2017
Beginning balance	$	1,889		$	1,847
Additions for current year tax positions	184			325
Additions for prior year tax positions	241			226
Decreases related to lapse of applicable statute of limitation	(503		)	(509		)
Ending balance	$	1,811		$	1,889

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Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2018

Multiemployer Plans [Line Items]

Summary Of Stock Option Activity

A summary of the Company’s stock option activity and related information is presented below: 

	2018					2017				2016
	Options		Weighted-Average Exercise Price			Options		Weighted-Average Exercise Price		Options		Weighted-Average Exercise Price
Outstanding at January 1	87,605		$	47.15		86,613		$	41.08	95,015		$	38.38
Granted	—		—			17,631		66.32		24,348		43.73
Exercised	(29,633	)	(39.31		)	(16,639	)	35.91		(32,750	)	35.28
Forfeited	—		—			—		—		—		—
Outstanding at December 31	57,972		$	51.15		87,605		$	47.15	86,613		$	41.08
Exercisable at end of year	2,697		$	45.13		7,887		$	37.37	3,000		$	29.45
Nonvested at beginning of year	79,718		48.08			83,613		41.47		75,265		39.38
Granted during the year	—		—			17,631		66.32		24,348		43.73
Vested during the year	(24,443	)	40.58			(21,526	)	37.31		(16,000	)	35.09
Forfeited during the year	—		—			—		—		—		—
Nonvested at end of year	55,275		$	51.40		79,718		$	48.08	83,613		$	41.47

Information regarding stock option exercises and stock-based compensation expense associated with stock options is provided in the following table (in thousands):

	For the year ended December 31,
	2018		2017		2016
Proceeds from stock option exercises	$	1,164	$	597	$	1,155
Intrinsic value of stock options exercised	944		481		551
Stock-based compensation expense associated with stock options	$	178	$	246	$	240
Income tax benefit recognized related to stock-based compensation	19		42		36
At period-end:	2018
Unrecognized stock-based compensation expense	$	204
Weighted average period in which the above amount is expected to be recognized	2.0		years

Stock Options Outstanding And Exercisable

Additional information regarding the Company's stock options outstanding and exercisable at December 31, 2018, is provided in the following table:  

Ranges of Exercise Prices	No. of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Months)	Aggregate Intrinsic Value (in thousands)		No. of Options Currently Exercisable	Weighted-Average Exercise Price of Options Currently Exercisable		Weighted-Average Remaining Contractual Life (Months)	Aggregate Intrinsic Value of Options Currently Exercisable  (in thousands)
$ 35.00 - 39.99	38	$	37.74	4.2	$	1	38	$	37.74	4.2	$	1
40.00 - 44.99	30,676	43.87		6.8	728		1,675	44.43		5.2	39
45.00 - 49.99	9,627	46.61		6.2	202		984	46.61		6.2	21
50.00 - 69.99	17,631	66.32		8.2	22		—	—		—	—
	57,972				$	953	2,697				$	61

Weighted Average Assumptions Estimate The Fair Value Of Options Granted

The following weighted average assumptions were used to estimate the fair value of options granted by the Company:

	For the year ended December 31,
	2017		2016
Risk-free interest rate	2.12	%	1.43	%
Expected dividend yield	2.60	%	3.86	%
Volatility factor	25.80	%	30.76	%
Expected life of option	7.0 years		7.0 years

Restricted Shares Activity And Related Information

A summary of the Company’s restricted shares activity and related information is presented below:

	2018				2017				2016
	Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant
Outstanding at January 1	170,033				180,622				172,921
Granted	28,363		$	69.94	28,839		$	64.42	30,601		$	46.39
Forfeited/Vested	(48,704	)			(39,428	)			(22,900	)
Outstanding at December 31	149,692				170,033				180,622

Summary Of Activity Within The Defined Benefit Plan

The following table summarizes activity within the Company's Defined Benefit Plans (dollars in thousands):

	Pension Benefits
	2018			2017
Change in fair value of plan assets:
Fair value at beginning of measurement period	$	16,360		$	17,117
Actual gain (loss) on plan assets	(434		)	1,890
Contributions	1,509			—
Benefits paid	(5,394		)	(2,647		)
Fair value at end of measurement period	12,041			16,360
Change in benefit obligation:
Benefit obligation at beginning of measurement period	(18,488		)	(19,742		)
Interest cost	(590		)	(772		)
Actuarial (loss) gain	(1,488		)	(392		)
Assumption changes	825			(614		)
Benefits paid	5,394			2,647
Settlement loss	125			385
Benefit obligation at end of measurement period	(14,222		)	(18,488		)
Funded status	$	(2,181	)	$	(2,128	)
Weighted-average assumptions for benefit obligation:
Discount rate	4.10		%	3.38		%
Expected long-term rate of return	6.75		%	6.56		%
Weighted-average assumptions for net periodic pension cost:
Discount rate	3.38		%	4.02		%
Expected long-term rate of return	6.56		%	5.83		%

Net Periodic Pension Cost Of The Defined Benefit Plan

The following table presents the components of the net periodic pension cost of the Company's Defined Benefit Plans, which is recognized in Other Expenses in the Consolidated Statements of Income (in thousands):

	2018			2017			2016
Components of net periodic benefit:
Interest cost	$	590		$	772		$	820
Expected return on plan assets	(1,080		)	(1,219		)	(1,154		)
Settlement	71			(104		)	—
Net amortization and deferral	890			849			849
Net Periodic Pension Cost	$	471		$	298		$	515

Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Income (Loss)

Amounts related to the Company's Defined Benefit Pension Plans recognized as a component of other comprehensive income were as follows (in thousands):

	2018			2017			2016
Net actuarial gain (loss)	$	(1,092	)	$	838		$	157
Deferred tax (expense) benefit	254			(1,211		)	(58		)
Other comprehensive income (loss), net of tax	$	(838	)	$	(373	)	$	99

Amounts recognized as a component of accumulated other comprehensive loss as of December 31, 2018 and 2017 were as follows (in thousands):

	2018			2017
Net actuarial loss	$	7,652		$	6,560
Deferred tax benefit	(1,781		)	(1,527		)
Amounts included in accumulated other comprehensive loss, net of tax	$	5,871		$	5,033

Summary Of Expected Benefit Payments

The following table summarizes the expected benefits to be paid in each of the next five years and in the aggregate for the five years thereafter (in thousands):

Plan Year Ending December 31,	Expected Benefits to be Paid
2019	$	1,012
2020	1,016
2021	1,010
2022	1,010
2023	1,016
2024 through 2027	4,958

Summary Of Assets Segregated By Level Of Valuation Inputs Within The Fair Value Hierarchy

The major categories of assets in the Company’s Defined Benefit Plans as of year-end are presented in the following table (in thousands).  Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 utilized to measure fair value (See Note Nineteen).

	Total		Level 1		Level 2		Level 3
2018
Cash and cash equivalents	$	12,041	$	12,041	$	—	$	—
Total	$	12,041	$	12,041	$	—	$	—
2017
Cash and cash equivalents	$	1,202	$	1,202	$	—	$	—
Mutual funds/Investment funds	5,421		5,206		215		—
Common stocks	5,575		3,763		1,812		—
Mortgage-backed securities	301		—		301		—
U.S. Treasuries	1,277		—		1,277		—
Corporate bonds	1,223		—		1,223		—
Alternative investments**	1,361		759		—		—
Total	$	16,360	$	10,930	$	4,828	$	—
** Includes an investment of $602 at December 31, 2017 that has not been categorized in the fair value hierarchy, as permitted by ASU No. 2015-07.

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2018

Related Party Transaction [Line Items]

Schedule of Related Party Transactions [Table Text Block]

			Principal		Principal
	December 31, 2017		Additions		Reductions			December 31, 2018
Related Party Loans	$	12,405	$	11,850	$	(2,223	)	$	22,032
Unfunded commitments	$	17,757						$	16,109

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Commitments And Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule Of Contractual Obligations From Significant Commitments

The table below presents a summary of the contractual obligations of the Company resulting from significant commitments (in thousands):

	December 31, 2018		December 31, 2017
Commitments to extend credit:
Home equity lines	$	207,509	$	194,477
Commercial real estate	68,649		66,901
Other commitments	201,687		184,895
Standby letters of credit	7,183		7,151
Commercial letters of credit	811		831

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Regulatory Requirements And Capital Ratios (Tables)

12 Months Ended

Dec. 31, 2018

Regulatory Capital Requirements [Abstract]

Schedule Of Capital Amounts And Ratios

December 31, 2018	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	492,526	15.1	%	$	208,294	6.375	%	$	228,715	7.0	%	$	212,378	6.5	%
City National Bank	423,099		13.1	%	206,676		6.375	%	226,938		7.0	%	210,728		6.5	%
Tier 1 Capital
City Holding Company	496,526		15.2	%	257,304		7.875	%	277,725		8.5	%	261,389		8.0	%
City National Bank	423,099		13.1	%	255,306		7.875	%	275,568		8.5	%	259,358		8.0	%
Total Capital
City Holding Company	512,801		15.7	%	322,651		9.875	%	343,072		10.5	%	326,736		10.0	%
City National Bank	439,374		13.6	%	320,145		9.875	%	340,408		10.5	%	324,198		10.0	%
Tier 1 Leverage Ratio
City Holding Company	496,526		11.4	%	174,833		4.000	%	174,833		4.0	%	218,542		5.0	%
City National Bank	423,099		9.8	%	172,594		4.000	%	172,594		4.0	%	215,742		5.0	%
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

December 31, 2017:	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET 1 Capital
City Holding Company	$	430,154	15.1	%	$	163,441	5.75	%	$	198,972	7.0	%	$	184,760	6.5	%
City National Bank	338,105		12.0	%	162,164		5.75	%	197,418		7.0	%	183,316		6.5	%
Tier 1 Capital
City Holding Company	446,154		15.7	%	206,078		7.25	%	241,609		8.5	%	227,397		8.0	%
City National Bank	338,105		12.0	%	204,468		7.25	%	239,721		8.5	%	225,620		8.0	%
Total Capital
City Holding Company	465,292		16.4	%	262,927		9.25	%	298,458		10.5	%	284,246		10.0	%
City National Bank	357,243		12.7	%	260,873		9.25	%	296,126		10.5	%	282,025		10.0	%
Tier 1 Leverage Ratio
City Holding Company	446,154		11.0	%	161,834		4.00	%	161,834		4.0	%	202,293		5.0	%
City National Bank	338,105		8.5	%	159,625		4.00	%	159,625		4.0	%	199,531		5.0	%
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring And Nonrecurring Basis

The following table presents the Company's assets and liabilities measured at fair value (in thousands):

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
December 31, 2018
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	5,733	$	—	$	5,733	$	—
Obligations of states and political subdivisions	128,070		—		128,070		—
Mortgage-backed securities:
U.S. Government agencies	550,758		—		550,758		—
Private label	12,043		—		12,043		—
Trust preferred securities	4,799		—		4,538		261
Corporate securities	16,658		—		16,658		—
Marketable equity securities	10,313		5,907		4,406		—
Certificates of Deposit held for investment	3,735		—		3,735		—
Investment funds	1,458		1,458		—		—
Derivative assets	17,100		—		17,100		—
Financial Liabilities
Derivative liabilities	16,905		—		16,905		—
Nonrecurring fair value measurements
Financial Assets
Impaired loans	$	10,078	$	—	$	—	$	10,078	$	(428	)
Non-Financial Assets
Other real estate owned	4,608		—		—		4,608		(838		)
Other assets	600		—		—		600		(492		)

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
December 31, 2017
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	2	$	—	$	2	$	—
Obligations of states and political subdivisions	96,196		—		96,196		—
Mortgage-backed securities:
U.S. Government agencies	419,347		—		419,347		—
Private label	652		—		652		—
Trust preferred securities	4,736		—		4,475		261
Corporate securities	22,268		—		22,268		—
Marketable equity securities	5,699		5,699		—		—
Investment funds	1,489		1,489		—		—
Derivative assets	14,502		—		14,502		—
Financial Liabilities
Derivative liabilities	14,390		—		14,390		—
Nonrecurring fair value measurements
Financial Assets
Impaired loans	$	9,020	$	—	$	—	$	9,020	$	(647	)
Non-Financial Assets
Other real estate owned	3,585		—		—		3,585		(374		)
Other assets	—		—		—		—		(170		)

Schedule Of Reconciliation Of Investment Securities Available For Sale Measured At Fair Value On A Recurring Basis Level 3 Assets

The table below presents a reconcilement of the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which consist solely of trust preferred securities (in thousands): 

	2018		2017
Beginning balance	$	261	$	2,535
Included in other comprehensive income	—		(974		)
Dispositions	—		(1,300		)
Ending Balance	$	261	$	261

Schedule Of Level 3 Financial Assets And Liabilities Measured On A Recurring Basis

The table below presents a reconcilement of the Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3), which solely relates to impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral (in thousands).  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows.  The significant unobservable inputs used in the fair value measurement of collateral for collateral-dependent impaired loans primarily relate to discounts applied to the customers’ reported amount of collateral.  The amount of collateral discount depends upon the marketability of the underlying collateral.  During December 31, 2018 and 2017, collateral discounts ranged from 20% to 30%. During December 31, 2018 and 2017, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

	2018			2017
Beginning balance	$	9,020		$	6,916
Loans classified as impaired during the period	2,330			3,098
Specific valuation allowance allocations	—			(94		)
	2,330			3,004
(Additional) reduction in specific valuation allowance allocations	(218		)	(19		)
Paydowns, payoffs, other activity	(1,054		)	(881		)
Ending balance	$	10,078		$	9,020

Schedule Of OREO Measured And Reported At Fair Value

The table below presents OREO that was remeasured and reported at fair value based on significant unobservable inputs (Level 3) (in thousands): 

	2018			2017
Beginning Balance	$	3,585		$	4,588
OREO remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	6,146			3,066
Charge-offs recognized in the allowance for loan losses	(1,951		)	(1,117		)
Fair value	4,195			1,949
OREO remeasured subsequent to initial recognition:
Carrying value of foreclosed assets prior to remeasurement	3,646			1,464
Fair value	2,808			1,090
Write-downs included in other non-interest expense	(838		)	(374		)
Disposals	(2,334		)	(2,578		)
Ending Balance	$	4,608		$	3,585

Schedule Of Estimates Of Fair Value Of Financial Instruments

The following table represents the estimates of fair value of financial instruments (in thousands). This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest-bearing demand, interest-bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity. 

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
December 31, 2018
Assets:
Cash and cash equivalents	$	122,991	$	122,991	$	122,991	$	—	$	—
Securities available-for-sale	723,254		723,254		1,458		721,535		261
Securities held-to-maturity	60,827		60,706		—		60,706		—
Other securities	28,810		28,810		5,907		22,903		—
Net loans	3,571,642		3,516,557		—		—		3,516,557
Accrued interest receivable	12,424		12,424		12,424		—		—
Derivative assets	17,100		17,100		—		17,100		—
Liabilities:
Deposits	3,975,559		3,985,534		2,622,905		1,362,629		—
Short-term debt	261,911		261,911		—		261,911		—
Long-term debt	4,053		4,115		—		4,115		—
Derivative liabilities	16,906		16,906		—		16,906		—
December 31, 2017
Assets:
Cash and cash equivalents	$	82,508	$	82,508	$	82,508	$	—	$	—
Securities available-for-sale	550,389		550,389		7,188		542,940		261
Securities held-to-maturity	64,449		65,646		—		65,646		—
Other securities	14,147		14,147		—		14,147		—
Net loans	3,108,574		3,090,471		—		—		3,090,471
Accrued interest receivable	9,223		9,223		9,223		—		—
Derivative assets	14,502		14,502		—		14,502		—
Liabilities:
Deposits	3,315,634		3,309,910		2,232,159		1,077,751		—
Short-term debt	252,219		252,219		—		252,219		—
Long-term debt	16,495		16,444		—		16,444		—
Derivative liabilities	14,390		14,390		—		14,390		—

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City Holding Company (Parent Company Only) Financial Information (Tables)

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

Condensed Balance Sheets

The following table presents the condensed balance sheets of City Holding Company, parent company only (in thousands):

	December 31
	2018		2017
Assets
Cash	$	20,621	$	59,031
Securities available-for-sale	5,908		5,699
Investment in subsidiaries	583,673		459,150
Loans	701		—
Fixed assets	5		6
Other assets	3,316		2,989
Total Assets	$	614,224	$	526,875
Liabilities
Junior subordinated debentures	$	4,053	$	16,495
Dividends payable	8,774		7,184
Deferred tax liability	366		436
Other liabilities	267		253
Total Liabilities	13,460		24,368
Total Shareholders’ Equity	600,764		502,507
Total Liabilities and Shareholders’ Equity	$	614,224	$	526,875

Condensed Statements Of Comprehensive Income

The following table presents the condensed statements of comprehensive income of City Holding Company, parent company only (in thousands):

	Year Ended December 31
	2018			2017			2016
Income
Dividends from subsidiaries	$	50,000		$	30,000		$	8,600
Realized investment securities gains	—			200			—
Unrealized gains recognized on securities still held	208			—			—
Other income	130			115			320
	50,338			30,315			8,920
Expenses
Interest expense	880			765			683
Merger related expenses	1,899			—			—
Other expenses	1,842			1,636			1,957
	4,621			2,401			2,640
Income Before Income Tax Benefit and Equity in Undistributed Net Income of Subsidiaries	45,717			27,914			6,280
Income tax benefit	(1,114		)	(1,197		)	(1,096		)
Income Before Equity in Undistributed Net Income of Subsidiaries	46,831			29,111			7,376
Equity in undistributed net income of subsidiaries	23,171			25,199			44,752
Net Income	$	70,002		$	54,310		$	52,128
Total Comprehensive Income	$	63,821		$	56,677		$	48,948

Condensed Statements Of Cash Flows

The following table presents the condensed statements of cash flows of City Holding Company, parent company only (in thousands):

	Year Ended December 31
	2018			2017			2016
Operating Activities
Net income	$	70,002		$	54,310		$	52,128
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized and realized investment securities losses (gains)	(208		)	(200		)	—
(Benefit) provision for deferred income taxes	(88		)	1,347			(241		)
Depreciation, amortization and accretion, net	1			1			(4		)
Stock based compensation	2,151			2,097			2,018
Asset write down	193			—			444
Change in other assets	2,668			(405		)	260
Change in other liabilities	(1,816		)	(1,660		)	(2,288		)
Equity in undistributed net income	(23,171		)	(25,199		)	(44,752		)
Net Cash Provided by Operating Activities	49,732			30,291			7,565
Investing Activities
Proceeds from sales of available for sale securities	—			200			—
Acquisition of Farmers Deposit Bancorp, Inc., net of cash acquired of $946	(23,954		)	—			—
Acquisition of Poage Bankshares, Inc., net of cash acquired of $518	502			—			—
Net Cash (Used in) Provided by Investing Activities	(23,452		)	200			—
Financing Activities
Repayment of long-term debt	(16,495		)	—			—
Proceeds from sale of capital securities	495			—			—
Dividends paid	(29,583		)	(27,120		)	(25,718		)
Issuance of common stock	—			28,408			6,864
Purchases of treasury stock	(20,271		)	—			(10,018		)
Exercise of stock options	1,164			732			1,155
Net Cash (Used in) Provided by Financing Activities	(64,690		)	2,020			(27,717		)
(Decrease) Increase in Cash and Cash Equivalents	(38,410		)	32,511			(20,152		)
Cash and cash equivalents at beginning of year	59,031			26,520			46,672
Cash and Cash Equivalents at End of Year	$	20,621		$	59,031		$	26,520

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Summarized Quarterly Financial Information (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Summary Of Selected Quarterly Financial Information

A summary of selected quarterly financial information (unaudited) is presented below (in thousands, except for per share data):

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2018
Interest income	$	37,644		$	39,180		$	42,729		$	44,348
Taxable equivalent adjustment	187			187			187			194
Interest income (FTE)	37,831			39,367			42,916			44,542
Interest expense	4,997			5,607			7,171			7,917
Net interest income	32,834			33,760			35,745			36,625
(Recovery of) provision for loan losses	181			(2,064		)	(27		)	(400		)
Unrealized gains (losses) recognized on securities still held	280			492			384			(1,246		)
Non-interest income	14,212			15,119			15,369			15,952
Non-interest expense	24,937			24,911			25,040			38,178
Income  before income tax expense	22,208			26,524			26,485			13,553
Income tax expense	4,405			5,358			5,606			2,646
Taxable equivalent adjustment	(187		)	(187		)	(187		)	(194		)
Net income available to common shareholders	$	17,616		$	20,979		$	20,692		$	10,713
Net earnings allocated to common  shareholders	$	17,421		$	20,768		$	20,491		$	10,623
Basic earnings  per common share	$	1.13		$	1.36		$	1.34		$	0.68
Diluted earnings per common share	1.13			1.35			1.33			0.68
Average common shares outstanding:
Basic	15,414			15,326			15,340			15,603
Diluted	15,436			15,345			15,358			15,618
2017
Interest income	$	34,214		$	35,298		$	36,366		$	37,053
Taxable equivalent adjustment	357			370			358			371
Interest income (FTE)	34,571			35,668			36,724			37,424
Interest expense	3,767			4,036			4,340			4,664
Net interest income	30,804			31,632			32,384			32,760
Provision for loan losses	681			510			1,393			422
Investment securities gains	4,276			—			—			200
Non-interest income	14,231			14,921			14,611			15,367
Non-interest expense	24,600			24,176			24,309			22,893
Income  before income tax expense	24,030			21,867			21,293			25,012
Income tax expense	7,647			6,812			7,003			14,972
Taxable equivalent adjustment	(357		)	(370		)	(358		)	(371		)
Net income available to common shareholders	$	16,026		$	14,685		$	13,932		$	9,669
Net earnings allocated to common  shareholders	$	15,849		$	14,531		$	13,778		$	9,560
Basic earnings  per common share	$	1.04		$	0.94		$	0.89		$	0.62

Diluted earnings per common share	1.04	0.94	0.89	0.62
Average common shares outstanding:
Basic	15,252	15,462	15,485	15,472
Diluted	15,277	15,487	15,505	15,497

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Schedule Of Computation Of Basic And Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	For the Year Ended December 31,
	2018			2017			2016
Net income available to common shareholders	$	70,002		$	54,310		$	52,128
Less: earnings allocated to participating securities	(654		)	(591		)	(623		)
Net earnings allocated to common shareholders	$	69,348		$	53,719		$	51,505
Distributed earnings allocated to common shares outstanding	$	32,483		$	27,497		$	25,710
Undistributed earnings allocated to common shares outstanding	36,865			26,222			25,795
Net earnings allocated to common shareholders	$	69,348		$	53,719		$	51,505
Average shares outstanding, basic	15,421			15,412			14,900
Effect of dilutive securities	18			24			13
Average shares outstanding, diluted	15,439			15,436			14,913
Basic earnings per share	$	4.50		$	3.49		$	3.46
Diluted earnings per share	$	4.49		$	3.48		$	3.45
Antidilutive options	—			3			2

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Accumulated Other Comprehensive Loss (Tables)

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive loss is presented in the tables below (in thousands). The activity is shown net of tax, which is calculated using a combined Federal and state income tax rate approximating 23%.

	Accumulated Other Comprehensive Loss
				Unrealized
				Gains (Losses) on
	Defined Benefit			Securities
	Pension Plans			Available-for-Sale			Total
Balance at December 31, 2016	$	(4,660	)	$	(2,352	)	$	(7,012	)
Other comprehensive income before reclassifications	528			4,658			5,186
Amounts reclassified from other comprehensive loss	—			(2,819		)	(2,819		)
	528			1,839			2,367
Adoption of ASU No. 2018-02	(901		)	(98		)	(999		)
Balance at December 31, 2017	$	(5,033	)	$	(611	)	$	(5,644	)
Other comprehensive loss before reclassifications	(963		)	(5,343		)	(6,306		)
Amounts reclassified from other comprehensive loss	125			—			125
	(838		)	(5,343		)	(6,181		)
Adoption of ASU No. 2016-01	—			(2,657		)	(2,657		)
Balance at December 31, 2018	$	(5,871	)	$	(8,611	)	$	(14,482	)

Schedule of Amounts Reclassified from Accumulated Other Comprehensive Income

	Amount reclassified from Other Comprehensive Loss									Affected line item
	December 31,									in the Statements
	2018			2017			2016			of Income
Securities available-for-sale:
Net securities gains reclassified into earnings	$	—		$	(4,476	)	$	(3,513	)	Gains on sale of investment securities
Related income tax expense	—			1,657			1,297			Income tax expense
Net effect on accumulated other comprehensive loss	$	—		$	(2,819	)	$	(2,216	)
Defined benefit pension plans:
Gain on termination of defined benefit plan	$	163		$	—		$	—		Other expense
Related income tax expense	(38		)	—			—			Income tax expense
Net effect on accumulated other comprehensive loss	$	125		$	—		$	—

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Contracts With Customers Disaggregation of Revenue (Tables)

12 Months Ended

Dec. 31, 2018

Revenue from External Customer [Line Items]

Non-Interest Income Segregated for Topic 606 [Table Text Block]

The following table shows the Company's total non-interest income segregated between those within the scope of ASC 606 and those within the scope of other GAAP topics (in thousands):

Non-interest income
Non-interest income from contracts with customers	$	57,453
Non-interest income within the scope of other GAAP topics	3,111
Total non-interest income	$	60,564

Disaggregation of Revenue [Table Text Block]

The following table illustrates the disaggregation by the Company's major revenue streams (in thousands):

	Point of Revenue
	Recognition
Major revenue streams
Service charges	At a point in time and over time	$	29,704
Bankcard revenue	At a point in time	18,369
Trust and investment management fee income	Over time	6,529
Other income	At a point in time and over time	2,851
Net revenue from contracts with customers		57,453
Non-interest income within the scope of other GAAP topics		3,111
Total non-interest income		$	60,564

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Summary Of Significant Accounting And Reporting Policies (Details) $ in Thousands	3 Months Ended				12 Months Ended
	Dec. 31, 2018 USD ($) branch	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($) branch	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Condensed Financial Statements, Captions [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification					$ 0	$ 0
Equity Securities, FV-NI, Unrealized Gain (Loss)	$ (1,246)	$ 384	$ 492	$ 280	$ (90)
Number of Reportable Segments					1
DiscontinuationofInterestThresholdDays					90 days
Past Due Threshold in Days					30 days
Other real estate, foreclosed assets, and repossessed assets	4,600				$ 4,600	3,600
Investments in affordable housing limited partnerships	$ 5,400				5,400	1,300
Cash paid for interest					24,800	16,400	$ 13,100
Income taxes paid					$ 20,800	22,600	$ 16,300
City National
Condensed Financial Statements, Captions [Line Items]
Number of offices | branch	100				100
Residential real estate
Condensed Financial Statements, Captions [Line Items]
Threshold period past due for write-off of financing receivable					120 days
Commercial Industrial Loans And Commercial Real Estate
Condensed Financial Statements, Captions [Line Items]
Threshold period past due for write-off of financing receivable					120 days
Consumer Loan
Condensed Financial Statements, Captions [Line Items]
Threshold period past due for write-off of financing receivable					120 days
Accounting Standards Update 2018-02 [Member]
Condensed Financial Statements, Captions [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification						$ 999
Accounting Standards Update 2016-01 [Member]
Condensed Financial Statements, Captions [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification					$ 2,657

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Acquisitions and Preliminary Purchase Price Allocation Acquisitions and Preliminary Purchase Price Allocation (Details) - USD ($) $ / shares in Units, shares in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 07, 2018
Business Acquisition [Line Items]
Goodwill	$ 109,567,000	$ 76,196,000	$ 76,196,000
Merger related costs	13,257,000	0	0
Legal and professional fees	1,847,000	$ 1,956,000	$ 1,882,000
Write-downs included in other non-interest expense	$ 492,000
Farmers Deposit Bancorp, Inc. [Member]
Business Acquisition [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired				100.00%
Goodwill				$ 4,738,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles				3,334,000
Premium on Time Deposits				$ 100,000
Business Acquisition, Name of Acquired Entity	Farmers Deposit Bancorp, Inc.
Payments to Acquire Businesses, Gross	$ 24,900,000.00
Business Acquisition, Share Price				$ 1,174.14
Poage Bankshares, Inc. [Member]
Business Acquisition [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired				100.00%
Goodwill				$ 28,633,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles				8,054,000
Premium on Time Deposits				1,700,000
Business Acquisition, Name of Acquired Entity	Poage Bankshares, Inc.
Payments to Acquire Businesses, Gross	$ 16,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	1.1
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned				$ 82,600,000
Business Acquisition, Share Price				$ 24.22
Poage and Farmers [Member]
Business Acquisition [Line Items]
Goodwill				$ 33,371,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles				11,388,000
Merger related costs	$ 13,257,000
Severance Costs	$ 3,200,000
Business Acquisition Purchase Price Allocation Amortizable Intangible Assets Time Period	10 years
Premium on Time Deposits Amortization Period	5 years
Legal and professional fees	$ 3,700,000
Information Technology and Data Processing	5,200,000
Payments to Acquire Businesses, Gross	$ 24,916,000
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned				$ 82,600,000

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Acquisitions and Preliminary Purchase Price Allocation Acquisitions and Preliminary Purchase Price Allocation Assets Acquired (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 07, 2018	Dec. 31, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill	$ 109,567,000		$ 76,196,000	$ 76,196,000
Farmers Deposit Bancorp, Inc. [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	24,900,000.00
Business Combination, Consideration Transferred	24,900,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents		$ 4,209,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Marketable Securities		46,235,000
Business Combination, Fair Value of Loans Acquired		58,477,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment		768,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities		(188,000)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets		2,302,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets		111,803,000
Business Acquisition, Purchase Price Allocation, Deposits		92,241,000
Business Combination, Purchase Price Allocation, Short-Term Debt		2,025,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other		709,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities		94,975,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net		16,828,000
Goodwill		4,738,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		3,334,000
Poage Bankshares, Inc. [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	16,000
Business Combination, Consideration Transferred, Other	1,355,000
Business Combination, Consideration Transferred	83,936,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents		34,288,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Marketable Securities		72,321,000
Business Combination, Fair Value of Loans Acquired		304,023,000
Business Acquisition, Purchase Price Allocation, Bank Owned Life Insurance		7,439,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment		4,547,000
Business Combination Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets		2,300,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets		8,799,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets		433,717,000
Business Acquisition, Purchase Price Allocation, Deposits		379,285,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt		4,053,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other		3,130,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities		386,468,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net		47,249,000
Goodwill		28,633,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		8,054,000
Poage and Farmers [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	24,916,000
Business Combination, Consideration Transferred, Other	1,355,000
Business Combination, Consideration Transferred	$ 108,836,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents		38,497,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Marketable Securities		118,556,000
Business Combination, Fair Value of Loans Acquired		362,500,000
Business Acquisition, Purchase Price Allocation, Bank Owned Life Insurance		7,439,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment		5,315,000
Business Combination Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets		2,112,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets		11,101,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets		545,520,000
Business Acquisition, Purchase Price Allocation, Deposits		471,526,000
Business Combination, Purchase Price Allocation, Short-Term Debt		2,025,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt		4,053,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other		3,839,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities		481,443,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net		64,077,000
Goodwill		33,371,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		$ 11,388,000

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Acquisitions and Preliminary Purchase Price Allocation Acquisitions and Preliminary Purchase Price Allocation Loans Acquired (Details) $ in Thousands	Dec. 07, 2018 USD ($)
Poage Bankshares, Inc. [Member]
Business Acquisition [Line Items]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Acquired During Period, Contractually Required Payments Receivable at Acquisition	$ 25,315
Certain Loans Acquired in Transfer, Nonaccretable Difference	(13,977)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Acquired During Period, Cash Flows Expected to be Collected at Acquisition	11,338
Certain Loans Acquired in Transfer, Accretable Yield	(2,375)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	8,963
Carrying Value of NonCredit Impaired Loans Acquired	295,425
Fair Value Adjustment for NonCredit Impaired Loans Acquired	(365)
Business Combination, Fair Value of Loans Acquired	304,023
Fair Value of NonCredit Impaired Loans Acquired	295,060
Poage and Farmers [Member]
Business Acquisition [Line Items]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Acquired During Period, Contractually Required Payments Receivable at Acquisition	25,315
Certain Loans Acquired in Transfer, Nonaccretable Difference	(13,977)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Acquired During Period, Cash Flows Expected to be Collected at Acquisition	11,338
Certain Loans Acquired in Transfer, Accretable Yield	(2,375)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	8,963
Carrying Value of NonCredit Impaired Loans Acquired	354,374
Fair Value Adjustment for NonCredit Impaired Loans Acquired	(837)
Business Combination, Fair Value of Loans Acquired	362,500
Fair Value of NonCredit Impaired Loans Acquired	353,537
Farmers Deposit Bancorp, Inc. [Member]
Business Acquisition [Line Items]
Carrying Value of NonCredit Impaired Loans Acquired	58,949
Fair Value Adjustment for NonCredit Impaired Loans Acquired	(472)
Business Combination, Fair Value of Loans Acquired	$ 58,477

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Restrictions On Cash Due From Banks (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Restricted Cash and Investments [Abstract]
Reserve balance	$ 40.6	$ 37.8

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Investments (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Schedule of Investments [Line Items]
Credit-related net investment impairment losses	$ 0	$ 0	$ 500,000
Other that temporary impairment credit losses recognized in earnings	1,600,000
nongovernmentalissuerover10%ofequity	$ 0	0
Maximum
Schedule of Investments [Line Items]
Regional community bank stocks, percent of average trading volumes	0.20%
First National Corporation (FXNC) [Domain] | Maximum
Schedule of Investments [Line Items]
Equity ownership positions in the community bank holding companies	4.00%
Eagle Financial Services, Inc. (EFSI) [Domain] | Maximum
Schedule of Investments [Line Items]
Equity ownership positions in the community bank holding companies	1.50%
Asset Pledged as Collateral [Member]
Schedule of Investments [Line Items]
Debt Securities, Available-for-sale, Restricted	$ 510,000,000	$ 429,000,000

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Investments (Aggregate Carrying And Approximate Market Values Of Available-For-Sale Securities) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	$ 734,378	$ 551,103
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	3,153	7,211
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	14,277	7,925
Securities available-for-sale	723,254	550,389
U.S. Government agencies
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	5,713	2
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	20	0
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	0	0
Securities available-for-sale	5,733	2
Obligations of states and political subdivisions
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	128,089	94,552
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	1,033	2,051
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	1,052	407
Securities available-for-sale	128,070	96,196
U.S. Government agencies
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	561,799	425,559
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	1,950	1,093
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	12,991	7,305
Securities available-for-sale	550,758	419,347
Private label
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	11,948	649
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	95	3
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	0	0
Securities available-for-sale	12,043	652
Trust preferred securities
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	4,774	4,764
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	25	26
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	0	54
Securities available-for-sale	4,799	4,736
Corporate securities
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	16,795	21,916
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	30	475
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	167	123
Securities available-for-sale	16,658	22,268
Debt Securities
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	729,118	547,442
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	3,153	3,648
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	14,210	7,889
Securities available-for-sale	718,061	543,201
Equity Securities
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost		2,136
Available-for-sale debt securities, accumulated gross unrealized gain, before tax		3,563
Available-for-sale debt securities, accumulated gross unrealized loss, before tax		0
Securities available-for-sale		5,699
Certificates of Deposit
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	3,735
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	0
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	0
Securities available-for-sale	3,735
Investment funds
Debt Securities, Available-for-sale [Line Items]
Securities available-for-sale, amortized cost	1,525	1,525
Available-for-sale debt securities, accumulated gross unrealized gain, before tax	0	0
Available-for-sale debt securities, accumulated gross unrealized loss, before tax	67	36
Securities available-for-sale	$ 1,458	$ 1,489

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Investments (Aggregate Carrying And Approximate Market Values Of Held-To-Maturity Securities) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Amortized Cost	$ 60,827	$ 64,449
Debt Securities, Held-to-maturity, Accumulated Unrecognized Gain	173	1,222
Debt Securities, Held-to-maturity, Accumulated Unrecognized Loss	294	25
Securities held-to-maturity, Estimated Fair Value	60,706	65,646
Marketable Securities	812,891	628,985
Other Investments	28,810	14,147
Equity Securities
Schedule of Held-to-maturity Securities [Line Items]
Marketable Securities	10,313
US Government Agencies Debt Securities
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Amortized Cost	56,827	60,449
Debt Securities, Held-to-maturity, Accumulated Unrecognized Gain	173	1,222
Debt Securities, Held-to-maturity, Accumulated Unrecognized Loss	294	25
Securities held-to-maturity, Estimated Fair Value	56,706	61,646
Trust preferred securities
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Amortized Cost	4,000	4,000
Debt Securities, Held-to-maturity, Accumulated Unrecognized Gain	0	0
Debt Securities, Held-to-maturity, Accumulated Unrecognized Loss	0	0
Securities held-to-maturity, Estimated Fair Value	4,000	4,000
Securities
Schedule of Held-to-maturity Securities [Line Items]
Equity Securities without Readily Determinable Fair Value, Amount	$ 18,497	$ 14,147

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Investments (Gross Unrealized Losses And Fair Value Of Investments) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	$ 111,307	$ 187,052
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	2,099	2,054
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	304,628	162,016
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	12,178	5,871
Securities available-for-sale, Total, Estimated Fair Value	415,935	349,068
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	14,277	7,925
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	28,274	7,182
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	126	25
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value	5,960	0
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	168	0
Debt Securities, Held-to-maturity, Unrealized Loss Position, Fair Value	34,234	7,182
Debt Securities, Held-to-maturity, Unrealized Loss Position, Accumulated Loss	294	25
Obligations of states and political subdivisions
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	11,837	4,913
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	272	28
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	22,068	19,440
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	780	379
Securities available-for-sale, Total, Estimated Fair Value	33,905	24,353
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	1,052	407
U.S. Government agencies
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	84,975	172,807
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	1,593	1,887
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	282,560	140,226
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	11,398	5,418
Securities available-for-sale, Total, Estimated Fair Value	367,535	313,033
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	12,991	7,305
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	28,274	7,182
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	126	25
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value	5,960	0
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	168	0
Debt Securities, Held-to-maturity, Unrealized Loss Position, Fair Value	34,234	7,182
Debt Securities, Held-to-maturity, Unrealized Loss Position, Accumulated Loss	294	25
Trust preferred securities
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value		4,475
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		54
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value		0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		0
Securities available-for-sale, Total, Estimated Fair Value		4,475
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		54
Corporate securities
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	12,995	3,357
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	167	49
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	0	2,350
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	74
Securities available-for-sale, Total, Estimated Fair Value	12,995	5,707
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	167	123
Investment funds
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	1,500	1,500
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	67	36
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	0
Securities available-for-sale, Total, Estimated Fair Value	1,500	1,500
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 67	$ 36

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Investments (Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Investments [Abstract]
Securities Available-for-Sale, Due in one year or less, Cost	$ 5,592
Securities Available-for-Sale, Due after one year through five years, Cost	24,793
Securities Available-for-Sale, Due after five years through ten years, Cost	132,761
Securities Available-for-Sale, Due after ten years, Cost	565,972
Securities Available-for-Sale, Cost, Total	729,118
Securities Available-for-Sale, Due in one year or less, Estimated Fair Value	5,572
Securities Available-for-Sale, Due after one year through five years, Estimated Fair Value	24,879
Securities Available-for-Sale, Due after five years through ten years, Estimated Fair Value	130,569
Securities Available-for-Sale, Due after ten years, Estimated Fair Value	557,041
Securities Available-for-Sale, Estimated Fair Value, Total	718,061
Securities Held-to-Maturity, Due after five years through ten years, Cost	4,927
Securities Held-to-Maturity, Due after ten years, Cost	55,900
Securities Held-to-Maturity, Cost, Total	60,827	$ 64,449
Securities Held-to-Maturity, Due after five years through ten years, Estimated Fair Value	5,053
Securities Held-to-Maturity, Due after ten years, Estimated Fair Value	55,653
Securities held-to-maturity, Estimated Fair Value	$ 60,706	$ 65,646

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Investments (Gross Gains And Losses Realized) (Details) - USD ($) $ in Thousands	3 Months Ended				12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Investments [Abstract]
Equity Securities, FV-NI, Unrealized Gain					$ 208
Equity Securities, FV-NI, Unrealized Loss					(298)
Equity Securities, FV-NI, Unrealized Gain (Loss)	$ (1,246)	$ 384	$ 492	$ 280	(90)
Gross unrealized gains recognized on securities still held					0	$ 4,476	$ 3,978
Gross unrealized losses recognized on securities still held					0	0	(465)
Net unrealized gains (losses) recognized on securities still held					$ 0	$ 4,476	$ 3,513

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Loans (Summary Of Major Classifications For Loans) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 3,587,608	$ 3,127,410
Allowance for loan losses	(15,966)	(18,836)
Net Loans	3,571,642	3,108,574
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	1,656,989	1,468,278
Allowance for loan losses	(4,116)	(5,212)
Construction Loan	21,834	25,270
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	153,496	139,499
Allowance for loan losses	(1,268)	(1,138)
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	286,314	208,484
Allowance for loan losses	(4,060)	(4,571)
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	1,433,291	1,277,576
Allowance for loan losses	(4,495)	(6,183)
Construction Loan	37,869	28,871
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	51,190	29,162
Allowance for loan losses	(319)	(62)
DDA overdrafts
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	6,328	4,411
Allowance for loan losses	$ (1,708)	$ (1,670)

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Allowance For Loan Losses (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Receivables [Abstract]
Loans and Leases Receivable, Impaired, Commitment to Lend	$ 0
Loan Review Selection Threshold ($)	1,000,000	$ 1,000,000	$ 1,000,000
Interest income forgone	$ 200,000	$ 200,000	$ 400,000

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Allowance For Loan Losses (Schedule Of Allowance For Loan Loss By Portfolio Segment) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Allowance for Loan Losses [Roll Forward]
Beginning balance	$ 18,836	$ 19,730
Charge-offs	(5,473)	(5,934)
Recoveries	4,913	2,034
Provision	2,270	(2,845)
Provision for acquired loans with deteriorated credit quality	(40)	161
Ending balance	15,966	18,836
Allowance for loan loss, Evaluated for impairment, Individually	428	647
Allowance for loan loss, Evaluated for impairment, Collectively	15,478	17,858
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	60	331
Allowance for loan loss, Total	15,966	18,836
Loans, Evaluated for impairment, Individually	10,506	9,667
Loans, Evaluated for impairment, Collectively	3,561,834	3,109,146
Gross loans	3,587,608	3,127,410
Commercial and industrial
Allowance for Loan Losses [Roll Forward]
Beginning balance	4,571	4,206
Charge-offs	(733)	(400)
Recoveries	2,152	58
Provision	1,930	(707)
Provision for acquired loans with deteriorated credit quality	0	0
Ending balance	4,060	4,571
Allowance for loan loss, Evaluated for impairment, Individually	0	0
Allowance for loan loss, Evaluated for impairment, Collectively	4,059	4,567
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	1	4
Allowance for loan loss, Total	4,060	4,571
Loans, Evaluated for impairment, Individually	651	849
Loans, Evaluated for impairment, Collectively	284,018	207,429
Gross loans	286,314	208,484
Commercial real estate
Allowance for Loan Losses [Roll Forward]
Beginning balance	6,183	6,573
Charge-offs	(369)	(720)
Recoveries	732	112
Provision	2,011	(57)
Provision for acquired loans with deteriorated credit quality	(40)	161
Ending balance	4,495	6,183
Allowance for loan loss, Evaluated for impairment, Individually	428	647
Allowance for loan loss, Evaluated for impairment, Collectively	4,015	5,313
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	52	223
Allowance for loan loss, Total	4,495	6,183
Loans, Evaluated for impairment, Individually	9,855	8,818
Loans, Evaluated for impairment, Collectively	1,412,023	1,263,076
Gross loans	1,433,291	1,277,576
Residential real estate
Allowance for Loan Losses [Roll Forward]
Beginning balance	5,212	6,680
Charge-offs	(682)	(1,637)
Recoveries	367	294
Provision	781	125
Provision for acquired loans with deteriorated credit quality	0	0
Ending balance	4,116	5,212
Allowance for loan loss, Evaluated for impairment, Individually	0	0
Allowance for loan loss, Evaluated for impairment, Collectively	4,116	5,112
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	0	100
Allowance for loan loss, Total	4,116	5,212
Loans, Evaluated for impairment, Individually	0	0
Loans, Evaluated for impairment, Collectively	1,654,892	1,465,685
Gross loans	1,656,989	1,468,278
Home equity
Allowance for Loan Losses [Roll Forward]
Beginning balance	1,138	1,417
Charge-offs	(219)	(403)
Recoveries	0	45
Provision	(349)	(79)
Provision for acquired loans with deteriorated credit quality	0	0
Ending balance	1,268	1,138
Allowance for loan loss, Evaluated for impairment, Individually	0	0
Allowance for loan loss, Evaluated for impairment, Collectively	1,268	1,138
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	0	0
Allowance for loan loss, Total	1,268	1,138
Loans, Evaluated for impairment, Individually	0	0
Loans, Evaluated for impairment, Collectively	153,496	139,499
Gross loans	153,496	139,499
Consumer Loan
Allowance for Loan Losses [Roll Forward]
Beginning balance	62	82
Charge-offs	(769)	(60)
Recoveries	166	63
Provision	(860)	23
Provision for acquired loans with deteriorated credit quality	0	0
Ending balance	319	62
Allowance for loan loss, Evaluated for impairment, Individually	0	0
Allowance for loan loss, Evaluated for impairment, Collectively	312	58
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	7	4
Allowance for loan loss, Total	319	62
Loans, Evaluated for impairment, Individually	0	0
Loans, Evaluated for impairment, Collectively	51,077	29,046
Gross loans	51,190	29,162
DDA Overdrafts
Allowance for Loan Losses [Roll Forward]
Beginning balance	1,670	772
Charge-offs	(2,701)	(2,714)
Recoveries	1,496	1,462
Provision	(1,243)	(2,150)
Provision for acquired loans with deteriorated credit quality	0	0
Ending balance	1,708	1,670
Allowance for loan loss, Evaluated for impairment, Individually	0	0
Allowance for loan loss, Evaluated for impairment, Collectively	1,708	1,670
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	0	0
Allowance for loan loss, Total	1,708	1,670
Loans, Evaluated for impairment, Individually	0	0
Loans, Evaluated for impairment, Collectively	6,328	4,411
Gross loans	6,328	4,411
Financial Asset Acquired with Credit Deterioration [Member]
Allowance for Loan Losses [Roll Forward]
Loans, Acquired with Deteriorated Credit Quality	15,268	8,597
Financial Asset Acquired with Credit Deterioration [Member] | Commercial and industrial
Allowance for Loan Losses [Roll Forward]
Loans, Acquired with Deteriorated Credit Quality	1,645	206
Financial Asset Acquired with Credit Deterioration [Member] | Commercial real estate
Allowance for Loan Losses [Roll Forward]
Loans, Acquired with Deteriorated Credit Quality	11,413	5,682
Financial Asset Acquired with Credit Deterioration [Member] | Residential real estate
Allowance for Loan Losses [Roll Forward]
Loans, Acquired with Deteriorated Credit Quality	2,097	2,593
Financial Asset Acquired with Credit Deterioration [Member] | Home equity
Allowance for Loan Losses [Roll Forward]
Loans, Acquired with Deteriorated Credit Quality	0	0
Financial Asset Acquired with Credit Deterioration [Member] | Consumer Loan
Allowance for Loan Losses [Roll Forward]
Loans, Acquired with Deteriorated Credit Quality	113	116
Financial Asset Acquired with Credit Deterioration [Member] | DDA Overdrafts
Allowance for Loan Losses [Roll Forward]
Loans, Acquired with Deteriorated Credit Quality	$ 0	$ 0

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Allowance For Loan Losses (Schedule Of Credit Quality Indicators) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	$ 3,587,608	$ 3,127,410
Commercial Industrial Loans And Commercial Real Estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	1,719,605	1,486,060
Commercial and industrial
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	286,314	208,484
Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	1,433,291	1,277,576
Residential real estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	1,656,989	1,468,278
Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	153,496	139,499
Consumer Loan
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	51,190	29,162
DDA Overdrafts
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	6,328	4,411
Pass | Commercial Industrial Loans And Commercial Real Estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	1,632,026	1,407,207
Pass | Commercial and industrial
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	250,856	175,951
Pass | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	1,381,170	1,231,256
Special Mention | Commercial Industrial Loans And Commercial Real Estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	33,582	33,940
Special Mention | Commercial and industrial
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	27,886	25,872
Special Mention | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	5,696	8,068
Substandard | Commercial Industrial Loans And Commercial Real Estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	53,997	44,913
Substandard | Commercial and industrial
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	7,572	6,661
Substandard | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	46,425	38,252
Doubtful | Commercial Industrial Loans And Commercial Real Estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	0	0
Doubtful | Commercial and industrial
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	0	0
Doubtful | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	$ 0	$ 0

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Allowance For Loan Losses (Schedule of Non-Commercial Loans By Payment Performance) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	$ 3,587,608	$ 3,127,410
Residential real estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	1,656,989	1,468,278
Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	153,496	139,499
Consumer Loan
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	51,190	29,162
DDA Overdrafts
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	6,328	4,411
Non-commercial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	1,868,003	1,641,350
Performing
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	1,863,387	1,638,257
Performing | Residential real estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	1,652,543	1,465,445
Performing | Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	153,334	139,239
Performing | Consumer Loan
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	51,188	29,162
Performing | DDA Overdrafts
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	6,322	4,411
Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	4,616	3,093
Non-Performing | Residential real estate
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	4,446	2,833
Non-Performing | Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	162	260
Non-Performing | Consumer Loan
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	2	0
Non-Performing | DDA Overdrafts
Financing Receivable, Recorded Investment [Line Items]
Loans, Total	$ 6	$ 0

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Allowance For Loan Losses (Schedule Of Aging Analysis Of Accruing And Non-Accruing Loans) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 3,559,926	$ 3,106,150
Non-accrual	14,551	10,297
Gross loans	3,587,608	3,127,410
Residential real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,642,724	1,458,746
Non-accrual	4,275	2,814
Gross loans	1,656,989	1,468,278
Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	152,083	138,480
Non-accrual	138	168
Gross loans	153,496	139,499
Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	284,140	206,447
Non-accrual	1,676	1,345
Gross loans	286,314	208,484
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,424,245	1,269,520
Non-accrual	8,461	5,970
Gross loans	1,433,291	1,277,576
Consumer Loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	50,894	29,108
Non-accrual	1	0
Gross loans	51,190	29,162
DDA Overdrafts
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	5,840	3,849
Non-accrual	0	0
Gross loans	6,328	4,411
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	11,451	9,631
Financing Receivables, 30 to 59 Days Past Due [Member] | Residential real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	8,607	5,990
Financing Receivables, 30 to 59 Days Past Due [Member] | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,240	671
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	397	549
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	487	1,841
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer Loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	253	39
Financing Receivables, 30 to 59 Days Past Due [Member] | DDA Overdrafts
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	467	541
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,423	1,070
Financing Receivables, 60 to 89 Days Past Due [Member] | Residential real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,213	709
Financing Receivables, 60 to 89 Days Past Due [Member] | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	11	88
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	49	1
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	94	245
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer Loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	41	13
Financing Receivables, 60 to 89 Days Past Due [Member] | DDA Overdrafts
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	15	14
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	257	262
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	170	19
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	24	92
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	52	142
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	4	0
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1	2
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | DDA Overdrafts
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 6	$ 7

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Allowance For Loan Losses (Schedule Of Impaired Loans) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	$ 7,521	$ 3,885
With no related allowance recorded, Unpaid principal balance	7,546	7,874
With an allowance recorded, Recorded investment	2,985	5,782
With an allowance recorded, Unpaid principal balance	2,985	5,782
With an allowance recorded, Related allowance	428	647
Commercial and industrial
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	651	849
With no related allowance recorded, Unpaid principal balance	651	3,013
With an allowance recorded, Recorded investment	0	0
With an allowance recorded, Unpaid principal balance	0	0
With an allowance recorded, Related allowance	0	0
Commercial real estate
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	6,870	3,036
With no related allowance recorded, Unpaid principal balance	6,895	4,861
With an allowance recorded, Recorded investment	2,985	5,782
With an allowance recorded, Unpaid principal balance	2,985	5,782
With an allowance recorded, Related allowance	$ 428	$ 647

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Allowance For Loan Losses (Schedule Of Information Related To Average Recorded Investment And Interest Income Recognized On Impaired Loans) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	$ 5,468	$ 5,620
Impaired Financing Receivable, with No Related Allowance, Interest Income, Accrual Method	39	69
With an allowance recorded, Average recorded investment	5,043	4,307
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	220	149
Commercial and industrial
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	845	1,086
Impaired Financing Receivable, with No Related Allowance, Interest Income, Accrual Method	0	0
With an allowance recorded, Average recorded investment	0	0
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	0	0
Commercial real estate
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	4,623	4,534
Impaired Financing Receivable, with No Related Allowance, Interest Income, Accrual Method	39	69
With an allowance recorded, Average recorded investment	5,043	4,307
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	$ 220	$ 149

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Allowance For Loan Losses (Schedule Of Troubled Debt Restructurings) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) contract	Dec. 31, 2017 USD ($) contract
Financing Receivable, Modifications [Line Items]
Accruing	$ 34,191	$ 32,568
Non-Accruing	663	134
Total	$ 34,854	$ 32,702
Number of Contracts | contract	43	48
Pre-modification Outstanding Recorded Investment	$ 2,600	$ 7,356
Post-modification Outstanding Recorded Investment	2,600	7,261
Commercial and industrial
Financing Receivable, Modifications [Line Items]
Accruing	98	135
Non-Accruing	0	0
Total	$ 98	$ 135
Number of Contracts | contract	0	0
Pre-modification Outstanding Recorded Investment	$ 0	$ 0
Post-modification Outstanding Recorded Investment	0	0
Commercial real estate
Financing Receivable, Modifications [Line Items]
Accruing	8,205	8,381
Non-Accruing	0	0
Total	$ 8,205	$ 8,381
Number of Contracts | contract	0	2
Pre-modification Outstanding Recorded Investment	$ 0	$ 3,098
Post-modification Outstanding Recorded Investment	0	3,003
Residential real estate
Financing Receivable, Modifications [Line Items]
Accruing	22,863	21,005
Non-Accruing	658	84
Total	$ 23,521	$ 21,089
Number of Contracts | contract	33	33
Pre-modification Outstanding Recorded Investment	$ 2,326	$ 3,987
Post-modification Outstanding Recorded Investment	2,326	3,987
Home equity
Financing Receivable, Modifications [Line Items]
Accruing	3,025	3,047
Non-Accruing	5	50
Total	$ 3,030	$ 3,097
Number of Contracts | contract	10	13
Pre-modification Outstanding Recorded Investment	$ 274	$ 271
Post-modification Outstanding Recorded Investment	274	271
Consumer
Financing Receivable, Modifications [Line Items]
Accruing	0	0
Non-Accruing	0	0
Total	$ 0	$ 0
Number of Contracts | contract	0	0
Pre-modification Outstanding Recorded Investment	$ 0	$ 0
Post-modification Outstanding Recorded Investment	$ 0	$ 0

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Premises And Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Depreciation	$ 5,087	$ 5,884	$ 6,235
Property, plant and equipment, gross	172,267	162,671
Less: accumulated depreciation	(93,884)	(89,989)
Property, Plant and Equipment, Net, Total	78,383	72,682
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	34,538	32,647
Buildings and improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 95,873	$ 90,261
Buildings and improvements | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	30 years	30 years
Buildings and improvements | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	10 years	10 years
Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 41,856	$ 39,763
Equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	7 years	7 years
Equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	3 years	3 years

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Goodwill And Other Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 506	$ 540	$ 500
Core Deposits
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life	10 years

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Goodwill And Other Intangible Assets Goodwill and Other Intangible Assets (Rollforward of Goodwill) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 76,196
Ending balance	109,567
Poage Bankshares, Inc. [Member]
Goodwill [Roll Forward]
Goodwill, Acquired During Period	28,633
Farmers Deposit Bancorp, Inc. [Member]
Goodwill [Roll Forward]
Goodwill, Acquired During Period	$ 4,738

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Goodwill And Other Intangible Assets (Summary Of Core Deposit Intangibles) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Gross carrying amount				$ 21,190	$ 9,802
Accumulated amortization				(7,909)	(7,403)
Total	$ 2,399	$ 2,939	$ 2,939	$ 13,281	$ 2,399
Finite-lived Intangible Assets [Roll Forward]
Beginning balance	2,399	2,939
Amortization expense	(506)	(540)	(500)
Ending balance	13,281	$ 2,399	$ 2,939
Poage Bankshares, Inc. [Member]
Finite-lived Intangible Assets [Roll Forward]
Finite-lived Intangible Assets Acquired	8,054
Farmers Deposit Bancorp, Inc. [Member]
Finite-lived Intangible Assets [Roll Forward]
Finite-lived Intangible Assets Acquired	$ 3,334

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Goodwill And Other Intangible Assets (Schedule Of Estimated Future Amortization Expense For Core Deposits) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
2019	$ 1,868
2020	1,697
2021	1,635
2022	1,515
2023	1,311
Thereafter	5,255
Total	$ 13,281	$ 2,399	$ 2,939

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Scheduled Maturities Of Time Deposits (Scheduled Maturities Of Time Deposits) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Maturities of Time Deposits [Abstract]
2019	$ 709,519
2020	406,443
2021	112,872
2022	99,203
2023	24,047
Over five years	570
Time Deposits, Total	$ 1,352,654	$ 1,083,475

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Scheduled Maturities Of Time Deposits (Scheduled Maturities Time Deposits Of $250,000 Or More) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Time Deposits, at or Above FDIC Insurance Limit	$ 172.2	$ 122.4

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Short-Term Debt (Narrative) (Details) - USD ($) $ in Billions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Investment Securities And One To Four Family Residential Property Loans
Short-term Debt [Line Items]
Collateral pledged to the FHLB	$ 2.1	$ 2.0
City National
Short-term Debt [Line Items]
FHLB stock purchased during year	64,000
Unused and available FHLB funds	$ 1.9	$ 1.6

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Short-Term Debt (Summary Of Short-Term Borrowings) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Short-term Debt [Abstract]
Federal Home Loan Bank advances	$ 40,000	$ 54,000	$ 64,100
Securities sold under agreements to repurchase	221,911	198,219	184,205
Federal Funds Purchased	0	0	0
Federal Home Loan Bank advances (Avg Bal)	74,102	46,639	18,850
Securities sold under agreements to repurchase (Avg Bal)	190,702	183,890	157,215
Federal Funds purchased (Avg Bal)	353
Federal Home Loan Bank advances (Max Outstanding)	185,000	126,500	88,600
Securities sold under agreements to repurchase (Max Outstanding)	221,911	257,034	184,205
Federal Funds Purchased Maximum Outstanding at Any Month End	$ 10,000	$ 0	$ 0
Federal Home Loan Bank advances (weighted average interest rate)	2.21%	1.30%	0.66%
Securities sold under agreements to repurchase (weighted average interest rate)	0.93%	0.33%	0.22%
Federal Funds purchased (weighted average interest rate)	2.10%
Federal Home Loan Bank advances (end of year interest rate)	2.76%	1.57%	0.77%
Securities sold under agreements to repurchase (end of year interest rate)	0.80%	0.31%	0.19%
Federal Funds Purchased Average Interest Rate at Period End	0.00%	0.00%	0.00%

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Long-Term Debt Long-Term Debt Details (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Long-term debt	$ 4,053	$ 16,495
Subordinated Borrowing, Interest Rate	4.64%	5.09%
Subordinated Borrowing, Due Date	Dec. 22, 2036
Repayment Price Junior Subordinated Deferrable Interest Debentures	100.00%
Repayment Price Capital Securities	100.00%
Number of Trust Preferred Securities	4,000
Trust Preferred Securities Liquidation Value	$ 1,000
Distributions On Debentures Interest Rate Over Three Month Libor Rate	1.83%
City Holding Capital Trust III [Member]
Debt Instrument [Line Items]
Long-term debt	$ 0	$ 16,495
Town Square Statutory Trust I [Member]
Debt Instrument [Line Items]
Long-term debt	4,124	0
Debt Instrument, Unamortized Discount	$ (71)	$ 0

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Derivative Instruments (Fair Value Of Derivative Instruments) (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Customer Counterparties Loan Interest Rate Swap Assets | Other Assets
Derivatives, Fair Value [Line Items]
Notional Amount	$ 132,146	$ 225,480
Fair Value	3,131	4,877
Customer Counterparties Loan Interest Rate Swap Liabilities | Other Assets
Derivatives, Fair Value [Line Items]
Notional Amount	372,223	314,450
Fair Value	13,774	9,513
Financial Institution Counterparties Loan Interest Rate Swap Asset | Other Liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	403,500	320,949
Fair Value	13,902	9,591
Financial Institution Counterparties Loan Interest Rate Swap Liabilities | Other Liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	132,146	218,924
Fair Value	$ 3,131	$ 4,877

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Derivative Instruments (Change In Fair Value Of Derivative Instruments) (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Derivative assets | Other Income
Derivatives, Fair Value [Line Items]
Change in Fair Value	$ 1,316	$ (3,379)	$ 3,904
Derivative liabilities | Other Income
Derivatives, Fair Value [Line Items]
Change in Fair Value	(1,316)	3,379	(3,904)
Derivative liabilities | Other Expense
Derivatives, Fair Value [Line Items]
Change in Fair Value	$ 50	$ 86	$ (52)

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Derivative Instruments (Derivative Assets Offset in The Consolidated Balance Sheet) (Details) - Not Designated as Hedging Instrument - Interest Rate Swap $ in Thousands	Dec. 31, 2018 USD ($)
Customer Counterparties Loan Interest Rate Swap Assets
Offsetting Assets [Line Items]
Gross Amounts of Recognized Assets	$ 3,131
Derivative assets	3,131
Derivative Asset, Fair Value of Collateral	3,131
Derivative Asset, Fair Value, Amount Not Offset Against Collateral	3,131
Derivative Asset, Fair Value, Amount Offset Against Collateral	0
Financial Institution Counterparties Loan Interest Rate Swap Asset
Offsetting Assets [Line Items]
Gross Amounts of Recognized Assets	10,771
Derivative assets	10,771
Derivative Asset, Fair Value of Collateral	10,771
Derivative Asset, Fair Value, Amount Not Offset Against Collateral	10,771
Derivative Asset, Fair Value, Amount Offset Against Collateral	$ 0

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Derivative Instruments (Derivative Liabilities Offset in the Consolidated Balance Sheet) (Details) - Not Designated as Hedging Instrument - Interest Rate Swap $ in Thousands	Dec. 31, 2018 USD ($)
Customer Counterparties Loan Interest Rate Swap Liabilities
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	$ 13,774
Derivative Liability	13,774
Derivative Liability, Fair Value of Collateral	13,774
Derivative Liability, Fair Value, Amount Not Offset Against Collateral	13,774
Derivative Liability, Fair Value, Amount Offset Against Collateral	0
Financial Institution Counterparties Loan Interest Rate Swap Liabilities
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	0
Derivative Liability	0
Derivative Liability, Fair Value of Collateral	0
Derivative Liability, Fair Value, Amount Not Offset Against Collateral	0
Derivative Liability, Fair Value, Amount Offset Against Collateral	$ 0

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Income Taxes (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Examination [Line Items]
Deferred Tax Assets, Valuation Allowance		$ 0	$ 0
Anticipated Reduction Resulting from Lapse of Applicable Statue of Limitations		503,000	509,000
Income tax interest and penalties		200,000	100,000	$ 100,000
Accrued income tax interest and penalties		500,000	300,000
Change in statutory tax rate		0	$ 7,070,000	$ 0
Increase in provisional amount, a component of income tax expense		$ 100,000
Scenario, Forecast
Income Tax Examination [Line Items]
Anticipated Reduction Resulting from Lapse of Applicable Statue of Limitations	$ 500,000

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Income Taxes (Summary Of Deferred Tax Assets And Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Allowance for Doubtful Accounts	$ 3,742	$ 4,385
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits	2,734	2,517
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Pensions	1,794	1,527
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Accrued Liabilities	2,276	1,057
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Impairment LossesImpaired assets	1,201	607
Deferred Tax Assets, Unrealized Losses on Available-for-Sale Securities, Gross	1,871	166
Deferred Tax Assets, Goodwill and Intangible assets	783	438
Deferred Tax Assets, Other	6,492	3,577
Total Deferred Tax Assets	20,893	14,274
Deferred Tax Liabilities, Other	3,555	2,361
Total Deferred Tax Liabilities	3,555	2,361
Deferred tax asset, net	$ 17,338	$ 11,913

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Income Taxes (Summary Of Income Tax Expense) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Federal									$ 16,846	$ 20,090	$ 20,100
State									2,413	1,436	1,166
Total current tax expense									19,259	21,526	21,266
Total deferred tax expense									(1,244)	14,909	3,817
Income tax expense	$ 2,646	$ 5,606	$ 5,358	$ 4,405	$ 14,972	$ 7,003	$ 6,812	$ 7,647	$ 18,015	$ 36,435	$ 25,083

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Income Taxes (Reconciliation Of The Significant Differences Between The Federal Statutory Income Tax Rate And Effective Income Tax Rate) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Computed federal taxes at statutory rate									$ 18,483	$ 31,761	$ 27,025
State income taxes, net of federal tax benefit									1,730	1,321	888
Tax effects of:
Tax-exempt interest income									(694)	(1,098)	(708)
Bank-owned life insurance									(649)	(1,474)	(1,164)
Change in statutory tax rate									0	7,070	0
Other items, net									(855)	(1,145)	(958)
Income tax expense	$ 2,646	$ 5,606	$ 5,358	$ 4,405	$ 14,972	$ 7,003	$ 6,812	$ 7,647	$ 18,015	$ 36,435	$ 25,083

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Income Taxes (Reconciliatoin Of The Unrecognized Tax Benefits Rollforward) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of the beginning and ending balance of unrecognized tax benefits
Beginning balance	$ 1,889	$ 1,847
Additions for current year tax positions	184	325
Additions for prior year tax positions	241	226
Decreases related to lapse of applicable statute of limitation	(503)	(509)
Ending balance	$ 1,811	$ 1,889

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Employee Benefit Plans (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Incentive stock options and SARs exercisable period	10 years
Stock awards available to be awarded	532,552
Contributions by employer	$ 1,509,000	$ 0
Supplemental Unemployment Benefits, Severance Benefits	$ 2,100,000	$ 2,000,000
Performance Shares [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Award vesting rights, percentage	33.33%
Median return on average assets of all FDIC insured depository institutions time period	20 years
Maximum
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Common stock issued upon the exercise of stock options, SARs and stock awards	750,000
Horizon Defined Benefit Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Contributions by employer	$ 0
Anticipated next year plan contributions	0
Community Defined Benefit Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Contributions by employer	$ 1,500,000
Equity Securities | Horizon Defined Benefit Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Percentage of Plan Assets	44.00%	48.00%
Defined Benefit Plan, Plan Assets, Target Allocation, Percentage	75.00%
Debt Securities | Horizon Defined Benefit Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Percentage of Plan Assets	21.00%	25.00%
Defined Benefit Plan, Plan Assets, Target Allocation, Percentage	25.00%
Cash and Cash Equivalents | Horizon Defined Benefit Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Percentage of Plan Assets	26.00%	15.00%
Alternative investments | Horizon Defined Benefit Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Percentage of Plan Assets	9.00%	12.00%

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Employee Benefit Plans (Summary Of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Options
Options Outstanding, beginning balance	87,605	86,613	95,015
Options, Granted	0	17,631	24,348
Options, Exercised	(29,633)	(16,639)	(32,750)
Options, Forfeited	0	0	0
Options Outstanding, ending balance	57,972	87,605	86,613
Weighted-Average Exercise Price
Weighted-Average Exercise Price, Outstanding, beginning balance	$ 47.15	$ 41.08	$ 38.38
Weighted-Average Exercise Price, Granted	0.00	66.32	43.73
Weighted-Average Exercise Price, Exercised	(39.31)	(35.91)	(35.28)
Weighted-Average Exercise Price, Forfeited	0.00	0.00	0.00
Weighted-Average Exercise Price, Outstanding, ending balance	$ 51.15	$ 47.15	$ 41.08
Options, Exercisable at end of year	2,697	7,887	3,000
Weighted-Average Exercise Price, Exercisable at end of year	$ 45.13	$ 37.37	$ 29.45
Options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares	55,275	79,718	83,613	75,265
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0	17,631	24,348
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares	24,443	21,526	16,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares	0	0	0
Weighted-Average Exercise Price
Share-based Compensation Arrangement by Share-based Payment Award, Option, Nonvested, Weighted Average Exercise Price	$ 51.40	$ 48.08	$ 41.47	$ 39.38
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	0.00	66.32	43.73
Weighted-Average Exercise Price, Vested during the year	40.58	37.31	35.09
Weighted-Average Exercise Price, Forfeited during the year	$ 0.00	$ 0.00	$ 0
Proceeds from stock option exercises	$ 1,164	$ 597	$ 1,155
Intrinsic value of stock options exercised	944	481	551
Stock-based compensation expense associated with stock options	178	246	240
Income tax benefit recognized related to stock-based compensation	19	$ 42	$ 36
Unrecognized stock-based compensation expense	$ 204
Weighted average period in which the above amount is expected to be recognized	2 years

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Employee Benefit Plans (Stock Options Outstanding And Exercisable) (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding | shares	57,972
Aggregate Intrinsic Value (in thousands) | $	$ 953
No. of Options Currently Exercisable | shares	2,697
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 61
35.00 - 39.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding | shares	38
Weighted-Average Remaining Contractual Life (Months)	$ 37.74
Weighted-Average Remaining Contractual Life (Months)	4 years 2 months
Aggregate Intrinsic Value (in thousands) | $	$ 1
No. of Options Currently Exercisable | shares	38
Weighted-Average Exercise Price of Options Currently Exercisable	$ 37.74
Weighted-Average Remaining Contractual Life (Months)	4 years 2 months
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 1
35.00 - 39.99 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices	$ 35.00
35.00 - 39.99 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices	$ 39.99
40.00 - 44.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding | shares	30,676
Weighted-Average Remaining Contractual Life (Months)	$ 43.87
Weighted-Average Remaining Contractual Life (Months)	6 years 9 months
Aggregate Intrinsic Value (in thousands) | $	$ 728
No. of Options Currently Exercisable | shares	1,675
Weighted-Average Exercise Price of Options Currently Exercisable	$ 44.43
Weighted-Average Remaining Contractual Life (Months)	5 years 2 months
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 39
40.00 - 44.99 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices	$ 40.00
40.00 - 44.99 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices	$ 44.99
45.00 - 49.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding | shares	9,627
Weighted-Average Remaining Contractual Life (Months)	$ 46.61
Weighted-Average Remaining Contractual Life (Months)	6 years 2 months
Aggregate Intrinsic Value (in thousands) | $	$ 202
No. of Options Currently Exercisable | shares	984
Weighted-Average Exercise Price of Options Currently Exercisable	$ 46.61
Weighted-Average Remaining Contractual Life (Months)	6 years 2 months
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 21
45.00 - 49.99 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices	$ 45.00
45.00 - 49.99 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices	$ 49.99
50.00 - 69.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding | shares	17,631
Weighted-Average Remaining Contractual Life (Months)	$ 66.32
Weighted-Average Remaining Contractual Life (Months)	8 years 2 months
Aggregate Intrinsic Value (in thousands) | $	$ 22
No. of Options Currently Exercisable | shares	0
Weighted-Average Exercise Price of Options Currently Exercisable	$ 0
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 0
50.00 - 69.99 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices	$ 50.00
50.00 - 69.99 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices	$ 69.99

XML

Employee Benefit Plans (Weighted Average Assumptions Estimate The Fair Value Of Options Granted) (Details)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation [Abstract]
Risk-free interest rate	2.12%	1.43%
Expected dividend yield	2.60%	3.86%
Volatility factor	25.80%	30.76%
Expected life of option	7 years	7 years

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Employee Benefit Plans (Restricted Shares Activity And Related Information) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Restricted Stock or Unit Expense	$ 1,600	$ 1,500	$ 1,400
Unrecognized stock-based compensation expense	$ 204
Weighted average period in which the above amount is expected to be recognized	2 years
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Restricted Awards, beginning balance	170,033	180,622	172,921
Restricted Awards, Granted	28,363	28,839	30,601
Restricted Awards, Forfeited/Vested	(48,704)	(39,428)	(22,900)
Restricted Awards, ending balance	149,692	170,033	180,622
Average Market Price at Grant, Granted	$ 69.94	$ 64.42	$ 46.39
Unrecognized stock-based compensation expense	$ 3,600
Weighted average period in which the above amount is expected to be recognized	3 years 1 month

XML

Employee Benefit Plans (Summary of 401k Activity) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total expense associated with the retirement benefit plan	$ 0.9	$ 0.8	$ 0.8
Common Stock Shares Held In Benefit Plan	229,276	228,662

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Employee Benefit Plans (Summary Of Activity Within The Defined Benefit Plan) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Change in fair value of plan assets:
Fair value at beginning of measurement period	$ 16,360	$ 17,117
Actual gain (loss) on plan assets	(434)	1,890
Contributions by employer	1,509	0
Defined Benefit Plan, Plan Assets, Benefits Paid	5,394	2,647
Fair value at End of measurement period	12,041	16,360	$ 17,117
Change in benefit obligation:
Benefit obligation at beginning of measurement period	(18,488)	(19,742)
Interest cost	(590)	(772)	(820)
Actuarial loss	(1,488)	(392)
Defined Benefit Plan, Benefit Obligation, Increase (Decrease) for Other Change	825	(614)
Benefits paid	(5,394)	(2,647)
Defined Benefit Plan, Benefit Obligation, (Increase) Decrease for Remeasurement due to Settlement	125	385
Benefit obligation at end of measurement period	(14,222)	(18,488)	$ (19,742)
Funded status	(2,181)	(2,128)
Other comprehensive loss	$ (5,871)	$ (5,033)
Weighted-average assumptions for benefit cost at beginning of year, Discount rate	4.10%	3.38%
Weighted-average assumptions for balance sheet liability at end of year, Expected long-term rate of return	6.75%	6.56%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate	3.38%	4.02%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets	6.56%	5.83%

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Employee Benefit Plans (Net Periodic Pension Cost Of The Defined Benefit Plan) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation [Abstract]
Interest cost	$ 590	$ 772	$ 820
Expected return on plan assets	(1,080)	(1,219)	(1,154)
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Gain (Loss) Due to Settlement	71	(104)	0
Net amortization and deferral	890	849	849
Net Periodic Pension Cost	$ 471	$ 298	$ 515

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Employee Benefit Plans (Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation [Abstract]
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax	$ (1,092)	$ 838	$ 157
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, Tax	254	(1,211)	(58)
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, after Tax	(838)	(373)	$ 99
Defined Benefit Plan, Accumulated Other Comprehensive (Income) Loss, before Tax	7,652	6,560
Underfunded pension liability, deferred tax benefit	(1,781)	(1,527)
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax	$ 5,871	$ 5,033

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Employee Benefit Plans (Summary Of Expected Benefit Payments) (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Share-based Compensation [Abstract]
2017	$ 1,012
2018	1,016
2019	1,010
2020	1,010
2021	1,016
2022 through 2026	$ 4,958

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Employee Benefit Plans (Summary Of Assets Segregated By Level Of Valuation Inputs Within The Fair Value Hierarchy) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Total	$ 12,041	$ 16,360	$ 17,117
Level 1
Defined Benefit Plan Disclosure [Line Items]
Total	12,041	10,930
Level 2
Defined Benefit Plan Disclosure [Line Items]
Total	0	4,828
Level 3
Defined Benefit Plan Disclosure [Line Items]
Total	0	0
Cash and Cash Equivalents
Defined Benefit Plan Disclosure [Line Items]
Total	12,041	1,202
Cash and Cash Equivalents | Level 1
Defined Benefit Plan Disclosure [Line Items]
Total	$ 12,041	1,202
Mutual funds/Investment funds
Defined Benefit Plan Disclosure [Line Items]
Total		5,421
Mutual funds/Investment funds | Level 1
Defined Benefit Plan Disclosure [Line Items]
Total		5,206
Mutual funds/Investment funds | Level 2
Defined Benefit Plan Disclosure [Line Items]
Total		215
Common stocks
Defined Benefit Plan Disclosure [Line Items]
Total		5,575
Common stocks | Level 1
Defined Benefit Plan Disclosure [Line Items]
Total		3,763
Common stocks | Level 2
Defined Benefit Plan Disclosure [Line Items]
Total		1,812
U.S. Government agencies
Defined Benefit Plan Disclosure [Line Items]
Total		301
U.S. Government agencies | Level 2
Defined Benefit Plan Disclosure [Line Items]
Total		301
Corporate bonds
Defined Benefit Plan Disclosure [Line Items]
Total		1,277
Corporate bonds | Level 2
Defined Benefit Plan Disclosure [Line Items]
Total		1,277
Corporate bonds
Defined Benefit Plan Disclosure [Line Items]
Total		1,223
Corporate bonds | Level 2
Defined Benefit Plan Disclosure [Line Items]
Total		1,223
Alternative investments
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets, Not Subject to Fair Value Hierarchy		602
Total		1,361
Alternative investments | Level 1
Defined Benefit Plan Disclosure [Line Items]
Total		759
Alternative investments | Level 2
Defined Benefit Plan Disclosure [Line Items]
Total		0
Alternative investments | Level 3
Defined Benefit Plan Disclosure [Line Items]
Total		$ 0

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Employee Benefit Plans (Summary Of Current Allocation Percentages Of Plan Assets) (Details) - Horizon Defined Benefit Plan	Dec. 31, 2018	Dec. 31, 2017
Common stocks
Defined Benefit Plan Disclosure [Line Items]
Percentage of Plan Assets	44.00%	48.00%
Debt Securities
Defined Benefit Plan Disclosure [Line Items]
Percentage of Plan Assets	21.00%	25.00%
Cash and Cash Equivalents
Defined Benefit Plan Disclosure [Line Items]
Percentage of Plan Assets	26.00%	15.00%
Alternative investments
Defined Benefit Plan Disclosure [Line Items]
Percentage of Plan Assets	9.00%	12.00%

XML

Employee Benefit Plans (Summary of Pentegra Plans) (Details) - Pentegra Defined Benefit Plan for Financial Institutions [Member]	Dec. 31, 2018
Classic Bancshares, Inc. [Domain]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Defined Benefit Plan, Funded Percentage	93.01%
Poage Bankshares, Inc. [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Defined Benefit Plan, Funded Percentage	98.11%

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Employee Benefit Plans (Summary of Other Post-Retirement Benefits) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred compensation agreement costs	$ 0.3	$ 0.3	$ 0.3
Deferred compensation agreement liabilities	6.9	5.7
Cash Surrender Value of Life Insurance	$ 6.8	$ 7.0

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Related Party Transactions (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Related Parties	$ 22.0	$ 12.4
Total principal additions	11.9
Total principal reductions	(2.2)
Unfunded Loan Commitment
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Related Parties	$ 16.1	$ 17.8

XML

Commitments And Contingencies (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Standby letters of credit
Other Commitments [Line Items]
Contractual obligations	$ 7,183	$ 7,151
Commercial letters of credit
Other Commitments [Line Items]
Contractual obligations	811	831
Home equity lines | Commitments to extend credit:
Other Commitments [Line Items]
Contractual obligations	207,509	194,477
Commercial real estate | Commitments to extend credit:
Other Commitments [Line Items]
Contractual obligations	68,649	66,901
Other commitments | Commitments to extend credit:
Other Commitments [Line Items]
Contractual obligations	$ 201,687	$ 184,895

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Preferred Stock Preferred Stock (Details)	Dec. 31, 2018 shares
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
Preferred shares outstanding	0

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Regulatory Requirements And Capital Ratios (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Parent Company
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Cash balance	$ 20,621	$ 59,031
City National
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Dividends Available Without Regulatory Approval	$ 88,800

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Regulatory Requirements And Capital Ratios (Schedule Of Capital Amounts And Ratios) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Parent Company
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
CET1 capital	$ 492,526	$ 430,154
CET1 ratio	15.10%	15.10%
CET1 capital, minimum capital required basel III phase in schedule	$ 208,294	$ 163,441
CET1 ratio, minimum capital required basel III phase in schedule	6.375%	5.75%
CET1 capital, minimum capital required basel III fully phased in	$ 228,715	$ 198,972
CET1 ratio, minimum capital required basel III fully phased in	7.00%	7.00%
CET1 capital, required to be well-capitalized	$ 212,378	$ 184,760
CET1 ratio, required to be well capitalized	6.50%	6.50%
Tier I capital	$ 496,526	$ 446,154
Tier I capital, ratio	15.20%	15.70%
Tier 1, capital, minimum capital required basel III phase in schedule	$ 257,304	$ 206,078
Tier 1, ratio, minimum capital required basel III phase in schedule	7.88%	7.25%
Tier 1, capital, minimum capital required basel III fully phased in	$ 277,725	$ 241,609
Tier 1, ratio, minimum capital required basel III fully phased in	8.50%	8.50%
Tier 1, capital, required to be well-capitalized	$ 261,389	$ 227,397
Tier 1, ratio, required to be well-capitalized	8.00%	8.00%
Total capital	$ 512,801	$ 465,292
Total capital, ratio	15.70%	16.40%
Total capital, minimum capital required basel III phase in schedule	$ 322,651	$ 262,927
Total capital, ratio, minimum capital required basel iIII phase in schedule	9.88%	9.25%
Total capital, minimum capital required basel III fully phased in	$ 343,072	$ 298,458
Total capital, ratio, minimum capital required basel III fully phased in	10.50%	10.50%
Total capital, required to be well-capitalized	$ 326,736	$ 284,246
Total capital, ratio, required to be well-capitalized	10.00%	10.00%
Tier 1 Leverage Capital, Average Assets	$ 496,526	$ 446,154
Tier I Leverage Ratio, Average Assets	11.40%	11.00%
Tier 1 Leverage Capital, minimum capital required basel III phase in schedule	$ 174,833	$ 161,834
Tier 1 Leverage Ratio, minimum capital required basel III phase in schedule	4.00%	4.00%
Tier 1 Leverage Capital, minimum capital required basel III fully phased in	$ 174,833	$ 161,834
Tier 1 Leverage Ratio, minimum capital required basel III fully phased in	4.00%	4.00%
Tier 1 Leverage Capital Required to be Well Capitalized	$ 218,542	$ 202,293
Tier 1 Leverage Capital, Average Assets, Well Capitalized Ratio	5.00%	5.00%
City National
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
CET1 capital	$ 423,099	$ 338,105
CET1 ratio	13.10%	12.00%
CET1 capital, minimum capital required basel III phase in schedule	$ 206,676	$ 162,164
CET1 ratio, minimum capital required basel III phase in schedule	6.375%	5.75%
CET1 capital, minimum capital required basel III fully phased in	$ 226,938	$ 197,418
CET1 ratio, minimum capital required basel III fully phased in	7.00%	7.00%
CET1 capital, required to be well-capitalized	$ 210,728	$ 183,316
CET1 ratio, required to be well capitalized	6.50%	6.50%
Tier I capital	$ 423,099	$ 338,105
Tier I capital, ratio	13.10%	12.00%
Tier 1, capital, minimum capital required basel III phase in schedule	$ 255,306	$ 204,468
Tier 1, ratio, minimum capital required basel III phase in schedule	7.88%	7.25%
Tier 1, capital, minimum capital required basel III fully phased in	$ 275,568	$ 239,721
Tier 1, ratio, minimum capital required basel III fully phased in	8.50%	8.50%
Tier 1, capital, required to be well-capitalized	$ 259,358	$ 225,620
Tier 1, ratio, required to be well-capitalized	8.00%	8.00%
Total capital	$ 439,374	$ 357,243
Total capital, ratio	13.60%	12.70%
Total capital, minimum capital required basel III phase in schedule	$ 320,145	$ 260,873
Total capital, ratio, minimum capital required basel iIII phase in schedule	9.88%	9.25%
Total capital, minimum capital required basel III fully phased in	$ 340,408	$ 296,126
Total capital, ratio, minimum capital required basel III fully phased in	10.50%	10.50%
Total capital, required to be well-capitalized	$ 324,198	$ 282,025
Total capital, ratio, required to be well-capitalized	10.00%	10.00%
Tier 1 Leverage Capital, Average Assets	$ 423,099	$ 338,105
Tier I Leverage Ratio, Average Assets	9.80%	8.50%
Tier 1 Leverage Capital, minimum capital required basel III phase in schedule	$ 172,594	$ 159,625
Tier 1 Leverage Ratio, minimum capital required basel III phase in schedule	4.00%	4.00%
Tier 1 Leverage Capital, minimum capital required basel III fully phased in	$ 172,594	$ 159,625
Tier 1 Leverage Ratio, minimum capital required basel III fully phased in	4.00%	4.00%
Tier 1 Leverage Capital Required to be Well Capitalized	$ 215,742	$ 199,531
Tier 1 Leverage Capital, Average Assets, Well Capitalized Ratio	5.00%	5.00%

XML

Fair Value Measurements (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Write-downs included in other non-interest expense	$ 492,000
Goodwill, Impairment Loss	$ 0	$ 0
Minimum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral discount	20.00%	20.00%
Maximum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral discount	30.00%	30.00%
Other Assets
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Write-downs included in other non-interest expense	$ 492,000	$ 170,000	$ 444,000

XML

Fair Value Measurements (Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring And Nonrecurring Basis) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Write-downs included in other non-interest expense	$ (492)
Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Provision For Loan Losses on Impaired Loans During Period	(428)	$ (647)
Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Write-downs included in other non-interest expense	(838)	(374)
Other Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Write-downs included in other non-interest expense	(492)	(170)	$ (444)
Fair Value, Measurements, Recurring [Member] | U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	5,733	2
Fair Value, Measurements, Recurring [Member] | U.S. Government agencies | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	5,733	2
Fair Value, Measurements, Recurring [Member] | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	128,070	96,196
Fair Value, Measurements, Recurring [Member] | Obligations of states and political subdivisions | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	128,070	96,196
Fair Value, Measurements, Recurring [Member] | U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	550,758	419,347
Fair Value, Measurements, Recurring [Member] | U.S. Government agencies | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	550,758	419,347
Fair Value, Measurements, Recurring [Member] | Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	12,043	652
Fair Value, Measurements, Recurring [Member] | Private label | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	12,043	652
Fair Value, Measurements, Recurring [Member] | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	4,799	4,736
Fair Value, Measurements, Recurring [Member] | Trust preferred securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	4,538	4,475
Fair Value, Measurements, Recurring [Member] | Trust preferred securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	261	261
Fair Value, Measurements, Recurring [Member] | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	16,658	22,268
Fair Value, Measurements, Recurring [Member] | Corporate securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	16,658	22,268
Fair Value, Measurements, Recurring [Member] | Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	10,313	5,699
Fair Value, Measurements, Recurring [Member] | Equity Securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	5,907	5,699
Fair Value, Measurements, Recurring [Member] | Equity Securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	4,406
Fair Value, Measurements, Recurring [Member] | Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	3,735
Fair Value, Measurements, Recurring [Member] | Certificates of Deposit | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	3,735
Fair Value, Measurements, Recurring [Member] | Investment funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	1,458	1,489
Fair Value, Measurements, Recurring [Member] | Investment funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	1,458	1,489
Fair Value, Measurements, Recurring [Member] | Derivative assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	17,100	14,502
Fair Value, Measurements, Recurring [Member] | Derivative assets | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	17,100	14,502
Fair Value, Measurements, Recurring [Member] | Derivative liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial and Nonfinancial Liabilities, Fair Value Disclosure	16,905	14,390
Fair Value, Measurements, Recurring [Member] | Derivative liabilities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial and Nonfinancial Liabilities, Fair Value Disclosure	0	0
Fair Value, Measurements, Recurring [Member] | Derivative liabilities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial and Nonfinancial Liabilities, Fair Value Disclosure	16,905	14,390
Fair Value, Measurements, Recurring [Member] | Derivative liabilities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial and Nonfinancial Liabilities, Fair Value Disclosure	0	0
Fair Value, Measurements, Nonrecurring [Member] | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	10,078	9,020
Fair Value, Measurements, Nonrecurring [Member] | Impaired loans | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Measurements, Nonrecurring [Member] | Impaired loans | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Measurements, Nonrecurring [Member] | Impaired loans | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	10,078	9,020
Fair Value, Measurements, Nonrecurring [Member] | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	4,608	3,585
Fair Value, Measurements, Nonrecurring [Member] | Other real estate owned | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Measurements, Nonrecurring [Member] | Other real estate owned | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Measurements, Nonrecurring [Member] | Other real estate owned | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	4,608	3,585
Fair Value, Measurements, Nonrecurring [Member] | Other Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	600	0
Fair Value, Measurements, Nonrecurring [Member] | Other Assets | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Measurements, Nonrecurring [Member] | Other Assets | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Measurements, Nonrecurring [Member] | Other Assets | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	$ 600	$ 0

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Fair Value Measurements (Schedule Of Reconciliation Of Investment Securities Available For Sale Measured At Fair Value On A Recurring Basis Level 3 Assets) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 261	$ 2,535
Included in other comprehensive income	0	(974)
Dispositions	0	(1,300)
Ending Balance	$ 261	$ 261

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Fair Value Measurements Schedule of Level 3 Financial Assets and Liabilities Measured on A Recurring Basis (Details) - Level 3 - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Fair Value Measurement On Nonrecurring Basis Asset And Liabilities Value [Roll Forward]
Beginning balance	$ 9,020	$ 6,916
Loans classified as impaired during the period	2,330	3,098
Specific valuation allowance allocations	0	(94)
Fair Value	2,330	3,004
(Additional) reduction in specific valuation allowance allocations	(218)	(19)
Paydowns, payoffs, other activity	(1,054)	(881)
Ending balance	$ 10,078	$ 9,020

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Fair Value Measurements (Schedule Of OREO Measured And Reported At Fair Value) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Other Real Estate [Roll Forward]
Beginning Balance	$ 3,585	$ 4,588
Write-downs included in other non-interest expense	(492)
Disposals	(2,334)	(2,578)
Ending Balance	4,608	3,585
OREO Remeasured At Initial Recognition
Other Real Estate [Roll Forward]
Carrying value of foreclosed assets prior to remeasurement	6,146	3,066
Charge-offs recognized in the allowance for loan losses	(1,951)	(1,117)
OREO Remeasured Subsequent To Initial Recognition
Other Real Estate [Roll Forward]
Carrying value of foreclosed assets prior to remeasurement	3,646	1,464
Write-downs included in other non-interest expense	(838)	(374)
Fair Value, Measurements, Nonrecurring [Member] | OREO Remeasured At Initial Recognition
Other Real Estate [Roll Forward]
Assets, Fair Value Disclosure	4,195	1,949
Fair Value, Measurements, Nonrecurring [Member] | OREO Remeasured Subsequent To Initial Recognition
Other Real Estate [Roll Forward]
Assets, Fair Value Disclosure	$ 2,808	$ 1,090

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Fair Value Measurements (Schedule Of Estimates Of Fair Value Of Financial Instruments) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Assets:
Securities available-for-sale	$ 723,254	$ 550,389
Securities held-to-maturity	60,706	65,646
Carrying Amount
Assets:
Cash and cash equivalents	122,991	82,508
Securities available-for-sale	723,254	550,389
Securities held-to-maturity	60,827	64,449
Other securities	28,810	14,147
Net loans	3,571,642	3,108,574
Accrued interest receivable	12,424	9,223
Derivative assets	17,100	14,502
Liabilities:
Deposits	3,975,559	3,315,634
Short-term debt	261,911	252,219
Long-term debt	4,053	16,495
Derivative liabilities	16,906	14,390
Fair Value
Assets:
Cash and cash equivalents	122,991	82,508
Securities available-for-sale	723,254	550,389
Securities held-to-maturity	60,706	65,646
Other securities	28,810	14,147
Net loans	3,516,557	3,090,471
Accrued interest receivable	12,424	9,223
Derivative assets	17,100	14,502
Liabilities:
Deposits	3,985,534	3,309,910
Short-term debt	261,911	252,219
Long-term debt	4,115	16,444
Derivative liabilities	16,906	14,390
Level 1
Assets:
Cash and cash equivalents	122,991	82,508
Securities available-for-sale	1,458	7,188
Securities held-to-maturity	0	0
Other securities	5,907	0
Net loans	0	0
Accrued interest receivable	12,424	9,223
Derivative assets	0	0
Liabilities:
Deposits	2,622,905	2,232,159
Short-term debt	0	0
Long-term debt	0	0
Derivative liabilities	0	0
Level 2
Assets:
Cash and cash equivalents	0	0
Securities available-for-sale	721,535	542,940
Securities held-to-maturity	60,706	65,646
Other securities	22,903	14,147
Net loans	0	0
Accrued interest receivable	0	0
Derivative assets	17,100	14,502
Liabilities:
Deposits	1,362,629	1,077,751
Short-term debt	261,911	252,219
Long-term debt	4,115	16,444
Derivative liabilities	16,906	14,390
Level 3
Assets:
Cash and cash equivalents	0	0
Securities available-for-sale	261	261
Securities held-to-maturity	0	0
Other securities	0	0
Net loans	3,516,557	3,090,471
Accrued interest receivable	0	0
Derivative assets	0	0
Liabilities:
Deposits	0	0
Short-term debt	0	0
Long-term debt	0	0
Derivative liabilities	$ 0	$ 0

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City Holding Company (Parent Company Only) Financial Information (Condensed Balance Sheets) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended			13 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2015
Condensed Financial Statements, Captions [Line Items]
Issuance of common stock	$ 0	$ 28,408	$ 6,864	$ 36,400
Stock Issued During Period, Shares, New Issues	0	440,604	107,662	548,000
Assets
Securities available-for-sale	$ 723,254	$ 550,389		$ 550,389
Net Loans	3,571,642	3,108,574		3,108,574
Fixed assets	78,383	72,682		72,682
Other assets	46,951	36,361		36,361
Total Assets	4,899,012	4,132,281		4,132,281
Liabilities
Deferred Tax Liabilities, Net	3,555	2,361		2,361
Other liabilities	56,725	45,426		45,426
Total Liabilities	4,298,248	3,629,774		3,629,774
Total Shareholders’ Equity	600,764	502,507	$ 442,438	502,507	$ 419,272
Total Liabilities and Shareholders’ Equity	4,899,012	4,132,281		$ 4,132,281
Shares Issued, Price Per Share				$ 64.82
proceedsthatcouldbereceived	18,600
Parent Company
Condensed Financial Statements, Captions [Line Items]
Issuance of common stock	0	28,408	$ 6,864
Assets
Cash	20,621	59,031		$ 59,031
Securities available-for-sale	5,908	5,699		5,699
Investment in subsidiaries	583,673	459,150		459,150
Net Loans	701	0		0
Fixed assets	5	6		6
Other assets	3,316	2,989		2,989
Total Assets	614,224	526,875		526,875
Liabilities
Junior subordinated debentures	4,053	16,495		16,495
Dividends payable	8,774	7,184		7,184
Deferred Tax Liabilities, Net	366	436		436
Other liabilities	267	253		253
Total Liabilities	13,460	24,368		24,368
Total Shareholders’ Equity	600,764	502,507		502,507
Total Liabilities and Shareholders’ Equity	614,224	$ 526,875		$ 526,875
Maximum
Condensed Financial Statements, Captions [Line Items]
Issuance of common stock	$ 55,000

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City Holding Company (Parent Company Only) Financial Information (Condensed Statements Of Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Condensed Financial Statements, Captions [Line Items]
Investment securities gains					$ 200	$ 0	$ 0	$ 4,276
Equity Securities, FV-NI, Unrealized Loss									$ (298)
Interest expense	$ 7,917	$ 7,171	$ 5,607	$ 4,997	4,664	4,340	4,036	3,767	25,692	$ 16,805	$ 13,207
Merger related costs									13,257	0	0
Income tax benefit	2,646	5,606	5,358	4,405	14,972	7,003	6,812	7,647	18,015	36,435	25,083
Net Income Available to Common Shareholders	$ 10,713	$ 20,692	$ 20,979	$ 17,616	$ 9,669	$ 13,932	$ 14,685	$ 16,026	70,002	54,310	52,128
Total Comprehensive Income									63,821	56,677	48,948
Parent Company
Condensed Financial Statements, Captions [Line Items]
Dividends from subsidiaries									50,000	30,000	8,600
Investment securities gains									0	200	0
Equity Securities, FV-NI, Unrealized Loss									208
Other income									130	115	320
Income									50,338	30,315	8,920
Interest expense									880	765	683
Merger related costs									1,899
Other expenses									1,842	1,636	1,957
Expenses									4,621	2,401	2,640
Income Before Income Tax Benefit and Equity in Undistributed Net Income of Subsidiaries									45,717	27,914	6,280
Income tax benefit									(1,114)	(1,197)	(1,096)
Income Before Equity in Undistributed Net Income of Subsidiaries									46,831	29,111	7,376
Equity in undistributed net income of subsidiaries									23,171	25,199	44,752
Net Income Available to Common Shareholders									70,002	54,310	52,128
Total Comprehensive Income									$ 63,821	$ 56,677	$ 48,948

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City Holding Company (Parent Company Only) Financial Information (Condensed Statements Of Cash Flows) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended			13 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017
Operating Activities
Net Income Available to Common Shareholders	$ 10,713	$ 20,692	$ 20,979	$ 17,616	$ 9,669	$ 13,932	$ 14,685	$ 16,026	$ 70,002	$ 54,310	$ 52,128
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized and Realized Investment Gains (Losses)									90	(4,476)	(3,513)
Deferred income tax expense									(1,244)	14,909	3,817
Stock based compensation									2,151	2,097	2,018
Asset write down									491	0	444
Change in other assets									(836)	1,277	(1,556)
Change in other liabilities									5,624	(426)	5,581
Net Cash Provided by Operating Activities									73,073	77,843	65,330
Investing Activities
Proceeds from sales of available for sale securities									0	5,776	30,850
Net Cash (Used in) Provided by Investing Activities									(163,966)	(173,405)	(261,293)
Financing Activities
Repayments of Subordinated Debt									(16,495)
Proceeds from the Redemption of Capital Securities									495
Dividends paid									(29,583)	(27,120)	(25,718)
Issuance of common stock									0	28,408	6,864	$ 36,400
Purchases of treasury stock									(20,271)	0	(10,018)
Exercise of stock options									1,164	597	1,155
Net Cash (Used in) Provided by Financing Activities									131,376	89,931	213,989
(Decrease) Increase in Cash and Cash Equivalents									40,483	(5,631)	18,026
Cash and cash equivalents at beginning of period				82,508				88,139	82,508	88,139	70,113
Cash and Cash Equivalents at End of Period	122,991				82,508				122,991	82,508	88,139	82,508
Parent Company
Operating Activities
Net Income Available to Common Shareholders									70,002	54,310	52,128
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized and Realized Investment Gains (Losses)									(208)	(200)	0
Deferred income tax expense									(88)	1,347	(241)
Depreciation, Amortization and Accretion, Net									1	1	(4)
Stock based compensation									2,151	2,097	2,018
Asset write down									193	0	444
Change in other assets									2,668	(405)	260
Change in other liabilities									(1,816)	(1,660)	(2,288)
Equity In Undistributed Earnings Of Subsidiaries									(23,171)	(25,199)	(44,752)
Net Cash Provided by Operating Activities									49,732	30,291	7,565
Investing Activities
Proceeds from sales of available for sale securities									0	200	0
Net Cash (Used in) Provided by Investing Activities									(23,452)	200	0
Financing Activities
Repayments of Subordinated Debt									(16,495)
Proceeds from the Redemption of Capital Securities									495
Dividends paid									(29,583)	(27,120)	(25,718)
Issuance of common stock									0	28,408	6,864
Purchases of treasury stock									(20,271)	0	(10,018)
Exercise of stock options									1,164	732	1,155
Net Cash (Used in) Provided by Financing Activities									(64,690)	2,020	(27,717)
(Decrease) Increase in Cash and Cash Equivalents									(38,410)	32,511	(20,152)
Cash and cash equivalents at beginning of period				$ 59,031				$ 26,520	59,031	26,520	46,672
Cash and Cash Equivalents at End of Period	$ 20,621				$ 59,031				20,621	$ 59,031	26,520	$ 59,031
Farmers Deposit Bancorp, Inc. [Member]
Condensed Financial Statements, Captions [Line Items]
Cash Acquired from Acquisition											4,209
Investing Activities
Payments to Acquire Businesses, Net of Cash Acquired									(20,691)
Farmers Deposit Bancorp, Inc. [Member] | Parent Company
Condensed Financial Statements, Captions [Line Items]
Cash Acquired from Acquisition									946
Investing Activities
Payments to Acquire Businesses, Net of Cash Acquired									(23,954)
Poage Bankshares, Inc. [Member]
Condensed Financial Statements, Captions [Line Items]
Cash Acquired from Acquisition											$ 34,288
Investing Activities
Payments to Acquire Businesses, Net of Cash Acquired									32,917
Poage Bankshares, Inc. [Member] | Parent Company
Condensed Financial Statements, Captions [Line Items]
Cash Acquired from Acquisition									518
Investing Activities
Payments to Acquire Businesses, Net of Cash Acquired									$ 502

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Summarized Quarterly Financial Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Quarterly Financial Information Disclosure [Abstract]
Interest income	$ 44,348	$ 42,729	$ 39,180	$ 37,644	$ 37,053	$ 36,366	$ 35,298	$ 34,214	$ 163,901	$ 142,930	$ 132,152
Taxable equivalent adjustment	(194)	(187)	(187)	(187)	(371)	(358)	(370)	(357)
Interest income (FTE)	44,542	42,916	39,367	37,831	37,424	36,724	35,668	34,571
Interest expense	7,917	7,171	5,607	4,997	4,664	4,340	4,036	3,767	25,692	16,805	13,207
Net Interest Income	36,625	35,745	33,760	32,834	32,760	32,384	31,632	30,804
Provision for loan losses	(400)	(27)	(2,064)	181	422	1,393	510	681	(2,310)	3,006	4,395
Investment securities gains (losses)					200	0	0	4,276
Equity Securities, FV-NI, Unrealized Gain (Loss)	(1,246)	384	492	280					(90)
Noninterest income	15,952	15,369	15,119	14,212	15,367	14,611	14,921	14,231	60,564	63,607	58,825
Noninterest expense	38,178	25,040	24,911	24,937	22,893	24,309	24,176	24,600	113,066	95,981	96,164
Income before income tax expense	13,553	26,485	26,524	22,208	25,012	21,293	21,867	24,030	88,017	90,745	77,211
Income tax expense	2,646	5,606	5,358	4,405	14,972	7,003	6,812	7,647	18,015	36,435	25,083
Interest Income Taxable Equivalent Adjustment - Tax	194	187	187	187	371	358	370	357
Net Income Available to Common Shareholders	10,713	20,692	20,979	17,616	9,669	13,932	14,685	16,026	70,002	54,310	52,128
Net earnings allocated to common shareholders	$ 10,623	$ 20,491	$ 20,768	$ 17,421	$ 9,560	$ 13,778	$ 14,531	$ 15,849	$ 69,348	$ 53,719	$ 51,505
Basic earnings per common share	$ 0.68	$ 1.34	$ 1.36	$ 1.13	$ 0.62	$ 0.89	$ 0.94	$ 1.04	$ 4.50	$ 3.49	$ 3.46
Diluted earnings per common share	$ 0.68	$ 1.33	$ 1.35	$ 1.13	$ 0.62	$ 0.89	$ 0.94	$ 1.04	$ 4.49	$ 3.48	$ 3.45
Basic	15,603	15,340	15,326	15,414	15,472	15,485	15,462	15,252	15,421	15,412	14,900
Average shares outstanding, diluted	15,618	15,358	15,345	15,436	15,497	15,505	15,487	15,277	15,439	15,436	14,913

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Earnings Per Share [Abstract]
Net Income Available to Common Shareholders	$ 10,713	$ 20,692	$ 20,979	$ 17,616	$ 9,669	$ 13,932	$ 14,685	$ 16,026	$ 70,002	$ 54,310	$ 52,128
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic									654	591	623
Distributed earnings allocated to common shares outstanding									32,483	27,497	25,710
Undistributed earnings allocated to common shares outstanding									36,865	26,222	25,795
Net earnings allocated to common shareholders	$ 10,623	$ 20,491	$ 20,768	$ 17,421	$ 9,560	$ 13,778	$ 14,531	$ 15,849	$ 69,348	$ 53,719	$ 51,505
Average shares outstanding, basic	15,603,000	15,340,000	15,326,000	15,414,000	15,472,000	15,485,000	15,462,000	15,252,000	15,421,000	15,412,000	14,900,000
Effect of dilutive securities									18,000	24,000	13,000
Average shares outstanding, diluted	15,618,000	15,358,000	15,345,000	15,436,000	15,497,000	15,505,000	15,487,000	15,277,000	15,439,000	15,436,000	14,913,000
Basic earnings per share	$ 0.68	$ 1.34	$ 1.36	$ 1.13	$ 0.62	$ 0.89	$ 0.94	$ 1.04	$ 4.50	$ 3.49	$ 3.46
Diluted earnings per share	$ 0.68	$ 1.33	$ 1.35	$ 1.13	$ 0.62	$ 0.89	$ 0.94	$ 1.04	$ 4.49	$ 3.48	$ 3.45
Options to purchase shares of common stock, anti-dilutive									328	2,785	2,096

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Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Combined Federal And State Income Tax Rate	23.00%	23.00%
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	$ (5,644)	$ (7,012)
Other comprehensive income before reclassifications	(6,306)	5,186
Amounts reclassified from other comprehensive loss	125	(2,819)
Other Comprehensive Income (Loss), Net of Tax	(6,181)	2,367	$ (3,180)
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	0	0
Ending balance	(14,482)	(5,644)	(7,012)
Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(5,033)	(4,660)
Other comprehensive income before reclassifications	(963)	528
Amounts reclassified from other comprehensive loss	125	0
Other Comprehensive Income (Loss), Net of Tax	(838)	528
Ending balance	(5,871)	(5,033)	(4,660)
Unrealized Gains (Losses) on Securities Available-for-Sale
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(611)	(2,352)
Other comprehensive income before reclassifications	(5,343)	4,658
Amounts reclassified from other comprehensive loss	0	(2,819)
Other Comprehensive Income (Loss), Net of Tax	(5,343)	1,839
Ending balance	(8,611)	(611)	(2,352)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Other Comprehensive Income (Loss), Net of Tax	(6,181)	2,367	$ (3,180)
Accounting Standards Update 2016-01 [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	2,657
Accounting Standards Update 2016-01 [Member] | Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	0
Accounting Standards Update 2016-01 [Member] | Unrealized Gains (Losses) on Securities Available-for-Sale
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	(2,657)
Accounting Standards Update 2016-01 [Member] | Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ (2,657)
Accounting Standards Update 2018-02 [Domain] | Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		(901)
Accounting Standards Update 2018-02 [Domain] | Unrealized Gains (Losses) on Securities Available-for-Sale
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		(98)
Accounting Standards Update 2018-02 [Domain] | Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		$ (999)

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Accumulated Other Comprehensive Loss Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Gains on sale of investment securities									$ 0	$ (4,476)	$ (3,513)
Actual gain (loss) on plan assets									(434)	1,890
Income tax expense	$ 2,646	$ 5,606	$ 5,358	$ 4,405	$ 14,972	$ 7,003	$ 6,812	$ 7,647	18,015	36,435	25,083
Net Income Available to Common Shareholders	$ (10,713)	$ (20,692)	$ (20,979)	$ (17,616)	$ (9,669)	$ (13,932)	$ (14,685)	$ (16,026)	(70,002)	(54,310)	(52,128)
Unrealized Gains (Losses) on Securities Available-for-Sale | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Gains on sale of investment securities									0	(4,476)	(3,513)
Income tax expense									0	1,657	1,297
Net Income Available to Common Shareholders									0	$ (2,819)	$ (2,216)
Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Attributable to Parent [Member] | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Actual gain (loss) on plan assets									(163)
Income tax expense									(38)
Net Income Available to Common Shareholders									$ 125

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Contracts With Customers (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue from External Customer [Line Items]
Revenue from Contract with Customer, Including Assessed Tax									$ 57,453
RevenueOutsideScopeofTopic606									3,111
Noninterest Income	$ 15,952	$ 15,369	$ 15,119	$ 14,212	$ 15,367	$ 14,611	$ 14,921	$ 14,231	60,564	$ 63,607	$ 58,825
Fees and Commissions, Depositor Accounts [Domain]
Revenue from External Customer [Line Items]
Revenue from Contract with Customer, Including Assessed Tax									29,704
Fees and Commissions, Debit Cards [Domain]
Revenue from External Customer [Line Items]
Revenue from Contract with Customer, Including Assessed Tax									18,369
Fees and Commissions, Fiduciary and Trust Accounts [Domain]
Revenue from External Customer [Line Items]
Revenue from Contract with Customer, Including Assessed Tax									6,529
Other Non-Interest Income [Domain]
Revenue from External Customer [Line Items]
Revenue from Contract with Customer, Including Assessed Tax									$ 2,851