CHCO City Holding Company

City Holding Company, “the Company” (NASDAQ:CHCO), a $3.4 billion bank holding company headquartered in Charleston, today announced net income of $48.7 million, or $3.06 per diluted share, for the year ended December 31, 2013. City’s net income increased $9.7 million from 2012 due primarily to the acquisitions of Virginia Savings Bank in the second quarter of 2012 and Community Financial Corporation (“Community Bank”) in the first quarter of 2013. For 2013, the Company achieved a return on assets of 1.44%, a return on tangible equity of 16.4%, a net interest margin of 4.33%, and an efficiency ratio of 55.5%. Despite $5.5 million of merger-related expenses, 2013’s financial performance outpaced 2012’s results.

For the fourth quarter of 2013 the Company reported net income of $13.7 million, or $0.86 per diluted share. The Company achieved a return on assets of 1.61%, a return on tangible equity of 17.7%, a net interest margin of 4.33%, and an efficiency ratio of 51.7% in the fourth quarter of 2013.

City’s CEO Charles Hageboeck stated that, “2013 was a record year for City with reported earnings of $3.06 per diluted share despite merger-related expenses of $5.5 million ($0.23 per diluted share on an after tax basis). While the results from our acquisitions of Virginia Savings Bancorp and Community Bank have been in line with our expectations, the results of resolving problem loans associated with these acquisitions have exceeded our expectations. This has largely been due our credit and lending teams’ ability to effectively workout a number of problem loans. As a result of these efforts, our nonperforming loans, past due loans, and other asset quality measures continue to show improvement. Although our work is not yet complete in regards to acquired problem assets, particularly those related to Community Bank, we expect to have less efforts concentrated in these endeavors during 2014.”

“During 2013, our reported net interest margin increased from 3.96% in 2012 to 4.33% for 2013. Excluding the positive impact of accretion relating to our acquisitions, our net interest margin only dropped from 3.85% for 2012 to 3.83% for 2013 despite the loss of over $50 million of high yielding trust preferred securities and continued historically low interest rates. Excluding the acquisition of Community Bank, our loans grew $87.7 million, or 4.1%, from December 31, 2012. This growth was fueled by an increase of $59.4 million (5.8%) in residential real estate loans and $42.9 million in commercial loans (4.6%).”

“I am also excited that in less than one year, the Company’s tangible capital rebounded after dropping to 8.6% following the Community Bank acquisition to 9.5% at December 31, 2013. At City, we are excited about our future and are poised to take advantage of the opportunities ahead.”

Net Interest Income

The Company’s tax equivalent net interest income increased $27.4 million, or 27.8%, from $98.5 million in 2012 to $125.9 million in 2013. This increase is due primarily to loan growth from the acquisition of Community Bank as of January 9, 2013 and accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bank and Community Bank. The Company’s reported net interest margin increased from 3.96% for the year ended December 31, 2012 to 4.33% for the year ended December 31, 2013. Excluding the favorable impact of the accretion from the fair value adjustments ($14.6 million for the year ended December 31, 2013 and $2.6 million for the year ended December 31, 2012), the net interest margin would have been 3.83% for the year ended December 31, 2013 and 3.85% for the year ended December 31, 2012.

During the fourth quarter of 2013, the Company’s tax equivalent net interest income decreased $0.3 million, or 1.1%, from $32.5 million during the third quarter of 2013 to $32.2 million. The Company’s reported net interest margin decreased from 4.47% for the third quarter of 2013 to 4.33% for the fourth quarter of 2013. Excluding the favorable impact of the accretion from the fair value adjustments ($3.9 million for the quarter ended December 31, 2013 and $5.0 million for the quarter ended September 30, 2013), the net interest margin would have been 3.81% for the quarter ended December 31, 2013 and 3.78% for the quarter ended September 30, 2013.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned decreased slightly from 1.28% at December 31, 2012 to 1.20% at December 31, 2013. Excluded from this ratio are purchased credit-impaired loans in which the Company estimated cash flows and estimated a credit mark. These loans are considered performing loans provided that the loan is performing in accordance with the estimated expectations. Such loans would be considered nonperforming loans if the loan’s performance deteriorates below the initial expectations. Total past due loans increased from $13.0 million, or 0.60% of total loans outstanding, at December 31, 2012 to $19.5 million, or 0.75% of total loans outstanding, at December 31, 2013. Acquired past due loans represent approximately 64% of total past due loans and have declined $4.0 million, or 24.2%, since March 31, 2013. In accordance with regulatory guidance issued in the third quarter of 2012, the Company classifies loans in which the borrower has filed Chapter 7 bankruptcy with the debt discharged by the bankruptcy court and the loan not reaffirmed by the borrower to be troubled debt restructured loans (“TDR’s”). Since the time of this change, TDR’s have increased from $21.5 million at September 30, 2012 to $25.1 million at December 31, 2013. More than 90% of these loans are current with interest and principal payments.

As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $1.9 million in the fourth quarter of 2013 and $6.8 million for the year ended December 31, 2013 compared to $1.8 million and $6.4 million of the comparable periods in 2012. During the fourth quarter of 2013 the Company re-estimated the expected cash flows from its purchased credit impaired loans, which resulted in a $0.5 million addition to the ALLL. The provision for loan losses recorded during 2013 reflects difficulties encountered by certain commercial borrowers of the Company during the year, the downgrade of their related credits and management’s assessment of the impact of these difficulties on the ultimate collectability of the loans. Changes in the amount of the provision and related allowance are based on the Company’s detailed systematic methodology and are directionally consistent with changes in the composition and quality of the Company’s loan portfolio. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision and allowance for loan losses that is directionally consistent with changes in asset quality and loss experience.

Investment Securities Gains/(Losses)

During 2013, the Company realized investment gains of $0.7 million associated with the calls of trust preferred securities. In addition, the Company also recognized gains of $0.1 million from the sale of certain equity positions related to community banks and bank holding companies.

Non-interest Income

Exclusive of net investment securities gains, non-interest income increased $2.9 million to $57.2 million for the year ended December 31, 2013 as compared to $54.3 million for the year ended December 31, 2012. Service charges increased $1.2 million, or 4.5%, to $27.6 million and bankcard revenues increased $1.1 million, or 9.0%, to $13.5 million for the year ended December 31, 2013. These increases were primarily due to the acquisition of Community Bank.

Exclusive of net investment securities gains, total non-interest income was flat for the fourth quarter of 2013 as compared to the fourth quarter of 2012. A decrease of $0.4 million in other income was essentially offset by an increase of $0.3 million in bankcard revenue during the fourth quarter of 2013.

Non-interest Expenses

During 2013, the Company recognized $5.5 million of acquisition and integration expenses associated with the completed acquisition of Community Bank. In comparison, during 2012, the Company recorded $4.7 million of acquisition and integration expenses associated with the completed acquisition of Virginia Savings Bancorp and the impending acquisition of Community Bank. Excluding these expenses, noninterest expenses increased $14.0 million from $82.7 million for the year ended December 31, 2012 to $96.7 million for the year ended December 31, 2013. Salaries and employee benefits increased $7.9 million due primarily to additional employees associated with the acquisition of Community Bank. Normal annual salary increases, increased pension costs, and increased incentive compensation accruals also contributed to the increase in salaries and employee benefits. In addition, other expenses increased $2.0 million, occupancy and equipment expenses increased $1.7 million, and depreciation expense increased $1.1 million. These increases were primarily attributable to the acquisition of Community Bank and were in line with the Company’s expectations. These increases were partially offset by a decrease in repossessed asset losses as a result of losses recognized in 2012.

For the fourth quarter of 2013, total non-interest expenses increased $2.9 million, from $21.3 million for the fourth quarter of 2012 to $24.2 million. Salaries and employee benefit expenses increased $1.6 million, primarily associated with the acquisition of Community Bank and increased pension costs. In addition, other expenses increased $0.7 million, occupancy and equipment expenses increased $0.4 million, legal and professional expenses increased $0.3 million, and depreciation expense increased $0.2 million from the fourth quarter of 2012. These increases were partially offset by decreases in merger related expenses ($0.3 million), repossessed asset losses ($0.2 million), and advertising expenses ($0.2 million).

Balance Sheet Trends

Loans increased $458.4 million (21.4%) from December 31, 2012 to $2.60 billion at December 31, 2013, primarily due to the Company’s acquisition of Community Bank ($370.8 million). Excluding the Community Bank acquisition, loans increased $87.7 million (4.1%) from December 31, 2012 to $2.23 billion at December 31, 2013. Increases in residential real estate loans of $59.4 million (5.8%), commercial real estate loans of $32.9 million (4.0%), and commercial and industrial (“C&I”) loans of $10.0 million (9.2%) were partially offset by a decrease in consumer loans ($14.1 million). The majority of this decrease is attributable to the Company’s decision to strategically reduce the portfolio of indirect auto loans with unsatisfactory credit quality metrics associated with the Community Bank acquisition.

Total average depository balances increased $413.5 million, or 17.3%, from the quarter ended December 31, 2012 to the quarter ended December 31, 2013. This growth was primarily attributable to deposits acquired from Community Bank ($337.3 million). Exclusive of this contribution, the Company experienced increases in noninterest-bearing demand deposits ($43.9 million), savings deposits ($39.6 million), and interest-bearing demand deposits ($14.9 million) that were partially offset by a decrease in time deposits ($22.5 million).

Income Tax Expense

The Company’s effective income tax rate for the quarter and year ended December 31, 2013 was 34.2% and 34.4%, respectively, compared to 34.9% and 34.3% for the quarter and year ended December 31, 2012, respectively.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 93.5% and the loan to asset ratio was 77.3% at December 31, 2013. The Company maintained investment securities totaling 11.0% of assets as of this date. The Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 50.7% of assets at December 31, 2013. Time deposits fund 32.0% of assets at December 31, 2013, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.

The Company is also strongly capitalized. Although the Company’s acquisition of Community Bank lowered its tangible equity ratio from 9.4% at December 31, 2012 to 8.6% at March 31, 2013, our tangible equity ratio has returned to 9.5% at December 31, 2013. At December 31, 2013, City National Bank’s leverage ratio is 8.54%, its tier I capital ratio is 11.35%, and its total risk-based capital ratio is 12.18%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On December 18, 2013, the Board approved a quarterly cash dividend of 37 cents per share payable January 31, 2014, to shareholders of record as of January 15, 2014.

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

Forward-Looking Information

This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such information involves risks and uncertainties that could result in the Company's actual results differing from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (12) continued deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; and (13) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) recently adopted by the United States Congress. Forward-looking statements made herein reflect management’s expectations as of the date such statements are made. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its December 31, 2013 Form 10-K. The Company will continue to evaluate the impact of any subsequent events on the preliminary December 31, 2013 results and will adjust the amounts if necessary.

  CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights (Unaudited)           Three Months Ended December 31, Percent   2013     2012   Change   Earnings ($000s, except per share data): Net Interest Income (FTE) $ 32,159 $ 25,707 25.10 % Net Income available to common shareholders 13,699 10,894 25.75 % Earnings per Basic Share 0.87 0.73 18.51 % Earnings per Diluted Share 0.86 0.73 17.77 %           Key Ratios (percent): Return on Average Assets 1.61 % 1.49 % 7.86 % Return on Average Tangible Equity 17.73 % 16.15 % 9.77 % Net Interest Margin 4.33 % 3.99 % 8.49 % Efficiency Ratio 51.71 % 53.12 % (2.66 )% Average Shareholders' Equity to Average Assets 11.35 % 11.49 % (1.26 )%   Consolidated Risk Based Capital Ratios (a): Tier I 12.96 % 12.97 % (0.08 )% Total 13.81 % 13.85 % (0.29 )%   Tangible Equity to Tangible Assets 9.46 % 9.40 % 0.69 %           Common Stock Data: Cash Dividends Declared per Share $ 0.37 $ 0.35 5.71 % Book Value per Share 24.64 22.47 9.66 % Tangible Book Value per Share 19.78 18.08 9.38 % Market Value per Share: High 49.21 36.45 35.01 % Low 41.87 31.78 31.75 % End of Period 46.33 34.85 32.94 %   Price/Earnings Ratio (b) 13.34 11.89 12.17 %         Twelve Months Ended December 31, Percent   2013     2012   Change   Earnings ($000s, except per share data): Net Interest Income (FTE) $ 125,897 $ 98,538 27.76 % Net Income available to common shareholders 48,667 38,945 24.96 % Earnings per Basic Share 3.10 2.63 18.00 % Earnings per Diluted Share 3.06 2.61 17.37 %           Key Ratios (percent): Return on Average Assets 1.44 % 1.37 % 4.95 % Return on Average Tangible Equity 16.35 % 14.74 % 10.90 % Net Interest Margin 4.33 % 3.96 % 9.44 % Efficiency Ratio 55.45 % 57.16 % (3.00 )% Average Shareholders' Equity to Average Assets 11.04 % 11.46 % (3.61 )%           Common Stock Data: Cash Dividends Declared per Share $ 1.48 $ 1.40 5.71 % Market Value per Share: High 49.21 37.16 32.43 % Low 36.07 30.96 16.51 %   Price/Earnings Ratio (b) 14.95 13.27 12.66 %     (a) December 31, 2013 risk-based capital ratios are estimated (b) December 31, 2013 price/earnings ratio computed based on annualized fourth quarter 2013 earnings       CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights     (Unaudited)                             Book Value and Market Price Range per Share Market Price Book Value per Share Range per Share March 31   June 30   September 30   December 31   Low   High   2007 $ 17.62 $ 17.40 $ 17.68 $ 18.14 $ 31.16 $ 41.54 2008 18.92 18.72 17.61 17.58 29.08 42.88 2009 17.69 18.24 18.95 19.37 20.88 34.34 2010 19.71 20.02 20.31 20.31 26.87 38.03 2011 20.39 20.58 20.86 21.05 26.06 37.22 2012 21.46 21.63 22.14 22.47 30.96 37.16 2013 23.27 23.52 24.03 24.64 36.07 49.21                           Earnings per Basic Share   Quarter Ended March 31   June 30   September 30   December 31   Year-to-Date   2007 $ 0.76 $ 0.72 $ 0.76 $ 0.78 $ 3.02 2008 0.81 0.83 (0.16 ) 0.26 1.74 2009 0.69 0.64 0.66 0.70 2.69 2010 0.59 0.68 0.58 0.64 2.48 2011 0.62 0.65 0.77 0.65 2.68 2012 0.68 0.50 0.71 0.73 2.63 2013 0.51 0.83 0.89 0.87 3.10                           Earnings per Diluted Share   Quarter Ended March 31   June 30   September 30   December 31   Year-to-Date   2007 $ 0.76 $ 0.72 $ 0.76 $ 0.78 $ 3.01 2008 0.80 0.83 (0.16 ) 0.26 1.74 2009 0.69 0.64 0.66 0.70 2.68 2010 0.58 0.68 0.58 0.64 2.47 2011 0.62 0.64 0.76 0.65 2.67 2012 0.67 0.50 0.71 0.73 2.61 2013 0.51 0.82 0.88 0.86 3.06   CITY HOLDING COMPANY AND SUBSIDIARIES   Consolidated Statements of Income (Unaudited) ($ in 000s, except per share data)  

Three Months EndedDecember 31,

  2013       2012   Interest Income Interest and fees on loans $ 31,901 $ 25,588 Interest on investment securities: Taxable 2,924 2,940 Tax-exempt 291 341 Interest on federal funds sold   -     15 Total Interest Income 35,116 28,884   Interest Expense Interest on deposits 2,868 3,114 Interest on short-term borrowings 94 83 Interest on long-term debt   153     163 Total Interest Expense   3,115     3,360 Net Interest Income 32,001 25,524 Provision for loan losses   1,945     1,775 Net Interest Income After Provision for Loan Losses 30,056 23,749   Non-Interest Income Total investment securities impairment losses - - Noncredit impairment losses recognized in other comprehensive income   -     - Net investment securities impairment losses - - Gains on sale of investment securities   671     - Net investment securities gains 671 -   Service charges 6,995 7,113 Bankcard revenue 3,403 3,101 Insurance commissions 1,269 1,289 Trust and investment management fee income 1,093 1,112 Bank owned life insurance 976 754 Other income   541     897 Total Non-Interest Income 14,948 14,266   Non-Interest Expense Salaries and employee benefits 12,910 11,301 Occupancy and equipment 2,529 2,147 Depreciation 1,468 1,234 FDIC insurance expense 500 407 Advertising 408 596 Bankcard expenses 697 628 Postage, delivery, and statement mailings 521 514 Office supplies 408 412 Legal and professional fees 778 437 Telecommunications 581 405 Repossessed asset (gains)/losses, net of expenses (72 ) 146 Merger related expenses 72 373 Other expenses   3,390     2,673 Total Non-Interest Expense   24,190     21,273 Income Before Income Taxes 20,814 16,742 Income tax expense   7,115     5,848 Net Income Available to Common Shareholders $ 13,699   $ 10,894     Distributed earnings allocated to common shareholders $ 5,775 $ 5,151 Undistributed earnings allocated to common shareholders   7,800     5,658 Net earnings allocated to common shareholders $ 13,575   $ 10,809   Average common shares outstanding 15,636 14,755 Effect of dilutive securities: Employee stock options and warrants   187     82 Shares for diluted earnings per share   15,823     14,837   Basic earnings per common share $ 0.87 $ 0.73 Diluted earnings per common share $ 0.86 $ 0.73 Dividends declared per common share $ 0.37 $ 0.35   Comprehensive Income $ 14,882 $ 9,837   CITY HOLDING COMPANY AND SUBSIDIARIES   Consolidated Statements of Income (Unaudited) ($ in 000s, except per share data)   Twelve months ended December 31,   2013     2012     Interest Income Interest and fees on loans $ 126,594 $ 96,432 Interest on investment securities: Taxable 10,697 14,285 Tax-exempt 1,226 1,442 Interest on federal funds sold   22   53   Total Interest Income 138,539 112,212   Interest Expense Interest on deposits 12,358 13,477 Interest on short-term borrowings 325 312 Interest on long-term debt   618   661   Total Interest Expense   13,301   14,450   Net Interest Income 125,238 97,762 Provision for loan losses   6,848   6,375   Net Interest Income After Provision for Loan Losses 118,390 91,387   Non-Interest Income Total investment securities impairment losses - (878 ) Noncredit impairment losses recognized in other comprehensive income   -   302   Net investment securities impairment losses - (576 ) Gains on sale of investment securities   764   1,530   Net investment securities gains 764 954   Service charges 27,596 26,409 Bankcard revenue 13,521 12,406 Insurance commissions 5,832 6,071 Trust and investment management fee income 3,986 3,774 Bank owned life insurance 3,391 2,983 Other income   2,916   2,660   Total Non-Interest Income 58,006 55,257   Non-Interest Expense Salaries and employee benefits 51,430 43,509 Occupancy and equipment 9,910 8,186 Depreciation 5,757 4,605 FDIC insurance expense 1,852 1,590 Advertising 2,673 2,589 Bankcard expenses 2,870 2,662 Postage, delivery, and statement mailings 2,220 2,079 Office supplies 1,728 1,669 Legal and professional fees 2,338 1,786 Telecommunications 2,212 1,614 Repossessed asset losses, net of expenses 646 1,346 Merger related expenses 5,526 4,708 Other expenses   13,054   11,058   Total Non-Interest Expense   102,216   87,401   Income Before Income Taxes 74,180 59,243 Income tax expense   25,513   20,298   Net Income Available to Common Shareholders $ 48,667 $ 38,945       Distributed earnings allocated to common shareholders $ 23,100 $ 20,603   Undistributed earnings allocated to common shareholders   25,127   18,034     Net earnings allocated to common shareholders $ 48,227 $ 38,637     Average common shares outstanding 15,564 14,714 Effect of dilutive securities: Employee stock options and warrants   171   82   Shares for diluted earnings per share   15,735   14,796     Basic earnings per common share $ 3.10 $ 2.63 Diluted earnings per common share $ 3.06 $ 2.61 Dividends declared per common share $ 1.48 $ 1.40   Comprehensive Income $ 45,099 $ 41,430   CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity (Unaudited) ($ in 000s)     Three Months Ended December 31, 2013   December 31, 2012   Balance at October 1 $ 378,042 $ 328,415   Net income 13,699 10,894 Other comprehensive income: Change in unrealized loss on securities available-for-sale (932 ) (794 ) Change in underfunded pension liability 2,115 (263 ) Cash dividends declared ($0.37/share) and ($0.35/share), respectively (5,827 ) (5,192 ) Issuance of stock award shares, net 318 214 Exercise of 19,028 stock options   661       -   Balance at December 31 $ 388,076     $ 333,274         Twelve Months Ended December 31, 2013   December 31, 2012   Balance at January 1 $ 333,274 $ 311,134   Net income 48,667 38,945 Other comprehensive income: Change in unrealized gain (loss) on securities available-for-sale (5,683 ) 2,749 Change in underfunded pension liability 2,115 (264 ) Cash dividends declared ($1.48/share) and ($1.40/share), respectively (23,513 ) (20,725 ) Issuance of stock award shares, net 1,281 1,083 Acquisition of Community Financial Corporation 28,508 -

Acquisition of Virginia Savings Bancorp

- 7,723 Exercise of 126,168 stock options 3,427 - Exercise of 18,899 stock options - 544 Purchase of 237,535 common shares of treasury   -       (7,915 ) Balance at December 31 $ 388,076     $ 333,274             CITY HOLDING COMPANY AND SUBSIDIARIES Condensed Consolidated Quarterly Statements of Income (Unaudited) ($ in 000s, except per share data)   Quarter Ended December 31 September 30 June 30 March 31 December 31   2013       2013       2013       2013       2012    

Interest income

$ 35,116 $ 35,674 $ 34,724 $ 33,026 $ 28,884

Taxable equivalent adjustment

 

158

     

161

     

167

     

174

      183   Interest income (FTE) 35,274 35,835 34,891 33,200 29,067

Interest expense

  3,115       3,304       3,427       3,455       3,360  

Net interest income

32,159 32,531 31,464 29,745 25,707 Provision for loan losses   1,945       1,154       2,011       1,738       1,775  

Net interest income after provision for loan losses

30,214 31,377 29,453 28,007 23,932   Noninterest income 14,948 14,480 14,252 14,326 14,266 Noninterest expense   24,190       24,665       23,959       29,403       21,273   Income before income taxes 20,972 21,192 19,746 12,930 16,925 Income tax expense 7,115 7,056 6,573 4,769 5,848 Taxable equivalent adjustment   158       161       167       174       183   Net income available to common shareholders $ 13,699     $ 13,975     $ 13,006     $ 7,987     $ 10,894                             Distributed earnings allocated to common shareholders $ 5,775 $ 5,767 $ 5,751 $ 5,747 $ 5,151 Undistributed earnings allocated to common shareholders   7,800       8,081       7,139       2,175       5,658   Net earnings allocated to common shareholders $ 13,575     $ 13,848     $ 12,890     $ 7,922     $ 10,809     Average common shares outstanding 15,636 15,608 15,582 15,473 14,755   Effect of dilutive securities: Employee stock options and warrants   187       182       170       154       82     Shares for diluted earnings per share   15,823       15,790       15,752       15,627       14,837     Basic earnings per common share $ 0.87 $ 0.89 $ 0.83 $ 0.51 $ 0.73 Diluted earnings per common share 0.86 0.88 0.82 0.51 0.73   Cash dividends declared per share 0.37 0.37 0.37 0.37 0.35                         Net Interest Margin 4.33 % 4.47 % 4.35 % 4.18 % 3.99 %  

Interest Income from Accretion Related to Fair Value Adjustments Recorded as a Result of Acquisition

$ 3,899 $ 5,046 $ 3,517 $ 2,181 $ 1,658   CITY HOLDING COMPANY AND SUBSIDIARIES Non-Interest Income and Non-Interest Expense (Unaudited) ($ in 000s)             Quarter Ended December 31 September 30 June 30 March 31 December 31   2013       2013       2013       2013       2012   Non-Interest Income: Service charges $ 6,995 $ 7,169 $ 6,897 $ 6,535 $ 7,113 Bankcard revenue 3,403 3,468 3,450 3,199 3,101 Insurance commissions 1,269 1,365 1,358 1,840 1,289 Trust and investment management fee income 1,093 939 964 990 1,112 Bank owned life insurance 976 805 799 812 754 Other income   541       734       775       866       897 Subtotal 14,277 14,480 14,243 14,242 14,266 Total investment securities impairment losses - - - - -

Noncredit impairment losses recognized in other comprehensive income

  -       -       -       -       - Net investment securities impairment losses - - - - - Gain (loss) on sale of investment securities   671       -       9       84       - Total Non-Interest Income $ 14,948     $ 14,480     $ 14,252     $ 14,326     $ 14,266   Non-Interest Expense: Salaries and employee benefits $ 12,910 $ 12,930 $ 12,640 $ 12,949 $ 11,301 Occupancy and equipment 2,529 2,409 2,500 2,472 2,147 Depreciation 1,468 1,437 1,453 1,399 1,234 FDIC insurance expense 500 500 341 511 407 Advertising 408 712 819 735 596 Bankcard expenses 697 680 766 727 628 Postage, delivery and statement mailings 521 541 552 605 514 Office supplies 408 416 463 441 412 Legal and professional fees 778 591 535 435 437 Telecommunications 581 721 465 445 405 Repossessed asset (gains) losses, net of expenses (72 ) 896 (23 ) (155 ) 146 Merger related expenses 72 (150 ) 65 5,540 373 Other expenses   3,390       2,982       3,383       3,299       2,673 Total Non-Interest Expense $ 24,190     $ 24,665     $ 23,959     $ 29,403     $ 21,273                             Employees (Full Time Equivalent) 923 924 931 932 843 Branch Locations 83 83 83 83 73   CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000s)   December 31   December 31   2013       2012   (Unaudited) Assets Cash and due from banks $ 75,999 $ 58,718 Interest-bearing deposits in depository institutions 9,877 16,276 Federal funds sold   -       10,000   Cash and cash equivalents 85,876 84,994   Investment securities available-for-sale, at fair value 352,660 377,122 Investment securities held-to-maturity, at amortized cost 4,117 13,454 Other securities   13,343       11,463   Total investment securities 370,120 402,039   Gross loans 2,604,782 2,146,369 Allowance for loan losses   (20,575 )     (18,809 ) Net loans 2,584,207 2,127,560   Bank owned life insurance 92,047 81,901 Premises and equipment, net 82,548 72,728 Accrued interest receivable 6,866 6,692 Net deferred tax assets 42,165 32,737 Intangible assets 76,557 65,057 Other assets   27,852       43,758   Total Assets $ 3,368,238     $ 2,917,466     Liabilities Deposits: Noninterest-bearing $ 493,228 $ 429,969 Interest-bearing: Demand deposits 601,527 553,132 Savings deposits 612,772 506,869 Time deposits   1,077,606       919,346   Total deposits 2,785,133 2,409,316 Short-term borrowings Customer repurchase agreements 137,798 114,646 Long-term debt 16,495 16,495 Other liabilities   40,736       43,735   Total Liabilities 2,980,162 2,584,192   Stockholders' Equity Preferred stock, par value $25 per share: 500,000 shares authorized; none issued - -

Common stock, par value $2.50 per share: 50,000,000 shares authorized; 18,499,282 shares issued at December 31, 2013 and December 31, 2012 less 2,748,922 and 3,665,999 shares in treasury, respectively

46,249 46,249 Capital surplus 107,596 103,524 Retained earnings 334,423 309,270 Cost of common stock in treasury (95,202 ) (124,347 ) Accumulated other comprehensive loss: Unrealized gain on securities available-for-sale (2,110 ) 3,573 Underfunded pension liability   (2,880 )     (4,995 ) Total Accumulated Other Comprehensive Loss   (4,990 )     (1,422 ) Total Stockholders' Equity   388,076       333,274   Total Liabilities and Stockholders' Equity $ 3,368,238     $ 2,917,466           CITY HOLDING COMPANY AND SUBSIDIARIES Investment Portfolio (Unaudited) ($ in 000s)   Original Cost

Credit-RelatedNet InvestmentImpairmentLosses through December 31, 2013

Unrealized Gains(Losses)

Carrying Value   US Government Agencies $ 2,317 $ - $ 48 $ 2,365 Mortgage Backed Securities 284,837 - (4,531 ) 280,306 Municipal Bonds 41,027 - 520 41,547 Pooled Bank Trust Preferreds 23,358 (20,171 ) 512 3,699

Single Issuer Bank Trust Preferreds, Subdebt of Financial Institutions, and Bank Holding Company Preferred Stocks

 

24,910 (1,015 ) (1,193 ) 22,702 Money Markets and Mutual Funds 1,525 - (40 ) 1,485 Federal Reserve Bank and FHLB stock 13,343 - - 13,343 Community Bank Equity Positions   8,032   (4,698 )   1,339     4,673 Total Investments $ 399,349 $ (25,884 ) $ (3,345 ) $ 370,120   CITY HOLDING COMPANY AND SUBSIDIARIES Loan Portfolio (Unaudited) ($ in 000s)         December 31 September 30 June 30 March 31 December 31   2013     2013     2013     2013     2012   Residential real estate (1) $ 1,207,150 $ 1,188,841 $ 1,170,123 $ 1,149,411 $ 1,031,435 Home equity - junior liens 143,390 140,887 138,367 138,333 143,110 Commercial and industrial 164,484 151,185 138,299 149,677 108,739 Commercial real estate (2) 1,039,451 1,022,278 1,023,311 1,001,453 821,970 Consumer 46,402 50,757 54,242 55,274 36,564 DDA overdrafts   3,905     4,508     3,103     2,876     4,551 Gross Loans $ 2,604,782   $ 2,558,456   $ 2,527,445   $ 2,497,024   $ 2,146,369   Construction loans included in: (1) - Residential real estate loans $ 17,337 $ 14,808 $ 15,889 $ 16,884 $ 15,408 (2) - Commercial real estate loans $ 24,026 $ 17,391 $ 24,726 $ 26,163 $ 15,352   CITY HOLDING COMPANY AND SUBSIDIARIES Acquisition Activity - Accretion (Unaudited) ($ in millions)           The following table presents the actual and forecasted accretion related to the fair value adjustments on net interest income recorded as a result of the Virginia Savings Bancorp (VSB) and Community Financial Corporation (Community) acquisitions.     VSB Community Loan

Certificates of

Loan Certificates of Year Ended: Accretion(a)   Deposit(a) Accretion(a)   Deposit(a) Total   1Q 2013 $ 985 $ 178 $ 858 $ 160 $ 2,181 2Q 2013 1,334 122 1,887 174 3,517 3Q 2013 632 121 4,119 174 5,046 4Q 2013 561 121 3,043 174 3,899 2014 922 536 4,104 250 5,812 2015 564 518 3,040 160 4,282 2016 325 497 1,477 44 2,343  

a - 2013 amounts are based on actual results. 2014, 2015 and 2016 amounts are based on estimated amounts.

 

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

 

CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s)         Three Months Ended December 31, 2013 2012 Average Yield/ Average Yield/ Balance   Interest   Rate     Balance   Interest   Rate     Assets: Loan portfolio (1): Residential real estate (2) $ 1,334,624 $ 13,949 4.15 % $ 1,152,921 $ 12,267 4.23 % Commercial, financial, and agriculture (3) 1,182,386 15,924 5.34 % 901,966 11,420 5.04 % Installment loans to individuals (4), (5) 60,877 1,465 9.55 % 49,596 1,007 8.08 % Previously securitized loans (6) ***     563   ***     ***     894   ***   Total loans 2,577,887 31,901 4.91 % 2,104,483 25,588 4.84 % Securities: Taxable 331,134 2,924 3.50 % 380,897 2,940 3.07 % Tax-exempt (7)   28,430     449   6.27 %     35,847     524   5.82 % Total securities 359,564 3,373 3.72 % 416,744 3,464 3.31 % Deposits in depository institutions 8,194 - - 7,431 - - Federal funds sold   -     -   -       32,876     15   0.18 % Total interest-earning assets 2,945,645 35,274 4.75 % 2,561,534 29,067 4.51 % Cash and due from banks 140,269 70,075 Bank premises and equipment 82,738 72,702 Other assets 250,082 230,098 Less: Allowance for loan losses   (20,415 )             (19,551 )         Total assets $ 3,398,319             $ 2,914,858             Liabilities: Interest-bearing demand deposits 597,221 176 0.12 % 540,107 165 0.12 % Savings deposits 607,522 218 0.14 % 498,027 183 0.15 % Time deposits (8) 1,086,288 2,474 0.90 % 923,025 2,766 1.19 % Short-term borrowings 145,491 94 0.26 % 128,706 83 0.26 % Long-term debt   16,495     153   3.68 %     16,495     163   3.93 % Total interest-bearing liabilities 2,453,017 3,115 0.50 % 2,106,360 3,360 0.63 % Noninterest-bearing demand deposits 517,820 434,429 Other liabilities 41,888 39,120 Stockholders' equity   385,594               334,949          

Total liabilities and stockholders' equity

$ 3,398,319             $ 2,914,858           Net interest income     $ 32,159             $ 25,707       Net yield on earning assets         4.33 %           3.99 %  

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

(2) For 2013, interest income on residential real estate loans includes $0.2 million and $0.3 million of accretion related to the fair value adjustments due to the acquisitions of Virginia Savings Bancorp, Inc. and Community Financial Corporation, respectively. For 2012, interest income on residential real estate loans includes $0.1 million of accretion related to the fair value adjustments due to the acquisition of Virginia Savings Bancorp, Inc.

(3) For 2013, interest income on commercial, financial, and agriculture loans includes $0.3 million and $2.4 million of accretion related to the fair value adjustments due to the acquisitions of Virginia Savings Bancorp, Inc. and Community Financial Corporation, respectively. For 2012, interest income on commercial, financial and agricultural loans includes $1.4 million of accretion related to the fair value adjustments due to the acquisition of Virginia Savings Bancorp, Inc.

(4) For 2013, interest income on installment loans to individuals includes $0.1 million and $0.3 million of accretion related to the fair value adjustments due to the acquisitions of Virginia Savings Bancorp, Inc. and Community Financial Corporation, respectively. For 2012, interest income on installment loans to individuals includes $0.1 million of accretion related to the fair value adjustments due to the acquisition of Virginia Savings Bancorp, Inc.

(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 35%.

(8) For 2013, interest expense on time deposits includes $0.1 million and $0.2 million in accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp, Inc. and Community Financial Corporation, respectively. For 2012, interest expense on time deposits includes $0.1 million in accretion of the fair value adjustments related to the acquisition of Virginia Savings Bancorp, Inc.

  CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s)             Twelve Months Ended December 31, 2013 2012 Average Yield/ Average Yield/ Balance     Interest   Rate     Balance     Interest   Rate     Assets: Loan portfolio (1): Residential real estate (2) $ 1,304,741 $ 55,165 4.23 % $ 1,114,653 $ 49,000 4.40 % Commercial, financial, and agriculture (3) 1,154,637 62,679 5.43 % 880,502 40,815 4.64 % Installment loans to individuals (4), (5) 64,377 6,219 9.66 % 46,721 3,311 7.09 % Previously securitized loans (6) ***       2,531   ***     ***       3,306   ***   Total loans 2,523,755 126,594 5.02 % 2,041,876 96,432 4.72 % Securities: Taxable 330,225 10,697 3.24 % 371,092 14,285 3.85 % Tax-exempt (7)   30,635       1,885   6.15 %     38,339       2,218   5.79 % Total securities 360,860 12,582 3.49 % 409,431 16,503 4.03 % Deposits in depository institutions 8,116 - - 7,258 - - Federal funds sold   13,052       22   0.17 %     30,507       53   0.17 % Total interest-earning assets 2,905,783 139,198 4.79 % 2,489,072 112,988 4.54 % Cash and due from banks 154,983 74,193 Bank premises and equipment 82,168 69,772 Other assets 255,544 223,783 Less: Allowance for loan losses   (20,127 )               (19,586 )           Total assets $ 3,378,351               $ 2,837,234               Liabilities: Interest-bearing demand deposits 603,844 712 0.12 % 534,211 697 0.13 % Savings deposits 599,574 864 0.14 % 479,760 759 0.16 % Time deposits (8) 1,103,945 10,782 0.98 % 909,951 12,021 1.32 % Short-term borrowings 127,679 325 0.25 % 121,780 312 0.26 % Long-term debt   16,495       618   3.75 %     16,495       661   4.01 % Total interest-bearing liabilities 2,451,537 13,301 0.54 % 2,062,197 14,450 0.70 % Noninterest-bearing demand deposits 514,210 414,969 Other liabilities 39,502 34,995 Stockholders' equity   373,102                 325,073            

 

Total liabilities and stockholders' equity

$ 3,378,351               $ 2,837,234             Net interest income       $ 125,897               $ 98,538       Net yield on earning assets           4.33 %             3.96 %   (1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.

(2) For 2013, interest income on residential real estate loans includes $1.0 million and $0.8 million of accretion related to the fair value adjustments due to the acquisitions of Virginia Savings Bancorp, Inc. and Community Financial Corporation, respectively. For 2012, interest income on residential real estate loans includes $0.7 million of accretion related to the fair value adjustments due to the acquisition of Virginia Savings Bancorp, Inc.

(3) For 2013, interest income on commercial, financial, and agriculture loans includes $2.4 million and $7.9 million of accretion related to the fair value adjustments due to the acquisitions of Virginia Savings Bancorp, Inc. and Community Financial Corporation, respectively. For 2012, interest income on commercial, financial and agricultural loans includes $1.6 million of accretion related to the fair value adjustments due to the acquisition of Virginia Savings Bancorp, Inc.

(4) Includes the Company’s consumer and DDA overdrafts loan categories.

(5) For 2013, interest income on installment loans to individuals includes $0.1 million and $1.2 million of accretion related to the fair value adjustments due to the acquisitions of Virginia Savings Bancorp, Inc. and Community Financial Corporation, respectively. For 2012, interest income on installment loans to individuals includes $0.1 million of accretion related to the fair value adjustments due to the acquisition of Virginia Savings Bancorp, Inc.

(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 35%.

(8) For 2013, interest expense on time deposits includes $0.5 million and $0.7 million in accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp, Inc. and Community Financial Corporation, respectively. For 2012, interest expense on time deposits includes $0.2 million in accretion of the fair value adjustments related to the acquisition of Virginia Savings Bancorp, Inc.

  CITY HOLDING COMPANY AND SUBSIDIARIES Analysis of Risk-Based Capital (Unaudited) ($ in 000s)             December 31 September 30 June 30 March 31 December 31  

2013 (a)

 

      2013       2013       2013       2012     Tier I Capital: Stockholders' equity $ 388,076 $ 378,042 $ 368,891 $ 365,848 $ 333,274 Goodwill and other intangibles (76,370 ) (76,233 ) (74,455 ) (75,563 ) (64,866 ) Accumulated other comprehensive loss 4,990 6,173 5,540 1,332 1,422 Qualifying trust preferred stock 16,000 16,000 16,000 16,000 16,000 Unrealized loss on AFS securities - (18 ) (11 ) - - Excess deferred tax assets   (8,896 )       (12,495 )     (13,572 )     (17,737 )     (6,577 ) Total tier I capital $ 323,801       $ 311,470     $ 302,394     $ 289,880     $ 279,254                             Total Risk-Based Capital: Tier I capital $ 323,801 $ 311,470 $ 302,394 $ 289,880 $ 279,254 Qualifying allowance for loan losses 20,575 20,606 20,069 19,721 18,809 Unrealized gain on securities   606         722       686       696       -   Total risk-based capital $ 344,982       $ 332,798     $ 323,149     $ 310,297     $ 298,063     Net risk-weighted assets $ 2,498,080 $ 2,460,895 $ 2,450,010 $ 2,436,022 $ 2,152,622                           Ratios: Average stockholders' equity to average assets 11.35 % 11.14 % 10.94 % 10.74 % 11.49 % Tangible capital ratio 9.46 % 9.08 % 8.90 % 8.61 % 9.40 % Risk-based capital ratios: Tier I capital 12.96 % 12.66 % 12.34 % 11.90 % 12.97 % Total risk-based capital 13.81 % 13.52 % 13.19 % 12.74 % 13.85 % Leverage capital 9.77 % 9.43 % 9.12 % 8.98 % 9.82 %     (a) December 31, 2013 risk-based capital ratios are estimated                               CITY HOLDING COMPANY AND SUBSIDIARIES Intangibles (Unaudited) ($ in 000s)   As of and for the Quarter Ended December 31 September 30 June 30 March 31 December 31   2013         2013       2013       2013       2012     Intangibles, net $ 76,557 $ 76,420 $ 74,642 $ 75,750 $ 65,057 Intangibles amortization expense 260 260 260 260 135   CITY HOLDING COMPANY AND SUBSIDIARIES Summary of Loan Loss Experience (Unaudited) ($ in 000s)   Quarter Ended December 31 September 30 June 30 March 31 December 31   2013       2013     2013     2013     2012     Balance at beginning of period $ 20,606 $ 20,069 $ 19,721 $ 18,809 $ 18,986   Charge-offs: Commercial and industrial 268 380 330 62 100 Commercial real estate 1,384 181 419 203 1,744 Residential real estate 583 487 520 591 284 Home equity 17 8 154 116 366 Consumer 128 102 221 3 42 DDA overdrafts   381       415     348     339     394   Total charge-offs 2,761 1,573 1,992 1,314 2,930   Recoveries: Commercial and industrial 33 30 20 1 19 Commercial real estate 116 635 16 18 190 Residential real estate 97 69 20 48 7 Home equity - - - - 6 Consumer 85 25 70 147 45 DDA overdrafts   454       197     203     274     711   Total recoveries 785 956 329 488 978             Net charge-offs 1,976 617 1,663 826 1,952 Provision for loan losses 1,438 1,241 1,834 1,738 1,775 Provision for (recovery of) acquired loans   507       (87 )   177     -     -   Balance at end of period $ 20,575     $ 20,606   $ 20,069   $ 19,721   $ 18,809     Loans outstanding $ 2,604,782     $ 2,558,456   $ 2,527,445   $ 2,497,023   $ 2,146,369   Average loans outstanding   2,577,887       2,536,542     2,513,883     2,465,336     2,104,483   Allowance as a percent of loans outstanding   0.79 %     0.81 %   0.79 %   0.79 %   0.88 % Allowance as a percent of non-performing loans   90.25 %     93.86 %   87.14 %   82.18 %   96.59 %

Net charge-offs (annualized) as a percent of average loans outstanding

  0.31 %     0.10 %   0.26 %   0.13 %   0.37 %

Net charge-offs, excluding overdraft deposit accounts, (annualized) as a percent of average loans outstanding

  0.32 %     0.06 %   0.24 %   0.12 %   0.43 %   CITY HOLDING COMPANY AND SUBSIDIARIES Summary of Non-Performing Assets (Unaudited) ($ in 000s)   December 31 September 30 June 30 March 31 December 31   2013     2013     2013     2013     2012     Nonaccrual loans $ 22,363 $ 21,535 $ 21,847 $ 23,198 $ 19,194 Accruing loans past due 90 days or more   436     418     1,185     799     280   Total non-performing loans 22,799 21,953 23,032 23,997 19,474 Other real estate owned   8,470     7,518     10,837     10,508     8,162   Total non-performing assets $ 31,269   $ 29,471   $ 33,869   $ 34,505   $ 27,636     Non-performing assets as a percent of loans and other real estate owned 1.20 % 1.15 % 1.33 % 1.38 % 1.28 %                 CITY HOLDING COMPANY AND SUBSIDIARIES Summary of Total Past Due Loans (Unaudited) ($ in 000s) Originated December 31 September 30 June 30 March 31 December 31   2013     2013     2013     2013     2012     Residential real estate $ 4,850 $ 5,414 $ 6,525 $ 5,889 $ 5,748 Home equity - junior liens 921 732 655 858 2,893 Commercial and industrial - 5 234 303 496 Commercial real estate 668 612 2,556 1,503 633 Consumer 182 96 103 83 121 DDA overdrafts   393     280     290     337     281   Total past due loans $ 7,014   $ 7,139   $ 10,363   $ 8,973   $ 10,172     Acquired December 31 September 30 June 30 March 31 December 31   2013     2013     2013     2013     2012     Residential real estate $ 1,014 $ 1,032 $ 951 $ 2,037 $ - Home equity - junior liens - 23 - - - Commercial and industrial 80 2,166 2,534 7,783 1,004 Commercial real estate 10,689 7,324 8,019 5,770 1,793 Consumer 695 703 693 864 - DDA overdrafts   -     -     -     -     -   Total past due loans $ 12,478   $ 11,248   $ 12,197   $ 16,454   $ 2,797    

Total

 

        December 31 September 30 June 30 March 31 December 31   2013     2013     2013     2013     2012     Residential real estate $ 5,864 $ 6,446 $ 7,476 $ 7,926 $ 5,748 Home equity - junior liens 921 755 655 858 2,893 Commercial and industrial 80 2,171 2,768 8,086 1,500 Commercial real estate 11,357 7,936 10,575 7,273 2,426 Consumer 877 799 796 947 121 DDA overdrafts   393     280     290     337     281   Total past due loans $ 19,492   $ 18,387   $ 22,560   $ 25,427   $ 12,969     Total past due loans as a percent of loans outstanding 0.75 % 0.72 % 0.89 % 1.02 % 0.60 %                 CITY HOLDING COMPANY AND SUBSIDIARIES Summary of Troubled Debt Restructurings (Unaudited) ($ in 000s)   December 31 September 30 June 30 March 31 December 31   2013     2013     2013     2013     2012     Residential real estate $ 20,345 $ 20,380 $ 21,480 $ 20,136 $ 18,988 Home equity - junior liens 2,873 2,772 2,963 3,025 3,743 Commercial and industrial 88 91 95 101 101 Commercial real estate 1,783 1,567 1,791 1,805 734 Consumer   -     -     -     142     142   Total $ 25,089   $ 24,810   $ 26,329   $ 25,209   $ 23,708       At September 30, 2012, the Company reclassified $21.1 million of loans as TDRs in accordance with recent regulatory guidance. The regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court and the borrower has not reaffirmed the debt.   CITY HOLDING COMPANY AND SUBSIDIARIES Summary of Purchased Credit Impaired Loans (Unaudited) ($ in 000s)           Virginia Savings Acquisition December 31 September 30 June 30 March 31 December 31 2013   2013   2013   2013   2012   Contractual required principal and interest 3,932 5,253 7,330 8,789 10,759 Carrying value 3,115 4,248 5,421 5,886 7,018   Community Financial Acquisition December 31 September 30 June 30 March 31 December 31 2013   2013   2013   2013   2012   Contractual required principal and interest 40,639 40,896 47,850 ** - Carrying value 26,865 24,958 27,845 ** -     ** Comparative information was not available from the Company's third party service provider

City Holding CompanyCharles R. Hageboeck, Chief Executive Officer and President304-769-1102