City Holding Company Announces Record Annual Earnings

Share Name	Share Symbol	Market	Type
City Holding Company	NASDAQ:CHCO	NASDAQ	Common Stock

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	114.61	45.85	183.37				1	13:09:21

City (NASDAQ:CHCO)
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From Jul 2019 to Jul 2024

City Holding Company, “the Company” (NASDAQ:CHCO), a $3.7 billion bank holding company headquartered in Charleston, today announced record net income of $54.1 million, or $3.53 per diluted share, for the year ended December 31, 2015. City’s net income increased $1.1 million from 2014 due primarily to the gain recognized from the sale of its insurance operations, “CityInsurance”, effective January 1, 2015. For 2015, the Company achieved a return on assets of 1.52%, a return on tangible equity of 15.8%, a net interest margin of 3.76%, and an efficiency ratio of 53.7%.

For the fourth quarter of 2015 the Company reported net income of $13.5 million, or $0.88 per diluted share. The Company achieved a return on assets of 1.48%, a return on tangible equity of 15.5%, a net interest margin of 3.62%, and an efficiency ratio of 48.6% in the fourth quarter of 2015.

Net Interest Income

The Company’s tax equivalent net interest income decreased $2.4 million, or 2.0%, from $118.2 million in 2014 to $115.8 million in 2015. This decrease is due primarily to a decrease of 25 basis points in the yield on interest-earning assets from 4.39% in 2014 to 4.14% in 2015. During 2015, the Company continued to originate a significant portion of its commercial loans based on WSJ Prime or LIBOR and has elected to maintain fixed rate investment security balances below 15% of total assets. The Company believes that these measures will position its balance sheet to benefit from an increasing rate environment. The Company’s reported net interest margin decreased from 3.98% for the year ended December 31, 2014 to 3.76% for the year ended December 31, 2015. Excluding the favorable impact of the accretion from fair value adjustments on recent acquisitions, the net interest margin would have been 3.54% for the year ended December 31, 2015 and 3.75% for the year ended December 31, 2014. The decrease was primarily caused by loan yields compressing from 4.27% for the year ended December 31, 2014 to 4.05% for the year ended December 31, 2015.

During the fourth quarter of 2015, the Company’s tax equivalent net interest income increased $1.4 million, or 4.9%, to $29.4 million from $28.0 million during the third quarter of 2015. This increase was largely due to City’s acquisition of three branches in Lexington, KY, from American Founders Bank, Inc. (“AFB”) in November 2015. In addition, strong originations of residential real estate loans and investment purchases also contributed to the increase. The Company’s reported net interest margin remained stable at 3.62% for both the third quarter of 2015 and the fourth quarter of 2015. Excluding the favorable impact of the accretion from the fair value adjustments ($1.6 million for the quarter ended December 31, 2015 and $1.1 million for the quarter ended September 30, 2015), the net interest margin would have been 3.42% for the quarter ended December 31, 2015 and 3.48% for the quarter ended September 30, 2015.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned decreased from 0.90% at December 31, 2014 to 0.83% at December 31, 2015. Total non-performing assets increased modestly from $23.9 million at December 31, 2014 to $24.0 million at December 31, 2015. Excluded from these ratios and balances are purchased credit-impaired loans which continue to perform in accordance with the estimated expectations. Such loans would be considered nonperforming loans if any such loan’s performance deteriorates below the initial expectations. Total past due loans decreased from $10.7 million, or 0.40% of total loans outstanding, at December 31, 2014 to $9.2 million, or 0.32% of total loans outstanding, at December 31, 2015. Acquired past due loans represent approximately 18% of total past due loans and have declined $14.8 million, or 90%, since March 31, 2013.

As a result of the Company’s quarterly analysis of the adequacy of the Allowance for Loan Losses (“ALLL”), the Company recorded a provision for loan losses of $2.8 million in the fourth quarter of 2015 and $7.0 million for the year ended December 31, 2015 compared to $0.4 million and $4.1 million of the comparable periods in 2014. The provision for loan losses recorded in 2015 reflects the impact of several factors, including difficulties encountered by a certain commercial borrower of the Company engaged in the mining and energy sectors (per the North American Industry Classification System (NAICS)) which filed for bankruptcy during 2015, the modest growth in the loan portfolio, and changes in the quality of the portfolio. Changes in the amount of the provision and related allowance are based on the Company’s detailed systematic methodology and are directionally consistent with changes in the composition and quality of the Company’s loan portfolio. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio.

Non-interest Income

During 2015, the Company realized investment gains of $2.1 million from the call of trust preferred securities which represented a partial recovery of impairment charges previously recognized. In addition, the Company sold its insurance operations, CityInsurance, effective January 1, 2015, which resulted in a pre-tax gain of $11.1 million. Exclusive of these gains, non-interest income decreased $3.6 million to $54.0 million for the year ended December 31, 2015 as compared to $57.6 million for the year ended December 31, 2014. This decrease was primarily attributable to the sale of CityInsurance which had insurance commission revenues of $6.0 million in 2014. Additionally, service charges decreased $0.3 million, or 1.0%, from $26.6 million in 2014 to $26.3 million in 2015. These decreases were partially offset by an increase in other income of $1.0 million primarily due to mortgage banking activities, an increase of $0.8 million, or 5.5%, in bankcard revenues to $15.9 million, and an increase of $0.5 million, or 11.1%, in trust revenues to $5.1 million.

Exclusive of net investment securities gains, total non-interest income decreased $0.4 million from $14.5 million for the fourth quarter of 2014 to $14.1 million for the fourth quarter of 2015. This decrease was due to the sale of CityInsurance which had insurance commission revenues of $1.2 million in the fourth quarter of 2014. This decrease was partially offset by an increase in other income of $0.2 million, an increase of $0.2 million in trust revenues, and a $0.2 million increase in bankcard revenues.

Non-interest Expenses

During 2015, the Company recognized $0.6 million of acquisition and integration expenses associated with the completed acquisition of three branches from AFB. Excluding acquisition related expenses, noninterest expenses decreased $2.7 million from $95.0 million for the year ended December 31, 2014 to $92.3 million for the year ended December 31, 2015. Salaries and employee benefits decreased $3.9 million from 2014 largely as a result of the sale of CityInsurance and an overall reduction of retail branch staff. Additionally, advertising expenses decreased $0.8 million from 2014. These decreases were partially offset by increases in other expenses of $1.3 million and repossessed asset losses of $0.7 million. Other expenses increased primarily as a result of the previously disclosed write down of the Company’s partnership investment in Mountaineer Capital LP of $1.45 million in 2015.

Exclusive of acquisition and integration related expenses of $0.3 million, total non-interest expenses decreased $2.2 million, from $23.0 million for the fourth quarter of 2014 to $20.8 million. This decrease was due to a decrease in salaries and employee benefits ($1.2 million) due primarily to the sale of CityInsurance and lower health insurance expenses, other expenses ($0.6 million), and advertising expenses ($0.5 million).

Balance Sheet Trends

Loans increased $211.3 million (8.0%) from December 31, 2014 to $2.86 billion at December 31, 2015 primarily due to the acquisition of three branches from AFB ($114.4 million). Excluding the acquisition of the three branches from AFB, loans increased $96.9 million (3.7%) from December 31, 2014 to $2.75 billion at December 31, 2015. Increases in residential real estate loans of $81.2 million (6.3%) and commercial real estate loans of $47.9 million (4.7%) were partially offset by decreases in commercial and industrial (“C&I”) loans ($23.8 million), home equity loans ($4.8 million), and consumer loans of ($4.2 million).

Total average depository balances increased $146.7 million, or 5.2%, from the quarter ended December 31, 2014 to the quarter ended December 31, 2015. This growth was partially attributable to deposits acquired from the three branches acquired from AFB ($74.8 million). Exclusive of this contribution, the Company had increases in savings deposits ($63.0 million), noninterest-bearing demand deposits ($37.6 million), and interest-bearing demand deposits ($23.2 million) which were partially offset by a decrease in time deposits ($51.9 million).

Income Tax Expense

The Company’s effective income tax rate for the year ended December 31, 2015 was 34.4% compared to 31.4% for the year ended December 31, 2014. During the years ended December 31, 2015 and December 31, 2014, the Company reduced income tax expense by $0.6 million and $1.8 million, respectively, due to the recognition of previously unrecognized tax positions. In addition, as previously noted, the Company sold CityInsurance in the first quarter of 2015. As a result of differences between the book and tax basis of the assets that were sold, the Company’s income tax expense increased by $1.1 million. Exclusive of these items, the Company’s tax rate from operations was 33.6% and 33.8% for the year ended December 31, 2015 and December 31, 2014, respectively.

The Company’s effective income tax rate for the quarter ended December 31, 2015 was 30.0% compared to 29.1% for the quarter ended December 31, 2014. During the quarters ended December 31, 2015, and December 31, 2014, the Company reduced income tax expense by $0.6 million and $1.0 million, respectively, due to the recognition of previously unrecognized tax positions resulting from the close of the statute of limitations for previous tax years. Exclusive of these items, the Company’s tax rate from operations was 33.6% and 33.8% for the quarters ended December 31, 2015 and December 31, 2014, respectively.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 92.8% and the loan to asset ratio was 77.1% at December 31, 2015. The Company maintained investment securities totaling 12.7% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 55.7% of assets at December 31, 2015. Time deposits fund 27.4% of assets at December 31, 2015, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.

The Company continues to be strongly capitalized. The Company’s tangible equity ratio was 9.3% at December 31, 2015 compared to 9.4% at December 31, 2014. At December 31, 2015, City National Bank’s Leverage Ratio is 8.14%, its Common Equity Tier I ratio is 10.53%, its Tier I Capital ratio is 11.48%, and its Total Risk-Based Capital ratio is 12.28%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory capital designation.

On December 16, 2015, the Board approved a quarterly cash dividend of $0.42 cents per share payable January 29, 2016, to shareholders of record as of January 15, 2016. During the year ended December 31, 2015, the Company repurchased 150,000 common shares at a weighted average price of $46.91 as part of a one million share repurchase plan authorized by the Board of Directors in September 2014. As of December 31, 2015, the Company could repurchase approximately 633,000 shares under the current plan.

As previously reported, effective December 31, 2015, Philip L. McLaughlin resigned as Chairman of the Board of Directors of City Holding Company. The Company’s Board elected C. Dallas Kayser to succeed Mr. McLaughlin as Chairman of the Board.

City Holding Company is the parent company of City National Bank of West Virginia. City National operates 85 branches across West Virginia, Virginia, Kentucky, and Ohio.

Forward-Looking Information

This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such information involves risks and uncertainties that could result in the Company's actual results differing materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (12) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; (13) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject the Company and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses; (14) the impact of new minimum capital thresholds established as a part of the implementation of Basel III; and (15) other risk factors relating to the banking industry or the Company as detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those risk factors included in the disclosures under the heading “ITEM 1A Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its December 31, 2015 Form 10-K. The Company will continue to evaluate the impact of any subsequent events on the preliminary December 31, 2015 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights (Unaudited) Three Months Ended December 31, Percent 2015 2014 Change Earnings ($000s, except per share data): Net Interest Income (FTE) $ 29,391 $ 29,405 (0.05 )% Net Income available to common shareholders 13,515 14,530 (6.99 )% Earnings per Basic Share 0.88 0.95 (7.42 )% Earnings per Diluted Share 0.88 0.95 (7.00 )% Key Ratios (percent): Return on Average Assets 1.48 % 1.69 % (12.05 )% Return on Average Tangible Equity 15.49 % 18.26 % (15.14 )% Net Interest Margin 3.62 % 3.89 % (6.90 )% Efficiency Ratio 48.55 % 52.14 % (6.89 )% Average Shareholders' Equity to Average Assets 11.65 % 11.40 % 2.21 % Consolidated Risk Based Capital Ratios (a): CET I 13.65 %

N/A Tier I 14.28 % 13.36 % 6.89 % Total 15.10 % 14.19 % 6.41 % Tangible Equity to Tangible Assets 9.34 % 9.35 % (0.05 )% Common Stock Data: Cash Dividends Declared per Share $ 0.42 $ 0.40 5.00 % Book Value per Share 27.61 25.79 7.06 % Tangible Book Value per Share 22.36 20.90 6.99 % Market Value per Share: High 51.12 46.95 8.88 % Low 43.85 41.88 4.70 % End of Period 45.64 46.53 (1.91 )% Price/Earnings Ratio (b) 12.94 12.22 5.95 % Twelve Months Ended December 31, Percent 2015 2014 Change Earnings ($000s, except per share data): Net Interest Income (FTE) $ 115,856 $ 118,221 (2.00 )% Net Income available to common shareholders 54,097 52,962 2.14 % Earnings per Basic Share 3.54 3.40 3.96 % Earnings per Diluted Share 3.53 3.38 4.21 % Key Ratios (percent): Return on Average Assets 1.52 % 1.56 % (2.44 )% Return on Average Tangible Equity 15.77 % 16.49 % (4.33 )% Net Interest Margin 3.76 % 3.98 % (5.69 )% Efficiency Ratio (c) 53.67 % 53.72 % (0.09 )% Average Shareholders' Equity to Average Assets 11.64 % 11.63 % 0.12 % Common Stock Data: Cash Dividends Declared per Share $ 1.68 $ 1.60 5.00 % Market Value per Share: High 51.73 46.95 10.18 % Low 41.76 41.20 1.36 % Price/Earnings Ratio (b) 12.91 13.68 (5.65 )% (a) December 31, 2015 risk-based capital ratios are estimated. (b) December 31, 2015 price/earnings ratio computed based on annualized fourth quarter 2015 earnings. (c) The December 31, 2015 YTD efficiency ratio calculation excludes the gain on sale of insurance division. (*) Basel III CET 1 ratio requirements are effective beginning January 1, 2015 and are not required for prior periods. CITY HOLDING COMPANY AND SUBSIDIARIES Financial Highlights (Unaudited)

Book Value and Market Price Range per Share

Market Price

Book Value per Share

Range per Share March 31 June 30 September 30 December 31 Low

High

2011 $ 20.39 $ 20.58 $ 20.86 $ 21.05 $ 26.06 $ 37.22 2012 21.46 21.63 22.14 22.47 30.96 37.16 2013 23.36 23.52 24.03 24.61 36.07 49.21 2014 25.05 25.45 25.52 25.85 41.20 46.95 2015 26.63 26.92 27.34 27.61 43.85 51.12 Earnings per Basic Share

Quarter Ended

March 31 June 30 September 30 December 31 Year-to-Date 2011 $ 0.62 $ 0.65 $ 0.77 $ 0.65 $ 2.68 2012 0.68 0.50 0.71 0.73 2.63 2013 0.51 0.83 0.89 0.84 3.07 2014 0.87 0.81 0.76 0.95 3.40 2015 1.18 0.78 0.69 0.88 3.54 Earnings per Diluted Share

Quarter Ended

March 31 June 30 September 30 December 31 Year-to-Date 2011 $ 0.62 $ 0.64 $ 0.76 $ 0.65 $ 2.67 2012 0.67 0.50 0.71 0.73 2.61 2013 0.51 0.82 0.88 0.83 3.04 2014 0.86 0.80 0.76 0.95 3.38 2015 1.17 0.78 0.69 0.88 3.53 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) ($ in 000s, except per share data) Three Months Ended December 31, 2015 2014 Interest Income Interest and fees on loans $ 29,032 $ 29,011 Interest on investment securities: Taxable 2,856 2,969 Tax-exempt 334 302 Total Interest Income 32,222 32,282 Interest Expense Interest on deposits 2,760 2,792 Interest on short-term borrowings 91 96 Interest on long-term debt 159 153 Total Interest Expense 3,010 3,041 Net Interest Income 29,212 29,241 Provision for loan losses 2,813 384 Net Interest Income After Provision for Loan Losses 26,399 28,857 Non-Interest Income Gains on sale of investment securities - 184 Service charges 6,893 6,750 Bankcard revenue 3,923 3,744 Insurance commissions - 1,238 Trust and investment management fee income 1,547 1,363 Bank owned life insurance 898 778 Other income 813 612 Total Non-Interest Income 14,074 14,669 Non-Interest Expense Salaries and employee benefits 11,296 12,489 Occupancy and equipment 2,583 2,449 Depreciation 1,539 1,534 FDIC insurance expense 443 448 Advertising 264 726 Bankcard expenses 778 948 Postage, delivery, and statement mailings 532 549 Office supplies 273 360 Legal and professional fees 662 552 Telecommunications 409 522 Repossessed asset losses, net of expenses 217 27 Merger related expenses 315 - Other expenses 1,854 2,431 Total Non-Interest Expense 21,165 23,035 Income Before Income Taxes 19,308 20,491 Income tax expense 5,793 5,961 Net Income Available to Common Shareholders $ 13,515 $ 14,530 Distributed earnings allocated to common shareholders $ 6,303 $ 5,996 Undistributed earnings allocated to common shareholders 7,059 8,378 Net earnings allocated to common shareholders $ 13,362 $ 14,374 Average common shares outstanding 15,158 15,096 Effect of dilutive securities: Employee stock options and warrants 17 86 Shares for diluted earnings per share 15,175 15,182 Basic earnings per common share $ 0.88 $ 0.95 Diluted earnings per common share $ 0.88 $ 0.95 Dividends declared per common share $ 0.42 $ 0.40 Comprehensive Income $ 13,134 $ 13,292 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) ($ in 000s, except per share data) Twelve months ended December 31, 2015 2014 Interest Income Interest and fees on loans $ 115,107 $ 116,658 Interest on investment securities: Taxable 10,830 11,766 Tax-exempt 1,137 1,142 Total Interest Income 127,074 129,566 Interest Expense Interest on deposits 10,886 11,012 Interest on short-term borrowings 327 342 Interest on long-term debt 617 606 Total Interest Expense 11,830 11,960 Net Interest Income 115,244 117,606 Provision for loan losses 6,988 4,054 Net Interest Income After Provision for Loan Losses 108,256 113,552 Non-Interest Income Gains on sale of investment securities 2,130 1,156 Service charges 26,316 26,583 Bankcard revenue 15,894 15,063 Insurance commissions - 5,978 Trust and investment management fee income 5,124 4,614 Bank owned life insurance 3,374 3,070 Gain on sale of insurance division 11,084 - Other income 3,284 2,258 Total Non-Interest Income 67,206 58,722 Non-Interest Expense Salaries and employee benefits 47,847 51,749 Occupancy and equipment 10,277 9,990 Depreciation 6,088 6,087 FDIC insurance expense 1,794 1,647 Advertising 2,446 3,274 Bankcard expenses 3,262 3,555 Postage, delivery, and statement mailings 2,123 2,211 Office supplies 1,350 1,595 Legal and professional fees 2,391 2,049 Telecommunications 1,765 1,876 Repossessed asset losses, net of expenses 1,264 579 Merger related expenses 598 - Other expenses 11,746 10,429 Total Non-Interest Expense 92,951 95,041 Income Before Income Taxes 82,511 77,233 Income tax expense 28,414 24,271 Net Income Available to Common Shareholders $ 54,097 $ 52,962 Distributed earnings allocated to common shareholders $ 25,212 $ 23,984 Undistributed earnings allocated to common shareholders 28,272 28,416 Net earnings allocated to common shareholders $ 53,484 $ 52,400 Average common shares outstanding 15,123 15,403 Effect of dilutive securities: Employee stock options and warrants 48 85 Shares for diluted earnings per share 15,171 15,488 Basic earnings per common share $ 3.54 $ 3.40 Diluted earnings per common share $ 3.53 $ 3.38 Dividends declared per common share $ 1.68 $ 1.60 Comprehensive Income $ 54,315 $ 53,793 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity (Unaudited) ($ in 000s) Three Months Ended December 31, 2015 December 31, 2014 Balance at October 1 $ 418,767 $ 391,673 Net income 13,515 14,530 Other comprehensive income: Change in unrealized gain (loss) on securities available-for-sale (862 ) 1,232 Change in underfunded pension liability 481 (2,470 ) Cash dividends declared ($0.42/share) and ($0.40/share), respectively (6,376 ) (6,040 ) Issuance of stock award shares, net 363 326 Exercise of 9,750 stock options 330 - Exercise of 1,000 stock options - 26 Purchase of 150,385 common shares of treasury (7,055 ) - Purchase of 193,943 common shares of treasury - (8,424 ) Balance at December 31 $ 419,163 $ 390,853 Twelve Months Ended December 31, 2015 December 31, 2014 Balance at January 1 $ 390,853 $ 387,623 Net income 54,097 52,962 Other comprehensive income: Change in unrealized gain (loss) on securities available-for-sale (263 ) 3,301 Change in underfunded pension liability 481 (2,470 ) Cash dividends declared ($1.68/share) and ($1.60/share), respectively (25,618 ) (24,721 ) Issuance of stock award shares, net 1,793 1,535 Exercise of 81,500 stock options 2,979 - Exercise of 20,000 stock options - 580 Exercise of 61,796 warrants 1,896 - Purchase of 150,385 common shares of treasury (7,055 )

Purchase of 650,799 common shares of treasury - (27,957 ) Balance at December 31 $ 419,163 $ 390,853 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 2015 2015 2015 2015 2014 Interest income $ 32,222 $ 30,768 $ 31,720 $ 32,364 $ 32,282 Taxable equivalent adjustment 179 147 144 142 164 Interest income (FTE) 32,401 30,915 31,864 32,506 32,446 Interest expense 3,010 2,910 2,937 2,973 3,041 Net interest income 29,391 28,005 28,927 29,533 29,405 Provision for loan losses 2,813 451 2,836 888 384 Net interest income after provision for loan losses 26,578 27,554 26,091 28,645 29,021 Noninterest income 14,074 13,706 15,405 24,021 14,669 Noninterest expense 21,165 25,377 23,244 23,165 23,035 Income before income taxes 19,487 15,883 18,252 29,501 20,655 Income tax expense 5,793 5,129 6,125 11,367 5,961 Taxable equivalent adjustment 179 147 144 142 164 Net income $ 13,515 $ 10,607 $ 11,983 $ 17,992 $ 14,530 Distributed earnings allocated to common shareholders $ 6,303 $ 6,362 $ 6,344 $ 6,315 $ 5,996 Undistributed earnings allocated to common shareholders 7,059 4,125 5,505 11,468 8,378 Net earnings allocated to common shareholders $ 13,362 $ 10,487 $ 11,849 $ 17,783 $ 14,374 Average common shares outstanding 15,158 15,178 15,104 15,067 15,096 Effect of dilutive securities: Employee stock options and warrants 17 20 23 82 86 Shares for diluted earnings per share 15,175 15,198 15,127 15,149 15,182 Basic earnings per common share $ 0.88 $ 0.69 $ 0.78 $ 1.18 $ 0.95 Diluted earnings per common share 0.88 0.69 0.78 1.17 0.95 Cash dividends declared per share 0.42 0.42 0.42 0.42 0.40 Net Interest Margin 3.62 % 3.62 % 3.82 % 3.99 % 3.89 % Interest Income from Accretion Related to Fair Value Adjustments Recorded as a Result of Acquisition $ 1,572 $ 1,056 $ 1,607 $ 2,450 $ 1,307 Net Interest Margin (excluding accretion) 3.42 % 3.48 % 3.60 % 3.66 % 3.71 % 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 2015 2015 2015 2015 2014 Non-Interest Income: Service charges $ 6,893 $ 6,907 $ 6,589 $ 5,927 $ 6,750 Bankcard revenue 3,923 3,895 4,002 4,074 3,744 Insurance commissions - - - - 1,238 Trust and investment management fee income 1,547 1,176 1,201 1,200 1,363 Bank owned life insurance 898 929 783 764 778 Gain on sale of insurance division - - - 11,084 - Other income 813 799 714 958 612 Subtotal 14,074 13,706 13,289 24,007 14,485 Gains on sale of investment securities - - 2,116 14 184 Total Non-Interest Income $ 14,074 $ 13,706 $ 15,405 $ 24,021 $ 14,669 Non-Interest Expense: Salaries and employee benefits $ 11,296 $ 12,179 $ 12,193 $ 12,179 $ 12,489 Occupancy and equipment 2,583 2,575 2,529 2,590 2,449 Depreciation 1,539 1,522 1,516 1,511 1,534 FDIC insurance expense 443 456 445 450 448 Advertising 264 777 701 704 726 Bankcard expenses 778 785 829 870 948 Postage, delivery and statement mailings 532 523 507 561 549 Office supplies 273 384 347 346 360 Legal and professional fees 662 620 542 567 552 Telecommunications 409 418 463 475 522

Repossessed asset losses, net of expenses

217 492 335 220 27 Merger related expenses 315 175 108 - - Other expenses 1,854 4,471 2,729 2,692 2,431 Total Non-Interest Expense $ 21,165 $ 25,377 $ 23,244 $ 23,165 $ 23,035 Employees (Full Time Equivalent) 853 828 844 845 889 Branch Locations 85 82 82 82 82 CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000s) December 31, 2015 December 31, 2014 (Unaudited) Assets Cash and due from banks $ 58,829 $ 138,503 Interest-bearing deposits in depository institutions 11,284 9,725 Cash and cash equivalents 70,113 148,228 Investment securities available-for-sale, at fair value 369,466 254,043 Investment securities held-to-maturity, at amortized cost 88,937 90,786 Other securities 12,915 9,857 Total investment securities 471,318 354,686 Gross loans 2,863,327 2,652,066 Allowance for loan losses (20,044 ) (20,150 ) Net loans 2,843,283 2,631,916 Bank owned life insurance 97,919 95,116 Premises and equipment, net 77,271 77,988 Accrued interest receivable 7,432 6,826 Net deferred tax assets 30,781 36,766 Intangible assets 79,792 74,198 Other assets 34,144 35,909 Total Assets $ 3,712,053 $ 3,461,633 Liabilities Deposits: Noninterest-bearing $ 621,073 $ 545,465 Interest-bearing: Demand deposits 679,735 639,932 Savings deposits 765,611 660,727 Time deposits 1,017,556 1,026,663 Total deposits 3,083,975 2,872,787 Short-term borrowings Federal Funds purchased 13,000 - Customer repurchase agreements 141,869 134,931 Long-term debt 16,495 16,495 Other liabilities 37,551 46,567 Total Liabilities 3,292,890 3,070,780 Stockholders' Equity Preferred stock, par value $25 per share: 500,000 shares authorized; none issued - - Common stock, par value $2.50 per share: 50,000,000 shares authorized; 18,499,282 shares issued at December 31, 2015 and December 31, 2014 less 3,319,067 and 3,345,590 shares in treasury, respectively 46,249 46,249 Capital surplus 106,269 107,370 Retained earnings 390,690 362,211 Cost of common stock in treasury (120,104 ) (120,818 ) Accumulated other comprehensive loss: Unrealized gain on securities available-for-sale 927 1,190 Underfunded pension liability (4,868 ) (5,349 ) Total Accumulated Other Comprehensive Loss (3,941 ) (4,159 ) Total Stockholders' Equity 419,163 390,853 Total Liabilities and Stockholders' Equity $ 3,712,053 $ 3,461,633 CITY HOLDING COMPANY AND SUBSIDIARIES Investment Portfolio (Unaudited) ($ in 000s) Original Cost

Credit-Related

Net Investment

Impairment

Losses through

December 31,

2015

Unrealized Gains

(Losses)

Carrying Value US Government Agencies $ 5 $ - $ - $ 5 Mortgage Backed Securities 374,092 - 273 374,365 Municipal Bonds 49,725 - 972 50,697 Pooled Bank Trust Preferreds 18,381 (16,571 ) 35 1,845 Single Issuer Bank Trust Preferreds, Subdebt of Financial Institutions, and Bank Holding Company Preferred Stocks 27,548 (15 ) (827 ) 26,706 Money Markets and Mutual Funds 1,525 - (13 ) 1,512 Federal Reserve Bank and FHLB stock 12,915 - - 12,915 Community Bank Equity Positions 3,715 (1,584 ) 1,142 3,273 Total Investments $ 487,906 $ (18,170 ) $ 1,582 $ 471,318 CITY HOLDING COMPANY AND SUBSIDIARIES Loan Portfolio (Unaudited) ($ in 000s) December 31 September 30 June 30 March 31 December 31 2015 2015 2015 2015 2014 Residential real estate (1) $ 1,383,133 $ 1,358,083 $ 1,325,453 $ 1,303,258 $ 1,294,576 Home equity - junior liens 147,036 144,748 143,772 143,670 145,604 Commercial and industrial 165,887 124,495 142,065 132,127 140,548 Commercial real estate (2) 1,127,827 1,029,103 1,032,333 1,011,777 1,028,831 Consumer 36,083 36,751 37,555 38,436 39,705 DDA overdrafts 3,361 3,258 3,279 3,203 2,802 Gross Loans $ 2,863,327 $ 2,696,438 $ 2,684,457 $ 2,632,471 $ 2,652,066 Construction loans included in: (1) - Residential real estate loans $ 13,135 $ 14,765 $ 15,412 $ 17,459 $ 22,992 (2) - Commercial real estate loans $ 12,599 $ 11,970 $ 4,043 $ 30,554 $ 28,652 CITY HOLDING COMPANY AND SUBSIDIARIES Acquisition Activity - Accretion (Unaudited) ($ in 000s) The following table presents the actual and forecasted accretion related to the fair value adjustments on net interest income recorded as a result of the Virginia Savings Bancorp ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Bank, Inc. ("AFB") acquisitions. Virginia Savings Community AFB Loan Certificates of Loan Certificates of Loan Certificates of Year Ended: Accretion(a) Deposit(a) Accretion(a) Deposit(a) Accretion(a) Deposit(a) Total 1Q 2015 $ 123 $ 129 $ 2,158 $ 40 $ - $ - $ 2,450 2Q 2015 189 129 1,249 40 - - 1,607 3Q 2015 245 129 642 40 - - 1,056 4Q 2015 138 129 1,226 40 28 11 1,572 2016 299 497 1,183 43 286 52 2,360 2017 161 - 939 4 256 11 1,371 2018 99 - 712 - 234 - 1,045 a - 2015 amounts are based on actual results. 2016, 2017 and 2018 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, 2015 2014 Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,518,581 $ 14,763 3.86 % $ 1,426,501 $ 14,107 3.92 % Commercial, financial, and agriculture (2) 1,230,907 13,034 4.20 % 1,169,045 13,074 4.44 % Installment loans to individuals (2), (3) 39,865 750 7.46 % 43,561 1,272 11.59 % Previously securitized loans (4) *** 485 *** *** 558 *** Total loans 2,789,354 29,032 4.13 % 2,639,106 29,011 4.36 % Securities: Taxable 387,048 2,856 2.93 % 322,871 2,969 3.65 % Tax-exempt (5) 37,818 513 5.38 % 30,775 466 6.01 % Total securities 424,866 3,369 3.15 % 353,646 3,435 3.85 % Deposits in depository institutions 9,562 - - 9,948 - - Federal funds sold - - - - -

Total interest-earning assets 3,223,782 32,401 3.99 % 3,002,700 32,446 4.29 % Cash and due from banks 117,290 138,946 Bank premises and equipment 75,729 78,740 Other assets 248,693 246,507 Less: Allowance for loan losses (21,101 ) (21,010 ) Total assets $ 3,644,393 $ 3,445,883 Liabilities: Interest-bearing demand deposits

650,523

126 0.08 %

619,736

136 0.09 % Savings deposits 732,129 192 0.10 % 642,938 187 0.12 % Time deposits (2) 1,004,296 2,442 0.96 % 1,030,010 2,468 0.95 % Short-term borrowings 165,996 91 0.22 % 150,205 98 0.26 % Long-term debt 16,495 159 3.82 % 16,495 152 3.66 % Total interest-bearing liabilities 2,569,439 3,010 0.46 % 2,459,384 3,041 0.49 % Noninterest-bearing demand deposits 609,350 556,937 Other liabilities 41,151 36,896 Stockholders' equity 424,453 392,666 Total liabilities and stockholders' equity $ 3,644,393 $ 3,445,883 Net interest income $ 29,391 $ 29,405 Net yield on earning assets 3.62 % 3.89 %

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

(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Banks, Inc. ("AFB"): Three Months Ended December 31, 2015 Virginia Savings Community AFB Total Residential real estate $ 78 $ 109 $ 9 $ 196 Commercial, financial, and agriculture 36 1,093 17 1,146 Installment loans to individuals 24 24 2 50 Time deposits 129 40 11 180 $ 267 $ 1,266 $ 39 $ 1,572 Three Months Ended December 31, 2014 Virginia Savings Community Total Residential real estate $ 66 $ 94 $ 160 Commercial, financial, and agriculture 80 751 831 Installment loans to individuals 41 88 129 Time deposits 135 52 187 $ 322 $ 985 $ 1,307 (3) Includes the Company’s consumer and DDA overdrafts loan categories. (4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%. CITY HOLDING COMPANY AND SUBSIDIARIES Consolidated Average Balance Sheets, Yields, and Rates (Unaudited) ($ in 000s) Twelve Months Ended December 31, 2015 2014 Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,474,631 $ 57,692 3.91 % $ 1,384,677 $ 55,627 4.02 % Commercial, financial, and agriculture (2) 1,175,707 51,660 4.39 % 1,163,449 54,288 4.67 % Installment loans to individuals (2), (3) 40,966 3,959 9.66 % 45,470 4,556 10.02 % Previously securitized loans (4) *** 1,796 *** *** 2,187 *** Total loans 2,691,304 115,107 4.28 % 2,593,597 116,658 4.50 % Securities: Taxable 352,296 10,830 3.07 % 337,440 11,766 3.49 % Tax-exempt (5) 31,389 1,749 5.57 % 28,464 1,757 6.17 % Total securities 383,685 12,579 3.28 % 365,904 13,523 3.70 % Deposits in depository institutions 9,733 - - 9,205 - - Federal funds sold - -

- -

Total interest-earning assets 3,084,722 127,686 4.14 % 2,968,706 130,181 4.39 % Cash and due from banks 180,965 130,183 Bank premises and equipment 76,136 80,459 Other assets 243,905 246,618 Less: Allowance for loan losses (20,995 ) (21,148 ) Total assets $ 3,564,733 $ 3,404,818 Liabilities: Interest-bearing demand deposits

644,961

505 0.08 %

614,489

615 0.10 % Savings deposits 706,926 712 0.10 % 632,510 784 0.12 % Time deposits (2) 1,005,232 9,669 0.96 % 1,046,925 9,613 0.92 % Short-term borrowings 145,199 327 0.23 % 133,769 342 0.26 % Long-term debt 16,495 617 3.74 % 16,495 606 3.67 % Total interest-bearing liabilities 2,518,813 11,830 0.47 % 2,444,188 11,960 0.49 % Noninterest-bearing demand deposits 590,424 531,061 Other liabilities 40,445 33,629 Stockholders' equity 415,051 395,940 Total liabilities and stockholders' equity $ 3,564,733 $ 3,404,818 Net interest income $ 115,856 $ 118,221 Net yield on earning assets 3.76 % 3.98 %

(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.

2015 (a)

2015 2015 2015 2014 Tier I Capital: Stockholders' equity $ 419,163 $ 418,767 $ 411,240 $ 405,075 $ 390,853 Goodwill and other intangibles (77,484 ) (69,103 ) (69,153 ) (69,227 ) (74,011 ) Accumulated other comprehensive loss 3,941 3,560 4,892 3,253 4,159 Qualifying trust preferred stock 16,000 16,000 16,000 16,000 16,000 Excess deferred tax assets - - - (1,564 ) (3,838 ) Total tier I capital $ 361,620 $ 369,224 $ 362,979 $ 353,537 $ 333,163 Qualifying trust preferred stock (16,000 ) $ (16,000 ) $ (16,000 ) $ (16,000 )

Total CET I capital $ 345,620 $ 353,224 $ 346,979 $ 337,537

Total Risk-Based Capital: Tier I capital $ 361,620 $ 369,224 $ 362,979 $ 353,537 $ 333,163 Qualifying allowance for loan losses 20,044 20,941 20,809 20,179 20,150 Unrealized gain on securities 516 447 600 704 560 Total risk-based capital $ 382,180 $ 390,612 $ 384,388 $ 374,420 $ 353,873 Net risk-weighted assets $ 2,531,647 $ 2,449,191 $ 2,448,848 $ 2,404,331 $ 2,493,078 Ratios: Average stockholders' equity to average assets 11.65 % 11.90 % 11.54 % 11.48 % 11.40 % Tangible capital ratio 9.34 % 10.14 % 9.89 % 9.60 % 9.35 % Risk-based capital ratios: CET 1 capital 13.65 % 14.42 % 14.17 % 14.04 %

Tier I capital 14.28 % 15.08 % 14.82 % 14.70 % 13.36 % Total risk-based capital 15.10 % 15.95 % 15.70 % 15.57 % 14.19 % Leverage capital 10.15 % 10.71 % 10.38 % 10.23 % 9.89 % (a) December 31, 2015 risk-based capital ratios are estimated. (*) Basel III CET 1 ratio requirements are effective beginning January 1, 2015 and are not required for prior periods. 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 2015 2015 2015 2015 2014 Intangibles, net $ 79,792 $ 70,653 $ 70,779 $ 70,964 $ 74,198 Intangibles amortization expense 151 126 185 214 236 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 2015 2015 2015 2015 2014 Balance at beginning of period $ 20,941 $ 20,809 $ 20,179 $ 20,150 $ 20,487 Charge-offs: Commercial and industrial (3,148 ) 89 (1,898 ) (94 ) 7 Commercial real estate (303 ) (1 ) 61 (337 ) (260 ) Residential real estate (386 ) (229 ) (272 ) (257 ) (414 ) Home equity (76 ) (128 ) (17 ) (91 ) (21 ) Consumer (39 ) (28 ) (69 ) (74 ) (17 ) DDA overdrafts (376 ) (414 ) (313 ) (311 ) (363 ) Total charge-offs (4,328 ) (711 ) (2,508 ) (1,164 ) (1,068 ) Recoveries: Commercial and industrial 2 45 9 18 4 Commercial real estate 317 18 23 8 19 Residential real estate 69 66 54 10 96 Home equity - - - - - Consumer 32 75 51 28 32 DDA overdrafts 198 188 165 241 196 Total recoveries 618 392 302 305 347 Net charge-offs (3,710 ) (319 ) (2,206 ) (859 ) (721 ) Provision for (recovery of) acquired loans 32 (24 ) 299 246 148 Provision for loan losses 2,781 475 2,537 642 236 Balance at end of period $ 20,044 $ 20,941 $ 20,809 $ 20,179 $ 20,150 Loans outstanding $ 2,863,327 $ 2,696,438 $ 2,684,457 $ 2,632,471 $ 2,652,066 Average loans outstanding 2,789,354 2,679,429 2,658,484 2,636,400 2,639,106 Allowance as a percent of loans outstanding 0.70 % 0.78 % 0.78 % 0.77 % 0.76 % Allowance as a percent of non-performing loans 114.91 % 95.81 % 130.98 % 121.81 % 128.10 % Net charge-offs (annualized) as a percent of average loans outstanding 0.53 % 0.05 % 0.33 % 0.13 % 0.11 % Net charge-offs, excluding overdraft deposit accounts, (annualized) as a percent of average loans outstanding 0.51 % 0.01 % 0.31 % 0.12 % 0.08 % CITY HOLDING COMPANY AND SUBSIDIARIES Summary of Non-Performing Assets (Unaudited) ($ in 000s) December 31 September 30 June 30 March 31 December 31 2015 2015 2015 2015 2014 Nonaccrual loans $ 16,949 $ 21,407 $ 15,623 $ 16,182 $ 15,307 Accruing loans past due 90 days or more 494 449 264 384 423 Total non-performing loans 17,443 21,856 15,887 16,566 15,730 Other real estate owned 6,519 6,026 6,729 8,771 8,180 Total non-performing assets $ 23,962 $ 27,882 $ 22,616 $ 25,337 $ 23,910 Non-performing assets as a percent of loans and other real estate owned 0.83 % 1.03 % 0.84 % 0.96 % 0.90 % CITY HOLDING COMPANY AND SUBSIDIARIES Summary of Troubled Debt Restructurings (Unaudited) ($ in 000s) December 31 September 30 June 30 March 31 December 31 2015 2015 2015 2015 2014 Residential real estate $ 17,987 $ 18,154 $ 19,021 $ 19,067 $ 18,492 Home equity - junior liens 2,693 2,746 2,662 2,741 2,688 Commercial and industrial 58 62 66 70 73 Commercial real estate 529 1,921 1,872 1,894 2,263 Consumer - - - - - Total $ 21,267 $ 22,883 $ 23,621 $ 23,772 $ 23,516 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 2015 2015 2015 2015 2014 Residential real estate $ 5,871 $ 4,813 $ 4,107 $ 4,326 $ 5,164 Home equity - junior liens 393 548 393 543 746 Commercial and industrial 62 4 600 113 310 Commercial real estate 779 1,183 536 299 479 Consumer 106 89 82 122 197 DDA overdrafts 313 330 327 215 318 Total past due loans $ 7,524 $ 6,967 $ 6,045 $ 5,618 $ 7,214 Acquired December 31 September 30 June 30 March 31 December 31 2015 2015 2015 2015 2014 Residential real estate $ 739 $ 709 $ 1,163 $ 1,792 $ 714 Home equity - junior liens 13 10 5 86 2 Commercial and industrial 97 351 14 490 143 Commercial real estate 701 2,439 2,179 2,018 2,372 Consumer 90 129 175 150 221 DDA overdrafts - - - - - Total past due loans $ 1,640 $ 3,638 $ 3,536 $ 4,536 $ 3,452 Total December 31 September 30 June 30 March 31 December 31 2015 2015 2015 2015 2014 Residential real estate $ 6,610 $ 5,522 $ 5,270 $ 6,118 $ 5,878 Home equity - junior liens 406 558 398 629 748 Commercial and industrial 159 355 614 603 453 Commercial real estate 1,480 3,622 2,715 2,317 2,851 Consumer 196 218 257 272 418 DDA overdrafts 313 330 327 215 318 Total past due loans $ 9,164 $ 10,605 $ 9,581 $ 10,154 $ 10,666 Total past due loans as a percent of loans outstanding 0.32 % 0.39 % 0.36 % 0.39 % 0.40 % 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 2015 2015 2015 2015 2014 Contractual required principal and interest

$ 1,965

$ 2,149

$ 2,376

$ 2,419

$ 2,407

Carrying value 1,707 1,861 1,984 1,979 1,964 Community Acquisition December 31 September 30 June 30 March 31 December 31 2015 2015 2015 2015 2014 Contractual required principal and interest

$16,362

$17,834

$18,546

$20,189

$23,277

Carrying value 12,899 13,400 13,958 14,627 15,365

View source version on businesswire.com: http://www.businesswire.com/news/home/20160125006307/en/

City Holding CompanyCharles R. Hageboeck, 304-769-1102Chief Executive Officer and President

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