City Holding Company Announces Record Quarterly Diluted Earnings Per Share

CHARLESTON, W.Va., July 23 /PRNewswire-FirstCall/ -- City Holding Company,
"the Company" (Nasdaq: CHCO), a $2.5 billion bank holding company
headquartered in Charleston, today announced record net income per diluted
share for the second quarter of $0.83 compared to $0.72 per diluted share in
the second quarter of 2007, or a 15.3% increase. Net income for the second
quarter of 2008 was $13.4 million, an increase of 8.6% from $12.3 million in
the second quarter of 2007. For the second quarter of 2008, the Company
achieved a return on assets of 2.14%, a return on tangible equity of 21.0%, a
net interest margin of 4.65%, and an efficiency ratio of 46.9%. This compares
with a return on assets of 1.94%, a return on equity of 19.9%, a net interest
margin of 4.32%, and an efficiency ratio of 45.7% for the comparable period of
2007.
Net Interest Income
The Company's tax equivalent net interest income increased $1.1 million,
or 4.5%, from $24.6 million during the second quarter of 2007 to $25.7 million
during the second quarter of 2008. This increase is primarily attributable to
interest expense on deposits and other interest bearing liabilities decreasing
more quickly than interest income from loans and investments as a result of
rate declines in the Federal Funds rate during 2008. As a result of the
Company's positioning of its balance sheet, interest sensitive liabilities
have repriced to lower levels at a faster rate than interest sensitive assets.
Additionally, the Company's interest rate floors with a total notional value
of $500 million have diminished the impact of falling rates on the Company's
interest income from variable rate loans. The Company also benefited from an
increase in its yield on taxable securities of nine basis points from the
quarter ended June 30, 2007 and 16 basis points from the quarter ended March
31, 2008. This increase was a result of the Company's additional investments
in preferred stocks and trust preferred securities primarily of regional banks
during 2008. Partially offsetting these increases from falling market rates
was a decrease of $0.4 million in interest income from Previously Securitized
Loans from the second quarter of 2007, as the balances of these loans have
decreased 49.1%. The decrease in average balances was partially mitigated by
an increase in the yield on these loans from 66.4% for the second quarter of
2007 to 110.2% for the second quarter of 2008. The yield on the previously
securitized loans has increased due to improved cash flows as net default
rates have been less than previously estimated. The default rates have
decreased as a result of the Company's assumption of the servicing of all of
the pool balances during the second quarter of 2005. Subsequent to our
assumption of the servicing of these loans, the Company has averaged net
recoveries, but does not believe that continued net recoveries can be
sustained indefinitely.
The Company's net interest margin was 4.65% in the second quarter of 2008
as compared to 4.32% in the second quarter of 2007.
Credit Quality
At June 30, 2008, the Allowance for Loan Losses ("ALLL") was $18.0 million
or 1.03% of total loans outstanding and 123% of non-performing loans, compared
to $17.6 million or 1.00% of loans outstanding and 103% of non-performing
loans at December 31, 2007, and $16.6 million or 0.96% of loans outstanding
and 145% of non-performing loans at June 30, 2007.
As a result of the Company's quarterly analysis of the adequacy of the
ALLL, the Company recorded a provision for loan losses of $0.85 million in the
second quarter of 2008 compared to $1.6 million for the comparable period in
2007 and $1.9 million in the first quarter of 2008. The provision for loan
losses recorded during the second quarter of 2008 reflects the impact of
improving loss experience on overdraft accounts. Changes in the amount of the
provision and related allowance are based on the Company's detailed systematic
methodology and are directionally consistent with growth and changes in the
composition and quality of the Company's loan portfolio. The Company believes
its methodology for determining the adequacy of its ALLL adequately provides
for probable losses inherent in the loan portfolio and produces a provision
and allowance for loan losses that is directionally consistent with changes in
asset quality and loss experience.
The Company's ratio of non-performing assets to total loans and other real
estate owned improved slightly from 1.21% at March 31, 2008 to 1.20% at June
30, 2008. Based on our analysis, the Company believes that the allowance
allocated to the substandard and nonperforming loans, after considering the
value of the collateral securing such loans, is adequate to cover losses that
may result from these loans. The Company's ratio of non-performing assets to
total loans and other real estate owned is 62 basis points lower than that of
our peer group (bank holding companies with total assets between $1 and $5
billion), which reported average non-performing assets as a percentage of
loans and other real estate owned of 1.82% for the most recently reported
quarter ended March 31, 2008.
The Company had net charge-offs of $1.5 million for the second quarter of
2008. Net charge-offs on commercial and residential loans were $1.0 and $0.1
million, respectively, while installment loans experienced no net charge-offs
for the second quarter. Charge-offs for commercial loans were primarily
related to two specific credits that had been appropriately considered in
establishing the allowance for loan losses in prior periods. One of the
previously mentioned commercial charge-offs resulted in an increase of $1.9
million in the Company's other real estate owned due to the foreclosure on the
collateral securing the loan (a residential development property). In
addition, net charge-offs for depository accounts were $0.3 million for the
2nd quarter of 2008. While charge-offs on depository accounts are
appropriately taken against the ALLL, the revenue associated with depository
accounts is reflected in service charges.
Non-interest Income
Exclusive of investment gains, non-interest income increased $0.6 million
to $14.2 million in the second quarter of 2008 as compared to $13.6 million in
the second quarter of 2007. Insurance commission revenues increased $0.3
million from the second quarter of 2007 primarily on the strength of the
Company's increased worker's compensation commissions. In addition, other
income increased $0.2 million from the quarter ended June 30, 2007 as a result
of income from an undesignated interest rate floor with a notional value of
$100 million (which expired in May 2008). Bank owned life insurance revenues
increased $0.2 million from the quarter ended June 30, 2007 as a result of the
Company modifying this portfolio during 2008. These increases were partially
offset by a modest decrease in service charges from depository accounts of
$0.1 million, or 1.4%, from $11.4 million during the second quarter of 2007 to
$11.3 million during the second quarter of 2008.
Non-interest Expenses
Non-interest expenses increased $1.3 million from $17.5 million in the
second quarter of 2007 to $18.8 million in the second quarter of 2008.
Salaries and employee benefits increased $0.6 million, or 6.8%, from the
second quarter of 2007 due in part to additional staffing for new retail
locations. Other expenses also include increased charitable contributions of
approximately $0.5 million. As noted with our March 31, 2008 results, the
Company has increased its charitable contributions in 2008 in recognition of
the Company's strong financial performance between 2002 and 2007.
Balance Sheet Trends
As compared to December 31, 2007, loans have decreased $17.0 million
(1.0%) at June 30, 2008, due to decreases in loans to depository institutions
of $60.0 million (100.0%), installment loans of $2.9 million (6.0%), and
previously securitized loans of $1.6 million (23.8%). These decreases were
partially offset by increases in home equity loans of $29.7 million (8.7%),
residential real estate loans of $10.6 million (1.8%), and commercial loans of
$7.2 million (1.0%).
Total average depository balances increased $28.0 million, or 1.4%, from
the quarter ended December 31, 2007 to the quarter ended June 30, 2008. This
increase was primarily in non-interest bearing demand deposits, savings
deposits, and interest bearing demand deposits, which have increased $17.0
million, $14.3 million, and $8.9 million, respectively.
Income Tax Expense
The Company's effective income tax rate for the second quarter of 2008 was
33.3% compared to 33.6% for the year ended December 31 2007, and 34.8% for the
quarter ended June 30, 2007. The effective rate is based upon the Company's
expected tax rate for the year ending December 31, 2008.
Previously Securitized Loans
At June 30, 2008, the Company reported "Previously Securitized Loans" of
$5.3 million compared to $6.9 million at December 31, 2007 and $10.3 million
at June 30, 2007, respectively, representing a decrease of 23.8% and 49.1%,
respectively. The yield on the previously securitized loans was 110.2% for
the quarter ended June 30, 2008, compared to 93.2% for the quarter ended
December 31, 2007, and 66.4% for the quarter ended June 30, 2007. The yield
on the previously securitized loans has increased due to improved cash flows
as net default rates have been less than previously estimated. The default
rates have decreased as a result of the Company's assumption of the servicing
of all of the pool balances during the second quarter of 2005. Subsequent to
our assumption of the servicing of these loans, the Company has averaged net
recoveries but does not believe that continued net recoveries can be sustained
indefinitely.
Capitalization and Liquidity
One of the Company's strengths is that it is highly profitable while
maintaining strong liquidity and capital. With respect to liquidity, the
Company's loan to deposit ratio was 87.1% and the loan to asset ratio was
70.1% at June 30, 2008. The Company maintained investment securities totaling
17.6% of assets as of this date. Further, the Company's deposit mix is
weighted heavily toward checking and saving accounts that fund 44.4% of assets
at June 30, 2008. Time deposits fund 36.1% of assets at June 30, 2008, but
very few of these deposits are in accounts that have balances of more than
$150,000, reflecting the core retail orientation of the Company.
The Company is also strongly capitalized. With respect to regulatory
capital, at June 30, 2008, the Company's Leverage Ratio is 10.75%, the Tier I
Capital ratio is 14.19%, and the Total Risk-Based Capital ratio is 15.16%.
These regulatory capital ratios are significantly above levels required to be
considered "well capitalized," which is the highest possible regulatory
designation. The Company's tangible equity ratio was 10.0% at June 30, 2008
compared with a tangible equity ratio of 9.7% at December 31, 2007.
City Holding Company is the parent company of City National Bank of West
Virginia. City National operates 68 branches across West Virginia, Eastern
Kentucky and Southern 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 may
experience increases in the default rates on previously securitized loans that
would result in impairment losses or lower the yield on such loans; (4) the
Company may continue to benefit from strong recovery efforts on previously
securitized loans resulting in improved yields on these assets; (5) the
Company could have adverse legal actions of a material nature; (6) the Company
may face competitive loss of customers; (7) the Company may be unable to
manage its expense levels; (8) the Company may have difficulty retaining key
employees; (9) 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; (10) changes in general economic
conditions and increased competition could adversely affect the Company's
operating results; (11) 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;
and (12) the Company may experience difficulties growing loan and deposit
balances. 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.

CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Three Months Ended June 30 Percent
2008 2007 Change

Earnings ($000s, except per share data):
Net Interest Income (FTE) $25,677 $24,565 4.53%
Net Income 13,379 12,322 8.58%
Earnings per Basic Share 0.83 0.72 15.28%
Earnings per Diluted Share 0.83 0.72 15.28%

Key Ratios (percent):
Return on Average Assets 2.14% 1.94% 9.84%
Return on Average Tangible Equity 21.03% 19.85% 5.95%
Net Interest Margin 4.65% 4.32% 7.78%
Efficiency Ratio 46.86% 45.68% 2.59%
Average Shareholders' Equity to
Average Assets 12.46% 12.11% 2.95%

Consolidated Risk Based Capital
Ratios (a):
Tier I 14.18% 15.15% (6.40)%
Total 15.15% 16.12% (6.02)%

Tangible Equity to Tangible Assets 10.02% 9.58% 4.62%

Common Stock Data:
Cash Dividends Declared per Share $0.34 $0.31 9.68%
Book Value per Share 18.72 17.40 7.57%
Tangible Book Value per Share 15.13 13.95 8.48%
Market Value per Share:
High 44.15 40.93 7.87%
Low 37.29 37.67 (1.01)%
End of Period 40.77 38.33 6.37%

Price/Earnings Ratio (b) 12.28 13.31 (7.73)%

Six Months Ended June 30 Percent
2008 2007 Change

Earnings ($000s, except per share data):
Net Interest Income (FTE) $49,814 $49,236 1.17%
Net Income 26,417 25,553 3.38%
Earnings per Basic Share 1.64 1.48 10.81%
Earnings per Diluted Share 1.63 1.48 10.14%

Key Ratios (percent):
Return on Average Assets 2.11% 2.02% 4.46%
Return on Average Tangible Equity 21.28% 20.50% 3.81%
Net Interest Margin 4.53% 4.36% 3.77%
Efficiency Ratio 47.71% 45.29% 5.36%
Average Shareholders' Equity to
Average Assets 12.25% 12.19% 0.46%

Common Stock Data:
Cash Dividends Declared per Share $0.68 $0.62 9.68%
Market Value per Share:
High 44.15 41.54 6.28%
Low 32.51 37.67 (13.70)%

(a) June 30, 2008 risk-based capital ratios are estimated
(b) June 30, 2008 price/earnings ratio computed based on annualized second
quarter 2008 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

2004 $12.09 $11.89 $12.70 $13.03 $27.30 $37.58
2005 13.20 15.56 15.99 16.14 27.57 39.21
2006 16.17 16.17 16.99 17.46 34.53 41.87
2007 17.62 17.40 17.68 18.14 31.16 41.54
2008 18.92 18.72 37.29 44.15

Earnings per Basic Share

Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date

2004 $0.66 $0.80 $0.66 $0.67 $2.79
2005 0.70 0.72 0.73 0.72 2.87
2006 0.71 0.78 0.78 0.74 3.00
2007 0.76 0.72 0.76 0.78 3.02
2008 0.81 0.83 1.64

Earnings per Diluted Share

Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date

2004 $0.65 $0.79 $0.65 $0.66 $2.75
2005 0.69 0.71 0.72 0.72 2.84
2006 0.71 0.77 0.77 0.74 2.99
2007 0.76 0.72 0.76 0.78 3.01
2008 0.80 0.83 1.63

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)

Three Months Ended June 30,
2008 2007

Interest Income
Interest and fees on loans $30,416 $31,947
Interest on investment securities:
Taxable 6,120 6,752
Tax-exempt 381 427
Interest on deposits in depository
institutions 51 113
Interest on federal funds sold - 291
Total Interest Income 36,968 39,530

Interest Expense
Interest on deposits 10,519 13,077
Interest on short-term borrowings 663 1,694
Interest on long-term debt 312 425
Total Interest Expense 11,494 15,196
Net Interest Income 25,474 24,334
Provision for loan losses 850 1,600
Net Interest Income After Provision for
Loan Losses 24,624 22,734

Non-Interest Income
Investment securities gains - 45
Service charges 11,269 11,426
Insurance commissions 1,168 832
Trust and investment management fee income 449 437
Bank owned life insurance 750 585
Other income 559 364
Total Non-Interest Income 14,195 13,689

Non-Interest Expense
Salaries and employee benefits 9,517 8,912
Occupancy and equipment 1,701 1,525
Depreciation 1,087 1,109
Professional fees 427 385
Postage, delivery, and statement mailings 618 569
Advertising 643 880
Telecommunications 440 460
Bankcard expenses 640 597
Insurance and regulatory 333 383
Office supplies 504 442
Repossessed asset losses, net of expenses 91 9
Other expenses 2,760 2,254
Total Non-Interest Expense 18,761 17,525
Income Before Income Taxes 20,058 18,898
Income tax expense 6,679 6,576
Net Income $13,379 $12,322

Basic earnings per share $0.83 $0.72
Diluted earnings per share $0.83 $0.72
Average Common Shares Outstanding:
Basic 16,103 17,100
Diluted 16,167 17,158

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)

Six months ended June 30
2008 2007

Interest Income
Interest and fees on loans $61,408 $63,411
Interest on investment securities:
Taxable 12,184 13,686
Tax-exempt 780 855
Interest on deposits in depository
institutions 116 230
Interest on federal funds sold - 547
Total Interest Income 74,488 78,729

Interest Expense
Interest on deposits 22,534 25,788
Interest on short-term borrowings 1,808 3,207
Interest on long-term debt 753 957
Total Interest Expense 25,095 29,952
Net Interest Income 49,393 48,777
Provision for loan losses 2,733 2,500
Net Interest Income After Provision for
Loan Losses 46,660 46,277

Non-Interest Income
Investment securities gains 2 45
Service charges 22,543 21,489
Insurance commissions 2,206 1,844
Trust and investment management fee income 1,081 1,005
Bank owned life insurance 1,426 1,281
Gain on sale of credit card merchant
agreements - 1,500
VISA IPO Gain 3,289 -
Other income 966 877
Total Non-Interest Income 31,513 28,041

Non-Interest Expense
Salaries and employee benefits 18,880 17,969
Occupancy and equipment 3,298 3,162
Depreciation 2,220 2,179
Professional fees 794 788
Postage, delivery, and statement mailings 1,272 1,346
Advertising 1,260 1,732
Telecommunications 858 915
Bankcard expenses 1,261 1,115
Insurance and regulatory 671 768
Office supplies 961 897
Repossessed asset (gains), net of expenses 123 (5)
Loss on early extinguishment of debt 1,208 -
Other expenses 5,854 4,256
Total Non-Interest Expense 38,660 35,122
Income Before Income Taxes 39,513 39,196
Income tax expense 13,096 13,643
Net Income $26,417 $25,553

Basic earnings per share $1.64 $1.48
Diluted earnings per share $1.63 $1.48
Average Common Shares Outstanding:
Basic 16,124 17,230
Diluted 16,186 17,292

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) ($ in 000s)

Three Months Ended
June 30, 2008 June 30, 2007

Balance at April 1 $304,841 $303,354

Net income 13,379 12,322
Other comprehensive income:
Change in unrealized (loss) on securities
available-for-sale (6,914) (2,841)
Change in unrealized (loss) on interest rate
floors (4,084) (1,122)
Cash dividends declared ($0.34/share) (5,489) -
Cash dividends declared ($0.31/share) - (5,256)
Issuance of stock award shares, net 67 54
Exercise of 12,375 stock options 239 -
Exercise of 2,000 stock options - 72
Excess tax benefits on stock compensation 17 3
Purchase of 305,900 common shares of
treasury - (11,803)
Balance at June 30 $302,056 $294,783

Six Months Ended
June 30, 2008 June 30, 2007

Balance at January 1 $293,994 $305,307

Cumulative effect of adopting FIN 48 - (125)
Net income 26,417 25,553
Other comprehensive income:
Change in unrealized (loss) on securities
available-for-sale (5,166) (2,118)
Change in unrealized gain (loss) on interest
rate floors 815 (1,000)
Cash dividends declared ($0.68/share) (10,965) -
Cash dividends declared ($0.62/share) - (10,598)
Issuance of stock award shares, net 340 318
Exercise of 18,075 stock options 315 -
Exercise of 7,300 stock options - 154
Excess tax benefits on stock compensation 23 3
Purchase of 104,960 common shares of treasury (3,717) -
Purchase of 580,200 common shares of treasury - (22,711)
Balance at June 30 $302,056 $294,783

CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)

Quarter Ended
June 30 March 31 Dec. 31 Sept. 30 June 30
2008 2008 2007 2007 2007

Interest income $36,968 $37,520 $38,989 $39,597 $39,530
Taxable equivalent adjustment 204 214 226 224 231
Interest income (FTE) 37,172 37,734 39,215 39,821 39,761
Interest expense 11,494 13,601 14,950 15,374 15,196
Net interest income 25,678 24,133 24,265 24,447 24,565
Provision for loan losses 850 1,883 1,650 1,200 1,600
Net interest income after
provision for loan losses 24,828 22,250 22,615 23,247 22,965

Noninterest income 14,195 17,318 14,281 13,814 13,689
Noninterest expense 18,761 19,899 17,861 18,031 17,525
Income before income taxes 20,262 19,669 19,035 19,030 19,129
Income tax expense 6,679 6,417 6,051 6,092 6,576
Taxable equivalent adjustment 204 214 226 224 231
Net income $13,379 $13,038 $12,758 $12,714 $12,322

Basic earnings per share $0.83 $0.81 $0.78 $0.76 $0.72
Diluted earnings per share 0.83 0.80 0.78 0.76 0.72
Cash dividends declared per
share 0.34 0.34 0.31 0.31 0.31

Average Common Share (000s):
Outstanding 16,103 16,147 16,359 16,714 17,100
Diluted 16,167 16,205 16,414 16,767 17,158

Net Interest Margin 4.65% 4.40% 4.32% 4.32% 4.32%

CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)

Quarter Ended
June 30 March 31 Dec. 31 Sept. 30 June 30
2008 2008 2007 2007 2007

Non-Interest Income:
Service charges $11,269 $11,274 $11,735 $11,192 $11,426
Insurance commissions 1,168 1,038 1,119 1,127 832
Trust and investment
management fee income 449 632 514 523 437
Bank owned life insurance 750 676 600 596 585
Other income 559 407 312 377 364
Subtotal 14,195 14,027 14,280 13,815 13,644
Investment securities gains
(losses) - 2 1 (1) 45
VISA IPO Gain - 3,289 - - -
Total Non-Interest Income $14,195 $17,318 $14,281 $13,814 $13,689

Non-Interest Expense:
Salaries and employee
benefits $9,517 $9,363 $8,759 $9,307 $8,912
Occupancy and equipment 1,701 1,597 1,604 1,600 1,525
Depreciation 1,087 1,133 1,133 1,160 1,109
Professional fees 427 367 424 416 385
Postage, delivery, and
statement mailings 618 654 601 641 569
Advertising 643 617 590 801 880
Telecommunications 440 418 456 438 460
Bankcard expenses 640 621 617 623 597
Insurance and regulatory 333 338 422 364 383
Office supplies 504 457 469 472 442
Repossessed asset losses
(gains), net of expenses 91 32 (105) (47) 9
Loss on early extinguishment
of debt - 1,208 - - -
Other expenses 2,760 3,094 2,891 2,256 2,254
Total Non-Interest Expense $18,761 $19,899 $17,861 $18,031 $17,525

Employees (Full Time Equivalent) 817 821 811 808 807
Branch Locations 68 69 69 68 68

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
June 30 December 31
2008 2007
(Unaudited)
Assets
Cash and due from banks $59,270 $64,726
Interest-bearing deposits in depository
institutions 10,601 9,792
Cash and cash equivalents 69,871 74,518

Investment securities available-for-sale,
at fair value 406,130 382,098
Investment securities held-to-maturity, at
amortized cost 33,646 34,918
Total investment securities 439,776 417,016

Gross loans 1,750,047 1,767,021
Allowance for loan losses (17,959) (17,581)
Net loans 1,732,088 1,749,440

Bank owned life insurance 68,894 64,467
Premises and equipment 56,492 54,635
Accrued interest receivable 9,923 11,254
Net deferred tax assets 23,001 20,633
Intangible assets 57,893 58,238
Other assets 36,898 32,566
Total Assets $2,494,836 $2,482,767

Liabilities
Deposits:
Noninterest-bearing $326,734 $314,231
Interest-bearing:
Demand deposits 418,835 397,510
Savings deposits 362,828 350,607
Time deposits 899,910 927,733
Total deposits 2,008,307 1,990,081
Short-term borrowings 136,820 161,916
Long-term debt 21,384 4,973
Other liabilities 26,269 31,803
Total Liabilities 2,192,780 2,188,773

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 June 30, 2008 and
December 31, 2007 less 2,365,367 and
2,292,357 shares in treasury, respectively 46,249 46,249
Capital surplus 102,962 103,390
Retained earnings 239,838 224,386
Cost of common stock in treasury (83,275) (80,664)
Accumulated other comprehensive income:
Unrealized loss on securities available-
for-sale (6,949) (1,783)
Unrealized gain on derivative instruments 5,205 4,390
Underfunded pension liability (1,974) (1,974)
Total Accumulated Other Comprehensive
Income (3,718) 633
Total Stockholders' Equity 302,056 293,994
Total Liabilities and Stockholders'
Equity $2,494,836 $2,482,767

CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)

June 30 March 31 Dec 31 Sept 30 June 30
2008 2008 2007 2007 2007

Residential real
estate $612,676 $605,579 $602,057 $600,094 $601,045
Home equity 371,537 347,986 341,818 338,161 330,203
Commercial, financial,
and agriculture 715,196 699,653 707,987 666,960 681,388
Loans to depository
institutions - - 60,000 60,000 60,000
Installment loans to
individuals 45,385 45,557 48,267 46,244 47,397
Previously
securitized loans 5,253 6,025 6,892 8,317 10,321
Gross Loans $1,750,047 $1,704,800 $1,767,021 $1,719,776 $1,730,354

CITY HOLDING COMPANY AND SUBSIDIARIES
Previously Securitized Loans
(Unaudited) ($ in millions)
Annualized Effective
December 31 Interest Annualized
Year Ended: Balance(a) Income(a) Yield(a)

2007 $6.9 $7.3 69%
2008 4.8 5.6 101%
2009 3.5 4.1 101%
2010 3.0 3.2 101%
2011 2.4 2.7 101%

a - 2007 amounts are based on actual results. 2008 amounts are based on
actual results through June 30, 2008 and estimated amounts for the
remainder of the year. 2009, 2010, and 2011 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 June 30,
2008
Average Yield/
Balance Interest Rate

Assets:
Loan portfolio:
Residential real estate $598,924 $9,348 6.28%
Home equity 360,041 6,493 7.25%
Commercial, financial, and agriculture 708,607 11,707 6.64%
Loans to depository institutions - - -
Installment loans to individuals 55,667 1,398 10.10%
Previously securitized loans 5,370 1,471 110.17%
Total loans 1,728,609 30,417 7.08%
Securities:
Taxable 446,625 6,120 5.51%
Tax-exempt 35,994 585 6.54%
Total securities 482,619 6,705 5.59%
Deposits in depository institutions 9,266 50 2.17%
Federal funds sold - - -
Total interest-earning assets 2,220,494 37,172 6.73%
Cash and due from banks 54,906
Bank premises and equipment 56,002
Other assets 193,346
Less: Allowance for loan losses (18,726)
Total assets $2,506,022

Liabilities:
Interest-bearing demand deposits 413,467 613 0.60%
Savings deposits 361,244 831 0.93%
Time deposits 909,421 9,075 4.01%
Short-term borrowings 139,787 663 1.91%
Long-term debt 21,401 313 5.88%
Total interest-bearing liabilities 1,845,320 11,495 2.51%
Noninterest-bearing demand deposits 323,123
Other liabilities 25,214
Stockholders' equity 312,365
Total liabilities and
stockholders' equity $2,506,022
Net interest income $25,677
Net yield on earning assets 4.65%

Three Months Ended June 30,
2007
Average Yield/
Balance Interest Rate

Assets:
Loan portfolio:
Residential real estate $596,246 $9,017 6.07%
Home equity 326,970 6,302 7.73%
Commercial, financial, and agriculture 670,687 12,655 7.57%
Loans to depository institutions 59,670 798 5.36%
Installment loans to individuals 46,206 1,319 11.45%
Previously securitized loans 11,210 1,856 66.41%
Total loans 1,710,989 31,947 7.49%
Securities:
Taxable 499,861 6,752 5.42%
Tax-exempt 40,160 658 6.57%
Total securities 540,021 7,410 5.50%
Deposits in depository institutions 10,227 113 4.43%
Federal funds sold 22,077 291 5.29%
Total interest-earning assets 2,283,314 39,761 6.98%
Cash and due from banks 50,715
Bank premises and equipment 47,304
Other assets 169,860
Less: Allowance for loan losses (16,135)
Total assets $2,535,058

Liabilities:
Interest-bearing demand deposits 428,772 1,310 1.23%
Savings deposits 344,204 1,429 1.67%
Time deposits 922,978 10,338 4.49%
Short-term borrowings 162,115 1,694 4.19%
Long-term debt 21,915 425 7.78%
Total interest-bearing liabilities 1,879,984 15,196 3.24%
Noninterest-bearing demand deposits 318,041
Other liabilities 30,109
Stockholders' equity 306,924
Total liabilities and
stockholders' equity $2,535,058
Net interest income $24,565
Net yield on earning assets 4.32%

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)

Six Months Ended June 30,
2008
Average Yield/
Balance Interest Rate

Assets:
Loan portfolio:
Residential real estate $600,262 $18,763 6.29%
Home equity 351,850 12,876 7.36%
Commercial, financial, and agriculture 704,381 23,941 6.84%
Loans to depository institutions 2,335 35 3.01%
Installment loans to individuals 51,648 2,743 10.68%
Previously securitized loans 5,895 3,050 104.05%
Total loans 1,716,371 61,408 7.19%
Securities:
Taxable 451,137 12,184 5.43%
Tax-exempt 36,865 1,200 6.55%
Total securities 488,002 13,384 5.52%
Deposits in depository institutions 8,982 116 2.60%
Federal funds sold - - -
Total interest-earning assets 2,213,355 74,908 6.81%
Cash and due from banks 60,174
Bank premises and equipment 55,355
Other assets 189,810
Less: Allowance for loan losses (18,282)
Total assets $2,500,412

Liabilities:
Interest-bearing demand deposits 411,606 1,325 0.65%
Savings deposits 360,916 1,934 1.08%
Time deposits 921,462 19,274 4.21%
Short-term borrowings 133,790 1,808 2.72%
Long-term debt 21,953 753 6.90%
Total interest-bearing liabilities 1,849,727 25,094 2.73%
Noninterest-bearing demand deposits 317,504
Other liabilities 26,991
Stockholders' equity 306,190
Total liabilities and
stockholders' equity $2,500,412
Net interest income $49,814
Net yield on earning assets 4.53%

Six Months Ended June 30,
2007
Average Yield/
Balance Interest Rate

Assets:
Loan portfolio:
Residential real estate $595,381 $17,872 6.05%
Home equity 324,820 12,544 7.79%
Commercial, financial, and agriculture 668,888 25,343 7.64%
Loans to depository institutions 54,586 1,452 5.36%
Installment loans to individuals 44,564 2,588 11.71%
Previously securitized loans 12,784 3,612 56.98%
Total loans 1,701,023 63,411 7.52%
Securities:
Taxable 502,707 13,686 5.49%
Tax-exempt 40,286 1,315 6.58%
Total securities 542,993 15,001 5.57%
Deposits in depository institutions 11,623 230 3.99%
Federal funds sold 20,812 547 5.30%
Total interest-earning assets 2,276,451 79,189 7.01%
Cash and due from banks 50,424
Bank premises and equipment 46,142
Other assets 169,455
Less: Allowance for loan losses (15,887)
Total assets $2,526,585

Liabilities:
Interest-bearing demand deposits 429,483 2,641 1.24%
Savings deposits 337,153 2,736 1.64%
Time deposits 922,460 20,412 4.46%
Short-term borrowings 154,328 3,207 4.19%
Long-term debt 27,145 957 7.11%
Total interest-bearing liabilities 1,870,569 29,953 3.23%
Noninterest-bearing demand deposits 317,382
Other liabilities 30,670
Stockholders' equity 307,964
Total liabilities and
stockholders' equity $2,526,585
Net interest income $49,236
Net yield on earning assets 4.36%

CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($ in 000s)

June 30 March 31 Dec 31
2008 (a) 2008 2007

Tier I Capital:
Stockholders' equity $302,056 $304,841 $293,994
Goodwill and other intangibles (57,893) (58,065) (58,238)
Accumulated other comprehensive loss
(income) 3,718 (7,280) (633)
Qualifying trust preferred stock 16,000 16,000 16,000
Unrealized Loss on AFS securities (712) (275) (247)
Excess deferred tax assets - - -
Total tier I capital $263,169 $255,221 $250,876

Total Risk-Based Capital:
Tier I capital $263,169 $255,221 $250,876
Qualifying allowance for loan losses 17,959 18,567 17,581
Total risk-based capital $281,128 $273,788 $268,457

Net risk-weighted assets $1,855,401 $1,828,559 $1,776,158

Ratios:
Average stockholders' equity to
average assets 12.46% 12.03% 11.84%
Tangible capital ratio 10.02% 10.00% 9.72%
Risk-based capital ratios:
Tier I capital 14.18% 13.96% 14.12%
Total risk-based capital 15.15% 14.97% 15.11%
Leverage capital 10.75% 10.47% 10.31%

Sept 30 June 30
2007 2007
Tier I Capital:
Stockholders' equity $291,720 $294,783
Goodwill and other intangibles (58,328) (58,504)
Accumulated other comprehensive loss
(income) 4,396 8,647
Qualifying trust preferred stock 16,000 16,000
Unrealized Loss on AFS securities (94) (97)
Excess deferred tax assets - (342)
Total tier I capital $253,694 $260,486

Total Risk-Based Capital:
Tier I capital $253,694 $260,486
Qualifying allowance for loan losses 16,980 16,616
Total risk-based capital $270,674 $277,102

Net risk-weighted assets $1,709,486 $1,719,540

Ratios:
Average stockholders' equity to
average assets 11.82% 12.11%
Tangible capital ratio 9.59% 9.58%
Risk-based capital ratios:
Tier I capital 14.84% 15.15%
Total risk-based capital 15.83% 16.12%
Leverage capital 10.38% 10.52%

(a) June 30, 2008 risk-based capital ratios are estimated

CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(Unaudited) ($ in 000s)

As of and for the Quarter Ended
June 30 March 31 Dec 31 Sept 30 June 30
2008 2008 2007 2007 2007

Intangibles, net $57,893 $58,065 $58,238 $58,328 $58,504
Intangibles amortization
expense 172 173 177 176 177

CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)

Quarter Ended
June 30 March 31 Dec 31
2008 2008 2007

Balance at beginning of period $18,567 $17,581 $16,980

Charge-offs:
Commercial, financial, and agricultural 1,022 406 359
Real estate-mortgage 190 274 203
Installment loans to individuals 77 75 108
Overdraft deposit accounts 604 985 938
Total charge-offs 1,893 1,740 1,608

Recoveries:
Commercial, financial, and agricultural 41 13 23
Real estate-mortgage 48 27 35
Installment loans to individuals 72 108 97
Overdraft deposit accounts 274 695 404
Total recoveries 435 843 559

Net charge-offs 1,458 897 1,049
Provision for loan losses 850 1,883 1,650
Balance at end of period $17,959 $18,567 $17,581

Loans outstanding $1,750,047 $1,704,800 $1,767,021
Average loans outstanding 1,728,609 1,704,133 1,739,166
Allowance as a percent of loans
outstanding 1.03% 1.09% 1.00%
Allowance as a percent of non-
performing loans 122.89% 113.55% 103.28%
Net charge-offs (annualized) as a
percent of average loans outstanding 0.34% 0.21% 0.24%
Net charge-offs, excluding overdraft
deposit accounts, (annualized) as a
percent of average loans outstanding 0.26% 0.14% 0.12%

Quarter Ended
Sept 30 June 30
2007 2007

Balance at beginning of period $16,616 $16,083

Charge-offs:
Commercial, financial, and agricultural - 120
Real estate-mortgage 240 452
Installment loans to individuals 91 60
Overdraft deposit accounts 1,035 956
Total charge-offs 1,366 1,588

Recoveries:
Commercial, financial, and agricultural 19 41
Real estate-mortgage 22 15
Installment loans to individuals 89 98
Overdraft deposit accounts 400 367
Total recoveries 530 521

Net charge-offs 836 1,067
Provision for loan losses 1,200 1,600
Balance at end of period $16,980 $16,616

Loans outstanding $1,719,776 $1,730,354
Average loans outstanding 1,729,267 1,710,989
Allowance as a percent of loans outstanding 0.99% 0.96%
Allowance as a percent of non-performing
loans 86.47% 145.11%
Net charge-offs (annualized) as a percent
of average loans outstanding 0.19% 0.25%
Net charge-offs, excluding overdraft deposit
accounts, (annualized) as a percent of
average loans outstanding 0.05% 0.11%

CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)

June 30 March 31 Dec 31 Sept 30 June 30
2008 2008 2007 2007 2007

Nonaccrual loans $14,018 $15,840 $16,437 $18,896 $11,194
Accruing loans past due 90
days or more 431 257 314 566 212
Previously securitized loans
past due 90 days or more 165 255 76 176 45
Total non-performing loans 14,614 16,352 16,827 19,638 11,451
Other real estate owned,
excluding property
associated with previously
securitized loans 6,164 4,192 4,163 1,091 624
Other real estate owned
associated with previously
securitized loans 321 148 - 405 231
Other real estate owned 6,485 4,340 4,163 1,496 855
Total non-performing
assets $21,099 $20,692 $20,990 $21,134 $12,306

Non-performing assets as a
percent of loans and other
real estate owned 1.20% 1.21% 1.23% 1.23% 0.71%

CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Total Past Due Loans
(Unaudited) ($ in 000s)

June 30 March 31 Dec 31 Sept 30 June 30
2008 2008 2007 2007 2007

Residential real estate $5,487 $3,763 $5,480 $4,500 $3,354
Home equity 1,316 1,344 2,141 1,075 879
Commercial, financial, and
agriculture 1,166 806 1,506 311 2,248
Loans to depository institutions - - - - -
Installment loans to individuals 290 360 385 279 370
Previously securitized loans 632 897 1,099 948 799
Overdraft deposit accounts 485 568 612 575 692
Total past due loans $9,376 $7,738 $11,223 $7,688 $8,342

SOURCE City Holding Company

Charles R. Hageboeck, Chief Executive Officer and President of City Holding
Company, +1-304-769-1102