8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported)

July 24, 2006

CITY HOLDING COMPANY

(Exact Name of Registrant as Specified in its Charter)

Commission File Number: 0-17733

West Virginia	55-0169957
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

25 Gatewater Road, Cross Lanes, WV 25313

(Address of Principal Executive Offices, Including Zip Code)

304-769-1100

(Registrant’s Telephone Number, Including Area Code)

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

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c))

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Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On July 24, 2006, City Holding Company (“the Company”) issued a news release, attached as Exhibit 99, announcing the Company’s second quarter 2006 earnings. Furnished as Exhibit 99 and incorporated herein by reference is the news release issued by the Company.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99 News Release issued July 24, 2006

Signatures

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

Dated: July 25, 2006	City Holding Company
By:	/s/ David L. Bumgarner
	David L. Bumgarner
	Chief Financial Officer

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EX-99

Exhibit 99

NEWS RELEASE

For Immediate Release

July 24, 2006

For Further Information Contact:

David L. Bumgarner, Chief Financial Officer

(304) 769-1169

City Holding Company Announces Increased Second Quarter Earnings

Charleston, West Virginia - City Holding Company, “the Company” (NASDAQ:CHCO), a $2.5 billion bank holding company headquartered in Charleston, today announced net income for the second quarter of $13.8 million, or diluted earnings per share of $0.77 compared to $12.3 million, or $0.71 per diluted share in the second quarter of 2005, an 8.5% increase. For the second quarter of 2006, the Company achieved a return on assets of 2.17%, a return on equity of 18.8%, a net interest margin of 4.58%, and an efficiency ratio of  44.1%.

Key components of the increase in net income were increases in net interest income of $2.3 million and non-interest income (principally service charge revenue) of $1.4 million. These increases were partially offset by the provision for loan losses of $0.7 million in the second quarter of 2006, as compared to no provision for loan losses in the second quarter of 2005 and increased non-interest expenses of $0.8 million (principally salaries and benefits). The Company completed the acquisition of Classic Bancshares, Inc. on May 20, 2005.

Charles Hageboeck, Chief Executive Officer and President, stated, “I am very pleased with City’s continuing success during the second quarter of 2006. The Company achieved a significant increase in its’ earnings per share despite the impact of the provision for loan losses in the second quarter of 2006 (as compared to no such provision in the second quarter of 2005) and a decrease of over $300,000 in interest income associated with previously securitized loans (whose balances decreased 45%). As compared to the prior year ended June 30, 2005, our net interest margin was higher, efficiency ratio better, and profitability as measured by our return on assets was higher. Loans and deposits both grew meaningfully in an economic environment that has been somewhat challenging for banks. Asset quality, as measured by non-performing assets, remained stable and at very desirable levels as compared to many of our peers and our level of net charge-offs was well within acceptable limits. The bank is extremely well capitalized and highly liquid. In summary, the Company is performing well against all measures. The Company used some of its’ profits to repurchase approximately 271,000 shares of common stock during the second quarter. Based on our continued success in the second quarter of 2006, we believe that the Company remains well positioned to maintain our solid performance on behalf of our shareholders throughout the remainder of the year.”

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For the six months ended June 30, 2006, City’s net income grew 10.8% to $26.6 million compared to $24.0 million in the first half of 2005. Diluted earnings per share grew 6.4% to $1.49 per share for the six months ended June 30, 2006 as compared to $1.40 per share for the six months ended June 30, 2005.

Net Interest Income

The Company’s tax equivalent net interest income increased $2.3 million, or 9.7%, from $23.9 million during the second quarter of 2005 to $26.2 million during the second quarter of 2006. This increase was primarily attributable to a widening of the Company’s net interest margin from increasing rates, which increased net interest income by $2.1 million from the second quarter of 2005. The increase was due primarily to an increase of 89 basis points in the Company’s traditional loan portfolio (residential real estate, home equity, commercial, and installment loans). As a result, interest income from the Company’s traditional loan portfolio increased $3.7 million from the second quarter of 2005. Also contributing to increased interest income was growth in the Company’s traditional loan portfolio due to internal growth and the acquisition of Classic Bancshares, Inc. during the second quarter of 2005. As a result of this growth of $185 million, or 12.89%, in the average balances of traditional loan products, interest income from these loans increased $2.7 million.

These increases were partially offset by increased interest expense associated with higher rates paid on deposits and increased balances of deposits. Interest expense increased $2.7 million due to a 75 basis point increase in the rate paid on interest bearing deposits from the second quarter of 2005. Meanwhile, increased average balances of deposits of $190 million, or 13.2%, from the second quarter of 2005 was due to internal growth and the acquisition of Classic during the second quarter of 2005. Growth in average balances of deposits increased interest expense by $1.2 million.

Interest income from previously securitized loans decreased $0.3 million from the second quarter of 2005. This decrease was related to a decrease in the average balance of the loans from $45.6 million for the quarter ended June 30, 2005, to $24.0 million for the quarter ended June 30, 2006. However, this reduction was partially mitigated as the yield on these loans rose from 25.0% from the second quarter of 2005 to 41.9% for the second quarter of 2006 (see Previously Securitized Loans section for further discussion).

Credit Quality

At June 30, 2006, the Allowance for Loan Losses (“ALLL”) was $16.6 million or 1.00% of total loans outstanding and 445% of non-performing loans compared to $18.3 million or 1.14% of loans outstanding and 464% of non-performing loans at June 30, 2005, and $16.8 million or 1.04% of loans outstanding and 402% of non-performing loans at December 31, 2005. As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $0.7 million in the second quarter of 2006 and no provision in the second quarter of 2005. The provision for loan losses also decreased slightly from $1.0 million in the first quarter of 2006 primarily due to recent improvements within the Company’s home equity and consumer portfolios.

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Changes in the amount of the provision and related allowance are based upon City’s detailed methodology and are directionally consistent with changes in quality of the Company’s loan portfolio.

The Company had net charge-offs of $0.9 million for the second quarter of 2006, with depository accounts representing $0.6 million of this total. While charge-offs on depository accounts are appropriately taken against the ALLL, the revenue associated with depository accounts is reflected in service charges and has been steadily growing as the core base of checking accounts has grown. Net charge-offs on real estate loans and installment loans were $0.2 million and $0.1 million, respectively, while commercial loans experienced no net charge-offs for the quarter ended June 30, 2006.

Due to a number of strategic initiatives to strengthen the loan portfolio implemented by management in recent years, including tightening credit standards, changing the overall mix of the portfolio to include a higher proportion of real estate secured loans, and identifying and charging off or resolving problem loans, the quality of the Company’s loan portfolio remains solid. At June 30, 2006, non-performing assets as a percentage of loans and other real estate owned were 0.25%. Average non-performing assets as a percentage of loans and other real estate owned for the Company’s peer group (bank holding companies with total assets between $1 and $5 billion) for the most recently reported quarter ended March 31, 2006, were 0.71%. Another contributing factor that has enabled the Company to maintain its’ allowance at lower levels than peers is the composition of the Company’s loan portfolio, which is weighted more heavily toward residential mortgage loans and less toward non-real estate secured commercial loans than its’ peers. As a result, the Company’s ALLL as a percentage of loans outstanding is 1.00% at June 30, 2006, compared to the average of the Company’s peer group of 1.20% for the most recently reported quarter. 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 for loan losses that is directionally consistent with changes in asset quality and loss experience.

Non-interest Income

Net of investment securities gains, non-interest income increased $1.4 million, or 11.4%, to $13.5 million in the second quarter of 2006 as compared to $12.1 million in the second quarter of 2005. The largest source of non-interest income is service charges from depository accounts, which increased $1.2 million, or 12.6%, from $9.7 million during the second quarter of 2005 to $10.9 million during the second quarter of 2006. This increase is due to an increase in the utilization of services by the Company’s expanding customer base. On a year-to-date basis, non-interest income increased $2.3 million, or 9.8%, exclusive of security gains primarily due to increases in service charges.

Non-interest Expenses

Non-interest expenses increased $0.8 million from $16.8 million in the second quarter of 2005 to $17.6 million in the second quarter of 2006. The increase in non-interest expenses for the quarter and year to date was primarily attributable to increased compensation expenses and other miscellaneous non-interest expenses related to the Company’s acquisition of Classic Bancshares, Inc. during the second quarter of 2005.

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The Company’s efficiency ratio improved from 46.9% for the quarter ended June 30, 2005 to 44.1% for the quarter ended June 30, 2006, reflecting ongoing strength in managing expenses while increasing revenues. The average efficiency ratio for the Company’s peer group for the most recently reported quarter ended March 31, 2006, was 61.1%. For the six months ended June 30, 2006, the efficiency ratio improved to 44.69% from 47.12% for the six months ended June 30, 2005.

Balance Sheet Trends

As compared to December 31, 2005, loans have increased $46.1 million at June 30, 2006. The primary reasons for this growth are increases in targeted areas of commercial loans of $38.9 million, home equity loans of $11.6 million and residential real estate loans of $8.6 million. These increases were partially offset by decreases in previously securitized loans of $8.0 million (see discussion below) and installment loans of $5.0 million. The Company was successful in increasing residential real estate loans and home equity loans despite continued difficulties imposed by the flat yield curve that has resulted in borrowers refinancing into fixed rate mortgages. Total average depository balances increased $63.0 million, or 13.3% on an annualized basis, from the quarter ended December 31, 2005 to the quarter ended June 30, 2006. This growth was primarily in time deposits, which have increased $56.1 million from the quarter ended December 31, 2005.

Previously Securitized Loans

Between 1997 and 1999, the Company originated and securitized $760 million in 125% loan to value junior-lien underlying mortgages in six separate pools. The Company had a retained interest in the residual cash flows associated with these underlying mortgages after satisfying priority claims. Principal amounts owed to investors in the securitizations were evidenced by notes that were subject to redemption under certain circumstances. When the notes were redeemed during 2003 and 2004, the Company became the beneficial owner of the mortgage loans and recorded the loans as “Previously Securitized Loans” within the loan portfolio. At June 30, 2006, the Company reported “Previously Securitized Loans” of $22.3 million compared to $41.7 million and $30.3 million at June 30, 2005 and December 31, 2005, respectively, representing a decrease of 46.6% and 26.5%, respectively.

Because the carrying value of the previously securitized loans incorporates discounts for expected prepayment and default rates, the carrying value of the loans is generally less than the contractual outstanding balance of the loans. As of June 30, 2006, the contractual outstanding balances of the mortgages securitized were $40.0 million while the carrying value of these assets was $22.3 million. The difference between the carrying value and the contractual outstanding balance of previously securitized loans is accreted into interest income over the life of the loans. An impairment charge on previously securitized loans would be provided through the Company’s provision and allowance for loan losses if the discounted present value of estimated future cash flows declines below the recorded value of previously securitized loans.

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The Company estimates the net carrying value of previously securitized loan balances and related interest income to decrease as shown below:

	12/31 Balance (in millions)*	Annualized Interest Income (in millions)*	Effective Annualized Yield*
2005	$30.3	$11.4	27%
2006	18.4	9.5	42%
2007	13.7	6.8	42%
2008	10.4	5.1	42%
2009	7.9	3.9	42%
* - 2005 amounts are based on actual results. 2006 amounts are based on actual results through 6/30/06 and estimated amounts for the remainder of the year. 2007, 2008 and 2009 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 different from that assumed, which could result in the actual results being materially different from the amounts estimated above.

The yield on the previously securitized loans was 41.9% for the quarter ended June 30, 2006, compared to 39.1% for the quarter ended March 31, 2006, and 25.0% for the quarter ended June 30, 2005. The yield on the previously securitized loans has increased due to improved cash flows from net default rates being less than previously estimated. The lower net default rates resulted from the Company’s assumption of the servicing of all of the pool balances during the second quarter of 2005. This favorably impacted the yield realized on the previously securitized loans by eliminating the servicing fees previously being paid to the external servicing agent and increased internal collection efforts that have resulted in enhanced levels of recoveries on previously charged-off loans. Subsequent to our assumption of the servicing of these loans, the Company has averaged net recoveries of approximately $485,000 per month. The Company does not believe that continued net recoveries at this rate can be sustained indefinitely. As a result of these net recoveries which are accreted into income over the remaining expected life of the loans, together with the improvements associated with lower servicing costs, the Company now projects that the yield on these loans will be in the range of 41-43%.

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 84.1% and the loan to asset ratio was 65.8% at June 30, 2006. The Company maintained investment securities totaling 22.5% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 43.3% of assets at June 30, 2006. Time deposits fund 34.9% of assets at June 30, 2006, 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.

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The Company is also strongly capitalized. Capitalization (as measured by average equity to average assets) was 11.5% for the quarter ended June 30, 2006 as a result of the Company’s strong earnings. With respect to regulatory capital, at June 30, 2006, the Company’s Leverage Ratio is 10.34%, the Tier I Capital ratio is 14.58%, and the Total Risk-Based Capital ratio is 15.53%. 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 9.1% at June 30, 2006 compared with a tangible equity ratio of 8.9% at June 30, 2005. During the second quarter of 2006, the Company repurchased 271,481 common shares at a weighted average price of $35.72 as part of a 1 million share repurchase plan authorized by the Board of Directors in June 2005. Between December 31, 2005 and June 30, 2006, the Company repurchased a total of 572,053 shares representing 3.2% of total shares outstanding. Due to the Company’s strong earnings, the Company was able to both repurchase these shares and increase its’ tangible equity ratio.

As a result of repurchases completed in the second quarter of 2006, the Company’s average outstanding shares decreased 109,000 shares during the quarter, providing the Company’s shareholders increased earnings capacity as shares repurchased improve earnings per share on the remaining shares outstanding. The Company has 222,847 shares remaining under the plan approved by the Board of Directors in June 2005.

City Holding Company is the parent company of City National Bank of West Virginia. City National operates 67 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.

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CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
	Three Months Ended
	June 30			June 30			Percent
	2006			2005			Change
Earnings ($000s, except per share data):
Net Interest Income (FTE)	$	26,171		$	23,863			9.67	%
Net Income		13,761			12,349			11.43	%
Earnings per Basic Share		0.78			0.72			8.33	%
Earnings per Diluted Share		0.77			0.71			8.45	%
Key Ratios (percent):
Return on Average Assets		2.17	%		2.09	%		3.77	%
Return on Average Equity		18.83	%		19.76	%		(4.74	)%
Net Interest Margin		4.58	%		4.42	%		3.56	%
Efficiency Ratio		44.11	%		46.90	%		(5.95	)%
Average Shareholders' Equity to Average Assets		11.51	%		10.57	%		8.93	%
Risk-Based Capital Ratios (a):
Tier I		14.57	%		14.38	%		1.32	%
Total		15.52	%		15.43	%		0.58	%
Average Tangible Equity to Average Tangible Assets		9.13	%		8.91	%		2.50	%
Common Stock Data:
Cash Dividends Declared per Share	$	0.28		$	0.25			12.00	%
Book Value per Share		16.17			15.56			3.95	%
Tangible Book Value per Share		12.80			12.13			5.53	%
Market Value per Share:
High		37.31			37.00			0.84	%
Low		34.53			27.57			25.24	%
End of Period		36.14			36.52			(1.04	)%
Price/Earnings Ratio (b)		11.58			12.68			(8.65	)%
		Six Months Ended
		June 30			June 30			Percent
		2006			2005			Change
Earnings ($000s, except per share data):
Net Interest Income (FTE)	$	52,276		$	46,360			12.76	%
Net Income		26,627			24,027			10.82	%
Earnings per Basic Share		1.49			1.42			4.93	%
Earnings per Diluted Share		1.49			1.40			6.43	%
Key Ratios (percent):
Return on Average Assets		2.12	%		2.10	%		0.80	%
Return on Average Equity		18.10	%		20.30	%		(10.88	)%
Net Interest Margin		4.64	%		4.44	%		4.60	%
Efficiency Ratio		44.69	%		47.12	%		(5.17	)%
Average Shareholders' Equity to Average Assets		11.69	%		10.33	%		13.11	%
Common Stock Data:
Cash Dividends Declared per Share	$	0.56		$	0.50			12.00	%
Market Value per Share:
High		37.64			37.00			1.73	%
Low		34.53			27.57			25.24	%
(a) June 30, 2006 risk-based capital ratios are estimated.
(b) June 30, 2006 price/earnings ratio computed based on annualized second quarter 2006 earnings.

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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
2002	$	8.92	$	9.40	$	9.64	$	9.93	$	12.04	$	30.20
2003		10.10		10.74		11.03		11.46		25.50		37.15
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						34.53		37.64
Earnings per Basic Share
		Quarter Ended
		March 31		June 30		September 30		December 31		Year-to-Date
2002	$	0.38	$	0.45	$	0.53	$	0.56	$	1.92
2003		0.56		0.73		0.69		0.64		2.62
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						1.49
Earnings per Diluted Share
		Quarter Ended
		March 31		June 30		September 30		December 31		Year-to-Date
2002	$	0.38	$	0.45	$	0.52	$	0.55	$	1.90
2003		0.55		0.72		0.68		0.63		2.58
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						1.49

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CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
	Three Months Ended June 30,
	2006			2005
Interest Income
Interest and fees on loans	$	30,651		$	24,523
Interest on investment securities:
Taxable		7,489			7,682
Tax-exempt		455			447
Interest on deposits in depository institutions		415			24
Total Interest Income		39,010			32,676
Interest Expense
Interest on deposits		10,520			6,605
Interest on short-term borrowings		1,326			787
Interest on long-term debt		1,239			1,662
Total Interest Expense		13,085			9,054
Net Interest Income		25,925			23,622
Provision for loan losses		675			-
Net Interest Income After Provision for Loan Losses		25,250			23,622
Non-Interest Income
Investment securities gains		-			18
Service charges		10,903			9,685
Insurance commissions		521			545
Trust and investment management fee income		504			462
Bank owned life insurance		678			545
Other income		857			843
Total Non-Interest Income		13,463			12,098
Non-Interest Expense
Salaries and employee benefits		8,764			8,404
Occupancy and equipment		1,624			1,564
Depreciation		1,071			994
Professional fees and litigation expense		571			514
Postage, delivery, and statement mailings		689			615
Advertising		755			762
Telecommunications		525			513
Bankcard expenses		458			560
Insurance and regulatory		381			365
Office supplies		372			275
Repossessed asset (gains) losses, net of expenses		(129	)		(16	)
Other expenses		2,474			2,289
Total Non-Interest Expense		17,555			16,839
Income Before Income Taxes		21,158			18,881
Income tax expense		7,397			6,532
Net Income	$	13,761		$	12,349
Basic earnings per share	$	0.78		$	0.72
Diluted earnings per share	$	0.77		$	0.71
Average Common Shares Outstanding:
Basic		17,719			17,268
Diluted		17,772			17,477

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CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
	Six Months Ended June 30,
	2006			2005
Interest Income
Interest and fees on loans	$	60,214		$	46,713
Interest on investment securities:
Taxable		14,748			15,328
Tax-exempt		922			882
Interest on deposits in depository institutions		566			42
Interest on federal funds sold		-			4
Total Interest Income		76,450			62,969
Interest Expense
Interest on deposits		19,721			12,473
Interest on short-term borrowings		2,452			1,364
Interest on long-term debt		2,499			3,247
Total Interest Expense		24,672			17,084
Net Interest Income		51,778			45,885
Provision for loan losses		1,675			-
Net Interest Income After Provision for Loan Losses		50,103			45,885
Non-Interest Income
Investment securities gains		-			21
Service charges		20,764			18,128
Insurance commissions		1,135			1,137
Trust and investment management fee income		1,070			1,053
Bank owned life insurance		1,215			1,536
Other income		1,667			1,667
Total Non-Interest Income		25,851			23,542
Non-Interest Expense
Salaries and employee benefits		17,396			16,324
Occupancy and equipment		3,223			3,039
Depreciation		2,121			1,938
Professional fees and litigation expense		966			1,079
Postage, delivery, and statement mailings		1,333			1,268
Advertising		1,529			1,467
Telecommunications		1,001			986
Bankcard expenses		1,001			1,085
Insurance and regulatory		769			731
Office supplies		754			478
Repossessed asset (gains) losses, net of expenses		(125	)		(15	)
Loss on early extinguishment of debt		282			-
Other expenses		4,802			4,472
Total Non-Interest Expense		35,052			32,852
Income Before Income Taxes		40,902			36,575
Income tax expense		14,275			12,548
Net Income	$	26,627		$	24,027
Basic earnings per share	$	1.49		$	1.42
Diluted earnings per share	$	1.49		$	1.40
Average Common Shares Outstanding:
Basic		17,860			16,938
Diluted		17,917			17,146

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CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) ($ in 000s)
	Three Months Ended
	June 30, 2006			June 30, 2005
Balance at April 1	$	288,376		$	219,302
Net income		13,761			12,349
Other comprehensive income:
Change in unrealized gain on securities available-for-sale		(2,994	)		2,660
Change in derivative instruments		(503	)		(104	)
Cash dividends declared ($0.28/share)		(4,919	)		-
Cash dividends declared ($0.25/share)		-			(4,497	)
Issuance of 1,580,034 shares for acquisition of Classic Bancshares, net
108,173 owned and transferred to treasury		-			54,339
Issuance of stock award shares, net		20			-
Exercise of 5,132 stock options		68			-
Exercise of 15,018 stock options		-			200
Excess tax benefits on stock compensation		22			-
Purchase of 271,481 common shares of treasury		(9,711	)		-
Purchase of 139,776 common shares of treasury		-			(4,625	)
Balance at June 30	$	284,120		$	279,624
		Six Months Ended
		June 30, 2006			June 30, 2005
Balance at January 1	$	292,141		$	216,080
Net income		26,627			24,027
Other comprehensive income:
Change in unrealized gain on securities available-for-sale		(3,911	)		(2,086	)
Change in derivative instruments		(1,012	)		(104	)
Cash dividends declared ($0.56/share)		(9,907	)		-
Cash dividends declared ($0.50/share)		-			(8,651	)
Issuance of 1,580,034 shares for acquisition of Classic Bancshares, net
108,173 owned and transferred to treasury		-			54,339
Issuance of stock award shares, net		187			-
Issuance of 4,800 stock award shares		-			147
Exercise of 32,007 stock options		425			-
Exercise of 38,368 stock options		-			497
Excess tax benefits on stock compensation		195			-
Purchase of 572,053 common shares of treasury		(20,625	)		-
Purchase of 139,776 common shares of treasury		-			(4,625	)
Balance at June 30	$	284,120		$	279,624

-13-

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
	2006			2006			2005			2005			2005
Interest income	$	39,010		$	37,441		$	36,639		$	35,910		$	32,676
Taxable equivalent adjustment		246			252			269			273			241
Interest income (FTE)		39,256			37,693			36,908			36,183			32,917
Interest expense		13,085			11,588			11,064			10,290			9,054
Net interest income		26,171			26,105			25,844			25,893			23,863
Provision for loan losses		675			1,000			800			600			-
Net interest income after provision
for loan losses		25,496			25,105			25,044			25,293			23,863
Noninterest income		13,463			12,389			13,537			13,012			12,098
Noninterest expense		17,555			17,497			18,339			17,922			16,839
Income before income taxes		21,404			19,997			20,242			20,383			19,122
Income tax expense		7,397			6,879			6,884			6,938			6,532
Taxable equivalent adjustment		246			252			269			273			241
Net income	$	13,761		$	12,866		$	13,089		$	13,172		$	12,349
Basic earnings per share	$	0.78		$	0.71		$	0.72		$	0.73		$	0.72
Diluted earnings per share		0.77			0.71			0.72			0.72			0.71
Cash dividends declared per share		0.28			0.28			0.25			0.25			0.25
Average Common Share (000s):
Outstanding		17,719			18,006			18,127			18,052			17,268
Diluted		17,772			18,067			18,211			18,238			17,477
Net Interest Margin		4.58	%		4.71	%		4.55	%		4.51	%		4.42	%

-14-

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
	2006			2006		2005			2005			2005
Non-Interest Income:
Service charges	$	10,903		$	9,862	$	10,530		$	10,433		$	9,685
Insurance commissions		521			614		620			595			545
Trust and investment mangagement fee income		504			566		504			468			462
Bank owned life insurance		678			537		691			552			545
Other income		857			810		1,067			959			843
Subtotal		13,463			12,389		13,412			13,007			12,080
Investment security gains		-			-		125			5			18
Total Non-Interest Income	$	13,463		$	12,389	$	13,537		$	13,012		$	12,098
Non-Interest Expense:
Salaries and employee benefits	$	8,764		$	8,632	$	8,416		$	8,739		$	8,404
Occupancy and equipment		1,624			1,599		1,569			1,687			1,564
Depreciation		1,071			1,050		1,062			1,096			994
Professional fees and litigation expense		571			395		486			456			514
Postage, delivery, and statement mailings		689			644		728			670			615
Advertising		755			774		710			764			762
Telecommunications		525			476		560			702			513
Bankcard expenses		458			543		540			512			560
Insurance and regulatory		381			388		380			385			365
Office supplies		372			383		388			327			275
Repossessed asset (gains) losses, net of expenses		(129	)		4		(28	)		(35	)		(16	)
Loss on early extinguishment of debt		-			282		-			-			-
Other expenses		2,474			2,327		3,528			2,619			2,289
Total Non-Interest Expense	$	17,555		$	17,497	$	18,339		$	17,922		$	16,839
Employees (Full Time Equivalent)		779			764		770			768			767
Branch Locations		67			66		67			67			67

-15-

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
	June 30			December 31
	2006			2005
	(Unaudited)
Assets
Cash and due from banks	$	59,282		$	81,822
Interest-bearing deposits in depository institutions		35,388			4,451
Cash and cash equivalents		94,670			86,273
Investment securities available-for-sale, at fair value		512,474			549,966
Investment securities held-to-maturity, at amortized cost		54,372			55,397
Total investment securities		566,846			605,363
Gross Loans		1,658,919			1,612,827
Allowance for loan losses		(16,636	)		(16,790	)
Net loans		1,642,283			1,596,037
Bank owned life insurance		54,058			52,969
Premises and equipment		43,094			42,542
Accrued interest receivable		11,271			13,134
Net deferred tax assets		30,095			27,929
Intangible assets		59,219			59,559
Other assets		20,485			18,791
Total Assets	$	2,522,021		$	2,502,597
Liabilities
Deposits:
Noninterest-bearing	$	345,207		$	376,076
Interest-bearing:
Demand deposits		427,813			437,639
Savings deposits		319,189			302,571
Time deposits		880,261			812,134
Total deposits		1,972,470			1,928,420
Short-term borrowings		142,156			152,255
Long-term debt		90,854			98,425
Other liabilities		32,421			31,356
Total Liabilities		2,237,901			2,210,456
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, 2006 and December 31, 2005
less 928,811 and 395,465 shares in treasury, respectively		46,249			46,249
Capital surplus		103,825			104,435
Retained earnings		177,467			160,747
Cost of common stock in treasury		(30,486	)		(11,278	)
Accumulated other comprehensive (loss) income:
Unrealized loss on securities available-for-sale		(8,750	)		(4,839	)
Unrealized loss on derivative instruments		(1,012	)		-
Underfunded pension liability		(3,173	)		(3,173	)
Total Accumulated Other Comprehensive (Loss) Income		(12,935	)		(8,012	)
Total Stockholders' Equity		284,120			292,141
Total Liabilities and Stockholders' Equity	$	2,522,021		$	2,502,597

-16-

CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
	June 30		March 31		Dec. 31		Sept. 30		June 30
	2006		2006		2005		2005		2005
Residential real estate	$	601,097	$	595,093	$	592,521	$	596,184	$	596,893
Home equity		313,301		304,559		301,728		306,448		307,354
Commercial, financial, and agriculture		668,581		643,269		629,670		621,345		584,164
Installment loans to individuals		53,687		54,287		58,652		63,134		70,904
Previously securitized loans		22,253		25,918		30,256		35,599		41,670
Gross Loans	$	1,658,919	$	1,623,126	$	1,612,827	$	1,622,710	$	1,600,985

-17-

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
	Three Months Ended June 30,
				2006								2005
	Average					Yield/			Average					Yield/
	Balance			Interest		Rate			Balance			Interest		Rate
Assets:
Loan portfolio:
Residential real estate	$	596,758		$	8,484		5.70	%	$	523,607		$	7,290		5.58	%
Home equity		309,270			5,962		7.73	%		304,475			4,602		6.06	%
Commercial, financial, and agriculture		651,501			12,092		7.44	%		545,511			8,258		6.07	%
Installment loans to individuals		55,280			1,600		11.61	%		54,704			1,537		11.27	%
Previously securitized loans		24,045			2,513		41.92	%		45,583			2,836		24.95	%
Total loans		1,636,854			30,651		7.51	%		1,473,880			24,523		6.67	%
Securities:
Taxable		579,058			7,489		5.19	%		645,375			7,682		4.77	%
Tax-exempt		43,388			700		6.47	%		41,209			688		6.70	%
Total securities		622,446			8,189		5.28	%		686,584			8,370		4.89	%
Deposits in depository institutions		33,986			416		4.91	%		5,061			24		1.90	%
Total interest-earning assets		2,293,286			39,256		6.87	%		2,165,525			32,917		6.10	%
Cash and due from banks		50,217								38,292
Bank premises and equipment		42,621								38,104
Other assets		170,271								140,301
Less: Allowance for loan losses		(16,911	)							(17,489	)
Total assets	$	2,539,484							$	2,364,733
Liabilities:
Interest-bearing demand deposits		438,851			1,329		1.21	%		428,700			845		0.79	%
Savings deposits		318,702			926		1.17	%		291,368			468		0.64	%
Time deposits		865,554			8,265		3.83	%		713,383			5,292		2.98	%
Short-term borrowings		161,082			1,326		3.30	%		158,170			787		2.00	%
Long-term debt		92,267			1,239		5.39	%		154,723			1,662		4.31	%
Total interest-bearing liabilities		1,876,456			13,085		2.80	%		1,746,344			9,054		2.08	%
Noninterest-bearing demand deposits		342,115								340,340
Other liabilities		28,527								28,098
Stockholders' equity		292,389								249,951
Total liabilities and
stockholders' equity	$	2,539,487							$	2,364,733
Net interest income				$	26,171							$	23,863
Net yield on earning assets							4.58	%							4.42	%

-18-

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
	Six Months Ended June 30,
				2006								2005
	Average					Yield/			Average					Yield/
	Balance			Interest		Rate			Balance			Interest		Rate
Assets:
Loan portfolio:
Residential real estate	$	594,954		$	16,864		5.72	%	$	494,968		$	13,809		5.63	%
Home equity		305,787			11,556		7.62	%		305,410			8,876		5.86	%
Commercial, financial, and agriculture		643,420			23,385		7.33	%		511,674			15,241		6.01	%
Installment loans to individuals		55,909			3,193		11.52	%		49,249			2,870		11.75	%
Previously securitized loans		26,037			5,217		40.41	%		50,230			5,917		23.75	%
Total loans		1,626,107			60,215		7.47	%		1,411,531			46,713		6.67	%
Securities:
Taxable		576,640			14,748		5.16	%		651,275			15,328		4.75	%
Tax-exempt		43,843			1,418		6.52	%		39,269			1,357		6.97	%
Total securities		620,483			16,166		5.25	%		690,544			16,685		4.87	%
Deposits in depository institutions		24,490			566		4.66	%		4,391			42		1.93	%
Federal funds sold		-			-		-			290			4		2.78	%
Total interest-earning assets		2,271,080			76,947		6.83	%		2,106,756			63,444		6.07	%
Cash and due from banks		51,726								41,063
Bank premises and equipment		42,575								36,229
Other assets		169,159								123,538
Less: Allowance for loan losses		(16,881	)							(17,485	)
Total assets	$	2,517,659							$	2,290,101
Liabilities:
Interest-bearing demand deposits		441,474			2,588		1.18	%		421,005			1,561		0.75	%
Savings deposits		312,542			1,658		1.07	%		284,281			823		0.58	%
Time deposits		848,306			15,474		3.68	%		685,619			10,089		2.97	%
Short-term borrowings		156,431			2,452		3.16	%		151,158			1,364		1.82	%
Long-term debt		93,773			2,499		5.37	%		151,796			3,247		4.31	%
Total interest-bearing liabilities		1,852,526			24,671		2.69	%		1,693,859			17,084		2.03	%
Noninterest-bearing demand deposits		342,298								331,046
Other liabilities		28,546								28,522
Stockholders' equity		294,294								236,674
Total liabilities and
stockholders' equity	$	2,517,664							$	2,290,101
Net interest income				$	52,276							$	46,360
Net yield on earning assets							4.64	%							4.44	%

-19-

CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($ in 000s)
	June 30			March 31			Dec. 31			Sept. 30			June 30
	2006 (a)			2006			2005			2005			2005
Tier I Capital:
Stockholders' equity	$	284,120		$	288,376		$	292,141		$	290,432		$	279,624
Goodwill and other intangibles		(59,219	)		(59,378	)		(59,559	)		(59,742	)		(61,578	)
Accumulated other comprehensive income		9,762			6,265			8,012			4,106			3,334
Qualifying trust preferred stock		25,500			25,500			28,000			28,000			28,000
Excess deferred tax assets		(4,079	)		(2,254	)		(1,071	)		-			-
Total tier I capital	$	256,084		$	258,509		$	267,523		$	262,796		$	249,380
Total Risk-Based Capital:
Tier I capital	$	256,084		$	258,509		$	267,523		$	262,796		$	249,380
Qualifying allowance for loan losses		16,636			16,818			16,790			17,768			18,298
Total risk-based capital	$	272,720		$	275,327		$	284,313		$	280,564		$	267,678
Net risk-weighted assets	$	1,757,720		$	1,742,943		$	1,735,538		$	1,758,566		$	1,734,653
Ratios:
Average stockholders' equity to average assets		11.51	%		11.87	%		11.87	%		11.47	%		10.57	%
Tangible capital ratio		9.13	%		9.24	%		9.52	%		9.32	%		8.91	%
Risk-based capital ratios:
Tier I capital		14.57	%		14.83	%		15.41	%		14.94	%		14.38	%
Total risk-based capital		15.52	%		15.80	%		16.38	%		15.95	%		15.43	%
Leverage capital		10.34	%		10.62	%		10.97	%		10.68	%		10.83	%
(a) June 30, 2006 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
		2006			2006			2005			2005			2005
Intangibles, net	$	59,219		$	59,378		$	59,559		$	59,742		$	61,578
Intangibles amortization expense		181			181			183			183			95

-20-

CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
	Quarter Ended
	June 30			March 31			Dec. 31			Sept. 30			June 30
	2006			2006			2005			2005			2005
Balance at beginning of period	$	16,818		$	16,790		$	17,768		$	18,298		$	16,325
Allowance acquired through acquisition		-			-			-			-			3,265
Charge-offs:
Commercial, financial, and agricultural		43			185			527			54			663
Real estate-mortgage		232			296			302			208			323
Installment loans to individuals		239			368			664			476			263
Overdraft deposit accounts		955			958			996			1,012			832
Total charge-offs		1,469			1,807			2,489			1,750			2,081
Recoveries:
Commercial, financial, and agricultural		33			32			30			135			345
Real estate-mortgage		56			105			188			53			25
Installment loans to individuals		151			198			163			136			175
Overdraft deposit accounts		372			500			330			296			244
Total recoveries		612			835			711			620			789
Net charge-offs		857			972			1,778			1,130			1,292
Provision for loan losses		675			1,000			800			600			-
Balance at end of period	$	16,636		$	16,818		$	16,790		$	17,768		$	18,298
Loans outstanding	$	1,658,919		$	1,623,126		$	1,612,827		$	1,622,710		$	1,600,985
Average loans outstanding		1,636,854			1,615,242			1,618,711			1,612,344			1,473,880
Allowance as a percent of loans outstanding		1.00	%		1.04	%		1.04	%		1.09	%		1.14	%
Allowance as a percent of non-performing loans		445	%		504	%		402	%		487	%		464	%
Net charge-offs (annualized) as a
percent of average loans outstanding		0.21	%		0.24	%		0.44	%		0.28	%		0.35	%
Net charge-offs, excluding overdraft deposit accounts,
(annualized) as a percent of average loans outstanding		0.07	%		0.13	%		0.27	%		0.10	%		0.19	%

-21-

CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
	June 30			March 31			Dec. 31			Sept. 30			June 30
	2006			2006			2005			2005			2005
Nonaccrual loans	$	3,046		$	2,743		$	2,785		$	2,468		$	2,709
Accruing loans past due 90 days or more		573			512			1,124			1,003			936
Previously securitized loans past due 90 days or more		123			85			268			174			299
Total non-performing loans		3,742			3,340			4,177			3,645			3,944
Other real estate owned, excluding property associated
with previously securitized loans		294			403			135			117			471
Other real estate owned associated with previously
securitized loans		92			306			-			-			-
		386			709			135			117			471
Total non-performing assets	$	4,128		$	4,049		$	4,312		$	3,762		$	4,415
Non-performing assets as a percent of loans and
other real estate owned		0.25	%		0.25	%		0.27	%		0.23	%		0.28	%

-22-