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): January 23, 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 Incorporation or Organization)	(I.R.S. Employer 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)

(Former Name or Former Address, if Changed Since Last Report)

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))

Section 2 – Financial Information

Item 2.02 Results of Operations and Financial Condition.

On January 23, 2006, City Holding Company (“the Company”) issued a news release, attached as Exhibit 99, announcing the Company’s fourth quarter 2005 earnings. Furnished as Exhibit 99 and incorporated herein by reference is the news release issued by the Company announcing its fourth quarter 2005 earnings.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99 News Release issued on January 23, 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: January 23, 2006	City Holding Company
	By:	/s/ David L. Bumgarner
		David L. Bumgarner
		Chief Financial Officer

EX-99

Exhibit 99

NEWS RELEASE

For Immediate Release

January 23, 2006

For Further Information Contact:

Charles R. Hageboeck, Chief Executive Officer and President

(304) 769-1102

City Holding Company Announces Record 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 fourth quarter of $13.1 million, or diluted earnings per share of $0.72 compared to $11.1 million, or $0.66 per diluted share in the fourth quarter of 2004, a 9.1% increase. For the fourth quarter of 2005, the Company achieved a return on assets of 2.10%, a return on equity of 17.66%, a net interest margin of 4.55%, and an efficiency ratio of 46.6%.

For the full year of 2005, the Company reported net income of $50.3 million, or diluted earnings per share of $2.84 compared to $46.3 million, or diluted earnings per share of $2.75 during 2004. The results for 2004 included income of $3.2 million net of associated expenses and taxes, or $0.19 per diluted share, recognized in connection with the settlement of a derivative action brought against certain current and former directors and former executive officers of City Holding Company and City National Bank seeking to recover alleged damages on behalf of City Holding Company and City National Bank. Also, the Company recorded a provision for loan losses of $1.4 million in 2005 as compared to no provision for loan losses during 2004. Return on assets for the full year was 2.09%, return on equity was 18.98%, the net interest margin was 4.49%, and the efficiency ratio was 46.7%.

Charles R. “Skip” Hageboeck, Chief Executive Officer and President, commented, “I am proud of management and staff efforts that produced record earnings during 2005. The Company experienced success not only by maintaining extraordinary financial performance, but also by positioning the Company for growth in its core markets. This occurred despite the revenues associated with the legal settlement during 2004 and recording a provision for loan loss expense during the last two quarters in 2005 for the first time since the second quarter of 2002. City’s net interest income increased despite a substantial decline in balances of high yielding previously securitized loans, and our net margin improved 20 basis points from 2004’s net interest margin. Fee income grew by 12% after adjusting for the proceeds of the 2004 legal settlement. Expenses, as evidenced by the efficiency ratio, were managed tightly, and the bank’s asset quality improved. Additionally, we successfully integrated Classic Bancshares, Inc. (“Classic”) into the City franchise. This acquisition added total assets of $338 million, net loans of $254 million, and deposits of $252 million to the Company. Finally, we accomplished all of this while successfully transitioning to a new management team. Based on the success the Company enjoyed in 2005, I am confident we are positioned to continue our performance on behalf of our shareholders during 2006.”

Net Interest Income

The Company’s tax equivalent net interest income increased $4.0 million, or 18.2%, from $21.9 million during the fourth quarter of 2004 to $25.8 million during the fourth quarter of 2005. The increase was primarily attributable to the acquisition of Classic ($2.8 million) as well as increased net interest income as a result of a widening of the net interest margin and growth in the Company’s traditional loan portfolio. Exclusive of the Classic acquisition, net interest income increased $1.2 million, or 5.6%, from the fourth quarter of 2004 to the fourth quarter of 2005. This increase was due primarily to an increase of $74.5 million, or 5.8%, in the average balances of traditional loans outstanding and a 78 basis points increase in the yield on such loans. These increases were partially offset by increased interest expense. The net interest margin for the fourth quarter of 2005 of 4.55% represented a 30 basis point increase from the fourth quarter of 2004 net interest margin of 4.25% and represented a 4 basis point increase from the net interest margin of 4.51% for the linked quarter ended September 30, 2005.

For the full year, the Company’s tax equivalent net interest income increased $10.1 million, or 11.5%, from $88.0 million in 2004 to $98.1 million in 2005. The acquisition of Classic, along with an increased interest rate environment and growth in the Company’s traditional loan portfolio, were largely responsible for this increase. The Classic acquisition contributed $7.5 million of net interest income during 2005. Interest income from previously securitized loans and retained interests decreased between 2004 and 2005. The average balances of previously securitized loans and retained interests decreased from $83.4 million for the year ended December 31, 2004 to $42.9 million for the year ended December 31, 2005. This decrease was partially mitigated as the yield on previously securitized loans rose from 17.11% for the year ended December 31, 2004 to 26.60% for the year ended December 31, 2005 (see Previously Securitized Loans). The net result of the decreases in balances of 48.6% and the increased yield was a decrease in interest income from previously securitized loans and retained interests of $3.1 million from 2004 to 2005. Therefore, net interest income, exclusive of the Classic acquisition and interest income from previously securitized loans and retained interests, increased $5.7 million, or 6.5%. This increase was primarily attributable to increases in average balances of traditional loan products of $66.7 million, or 5.3%. The yield on these loans increased 49 basis points due to increases by the Federal Reserve in the Federal Funds rate and the Company’s positioning of its balance sheet to benefit from such rising rates. The increases in loan balances and loan yields more than offset the corresponding increase in rates paid on depository balances.

The net interest margin for the year ended December 31, 2005 of 4.49% represented a 20 basis point increase from the year ended December 31, 2004’s net interest margin of 4.29%. To offset the effects of decreasing balances of high yielding previously securitized loans, the Company positioned its balance sheet to benefit from rising interest rates. Since December 2004, the Federal Funds rate has increased 200 basis points from 2.25% to 4.25% in December 2005. To manage its interest rate risk, the Company has focused on the origination of variable rate products in its traditional lending areas of commercial real estate and residential real estate loans.

Credit Quality

At December 31, 2005, the Allowance for Loan Losses (“ALLL”) was $16.8 million or 1.04% of total loans outstanding and 402% of non-performing loans compared to $17.8 million or 1.31% of loans outstanding and 487% of non-performing loans at December 31, 2004, and $17.8 million or 1.09% of loans outstanding and 487% of non-performing loans at September 30, 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 $800,000 in the fourth quarter of 2005. During the past three years, management has implemented a number of strategic initiatives to strengthen the loan portfolio 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. As a result of these initiatives, the quality of the Company’s loan portfolio has been solid over the past three years as evidenced by the stability of its ratio of non-performing assets to total loans and other real estate owned which was 0.28% on December 31, 2005. As the Company’s asset quality has consistently improved, the required level of the ALLL has decreased. The provision for loan losses recorded during the third and fourth quarters of 2005 was the result of an increase in loss trends for overdraft deposit accounts and credit card loans, and growth in the outstanding balances of commercial real estate loans during the quarters. The Company has continued to experience growth in commercial real estate loans, with average balances increasing by $106 million from the fourth quarter of 2004 to fourth quarter of 2005. While these trends have required the Company to increase the provision from the third quarter to the fourth quarter, the amount of provision recorded was favorably impacted by continued improvement in the quality of the loan portfolio. Specifically, two problem credits for which the Company had previously allocated $800,000 in reserves were refinanced by other banks during the fourth quarter. As a result, the reserves allocated to these credits were no longer required, favorably impacting the provision required by $800,000 for the fourth quarter.

The Company had net charge-offs of $1.8 million for the fourth quarter of 2005, with depository accounts representing $0.7 million of this total. While charge-offs on depository accounts were appropriately taken against the ALLL, the revenue associated with depository accounts was reflected in service charges and has been steadily growing as the core base of checking accounts has grown. Net charge-offs on installment loans were $0.5 million for the quarter ended December 31, 2005, which equaled the net charge-offs for consumer loans for the first three quarters of 2005 combined. This increase was attributable to increased bankruptcy notices received in conjunction with new bankruptcy legislation that took effect in the fourth quarter and is consistent with banking trends nationally. Net charge-offs for commercial real estate loans were $0.5 million for the quarter ended December 31, 2005. This increase primarily relates to two credits that had been previously identified with appropriate amounts of reserve allocated for each credit.

The ALLL as a percentage of loans outstanding is 1.04% at December 31, 2005, compared to the average of the Company’s peer group of 1.25% for the most recently reported quarter. The Company’s strong asset quality is the primary reason for this difference. At December 31, 2005, non-performing assets as a percentage of loans and other real estate owned were 0.27%. Average non-performing assets as a percentage of loans and other real estate owned for the Company’s peer group for the most recently reported quarter was 0.67%. 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 toward more residential mortgage loans and fewer non-real estate secured commercial loans than its peers. 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 $1.6 million, or 13.3%, to $13.4 million in the fourth quarter of 2005 as compared to $11.8 million in the fourth quarter of 2004. The largest source of non-interest income is service charges from depository accounts, which increased $1.8 million, or 21.3%, from $8.7 million during the fourth quarter of 2004 to $10.5 million during the fourth quarter of 2005. This increase was partially due to the Classic acquisition, which accounted for $0.8 million, as well as an increase in the utilization of services by the Company’s expanding customer base.

For the full year, net of investment securities gains and legal settlements, non-interest income increased $6.5 million, or 15.0%, from $43.4 million in 2004 to $49.9 million in 2005. Service charges increased 19.9% from $32.6 million in 2004 to $39.1 million in 2005. The acquisition of Classic accounted for $2.0 million of this increase, with the remainder of $4.5 million being attributable to increased services utilized by customers.

Non-interest Expenses

Non-interest expenses increased $1.2 million from $17.1 million in the fourth quarter of 2004 to $18.3 million in the fourth quarter of 2005. The Classic acquisition increased non-interest expenses by $1.4 million during the fourth quarter of 2005. Non-interest expenses for the fourth quarter of 2005 also included a loss on interest rate floors of approximately $1.4 million, with $0.9 million ($0.5 million after tax) relating to changes in market value in the second and third quarters that had previously been included in other comprehensive income. During the second, third, and fourth quarters of 2005, the Company entered into interest rate floor arrangements to protect the future income stream from certain variable rate loans should interest rates decline below certain specified levels. During the fourth quarter of 2005 management reviewed the Company’s hedging documentation and accounting treatment of the interest rate floors and determined that the changes in the market value of the floors should be charged to operations. Offsetting increased expenses associated with the Classic acquisition and hedge accounting, the Company experienced a decrease of $1.9 million in salary expense, related to an obligation to five executive officers for severance payments as provided under their respective employment agreements, which had been recorded in the fourth quarter of 2004. Excluding the impact of the Classic acquisition, hedge accounting, and executive severance obligations, non-interest expenses increased by $0.2 million in the fourth quarter of 2005 as compared to the fourth quarter of 2004.

For the full year, non-interest expenses increased $2.8 million, or 4.2%, from $66.3 million in 2004 to $69.1 million in 2005. Non-interest expenses increased $3.4 million due to the Classic

acquisition, and $1.4 million was related to the fair value adjustment associated with the interest rate floors. Compensation expense decreased $2.4 million primarily due to costs incurred in 2004 in regard to executive severance obligations as previously discussed. Exclusive of the Classic acquisition, hedge accounting, and executive severance obligations, non-interest expenses increased by $0.4 million between 2004 and 2005. Specifically, professional fees and litigation expense decreased $1.2 million from 2004 to 2005 due to costs incurred during 2004 associated with the derivative action previously discussed. Other expenses increased $1.0 million due to increased customer usage of electronic banking services and increased franchise taxes. Finally, advertising expenses increased $0.6 million from 2004 to 2005 due to an expanded territory resulting from the Classic acquisition and the Company’s focused efforts to attract and grow customer relationships.

Overall, the Company’s efficiency ratio improved from 48.5% for the year ended December 31, 2004 to 46.7% for the year ended December 31, 2005, 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 was 57.4%.

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 December 31, 2005, the Company reported “Previously Securitized Loans” of $30.3 million compared to $58.4 million at December 31, 2004, a decrease of 48.2%. As a result of this decrease, interest income associated with previously securitized loans and retained interests decreased by $3.1 million to $11.4 million for the year ended December 31, 2005 compared to $14.5 million for the year ended December 31, 2004. This decrease in interest income was offset by targeted loan growth in the commercial real estate and residential real estate loan portfolios and by an increase in the net interest margin yield due to the Company’s positioning of its balance sheet to benefit from rising interest rates.

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 December 31, 2005, the contractual outstanding balances of the mortgages securitized were $48.1 million while the carrying value of these assets was $30.3 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.

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

December 31, 2006	$21 million
December 31, 2007	$15 million
December 31, 2008	$11 million
December 31, 2009	$8 million

The yield on the previously securitized loans was 31.03% for the quarter ended December 31, 2005, compared to 30.14% for the quarter ended September 30, 2005, and 16.70% for the quarter ended December 31, 2004. For the year ended December 31, 2005, the yield on the previously securitized loans was 26.60% compared to 17.11% for the year ended December 31, 2004. The yield on the previously securitized loans has increased due to default rates being less than previously estimated and balances prepaying faster than previously estimated. In addition, the Company assumed the servicing of all of the pool balances during the second quarter of 2005. This also favorably impacted the yield realized on the previously securitized loans due to the elimination of the servicing fees previously being paid to the external servicing agent and increased internal collection efforts resulting in enhanced levels of recoveries on previously charged-off loans. All of these factors have increased the projected cash flows from the previously securitized loans and the Company now estimates that the yield on these loans will be in the range of 34% to 36% in the future.

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 83.6% and the loan to asset ratio was 64.4% at December 31, 2005. The Company maintained investment securities totaling 24.2% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 44.6% of assets at December 31, 2005. Time deposits fund 32.5% of assets at December 31, 2005, 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. Capitalization (as measured by average equity to average assets) was 11.03% for the year ended December 31, 2005 as a result of the Company’s strong earnings. The Company’s tangible equity ratio was 9.5% at December 31, 2005 compared with a tangible equity ratio of 9.5% at December 31, 2004. Due to its continued strong earnings performance, the Company was able to maintain this ratio despite the completion of an acquisition during the second quarter of 2005 that was funded by cash of approximately 25% and the repurchase of 342,576 common shares of Company stock during 2005. With respect to regulatory capital, at December 31, 2005, the Company’s Leverage Ratio is 10.97%, the Tier I Capital ratio is 15.41%, and the Total Risk-Based Capital ratio is 16.38%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

Other Events of Interest

On December 21, 2005, the Board approved a quarterly cash dividend of 25 cents per share payable January 31, 2006 to shareholders of record as of January 15, 2006.

On December 21, 2005, the Company accelerated the vesting schedule with regard to 20,000 value-vested options previously granted pursuant to the Company’s 2003 Incentive Plan. Based upon approximately 86,000 unvested options outstanding at December 31, 2005, the Company anticipates it will incur $0.2 million of expense in connection with the adoption of SFAS No. 123R, “Share Based Payment”, which will be effective January 1, 2006, for the Company.

On January 11, 2006, the Company announced plans to improve its presence in downtown Charleston, WV, by leasing a new location and purchasing an adjacent drive-through facility it had previously leased. By moving its downtown office to a larger space at One Bridge Place, City will offer an upgraded and more accessible banking center that will also become a base for commercial lending, trust, and private banking services. The new downtown facility is expected to open in the first quarter of 2006.

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.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)

	Three Months Ended
	December 31 2005			December 31 2004			Percent Change
Earnings ($000s, except per share data):
Net Interest Income (FTE)	$	25,844		$	21,870		18.17	%
Net Income		13,089			11,087		18.06	%
Earnings per Basic Share		0.72			0.67		7.46	%
Earnings per Diluted Share		0.72			0.66		9.09	%
Key Ratios (percent):
Return on Average Assets		2.10	%		2.01	%	4.22	%
Return on Average Equity		17.66	%		20.50	%	(13.86	)%
Net Interest Margin		4.55	%		4.25	%	7.10	%
Efficiency Ratio		46.57	%		51.03	%	(8.74	)%
Average Shareholders’ Equity to Average Assets		11.87	%		9.81	%	21.00	%
Risk-Based Capital Ratios (a):
Tier I		15.41	%		15.47	%	(0.39	)%
Total		16.38	%		16.64	%	(1.56	)%
Common Stock Data:
Cash Dividends Declared per Share	$	0.25		$	0.22		13.64	%
Book Value per Share		16.14			13.03		23.87	%
Market Value per Share:
High		37.62			37.58		0.11	%
Low		32.68			31.85		2.61	%
End of Period		35.95			36.24		(0.80	)%
Price/Earnings Ratio (b)		12.48			13.52		(7.69	)%

	Twelve Months Ended
	December 31 2005			December 31 2004			Percent Change
Earnings ($000s, except per share data):
Net Interest Income (FTE)	$	98,097		$	87,985		11.49	%
Net Income		50,288			46,344		8.51	%
Earnings per Basic Share		2.87			2.79		2.87	%
Earnings per Diluted Share		2.84			2.75		3.27	%
Key Ratios (percent):
Return on Average Assets		2.09	%		2.10	%	(0.08	)%
Return on Average Equity		18.98	%		22.43	%	(15.40	)%
Net Interest Margin		4.49	%		4.29	%	4.61	%
Efficiency Ratio		46.66	%		48.49	%	(3.77	)%
Average Shareholders’ Equity to Average Assets		11.03	%		9.34	%	18.10	%
Common Stock Data:
Cash Dividends Declared per Share	$	1.00		$	0.88		13.64	%
Market Value per Share:
High		39.21			37.58		4.34	%
Low		27.57			27.30		0.99	%

(a) December 31, 2005 risk-based capital ratios are estimated.

(b) December 31, 2005 price/earnings ratio computed based on annualized fourth quarter 2005 earnings.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)

Book Value and Market Price Range per Share

	Book Value per Share								Market Price Range per Share
	March 31		June 30		September 30		December 31		Low		High
2001	$	8.82	$	8.70	$	8.37	$	8.67	$	5.13	$	13.94
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

Earnings per Basic Share

	Quarter Ended
	March 31			June 30			September 30			December 31		Year-to-Date
2001	$	(0.34	)	$	(1.19	)	$	(0.46	)	$	0.45	$	(1.54	)
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

Earnings per Diluted Share

	Quarter Ended
	March 31			June 30			September 30			December 31		Year-to-Date
2001	$	(0.34	)	$	(1.19	)	$	(0.46	)	$	0.45	$	(1.54	)
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

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited) ($ in 000s, except per share data)

	Three Months Ended December 31,
	2005			2004
Interest Income
Interest and fees on loans	$	28,918		$	21,511
Interest on investment securities:
Taxable		7,188			7,779
Tax-exempt		497			437
Interest on deposits in depository institutions		36			16
Interest on federal funds sold		—			3
Total Interest Income		36,639			29,746
Interest Expense
Interest on deposits		8,569			5,932
Interest on short-term borrowings		1,049			424
Interest on long-term debt		1,446			1,756
Total Interest Expense		11,064			8,112
Net Interest Income		25,575			21,634
Provision for loan losses		800			—
Net Interest Income After Provision for Loan Losses		24,775			21,634
Non-Interest Income
Investment securities gains		125			32
Service charges		10,530			8,678
Insurance commissions		620			754
Trust fee income		504			466
Bank owned life insurance		691			1,184
Mortgage banking income		228			70
Other income		839			685
Total Non-Interest Income		13,537			11,869
Non-Interest Expense
Salaries and employee benefits		8,416			9,578
Occupancy and equipment		1,569			1,560
Depreciation		1,062			981
Professional fees and litigation expense		486			571
Postage, delivery, and statement mailings		728			589
Advertising		710			600
Telecommunications		560			403
Insurance and regulatory		380			330
Office supplies		388			210
Repossessed asset (gains) losses, net of expenses		(28	)		(31	)
Other expenses		4,068			2,340
Total Non-Interest Expense		18,339			17,131
Income Before Income Taxes		19,973			16,372
Income tax expense		6,884			5,285
Net Income	$	13,089		$	11,087
Basic earnings per share	$	0.72		$	0.67
Diluted earnings per share	$	0.72		$	0.66
Average Common Shares Outstanding:
Basic		18,127			16,572
Diluted		18,211			16,810

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited) ($ in 000s, except per share data)

	Twelve Months Ended December 31,
	2005			2004
Interest Income
Interest and fees on loans	$	103,714		$	86,099
Interest on investment securities:
Taxable		29,804			30,110
Tax-exempt		1,887			1,809
Interest on retained interests		—			808
Interest on deposits in depository institutions		109			52
Interest on federal funds sold		4			3
Total Interest Income		135,518			118,881
Interest Expense
Interest on deposits		28,805			23,207
Interest on short-term borrowings		3,369			1,082
Interest on long-term debt		6,264			7,582
Total Interest Expense		38,438			31,871
Net Interest Income		97,080			87,010
Provision for loan losses		1,400			—
Net Interest Income After Provision for Loan Losses		95,680			87,010
Non-Interest Income
Investment securities gains		151			1,173
Service charges		39,091			32,609
Insurance commissions		2,352			2,733
Trust fee income		2,025			2,026
Bank owned life insurance		2,779			2,931
Mortgage banking income		643			282
Legal settlement		—			5,453
Other income		3,050			2,829
Total Non-Interest Income		50,091			50,036
Non-Interest Expense
Salaries and employee benefits		33,479			34,245
Occupancy and equipment		6,295			5,984
Depreciation		4,096			3,932
Professional fees and litigation expense		2,021			3,265
Postage, delivery, and statement mailings		2,666			2,474
Advertising		2,941			2,366
Telecommunications		2,248			1,820
Insurance and regulatory		1,496			1,323
Office supplies		1,193			1,048
Repossessed asset (gains) losses, net of expenses		(78	)		(77	)
Loss on early extinguishment of debt		—			263
Other expenses		12,756			9,690
Total Non-Interest Expense		69,113			66,333
Income Before Income Taxes		76,658			70,713
Income tax expense		26,370			24,369
Net Income	$	50,288		$	46,344
Basic earnings per share	$	2.87		$	2.79
Diluted earnings per share	$	2.84		$	2.75
Average Common Shares Outstanding:
Basic		17,519			16,632
Diluted		17,690			16,882

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited) ($ in 000s)

	Three Months Ended
	December 31, 2005			December 31, 2004
Balance at September 1	$	290,432		$	210,285
Net income		13,089			11,087
Other comprehensive income:
Change in unrealized gain on securities available-for-sale		(3,701	)		(2,255	)
Change in underfunded pension liability		(748	)		(35	)
Reclassification of unrealized derivative losses		543			—
Cash dividends declared ($0.25/share)		(4,522	)		—
Cash dividends declared ($0.22/share)		—			(3,650	)
Exercise of 104,966 stock options		3,128			—
Exercise of 26,327 stock options		—			648
Purchase of 171,000 common shares of treasury		(6,080	)		—
Balance at December 31	$	292,141		$	216,080

	Twelve Months Ended
	December 31, 2005			December 31, 2004
Balance at January 1	$	216,080		$	190,690
Net income		50,288			46,344
Other comprehensive income:
Change in unrealized gain on securities available-for-sale		(6,120	)		(2,481	)
Change in underfunded pension liability		(748	)		(35	)
Cash dividends declared ($1.00/share)		(17,716	)		—
Cash dividends declared ($0.88/share)		—			(14,629	)
Issuance of 1,580,034 shares for acquisition of Classic Bancshares, net 108,173 owned and transferred to treasury		54,339			—
Issuance of 18,800 stock award shares		147			—
Exercise of 367,675 stock options		7,783			—
Exercise of 140,730 stock options		—			2,048
Purchase of 342,576 common shares for treasury		(11,912	)		—
Purchase of 197,040 common shares for treasury		—			(5,857	)
Balance at December 31	$	292,141		$	216,080

CITY HOLDING COMPANY AND SUBSIDIARIES

Condensed Consolidated Quarterly Statements of Income

(Unaudited) ($ in 000s, except per share data)

	Quarter Ended
	Dec. 31 2005			Sept. 30 2005			June 30 2005			March 31 2005			Dec. 31 2004
Interest income	$	36,639		$	35,910		$	32,676		$	30,293		$	29,746
Taxable equivalent adjustment		269			273			241			233			236
Interest income (FTE)		36,908			36,183			32,917			30,526			29,982
Interest expense		11,064			10,290			9,054			8,030			8,112
Net interest income		25,844			25,893			23,863			22,496			21,870
Provision for loan losses		800			600			—			—			—
Net interest income after provision for loan losses		25,044			25,293			23,863			22,496			21,870
Noninterest income		13,537			13,012			12,098			11,444			11,869
Noninterest expense		18,339			17,922			16,839			16,013			17,131
Income before income taxes		20,242			20,383			19,122			17,927			16,608
Income tax expense		6,884			6,938			6,532			6,016			5,285
Taxable equivalent adjustment		269			273			241			233			236
Net income	$	13,089		$	13,172		$	12,349		$	11,678		$	11,087
Basic earnings per share	$	0.72		$	0.73		$	0.72		$	0.70		$	0.67
Diluted earnings per share		0.72			0.72			0.71			0.69			0.66
Cash dividends declared per share		0.25			0.25			0.25			0.25			0.22
Average Common Share (000s):
Outstanding		18,127			18,052			17,268			16,605			16,572
Diluted		18,211			18,238			17,477			16,812			16,810
Net Interest Margin		4.55	%		4.51	%		4.42	%		4.40	%		4.25	%

CITY HOLDING COMPANY AND SUBSIDIARIES

Non-Interest Income and Non-Interest Expense

(Unaudited) ($ in 000s)

	Quarter Ended
	Dec. 31 2005			Sept. 30 2005			June 30 2005			March 31 2005		Dec. 31 2004
Non-Interest Income:
Service charges	$	10,530		$	10,433		$	9,685		$	8,443	$	8,678
Insurance commissions		620			595			545			592		754
Trust fee income		504			468			462			591		466
Bank owned life insurance		691			552			545			991		1,184
Mortgage banking income		228			191			106			118		70
Other income		839			768			737			706		685
Subtotal		13,412			13,007			12,080			11,441		11,837
Investment security gains		125			5			18			3		32
Total Non-Interest Income	$	13,537		$	13,012		$	12,098		$	11,444	$	11,869
Non-Interest Expense:
Salaries and employee benefits	$	8,416		$	8,739		$	8,404		$	7,920	$	9,578
Occupancy and equipment		1,569			1,687			1,564			1,475		1,560
Depreciation		1,062			1,096			994			944		981
Professional fees and litigation expense		486			456			514			565		571
Postage, delivery, and statement mailings		728			670			615			653		589
Advertising		710			764			762			705		600
Telecommunications		560			702			513			473		403
Insurance and regulatory		380			385			365			366		330
Office supplies		388			327			275			203		210
Repossessed asset (gains) losses, net of expenses		(28	)		(35	)		(16	)		1		(31	)
Other expenses		4,068			3,131			2,849			2,708		2,340
Total Non-Interest Expense	$	18,339		$	17,922		$	16,839		$	16,013	$	17,131
Employees (Full Time Equivalent)		770			768			767			689		691
Branch Locations		67			67			67			56		56

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

($ in 000s)

	December 31 2005			December 31 2004
	(Unaudited)
Assets
Cash and due from banks	$	81,822		$	52,854
Interest-bearing deposits in depository institutions		4,451			3,230
Cash and cash equivalents		86,273			56,084
Investment securities available-for-sale, at fair value		549,966			620,034
Investment securities held-to-maturity, at amortized cost		55,397			59,740
Total investment securities		605,363			679,774
Loans:
Residential real estate		592,521			469,458
Home equity		301,728			308,173
Commercial real estate		499,748			400,801
Other commercial		129,922			71,311
Installment		40,000			18,145
Indirect		3,580			10,324
Credit card		15,072			18,126
Previously securitized loans		30,256			58,436
Gross Loans		1,612,827			1,354,774
Allowance for loan losses		(16,790	)		(17,815	)
Net loans		1,596,037			1,336,959
Bank owned life insurance		52,969			50,845
Premises and equipment		42,542			34,607
Accrued interest receivable		13,134			9,868
Net deferred tax assets		27,929			27,025
Intangible assets		59,559			6,255
Other assets		18,791			11,813
Total Assets	$	2,502,597		$	2,213,230
Liabilities
Deposits:
Noninterest-bearing	$	376,076		$	319,425
Interest-bearing:
Demand deposits		437,639			411,127
Savings deposits		302,571			281,466
Time deposits		812,134			660,705
Total deposits		1,928,420			1,672,723
Short-term borrowings		152,255			145,183
Long-term debt		98,425			148,836
Other liabilities		31,356			30,408
Total Liabilities		2,210,456			1,997,150
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 and 16,919,248 shares issued at December 31, 2005 and December 31, 2004 less 395,465 and 331,191 shares in treasury, respectively		46,249			42,298
Capital surplus		104,435			55,512
Retained earnings		160,747			128,175
Cost of common stock in treasury		(11,278	)		(8,761	)
Accumulated other comprehensive (loss) income:
Unrealized (loss) gain on securities available-for-sale		(4,839	)		1,281
Underfunded pension liability		(3,173	)		(2,425	)
Total Accumulated Other Comprehensive (Loss) Income		(8,012	)		(1,144	)
Total Stockholders’ Equity		292,141			216,080
Total Liabilities and Stockholders’ Equity	$	2,502,597		$	2,213,230

CITY HOLDING COMPANY AND SUBSIDIARIES

Loan Portfolio

(Unaudited) ($ in 000s)

	Dec. 31 2005		Sept. 30 2005		June 30 2005		March 31 2005		Dec. 31 2004
Residential real estate	$	592,521	$	596,184	$	596,893	$	463,869	$	469,458
Home equity		301,728		306,448		307,354		302,262		308,173
Commercial real estate		499,748		483,334		445,241		409,064		400,801
Other commercial		129,922		138,011		138,923		66,485		71,311
Loans to depository institutions		—		—		—		10,000		—
Installment		40,000		42,844		48,668		16,065		18,145
Indirect		3,580		4,658		6,048		7,960		10,324
Credit card		15,072		15,632		16,188		16,954		18,126
Previously securitized loans		30,256		35,599		41,670		50,588		58,436
Gross Loans	$	1,612,827	$	1,622,710	$	1,600,985	$	1,343,247	$	1,354,774

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)

	Three Months Ended December 31,
	Average Balance			2005 Interest		Yield/ Rate		Average Balance			2004 Interest		Yield/ Rate
Assets:
Loan portfolio:
Residential real estate	$	595,309		$	8,365	5.57	%	$	468,362		$	6,646	5.65	%
Home equity		303,977			5,318	6.94	%		307,712			3,966	5.13	%
Commercial real estate		492,478			8,502	6.85	%		386,592			5,641	5.80	%
Other commercial		133,863			2,426	7.19	%		68,816			1,015	5.87	%
Installment		40,843			1,138	11.05	%		20,168			604	11.91	%
Indirect		4,112			118	11.39	%		11,584			321	11.02	%
Credit card		15,278			482	12.52	%		17,756			534	11.96	%
Previously securitized loans		32,851			2,569	31.03	%		66,307			2,784	16.70	%
Total loans		1,618,711			28,918	7.09	%		1,347,297			21,511	6.35	%
Securities:
Taxable		580,845			7,188	4.91	%		656,511			7,779	4.71	%
Tax-exempt		47,675			766	6.37	%		37,573			673	7.13	%
Total securities		628,520			7,954	5.02	%		694,084			8,452	4.84	%
Deposits in depository institutions		5,188			36	2.75	%		4,753			16	1.34	%
Federal funds sold		—			—	—			766			3	1.56	%
Total interest-earning assets		2,252,419			36,908	6.50	%		2,046,900			29,982	5.83	%
Cash and due from banks		52,828							42,920
Bank premises and equipment		42,432							34,859
Other assets		168,395							99,641
Less: Allowance for loan losses		(17,272	)						(18,332	)
Total assets	$	2,498,802						$	2,205,988
Liabilities:
Interest-bearing demand deposits		442,130			1,207	1.08	%		408,038			675	0.66	%
Savings deposits		302,904			684	0.90	%		275,776			361	0.52	%
Time deposits		809,433			6,678	3.27	%		661,131			4,896	2.95	%
Short-term borrowings		159,185			1,049	2.61	%		131,202			424	1.29	%
Long-term debt		114,590			1,446	5.01	%		174,923			1,756	3.99	%
Total interest-bearing liabilities		1,828,242			11,064	2.40	%		1,651,070			8,112	1.95	%
Noninterest-bearing demand deposits		347,777							315,759
Other liabilities		26,287							22,829
Stockholders’ equity		296,496							216,330
Total liabilities and stockholders’ equity	$	2,498,802						$	2,205,988
Net interest income				$	25,844						$	21,870
Net yield on earning assets						4.55	%						4.25	%

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)

	Twelve Months Ended December 31,
	Average Balance			2005 Interest		Yield/ Rate		Average Balance			2004 Interest		Yield/ Rate
Assets:
Loan portfolio:
Residential real estate	$	545,280		$	30,570	5.61	%	$	454,890		$	26,869	5.91	%
Home equity		305,525			19,088	6.25	%		298,703			14,004	4.69	%
Commercial real estate		447,243			28,756	6.43	%		367,599			20,684	5.63	%
Other commercial		109,950			7,318	6.66	%		72,825			3,913	5.37	%
Loans to depository institutions		7,419			213	2.87	%		3,060			35	1.14	%
Installment		33,327			3,592	10.78	%		25,343			2,895	11.42	%
Indirect		6,347			718	11.31	%		16,599			1,823	10.98	%
Credit card		16,417			2,058	12.54	%		18,002			2,164	12.02	%
Previously securitized loans		42,859			11,401	26.60	%		80,151			13,712	17.11	%
Total loans		1,514,367			103,714	6.85	%		1,337,172			86,099	6.44	%
Securities:
Taxable		623,155			29,804	4.78	%		666,863			30,110	4.52	%
Tax-exempt		43,767			2,904	6.64	%		38,169			2,784	7.29	%
Total securities		666,922			32,708	4.90	%		705,032			32,894	4.67	%
Retained interest in securitized loans		—			—	—			3,300			808	24.48	%
Deposits in depository institutions		4,609			109	2.36	%		5,347			52	0.97	%
Federal funds sold		105			4	3.81	%		193			3	1.55	%
Total interest-earning assets		2,186,003			136,535	6.25	%		2,051,044			119,856	5.84	%
Cash and due from banks		48,562							43,616
Bank premises and equipment		39,109							34,804
Other assets		145,899							102,179
Less: Allowance for loan losses		(17,515	)						(19,790	)
Total assets	$	2,402,058						$	2,211,853
Liabilities:
Interest-bearing demand deposits		433,831			3,866	0.89	%		405,865			2,599	0.64	%
Savings deposits		295,045			2,070	0.70	%		279,174			1,456	0.52	%
Time deposits		743,725			22,869	3.07	%		662,068			19,152	2.89	%
Short-term borrowings		157,264			3,369	2.14	%		120,849			1,082	0.90	%
Long-term debt		137,340			6,264	4.56	%		201,218			7,582	3.77	%
Total interest-bearing liabilities		1,767,205			38,438	2.18	%		1,669,174			31,871	1.91	%
Noninterest-bearing demand deposits		341,873							312,036
Other liabilities		28,026							24,072
Stockholders’ equity		264,954							206,571
Total liabilities and stockholders’ equity	$	2,402,058						$	2,211,853
Net interest income				$	98,097						$	87,985
Net yield on earning assets						4.49	%						4.29	%

CITY HOLDING COMPANY AND SUBSIDIARIES

Analysis of Risk-Based Capital

(Unaudited) ($ in 000s)

	Dec. 31 2005 (a)			Sept. 30 2005			June 30 2005			March 31 2005			Dec. 31 2004
Tier I Capital:
Stockholders’ equity	$	292,141		$	290,432		$	279,624		$	219,302		$	216,080
Goodwill and other intangibles		(59,559	)		(59,742	)		(61,578	)		(6,204	)		(6,255	)
Accumulated other comprehensive income		8,012			4,106			3,334			5,890			1,144
Qualifying trust preferred stock		28,000			28,000			28,000			28,000			28,000
Excess deferred tax assets		(1,071	)		—			—			(4,524	)		(3,129	)
Total tier I capital	$	267,523		$	262,796		$	249,380		$	242,464		$	235,840
Total Risk-Based Capital:
Tier I capital	$	267,523		$	262,796		$	249,380		$	242,464		$	235,840
Qualifying allowance for loan losses		16,790			17,768			18,298			16,325			17,815
Total risk-based capital	$	284,313		$	280,564		$	267,678		$	258,789		$	253,655
Net risk-weighted assets	$	1,735,538		$	1,758,566		$	1,734,653		$	1,522,881		$	1,524,581
Ratios:
Average stockholders’ equity to average assets		11.87	%		11.47	%		10.57	%		10.08	%		9.81	%
Tangible capital ratio		9.52	%		9.32	%		8.91	%		9.52	%		9.51	%
Risk-based capital ratios:
Tier I capital		15.41	%		14.94	%		14.38	%		15.92	%		15.47	%
Total risk-based capital		16.38	%		15.95	%		15.43	%		16.99	%		16.64	%
Leverage capital		10.97	%		10.68	%		10.83	%		11.00	%		10.74	%
(a)    December 31, 2005 risk-based capital ratios are estimated.
CITY HOLDING COMPANY AND SUBSIDIARIES Intangibles (Unaudited) ($ in 000s)
	As of and for the Quarter Ended
	Dec 31. 2005			Sept. 30 2005			June 30 2005			March 31 2005			Dec. 31 2004
Intangibles, net	$	59,559		$	59,742		$	61,578		$	6,204		$	6,255
Intangibles amortization expense		183			183			95			51			51

CITY HOLDING COMPANY AND SUBSIDIARIES

Summary of Loan Loss Experience

(Unaudited) ($ in 000s)

	Quarter Ended
	Dec. 31 2005			Sept. 30 2005			June 30 2005			March 31 2005			Dec. 31 2004
Balance at beginning of period	$	17,768		$	18,298		$	16,325		$	17,815		$	18,537
Allowance acquired through acquisition		—			—			3,265			—			—
Charge-offs:
Residential real estate		188			74			97			237			166
Home equity		114			134			226			421			5
Commercial real estate		505			52			653			393			105
Other commercial		22			2			10			36			14
Installment		664			476			263			308			458
Overdraft deposit accounts		996			1,012			832			744			586
Total charge-offs		2,489			1,750			2,081			2,139			1,334
Recoveries:
Residential real estate		183			46			16			37			137
Home equity		5			7			9			—			—
Commercial real estate		13			24			311			50			10
Other commercial		17			111			34			45			80
Installment		163			136			175			205			147
Overdraft deposit accounts		330			296			244			312			238
Total recoveries		711			620			789			649			612
Net charge-offs		1,778			1,130			1,292			1,490			722
Provision for loan losses		800			600			—			—			—
Balance at end of period	$	16,790		$	17,768		$	18,298		$	16,325		$	17,815
Loans outstanding	$	1,612,827		$	1,622,710		$	1,600,985		$	1,343,247		$	1,354,774
Average loans outstanding		1,618,711			1,612,344			1,473,880			1,348,489			1,347,297
Allowance as a percent of loans outstanding		1.04	%		1.09	%		1.14	%		1.22	%		1.31	%
Allowance as a percent of non-performing loans		402	%		487	%		464	%		490	%		487	%
Net charge-offs (annualized) as a percent of average loans outstanding		0.44	%		0.28	%		0.35	%		0.44	%		0.21	%

CITY HOLDING COMPANY AND SUBSIDIARIES

Summary of Non-Performing Assets

(Unaudited) ($ in 000s)

	Dec. 31 2005			Sept. 30 2005			June 30 2005			March 31 2005			Dec. 31 2004
Nonaccrual loans	$	2,785		$	2,468		$	2,709		$	2,641		$	2,147
Accruing loans past due 90 days or more		1,124			1,003			936			322			677
Previously securitized loans past due 90 days or more		268			174			299			372			832
Total non-performing loans		4,177			3,645			3,944			3,335			3,656
Other real estate owned		135			117			471			463			247
Total non-performing assets	$	4,312		$	3,762		$	4,415		$	3,798		$	3,903
Non-performing assets as a percent of loans and other real estate owned		0.27	%		0.23	%		0.28	%		0.28	%		0.29	%