CITY HOLDING CO - FORM 8-K - EX-99.1 - EXHIBIT 99.1, PRESS RELEASE 2ND QUARTER 2012 EARNINGS

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8-K - FORM 8-K, CHCO 2ND QUARTER 2012 EARNINGS - CITY HOLDING CO	form8-k.htm

NEWS RELEASE

For Immediate Release

July 27, 2012

For Further Information Contact:

Charles R. Hageboeck, Chief Executive Officer and President

(304) 769-1102

City Holding Company Announces Second Quarter Results

Charleston, West Virginia – City Holding Company, “the Company” (NASDAQ:CHCO), a $2.9 billion bank holding company headquartered in Charleston, today announced second quarter net income per diluted share of $0.50 and net income of $7.4 million. The results for the second quarter of 2012 include $4.0 million, or $0.18 diluted per share on an after tax basis, of acquisition and integration expenses related to the acquisition of Virginia Savings Bancorp, Inc. For the second quarter of 2012, the Company achieved a return on assets of 1.06%, a return on tangible equity of 11.2%, a net interest margin of 3.91%, and an efficiency ratio of 66.5%. Excluding the acquisition and integration expenses, the Company would have reported net income of $10.0 million, a return on assets of 1.44%, a return on tangible equity of 15.3%, and an efficiency ratio of 55.6% for the second quarter of 2012.

City’s CEO Charles Hageboeck stated that, “During the second quarter of 2012, we successfully completed the acquisition of Virginia Savings Bancorp, Inc., which expanded our footprint into Virginia. After purchase accounting adjustments, the five branches of Virginia Savings Bancorp, Inc. added approximately $123 million in deposits and $72 million in loans. Average loan balances have increased $119 million from the second quarter of 2011 exclusive of the loans acquired in the Virginia Savings Bancorp, Inc. acquisition. Net interest income increased $1.3 million from the second quarter of 2011 primarily on the strength of loan growth and lower rates paid on interest-bearing deposits. Loan growth and the impact of the low interest rate environment on deposit pricing improved our net margin from 3.78% for the second quarter of 2011 to 3.91% for the second quarter of 2012. While our margin has remained strong in recent quarters, new regulatory capital rules will cause some higher yielding trust preferred securities to be called early by issuers as these securities will no longer be treated as regulatory capital for certain issuers. At June 30, 2012 the Company owned approximately $77 million of these higher yielding securities and we were notified that approximately $38 million of securities will be called in the third quarter of 2012. Although we don’t anticipate our entire portfolio being called, our margin will be adversely impacted by such calls.”

“Our asset quality remains strong and steady. Non-performing assets stood at 1.47% of total loans and other real estate owned. Charge-offs for the second quarter of 2012 declined from prior quarters to $0.85 million and our provision expense for the quarter was $1.7 million.”

“Service fee revenues declined only $0.2 million from the second quarter of 2011 despite a change in check processing order implemented during the fourth quarter of 2011. Additionally, our trust and investment management fee income grew $0.2 million, or 29%, from the second quarter of 2011 due to assets under management increasing from $580 million at December 31, 2011 to $700 million at June 30, 2012,” Hageboeck concluded.

Net Interest Income

The Company’s tax equivalent net interest income increased $0.3 million, or 1.3%, from $23.7 million during the first quarter of 2012 to $24.0 million during the second quarter of 2012. This increase is due to the acquisition of Virginia Savings Bancorp, Inc. as of May 31, 2012. The Company’s reported net interest margin decreased from 3.98% for the quarter ended March 31, 2012 to 3.91% for the quarter ended June 30, 2012.

Credit Quality

The Company’s ratio of non-performing assets to total loans and other real estate owned remained stable at 1.47% at June 30, 2012 as compared to the prior quarter. Past due loans were $10.7 million at June 30, 2011 (0.56% of total loans outstanding) and $11.6 million at June 30, 2012 (0.56% of total loans outstanding). Past due residential real estate loans were $5.6 million or 0.80% of residential real estate loans outstanding at June 30, 2012; past due home equity loans were $1.9 million or 0.42% of home equity loans outstanding at June 30, 2012; and past due commercial real estate loans were $3.1 million or 0.41% of commercial real estate loans outstanding at June 30, 2012.

The Company had net charge-offs of $0.9 million for the second quarter of 2012, which primarily consists of net charge-offs on residential real estate loans of $0.3 million and home equity loans of $0.3 million.

At June 30, 2012, the Allowance for Loan Losses (“ALLL”) was $19.5 million or 0.94% of total loans outstanding and 89% of non-performing loans compared to $18.9 million or 1.00% of loans outstanding and 81% of non-performing loans at June 30, 2011, and $19.4 million or 0.98% of loans outstanding and 88% of non-performing loans at December 31, 2011.

As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $1.7 million in the second quarter of 2012, compared to the $1.3 million for the comparable period in 2011 and $2.0 million for the first quarter of 2012. Changes in the amount of the provision and related allowance are based on the Company’s detailed systematic methodology and are directionally consistent with changes in the composition and quality of the Company’s loan portfolio. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision and allowance for loan losses that is directionally consistent with changes in asset quality and loss experience.

Investment Securities Gains/(Losses)

During the second quarter of 2012, the Company sold certain equity positions related to community banks and bank holding companies and realized a $0.8 million gain. This gain was partially offset by $0.3 million of credit-related net investment impairment losses recorded by the Company during the second quarter of 2012. The charges deemed to be other than temporary were related to pooled bank trust preferreds with a remaining carrying value of $3.3 million at June 30, 2012. The credit-related net impairment charges were based on the Company’s quarterly reviews of its investment securities for indications of losses considered to be other than temporary.

Non-interest Income

Exclusive of net investment gains, non-interest income decreased $0.1 million to $13.3 million in the second quarter of 2012 as compared to $13.4 million in the second quarter of 2011. This decrease was primarily the result of service charges decreasing $0.2 million, or 2.1%, to $9.6 million and insurance commissions decreasing $0.2 million, or 10.4%, to $1.3 million for the quarter ended June 30, 2012. These decreases were partially offset by an increase of $0.2 million in trust and investment management fee income to $0.9 for the quarter ended June 30, 2012 and $0.1 million due to the acquisition of Virginia Savings Bancorp, Inc.

Non-interest Expenses

During the second quarter of 2012, the Company completed its acquisition of Virginia Savings Bancorp, Inc. and recognized $4.0 million of acquisition and integration expenses. In comparison, the Company recorded a $3.0 million litigation reserve accrual during the second quarter of 2011. Excluding these expenses, non-interest expenses increased $0.8 million from $19.9 million in the second quarter of 2011 to $20.7 million in the second quarter of 2012. Repossessed asset losses increased $0.7 million due to the decline in estimated fair value of a foreclosed property located in eastern panhandle of West Virginia. The Company continually reevaluates the estimated fair value of properties that it has repossessed by obtaining updated appraisals on at least an annual basis. As a result of this write-down, this foreclosed property is now valued at approximately one half of its original cost. In addition, salaries and employee benefits increased $0.5 million, other expenses increased $0.3 million and $0.2 million due to the acquisition of Virginia Savings Bancorp, Inc. These increases were partially offset by a decrease of $0.5 million due to lower FDIC insurance expense as a result of a change in the assessment base methodology.

Balance Sheet Trends

Loans have increased $92.5 million (4.7%) from December 31, 2011 to $2.07 billion at June 30, 2012, primarily due to the Company’s acquisition of Virginia Savings Bancorp, Inc. ($72.0 million). Excluding the Virginia Savings Bancorp, Inc. acquisition, loans have increased $20.5 million (1.0%) from December 31, 2011 to $1.99 billion at June 30, 2012. Increases in residential real estate loans of $25.3 million (2.7%) and commercial real estate loans of $14.8 million (2.0%) were partially offset by a decline in commercial and industrial (“C&I”) loans of $17.1 million.

Total average depository balances increased $64.1 million, or 2.8%, from the quarter ended March 31, 2012 to the quarter ended June 30, 2012. This growth was primarily attributable to deposits acquired from Virginia Savings Bancorp, Inc. ($40.9 million). Exclusive of this contribution, increases in savings deposits ($15.5 million), noninterest-bearing deposits ($16.9 million) and interest-bearing deposits ($3.8 million), were partially offset by a decrease in time deposits ($13.1 million).

Income Tax Expense

The Company’s effective income tax rate for the second quarter of 2012 was 33.8% compared to 33.6% for the year ended December 31, 2011, and 33.8% for the quarter ended June 30, 2011. The effective rate is based upon the Company’s expected tax rate for the year ending December 31, 2012.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 86.2% and the loan to asset ratio was 71.4% at June 30, 2012. The Company maintained investment securities totaling 14.1% of assets as of this date. The Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 50.6% of assets at June 30, 2012. Time deposits fund 32.2% of assets at June 30, 2012, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.

At June 30, 2012 the Company was strongly capitalized. The Company’s tangible equity ratio was 9.0% at June 30, 2012 compared to 9.4% at December 31, 2011. At June 30, 2012, City National Bank’s Leverage Ratio was 8.95%, its Tier I Capital ratio was 11.45%, and its Total Risk-Based Capital ratio was 12.38%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On June 27, 2012, the Board approved a quarterly cash dividend of $0.35 cents per share payable July 31, 2012, to shareholders of record as of July 13, 2012. During the quarter ended June 30, 2012, the Company repurchased 149,535 common shares at a weighted average price of $32.40 as part of a one million share repurchase plan authorized by the Board of Directors in July 2011. At June 30, 2012, the Company could repurchase approximately 454,000 shares under the July 2011 authorization.

City Holding Company is the parent company of City National Bank of West Virginia. City National operates 73 branches across West Virginia, Kentucky, Virginia and Ohio.

Forward-Looking Information

This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such information involves risks and uncertainties that could result in the Company's actual results differing from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (12) continued deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; and (13) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) recently adopted by the United States Congress. Forward-looking statements made herein reflect management’s expectations as of the date such statements are made. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its June 30, 2012 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2012 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)


	Three Months Ended June 30,						Percent
	2012			2011			Change

Earnings ($000s, except per share data):
Net Interest Income (FTE)	$	24,039		$	22,760			5.62	%
Net Income available to common shareholders		7,413			9,830			(24.59	)%
Earnings per Basic Share		0.50			0.65			(22.40	)%
Earnings per Diluted Share		0.50			0.64			(22.45	)%


Key Ratios (percent):
Return on Average Assets		1.06	%		1.45	%		(26.98	)%
Return on Average Tangible Equity		11.20	%		15.21	%		(26.33	)%
Net Interest Margin		3.91	%		3.78	%		3.57	%
Efficiency Ratio		66.45	%		63.49	%		4.66	%
Average Shareholders' Equity to Average Assets		11.47	%		11.59	%		(1.04	)%

Consolidated Risk Based Capital Ratios (a):
Tier I		12.46	%		13.42	%		(7.15	)%
Total		13.38	%		14.37	%		(6.89	)%

Tangible Equity to Tangible Assets		9.03	%		9.56	%		(5.50	)%


Common Stock Data:
Cash Dividends Declared per Share	$	0.35		$	0.34			2.94	%
Book Value per Share		21.63			20.58			5.14	%
Tangible Book Value per Share		17.24			16.84			2.37	%
Market Value per Share:
High		35.62			36.37			(2.06	)%
Low		30.96			30.55			1.34	%
End of Period		33.69			33.03			2.00	%

Price/Earnings Ratio (b)		16.81			12.79			31.44	%

	Six Months Ended June 30,						Percent
		2012			2011		Change

Earnings ($000s, except per share data):
Net Interest Income (FTE)	$	47,768		$	45,823			4.24	%
Net Income available to common shareholders		17,442			19,445			(10.30	)%
Earnings per Basic Share		1.18			1.27			(6.92	)%
Earnings per Diluted Share		1.17			1.26			(6.97	)%


Key Ratios (percent):
Return on Average Assets		1.26	%		1.44	%		(12.75	)%
Return on Average Tangible Equity		13.30	%		14.94	%		(11.03	)%
Net Interest Margin		3.94	%		3.86	%		2.11	%
Efficiency Ratio		59.74	%		59.61	%		0.22	%
Average Shareholders' Equity to Average Assets		11.51	%		11.75	%		(2.01	)%


Common Stock Data:
Cash Dividends Declared per Share	$	0.70		$	0.68			2.94	%
Market Value per Share:
High		37.16			37.22			(0.16	)%
Low		30.96			30.55			1.34	%

Price/Earnings Ratio (b)		14.29			13.04			9.58	%


(a) June 30, 2012 risk-based capital ratios are estimated
(b) June 30, 2012 price/earnings ratio computed based on annualized second quarter 2012 earnings

CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)



Book Value and Market Price Range per Share
										Market Price
	Book Value per Share									Range per Share
	March 31		June 30		September 30			December 31		Low		High

2008	$	18.92	$	18.72	$	17.61		$	17.58	$	29.08	$	42.88
2009		17.69		18.24		18.95			19.37		20.88		34.34
2010		19.71		20.02		20.31			20.31		26.87		38.03
2011		20.39		20.58		20.86			21.05		26.06		37.22
2012		21.46		21.63							30.96		37.16


Earnings per Basic Share

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

2008	$	0.81	$	0.83	$	(0.16	)	$	0.26	$	1.74
2009		0.69		0.64		0.66			0.70		2.69
2010		0.59		0.68		0.58			0.64		2.48
2011		0.62		0.65		0.77			0.65		2.68
2012		0.68		0.50							1.18


Earnings per Diluted Share

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

2008	$	0.80	$	0.83	$	(0.16	)	$	0.26	$	1.74
2009		0.69		0.64		0.66			0.70		2.68
2010		0.58		0.68		0.58			0.64		2.47
2011		0.62		0.64		0.76			0.65		2.67
2012		0.67		0.50							1.17

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

	Three Months Ended June 30,
	2012			2011

Interest Income
Interest and fees on loans	$	23,143		$	23,352
Interest on investment securities:
Taxable		3,943			4,513
Tax-exempt		368			445
Interest on federal funds sold		12			13
Total Interest Income		27,466			28,323

Interest Expense
Interest on deposits		3,383			5,568
Interest on short-term borrowings		77			77
Interest on long-term debt		165			158
Total Interest Expense		3,625			5,803
Net Interest Income		23,841			22,520
Provision for loan losses		1,675			1,286
Net Interest Income After Provision for Loan Losses		22,166			21,234

Non-Interest Income
Total investment securities impairment losses		(606	)		-
Noncredit impairment losses recognized in other comprehensive income		302			-
Net investment securities impairment losses		(304	)		-
Gains (losses) on sale of investment securities		832			3,128
Net investment securities (losses)		528			3,128

Service charges		9,649			9,855
Insurance commissions		1,347			1,504
Trust and investment management fee income		942			730
Bank owned life insurance		766			745
Other income		558			575
Total Non-Interest Income		13,790			16,537

Non-Interest Expense
Salaries and employee benefits		10,668			10,183
Occupancy and equipment		1,978			1,921
Depreciation		1,109			1,140
FDIC insurance expense		394			932
Advertising		675			628
Bankcard expenses		694			633
Postage, delivery, and statement mailings		488			510
Office supplies		396			452
Legal and professional fees		421			3,511
Telecommunications		387			417
Repossessed asset (gains)/losses, net of expenses		650			(7	)
Merger related expenses		4,042			-
Other expenses		2,861			2,592
Total Non-Interest Expense		24,763			22,912
Income Before Income Taxes		11,193			14,859
Income tax expense		3,780			5,029
Net Income Available to Common Shareholders	$	7,413		$	9,830


Distributed earnings allocated to common shareholders	$	5,146		$	5,092
Undistributed earnings allocated to common shareholders		2,208			4,669
Net earnings allocated to common shareholders	$	7,354		$	9,761

Average common shares outstanding		14,680			15,120
Effect of dilutive securities:
Employee stock options		79			73
Shares for diluted earnings per share		14,759			15,193

Basic earnings per common share	$	0.50		$	0.65
Diluted earnings per common share	$	0.50		$	0.64
Dividends declared per common share	$	0.35		$	0.34

Comprehensive Income	$	6,673		$	9,896

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

	Six months ended June 30,
	2012			2011

Interest Income
Interest and fees on loans	$	46,210		$	47,090
Interest on investment securities:
Taxable		7,907			9,055
Tax-exempt		755			907
Interest on federal funds sold		23			26
Total Interest Income		54,895			57,078

Interest Expense
Interest on deposits		7,051			11,279
Interest on short-term borrowings		150			149
Interest on long-term debt		333			315
Total Interest Expense		7,534			11,743
Net Interest Income		47,361			45,335
Provision for loan losses		3,625			2,372
Net Interest Income After Provision for Loan Losses		43,736			42,963

Non-Interest Income
Total investment securities impairment losses		(606	)		-
Noncredit impairment losses recognized in other comprehensive income		302			-
Net investment securities impairment losses		(304	)		-
Gains on sale of investment securities		801			3,128
Net investment securities gains (losses)		497			3,128

Service charges		18,739			18,909
Insurance commissions		3,343			3,125
Trust and investment management fee income		1,749			1,483
Bank owned life insurance		1,489			1,503
Other income		1,091			1,051
Total Non-Interest Income		26,908			29,199

Non-Interest Expense
Salaries and employee benefits		20,913			20,095
Occupancy and equipment		3,913			4,027
Depreciation		2,195			2,276
FDIC insurance expense		779			1,884
Advertising		1,319			1,308
Bankcard expenses		1,314			1,134
Postage, delivery, and statement mailings		1,036			1,064
Office supplies		851			991
Legal and professional fees		738			3,980
Telecommunications		776			846
Repossessed asset losses, net of expenses		771			191
Merger related expenses		4,177			-
Other expenses		5,496			4,974
Total Non-Interest Expense		44,278			42,770
Income Before Income Taxes		26,366			29,392
Income tax expense		8,924			9,947
Net Income Available to Common Shareholders	$	17,442		$	19,445


Distributed earnings allocated to common shareholders	$	10,291		$	10,184

Undistributed earnings allocated to common shareholders		7,011			9,123

Net earnings allocated to common shareholders	$	17,302		$	19,307

Average common shares outstanding		14,676			15,244

Effect of dilutive securities:
Employee stock options		84			78

Shares for diluted earnings per share		14,760			15,322

Basic earnings per common share	$	1.18		$	1.27
Diluted earnings per common share	$	1.17		$	1.26
Dividends declared per common share	$	0.70		$	0.68

Comprehensive Income	$	18,872		$	20,104

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


	Three Months Ended
	June 30, 2012			June 30, 2011

Balance at April 1	$	316,046		$	311,122

Net income		7,413			9,830
Other comprehensive income:
Change in unrealized (loss) gain on securities available-for-sale		(740	)		165
Change in unrealized (loss) on interest rate floors		-			(99	)
Cash dividends declared ($0.35/share) and ($0.34/share), respectively		(5,188	)		(5,129	)
Issuance of stock award shares, net		213			202
Acquisition of Virginia Savings Bancorp		7,723			-
Purchase of 149,535 common shares of treasury		(4,845	)		-
Purchase of 176,779 common shares of treasury		-			(5,712	)
Balance at June 30	$	320,622		$	310,379



	Six Months Ended
	June 30, 2012			June 30, 2011

Balance at January 1	$	311,134		$	314,861

Net income		17,442			19,445
Other comprehensive income:
Change in unrealized gain on securities available-for-sale		1,430			954
Change in unrealized (loss) on interest rate floors		-			(295	)
Cash dividends declared ($0.70/share) and ($0.68/share), respectively		(10,335	)		(10,320	)
Issuance of stock award shares, net		655			666
Acquisition of Virginia Savings Bancorp		7,723			-
Exercise of 16,899 stock options		488			-
Exercise of 5,476 stock options		-			153
Purchase of 237,535 common shares of treasury		(7,915	)		-
Purchase of 447,524 common shares of treasury		-			(15,085	)
Balance at June 30	$	320,622		$	310,379

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

	Quarter Ended
	June 30			March 31			December 31			September 30			June 30
	2012			2012			2011			2011			2011

Interest income	$	27,466		$	27,430		$	27,441		$	28,370		$	28,323
Taxable equivalent adjustment		198			208			215			212			240
Interest income (FTE)		27,664			27,638			27,656			28,582			28,563
Interest expense		3,625			3,908			4,216			4,799			5,803
Net interest income		24,039			23,730			23,440			23,783			22,760
Provision for loan losses		1,675			1,950			2,229			-			1,286
Net interest income after provision
for loan losses		22,364			21,780			21,211			23,783			21,474

Noninterest income		13,790			13,118			12,128			13,531			16,537
Noninterest expense		24,763			19,515			18,685			19,688			22,912
Income before income taxes		11,391			15,383			14,654			17,626			15,099
Income tax expense		3,780			5,144			4,787			5,837			5,029
Taxable equivalent adjustment		198			208			215			212			240
Net income available to common shareholders	$	7,413		$	10,031		$	9,652		$	11,577		$	9,830



Distributed earnings allocated to common shareholders	$	5,146		$	5,118		$	5,136		$	5,015		$	5,092
Undistributed earnings allocated to common shareholders		2,208			4,837			4,446			6,479			4,669
Net earnings allocated to common shareholders	$	7,354		$	9,955		$	9,582		$	11,494		$	9,761

Average common shares outstanding		14,680			14,679			14,743			15,003			15,120

Effect of dilutive securities:
Employee stock options		79			80			71			68			73

Shares for diluted earnings per share		14,759			14,759			14,814			15,071			15,193

Basic earnings per common share	$	0.50		$	0.68		$	0.65		$	0.77		$	0.65
Diluted earnings per common share		0.50			0.67			0.65			0.76			0.64

Cash dividends declared per share		0.35			0.35			0.35			0.34			0.34


Net Interest Margin		3.91	%		3.98	%		3.90	%		3.93	%		3.78	%

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

	Quarter Ended
	June 30			March 31			December 31			September 30			June 30
	2012			2012			2011			2011			2011

Non-Interest Income:
Service charges	$	9,649		$	9,090		$	9,360		$	9,840		$	9,855
Insurance commissions		1,347			1,996			1,433			1,388			1,504
Trust and investment management fee income		942			807			925			699			730
Bank owned life insurance		766			723			728			952			745
Other income		558			533			599			380			575
Subtotal		13,262			13,149			13,045			13,259			13,409
Total investment securities impairment losses		(606	)		-			(918	)		(1,849	)		-
Noncredit impairment losses recognized in other
comprehensive income		302			-			-			1,494			-
Net investment securities impairment losses		(304	)		-			(918	)		(355	)		-
Gain (loss) on sale of investment securities		832			(31	)		1			627			3,128
Total Non-Interest Income	$	13,790		$	13,118		$	12,128		$	13,531		$	16,537

Non-Interest Expense:
Salaries and employee benefits	$	10,668		$	10,245		$	10,320		$	10,302		$	10,183
Occupancy and equipment		1,978			1,935			1,929			2,057			1,921
Depreciation		1,109			1,086			1,100			1,131			1,140
FDIC insurance expense		394			385			300			392			932
Advertising		675			644			153			546			628
Bankcard expenses		694			620			566			559			633
Postage, delivery and statement mailings		488			548			484			551			510
Office supplies		396			455			429			492			452
Legal and professional fees		421			317			366			567			3,511
Telecommunications		387			389			388			371			417
Repossessed asset (gains) losses, net of expenses		650			121			(27	)		109			(7	)
Merger related expenses		4,042			135			-			-			-
Other expenses		2,861			2,635			2,677			2,611			2,592
Total Non-Interest Expense	$	24,763		$	19,515		$	18,685		$	19,688		$	22,912




Employees (Full Time Equivalent)		831			797			795			792			795
Branch Locations		73			68			68			68			68

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
	June 30			December 31
	2012			2011
	(Unaudited)
Assets
Cash and due from banks	$	90,630		$	140,873
Interest-bearing deposits in depository institutions		8,410			5,526
Federal funds sold		35,000			-
Cash and cash equivalents		134,040			146,399

Investment securities available-for-sale, at fair value		376,891			360,783
Investment securities held-to-maturity, at amortized cost		19,319			23,458
Other securities		11,686			11,934
Total investment securities		407,896			396,175

Gross loans		2,065,589			1,973,103
Allowance for loan losses		(19,452	)		(19,409	)
Net loans		2,046,137			1,953,694

Bank owned life insurance		80,407			78,961
Premises and equipment, net		72,516			64,612
Accrued interest receivable		7,090			7,093
Net deferred tax assets		34,716			32,219
Intangible assets		65,162			56,164
Other assets		45,502			41,792
Total Assets	$	2,893,466		$	2,777,109

Liabilities
Deposits:
Noninterest-bearing	$	421,664		$	369,025
Interest-bearing:
Demand deposits		543,623			526,824
Savings deposits		498,815			439,823
Time deposits		931,278			885,596
Total deposits		2,395,380			2,221,268
Short-term borrowings
Federal Funds purchased		-			75,000
Customer repurchase agreements		123,074			114,050
Long-term debt		16,495			16,495
Other liabilities		37,895			39,162
Total Liabilities		2,572,844			2,465,975

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, 2012 and December 31, 2011
less 3,678,649 and 3,717,993 shares in treasury, respectively		46,249			46,249
Capital surplus		103,449			103,335
Retained earnings		298,155			291,050
Cost of common stock in treasury		(124,754	)		(125,593	)
Accumulated other comprehensive loss:
Unrealized gain on securities available-for-sale		2,255			825
Underfunded pension liability		(4,732	)		(4,732	)
Total Accumulated Other Comprehensive Loss		(2,477	)		(3,907	)
Total Stockholders' Equity		320,622			311,134
Total Liabilities and Stockholders' Equity	$	2,893,466		$	2,777,109

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

	Original Cost		Credit-Related Net Investment Impairment Losses through June 30, 2012			Unrealized Gains (Losses)			Carrying Value

US Government Agencies	$	5,331	$	-		$	119		$	5,450
Mortgage Backed Securities		243,939		-			7,111			251,050
Municipal Bonds		52,197		-			1,736			53,933
Pooled Bank Trust Preferreds		27,035		(19,900	)		(3,843	)		3,292
Single Issuer Bank Trust Preferreds,
Subdebt of Financial Institutions, and
Bank Holding Company Preferred Stocks		79,227		(1,015	)		(1,522	)		76,690
Money Markets and Mutual Funds		1,724		-			56			1,780
Federal Reserve Bank and FHLB stock		11,686		-			-			11,686
Community Bank Equity Positions		9,368		(5,263	)		(90	)		4,015
Total Investments	$	430,507	$	(26,178	)	$	3,567		$	407,896

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

	June 30		March 31		December 31		September 30		June 30
	2012		2012		2011		2011		2011

Residential real estate (1)	$	997,016	$	939,611	$	929,788	$	916,122	$	902,846
Home equity - junior liens (including lines of credit)		143,400		139,764		141,797		142,028		140,024
Commercial and industrial		116,288		108,707		130,899		119,377		121,149
Commercial real estate (2)		768,176		745,586		732,146		708,558		693,959
Consumer		37,383		35,448		35,845		36,575		36,626
DDA overdrafts		3,326		2,848		2,628		2,924		2,415
Previously securitized loans		-		-		-		214		325
Gross Loans	$	2,065,589	$	1,971,964	$	1,973,103	$	1,925,798	$	1,897,344

Construction loans included in:
(1) - Residential real estate loans	$	11,919	$	11,613	$	9,287	$	7,456	$	6,879
(2) - Commercial real estate loans	$	18,544	$	20,661	$	20,201	$	23,915	$	23,433

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

	Three Months Ended June 30,
				2012								2011
	Average					Yield/			Average					Yield/
	Balance			Interest		Rate			Balance			Interest		Rate

Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,096,164		$	11,904		4.37	%	$	1,031,768		$	12,307		4.78	%
Commercial, financial, and agriculture (3)		876,678			9,742		4.47	%		797,909			9,440		4.75	%
Installment loans to individuals (4)		46,439			751		6.50	%		46,427			852		7.36	%
Previously securitized loans (5)		***			746		***			426			753		708.98	%
Total loans		2,019,281			23,143		4.61	%		1,876,530			23,352		4.99	%
Securities:
Taxable		378,656			3,943		4.19	%		449,006			4,513		4.03	%
Tax-exempt (6)		39,678			566		5.74	%		48,351			685		5.68	%
Total securities		418,334			4,509		4.34	%		497,357			5,198		4.19	%
Deposits in depository institutions		8,863			-		-			7,298			-		-
Federal funds sold		24,212			12		0.20	%		35,000			13		0.15	%
Total interest-earning assets		2,470,690			27,664		4.50	%		2,416,185			28,563		4.74	%
Cash and due from banks		70,858								52,867
Bank premises and equipment		68,936								64,432
Other assets		215,692								203,262
Less: Allowance for loan losses		(19,179	)							(18,797	)
Total assets	$	2,806,997							$	2,717,949

Liabilities:
Interest-bearing demand deposits		533,666			173		0.13	%		489,876			243		0.20	%
Savings deposits		474,976			184		0.16	%		417,453			273		0.26	%
Time deposits		895,921			3,026		1.36	%		960,187			5,052		2.11	%
Short-term borrowings		121,424			77		0.26	%		120,139			77		0.26	%
Long-term debt		16,495			165		4.02	%		16,495			158		3.84	%
Total interest-bearing liabilities		2,042,482			3,625		0.71	%		2,004,150			5,803		1.16	%
Noninterest-bearing demand deposits		413,709								379,129
Other liabilities		28,921								19,707
Stockholders' equity		321,885								314,963
Total liabilities and
stockholders' equity	$	2,806,997							$	2,717,949
Net interest income				$	24,039							$	22,760
Net yield on earning assets							3.91	%							3.78	%


(1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.
(2) Interest income includes $0 and $154 from interest rate floors for the three months ended June 30, 2012 and June 30, 2011, respectively.
(3) Includes the Company’s commercial and industrial and commercial real estate loan categories. Interest income includes $0 and $242 from interest rate floors for the three months ended June 30, 2012 and June 30, 2011, respectively.
(4) Includes the Company’s consumer and DDA overdrafts loan categories.
(5) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.
(6) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%.

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

	Six Months Ended June 30,
				2012								2011
	Average					Yield/			Average					Yield/
	Balance			Interest		Rate			Balance			Interest		Rate

Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,082,038		$	23,731		4.41	%	$	1,027,566		$	24,851		4.88	%
Commercial, financial, and agriculture (3)		869,782			19,326		4.47	%		795,238			18,917		4.80	%
Installment loans to individuals (4)		44,060			1,521		6.94	%		45,841			1,664		7.32	%
Previously securitized loans (5)		***			1,632		***			541			1,658		618.02	%
Total loans		1,995,880			46,210		4.66	%		1,869,186			47,090		5.08	%
Securities:
Taxable		365,233			7,907		4.35	%		434,624			9,055		4.20	%
Tax-exempt (6)		40,397			1,162		5.78	%		49,532			1,395		5.68	%
Total securities		405,630			9,069		4.50	%		484,156			10,450		4.35	%
Deposits in depository institutions		8,225			-		-			7,976			-		-
Federal funds sold		25,837			23		0.18	%		30,913			26		0.17	%
Total interest-earning assets		2,435,572			55,302		4.57	%		2,392,231			57,566		4.85	%
Cash and due from banks		73,171								54,653
Bank premises and equipment		66,841								64,387
Other assets		216,033								203,875
Less: Allowance for loan losses		(19,452	)							(18,677	)
Total assets	$	2,772,165							$	2,696,469

Liabilities:
Interest-bearing demand deposits		528,714			351		0.13	%		487,553			487		0.20	%
Savings deposits		461,705			372		0.16	%		409,818			530		0.26	%
Time deposits		892,516			6,328		1.43	%		956,430			10,262		2.16	%
Short-term borrowings		117,685			150		0.26	%		115,690			149		0.26	%
Long-term debt		16,495			333		4.06	%		16,495			315		3.85	%
Total interest-bearing liabilities		2,017,115			7,534		0.75	%		1,985,986			11,743		1.19	%
Noninterest-bearing demand deposits		403,305								374,270
Other liabilities		32,676								19,494
Stockholders' equity		319,069								316,719
Total liabilities and
stockholders' equity	$	2,772,165							$	2,696,469
Net interest income				$	47,768							$	45,823
Net yield on earning assets							3.94	%							3.86	%

(1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.
(2) Interest income includes $0 and $632 from interest rate floors for the six months ended June 30, 2012 and June 30, 2011, respectively.
(3) Includes the Company’s commercial and industrial and commercial real estate loan categories. Interest income includes $0 and $488 from interest rate floors for the six months ended June 30, 2012 and June 30, 2011, respectively.
(4) Includes the Company’s consumer and DDA overdrafts loan categories.
(5) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.
(6) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%.

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

	June 30			March 31			December 31			September 30			June 30
	2012 (a)			2012			2011			2011			2011

Tier I Capital:
Stockholders' equity	$	320,622		$	316,046		$	311,134		$	309,892		$	310,379
Goodwill and other intangibles		(64,971	)		(55,871	)		(55,969	)		(56,071	)		(56,173	)
Accumulated other comprehensive loss (income)		2,477			1,737			3,907			2,701			1,838
Qualifying trust preferred stock		16,000			16,000			16,000			16,000			16,000
Unrealized loss on AFS securities		-			-			(448	)		(1,081	)		(82	)
Excess deferred tax assets		(7,847	)		(4,020	)		(5,897	)		(5,435	)		(4,462	)
Total tier I capital	$	266,282		$	273,892		$	268,727		$	266,007		$	267,500


Total Risk-Based Capital:
Tier I capital	$	266,282		$	273,892		$	268,727		$	266,007		$	267,500
Qualifying allowance for loan losses		19,452			18,628			19,409			19,848			18,944
Total risk-based capital	$	285,734		$	292,520		$	288,136		$	285,855		$	286,444

Net risk-weighted assets	$	2,136,249		$	2,050,520		$	2,048,398		$	2,013,294		$	1,993,003


Ratios:
Average stockholders' equity to average assets		11.47	%		11.55	%		11.65	%		11.67	%		11.59	%
Tangible capital ratio		9.03	%		9.54	%		9.37	%		9.65	%		9.56	%
Risk-based capital ratios:
Tier I capital		12.46	%		13.36	%		13.12	%		13.21	%		13.42	%
Total risk-based capital		13.38	%		14.27	%		14.07	%		14.20	%		14.37	%
Leverage capital		9.74	%		10.23	%		10.18	%		10.04	%		10.07	%


(a) June 30, 2012 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			December 31			September 30			June 30
		2012			2012			2011			2011			2011

Intangibles, net	$	65,162		$	56,066		$	56,164		$	56,266		$	56,368
Intangibles amortization expense		109			98			102			102			103

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

	Quarter Ended
	June 30			March 31			December 31			September 30			June 30
	2012			2012			2011			2011			2011

Balance at beginning of period	$	18,628		$	19,409		$	19,848		$	18,944		$	18,414

Charge-offs:
Commercial and industrial		48			69			247			200			-
Commercial real estate		27			1,988			1,650			141			166
Residential real estate		296			198			176			264			377
Home equity		347			509			475			209			168
Consumer		36			59			31			75			14
DDA overdrafts		375			335			394			492			392
Total charge-offs		1,129			3,158			2,973			1,381			1,117

Recoveries:
Commercial and industrial		-			2			15			2			3
Commercial real estate		1			96			-			1,954			26
Residential real estate		3			4			10			1			12
Home equity		10			1			1			1			4
Consumer		35			29			29			58			11
DDA overdrafts		229			295			250			269			305
Total recoveries		278			427			305			2,285			361

Net charge-offs		851			2,731			2,668			(904	)		756
Provision for loan losses		1,675			1,950			2,229			-			1,286
Balance at end of period	$	19,452		$	18,628		$	19,409		$	19,848		$	18,944

Loans outstanding	$	2,065,589		$	1,971,964		$	1,973,103		$	1,925,798		$	1,897,344
Average loans outstanding		2,019,281			1,972,478			1,940,950			1,917,246			1,876,530
Allowance as a percent of loans outstanding		0.94	%		0.94	%		0.98	%		1.03	%		1.00	%
Allowance as a percent of non-performing loans		88.92	%		88.78	%		87.76	%		87.27	%		81.08	%
Net charge-offs (annualized) as a
percent of average loans outstanding		0.17	%		0.55	%		0.55	%		(0.19	)%		0.16	%
Net charge-offs, excluding overdraft deposit accounts,
(annualized) as a percent of average loans outstanding		0.14	%		0.55	%		0.52	%		(0.24	)%		0.14	%

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

	June 30			March 31			December 31			September 30			June 30
	2012			2012			2011			2011			2011

Nonaccrual loans	$	21,726		$	20,420		$	21,951		$	22,423		$	23,178
Accruing loans past due 90 days or more		149			562			166			320			188
Total non-performing loans		21,875			20,982			22,117			22,743			23,366
Other real estate owned		8,697			8,250			7,948			8,273			7,999
Total non-performing assets	$	30,572		$	29,232		$	30,065		$	31,016		$	31,365

Non-performing assets as a percent of loans and
other real estate owned		1.47	%		1.48	%		1.52	%		1.60	%		1.65	%



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

	June 30			March 31			December 31			September 30			June 30
		2012			2012			2011			2011			2011

Residential real estate	$	5,575		$	4,108		$	5,362		$	4,569		$	4,971
Home equity		1,864			1,560			2,246			2,425			2,299
Commercial and industrial		540			63			1,243			37			476
Commercial real estate		3,145			2,636			3,415			2,423			2,186
Consumer		90			58			138			112			185
Previously securitized loans		-			-			-			403			305
DDA overdrafts		364			304			909			614			279
Total past due loans	$	11,578		$	8,729		$	13,313		$	10,583		$	10,701

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