City Holding 8K RBC Financial Institutions Conference | CHCO 20 Sep 06

RBC Financial Institutions Conference

September 2006

Skip Hageboeck Craig Stilwell

President & CEO EVP-Retail Banking

Forward Looking Statements

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 could have adverse legal actions of a material nature; (5) the Company
may face competitive loss of customers; (6) the Company may be unable to manage its
expense levels; (7) the Company may have difficulty in retaining key employees; (8)
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; (9) changes in general economic conditions and increased competition could
adversely affect the Company's operating results; (10) 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 (11) 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:

•

Headquartered In Charleston WV

•

$2.5 Billion in Total Assets

•

67 Banking Offices

Key Markets

1^st & 10% Market Share

in Huntington WV/Ashland KY MSA

$3.6 Billion

8% Market Share in Morgan,

Berkeley & Jefferson Co. WV

$1.8 Billion

1^st & 30% Market Share

$1.6 Billion

2^nd & 11% Market Share

in WV’s largest market; $4.4B

Themes:

CHCO: Consistently superior results

CHCO: Conservative operating platform

CHCO: Growing and succeeding in

slow-growth markets

2005 Major Accomplishments

Maintained “High-Performing Bank”

Metrics

Grew “Core EPS”

Acquisition of Classic Bancshares added

10 offices in KY and OH

$256MM in loans

$212MM in deposits

Achieved strong growth in commercial

lending

Launched 2^nd Generation deposit products

Initiated improvements to retail distribution

network

2006 YTD Accomplishments

Loan Growth of 5.8% annualized

Commercial growth @ 12.7% annualized

Deposit Growth of 4.6% annualized

EPS growth of 4.9% despite:

Provision Expense of $1.7MM vs. $0 in

prior year

Decrease in interest income on Previously

Securitized Loans of $0.7MM

Non-interest income up 9.8%

Net interest margin up 20 bp to 4.64%

* Rankings based on Core ROA among 239 public banks $1-$10 Billion

	2004	2005	YTD 2006
n Reported ROA	2.10%	2.09%	2.12%	best in class!
n NIM	4.29%	4.49%	4.64%	increasing!
n Efficiency Ratio	48.7%	46.7%	44.7%	decreasing!
n Non-Int Rev/Total Rev	33%	34%	33%
n Non-perf Assets/ Loans	0.29%	0.27%	0.25%	decreasing!

Why Own CHCO Stock?

1. CHCO is consistently and

extraordinarily profitable:

Why Own This Stock?

1. CHCO is highly profitable

2. CHCO is conservatively positioned

3. CHCO is focused on growth

4. CHCO has strong management talent

Loan to Deposits 83.6%

Loan to Deposits 92.0%

Sample of 222 publicly traded banks

and thrifts with assets between $1-$5
billion as of December 31, 2005

As of December 31, 2005

Conservative Loan Portfolio

Mix

As of December 31, 2005

Sample of 222 publicly traded banks

and thrifts with assets between $1
and $5 billion

Strong Loan Quality

Deposits: Low Cost and Stable

Data: December 31, 2005

CHCO is highly liquid

34%

21%

79%

66%

*As of December 31, 2005.

Non-interest income excludes
security gains

Sample of 222 publicly traded banks

and thrifts with assets between $1
and $5 billion as of December 31,
2005

Favorable Revenue Profile

2004 Efficiency Ratio adjusted to eliminate $5.5 million in revenue

from Legal Settlement and associated legal expenses of $500M;
Peers: Sample of 222 publicly traded banks and thrifts with assets
between $1 to $5 Billion as of December 31, 2005

91^st percentile

City is Highly Efficient

	CHCO 6/30/06	Peer Median
Equity/Assets	11.5%	8.7%
Tang Equity/Tang Assets Tang Equity/Tang Assets	9.1% 9.1%	7.0% 7.0%
Leverage Ratio	10.3%	12.5%
Tier I Capital Ratio	14.6%	11.1%
Total Risk-based Capital Ratio Total Risk-based Capital Ratio	15.5% 15.5%	12.5%

Strong Capital facilitates growth:

Why Own This Stock?

1. CHCO is highly profitable

2. CHCO is well-positioned for the

future

3. CHCO is growing in slow-growth

markets

Internal Loan Growth

Internal Deposit Growth

Improvements to Retail Distribution

System

Acquisition

	Population Growth 2006-2011	Median Household Income 2006
CHCO franchise	1.6%	$35,928
West Virginia	0.8%	$34,207
U.S.	6.7%	$51,546

Banking in Slow-growth markets:

CHCO has succeeded despite the slow growing
markets in which it operates

	Population Growth 2006-2011	Household Income
Kanawha Co. (Charleston)	-3.8%	$39,847
Putnam Co.	4.4%	$54,072
Jefferson Co.	13.15%	$51,953

Local Demographics:

Within any franchise there are pockets of better opportunity

Kanawha County is losing

population – but there is growth
even in declining markets!

9.8%

10.4%

33.4%

incl. Classic

12.7%

annualized

Commercial Loan Growth:

Loan Mix:

34.0%

9.1%

2.1%

7.8%

annualized

Home Equity Loan Growth:

5.2%

26.2% incl.

Classic

2.9%

annualized

Residential Loan Growth:

Source: Internal data as of December 31, 2005

CHCO:

A Retail Focused Franchise

City’s Retail Business Model

Best in class products

Strong distribution network

Very targeted marketing/promotion

Alignment between staff, key

performance measures, and
compensation

Best in Class Products:

an early adopter of Totally Free
Checking

2001-2003

First to market

Little competition

High level of account growth

Strong Revenue lift

Best in Class Products:

Totally Free Checking

By late 2004

Every bank in market now offered free

checking

Growth started to flatten

Sole focus on Free Checking resulted in

91% of all new accounts opened being put
in this product type

Identified desire to diversify revenue

stream

Best in class products

2^nd Generation transaction accounts

2005

Simplified account offerings

Improved fee income opportunities in

new account line up

Gave our front line an improved sales

system combined with strong marketing

Goal was to lift the number of new

accounts and lower the percentage that
were sold free

Best in class products

2^nd Generation transaction accounts

Average of

2,657 in 2005

Average of

2,372 in 2004

Average of

2,674 YTD in
2006

Gave us the lift we wanted…

New Consumer DDA Accounts openings per month

20% CAGR

2^nd Q 2001 to 4^th Q 2005

And the corresponding revenues

Debit Card Revenue

Current run rate

is $5,000,000 in
annual revenue

	2003	2004	2005
Transactions	8,067,069	9,917,376	12,763,439
Sales Volume	$183 Million	$208 Million	$283 Million
Revenue	$2,700,722	$3,001,842	$3,980,931
Revenue Growth (over prior year)	23%	11%	33%
Active Cards	57,719	60,764	73,477
Penetration	75%	77%	80%
Avg Transactions per account	9.2	10.5	11.8

Debit Card Success

New Partnership with Elan to

provide Credit Card Products

The trend was not our

friend

No easy way to

differentiate products

Competing against teaser

rates; rewards programs,
affinity groups, etc

Strategic partnership

allows us to maintain
branded program with
stronger products and
support

City continues to innovate to offer

the best products to our customers:

Wal-Mart Strategy

Consolidations/Renovations/ Relocations

New Branches in growing areas of existing

markets

DeNovo entry into contiguous markets

Optimizing our Retail Distribution

System

Part of a Hub and Spoke distribution strategy

High-traffic Wal-Marts equal high volume in

new accounts and service fee income

Supports existing retail distribution outlets in

City’s major Markets with low capital outlay

Openings

Charleston – Sept 2004

Huntington – Sept 2004

Beckley – May 2005

Ashland – August 2005

Ripley – 1st Quarter 2007

Hurricane - 2007

City’s Wal-Mart Strategy

Consolidations/Renovations/Relocations:

Our New Downtown Charleston Office

Housing Retail, Trust, Commercial & Private Banking
Opened 2006

New branches in growing areas of

existing markets:
Newest branch opening next month in high growth market in Eastern Panhandle (near Washington DC)

Our new “flagship branch”

in the Eastern Panhandle

Other Strategic Opportunities

Capital Flexibility

Dividends

- Increased 10% in April 2004 to $0.88

Increased 13.6% in April 2005 to $1.00

Increased 12% in April 2006 to $1.12

Payout ratio in 2006: 37%

Share Repurchases

Tangible Capital @ 9.1% @ 6/30/2006

Purchased over 700,000 in 1^st half of 2006

Holding Company has $35 million in cash

CHCO’s strong profitability allows greater long-term

share repurchase activity than peers

$100MM to $500MM in assets

Markets in or adjacent to CHCO footprint

Retail Opportunity

Accretive to EPS in first full year

Acquisitions:

Industry Challenges for 2007

Flat Yield Curve & NIM Compression

CHCO is less dependent on NII for revenue than peers

CHCO has demonstrated strong management of

NII/NIM by delivering promised results to rising rates

Lower short-term rates would be

challenging

CHCO has purchased interest rate floors

CHCO maintains significant short-term investment

assets which could be moved into long-term bonds

Asset Quality is at its peak

CHCO’s loan to deposit ratio is less than peers

CHCO has focused on real-estate secured lending

Real estate prices in CHCO markets have been subdued

Housing is in decline

CHCO’s profitability has not been dependent upon

mortgage banking

Housing in CHCO’s markets has been generally stable

	2004	2005	2006 Projected	2007 Projected	2008 Projected
Average Balances	$83.5 MM	$42.9 MM	$24.7 MM	$16.5 MM	$12.1 MM
Rate	17.4%	26.6%	40%	40%	40%
Gross Interest Revenue	$14.5 MM	$11.4 MM	$9.6 MM	$6.7 MM	$4.9 MM

Previously Securitized Loans:

A unique challenge for CHCO which was met in 2005 and 2006 thru loan growth and a balance sheet positioned to benefit from rising
rates

Prime Rate

CHCO

Peers

Net Interest Margin: CHCO has benefited

from rising interest rates and
demonstrated strong management of net
interest margin

H/R Director	Clorox	2005
CFO	Public Accounting	2005
EVP – Commercial Lending	BB&T	2004
SVP – Mortgage Lending	United Bankshares	2004
Regional Branch Manager	BB&T	2004
Chief Auditor	BB&T	2001
SVP – Consumer Lending	Bank One	2001
SVP – Branch Banking	BB&T	2001
Senior Lender	BB&T	2001
Commercial Workout Manager	Huntington	2001
CEO	INB/NBD/PPLS	2001
EVP – Retail	PPLS/BKD	2001

A Deep & Diverse Talent Pool

Talented additions have been made where additional strength was needed:

CHCO Checklist for success in slow

growth markets:

Strong Net Interest Margin – Yes

Disciplined competition – True in most markets

Ability to grow share – Yes

Efficient Cost Structure – Yes

Tight Capital – No, but poses a significant opportunity to

enhance EPS as more optimal capital structure is
achieved!

Exploiting sub-market growth: Yes

Opportunity to grow into adjacent markets – A few

opportunities are available undertake this opportunity

Management – Strong as demonstrated by long-term

sustained performance

•

Based on Price of $39.82 (close of business 9/5/06)

** Based on Analyst estimates for 2007 of $3.16

Pricing Metrics*

Price to Book: 246%

Price to Tangible Book: 311%

Price to 2007 Projected Earnings** 12.6x

Institutional

Ownership 46%

Questions?

City Holding (CHCO) 8-KRBC Financial Institutions Conference