CITY HOLDING CO, S-4/A, 1995-06-15

CITY HOLDING CO
S-4/A, 1995-06-15
STATE COMMERCIAL BANKS

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As filed with the Securities and Exchange Commission on June 15, 1995

Registration No. 33-58647

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________

PRE-EFFECTIVE AMENDMENT NO. 2

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________

CITY HOLDING COMPANY
(Exact name of registrant as specified in its charter)
________________________

West Virginia 6711 55-0619957
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
3601 MacCorkle Avenue, S.E.
Charleston, West Virginia 25304
(304) 925-6611
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
________________________

STEVEN J. DAY
President and Chief Executive Officer
City Holding Company
3601 MacCorkle Avenue, S.E.
Charleston, West Virginia 25304
(304) 925-6611
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
________________________

Copy to:

LATHAN M. EWERS, JR. DEBORAH A. SINK
Hunton & Williams Bowles, Rice, McDavid, Graff & Love
951 East Byrd Street 16th Floor Commerce Square
Richmond, Virginia 23219-4074 P.O. Box 1386
Charleston, West Virginia 25325-1386
________________________

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes effective.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box.
_________________________

The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>

CITY HOLDING COMPANY

CROSS-REFERENCE SHEET

Caption(s) or Location in
Item of Form S-4 Joint Proxy
Statement/Prospectus
1. Forepart of Registration Facing Page; Cross Reference
Statement and Outside Front Sheet; Outside Front Cover
Cover Page of Joint Proxy Page
Statement/Prospectus

2. Inside Front and Outside Inside Front Cover Page; Table
Back Cover Pages of Joint of Contents; Available
Proxy Statement/Prospectus Information; Incorporation of
Certain Information by
Reference

3. Risk Factors, Ratio of Summary; Selected Financial
Earnings to Fixed Charges Data
and Other Information

4. Terms of the Transaction Summary; The Merger; City
Holding Capital Stock;
Comparative Rights of
Shareholders; Incorporation of
Certain Information by
Reference; Annex I; Annex II

5. Pro Forma Financial Pro Forma Condensed
Information Consolidated Financial
Statements (Unaudited)

6. Material Contacts with the Not Applicable
Company Being Acquired

7. Additional Information Not Applicable
Required for Reoffering by
Persons and Parties Deemed
to be Underwriters

8. Interests of Named Experts The Merger; Legal Opinions
and Counsel

9. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act
Liabilities

10. Information with Respect Not Applicable
to S-3 Registrants

11. Incorporation of Certain Not Applicable
Information by Reference

12. Information with Respect Business of City Holding;
to S-2 or S-3 Supervision and Regulation;
Registrants Selected Financial Data; City
Holding Capital Stock; City
Holding Management's
Discussion and Analysis of
Financial Condition and
Results of Operation; City
Holding Market Price and
Dividend Information; City
Holding Audited Consolidated
Financial Statements

13. Incorporation of Certain Incorporation of Certain
Information by Reference Information by Reference

14. Information with Respect Not Applicable
to Registrants Other
than S-3 or S-2
Registrants

15. Information with Respect Not Applicable
to S-3 Companies

16. Information with Respect Not Applicable
to S-2 or S-3 Companies

17. Information with Respect Business of FMB; Properties of
to Companies other than FMB; FMB Management's
S-2 or S-3 Companies Discussion and Analysis of
Financial Condition and
Results of Operation; FMB
Audited Financial Statements;
Legal Proceedings Concerning
FMB; Market for FMB Common
Stock and Related Stockholder
Matters

18. Information if Proxies, Summary; The Shareholder
Consents or Meetings; Dissenters' Rights;
Authorizations are to be Annex IV; The Merger; City
Solicited Holding Ownership of Equity
Securities; FMB Ownership of
Equity Securities; Election of
City Holding Directors;
Executive Officers of City
Holding; City Holding
Executive Compensation; City
Holding Performance Graph;
City Holding Employment
Agreements; City Holding
Certain Relationships and
Related Transactions; FMB
Certain Relationships and
Related Transactions

19. Information if Proxies, Not Applicable
Consents or
Authorizations are not
to be Solicited, or in
an Exchange Offer
<PAGE>

[First Merchants Bancorp, Inc. Letterhead]
Fourth Avenue and Washington Street
Montgomery, West Virginia 25136

June __, 1995

Dear Shareholders:

We cordially invite you to attend a special meeting of shareholders of
First Merchants Bancorp, Inc. ("FMB") to be held at FMB's corporate
headquarters at Fourth Avenue and Washington Street, Montgomery, West
Virginia, on July __, 1995, at 4:30 p.m. for the purpose of considering the
proposal by which FMB will merge with and into City Holding Company, a bank
holding company headquartered in Charleston, West Virginia ("City
Holding"), and the shareholders of FMB will become shareholders of City
Holding.

Upon consummation of the proposed merger, each FMB shareholder will be
entitled to receive for each share of FMB Common Stock, 1.60 shares of City
Holding Common Stock. The terms of the proposed merger are explained in
detail in the accompanying Joint Proxy Statement/Prospectus that we urge
you to read carefully.

Regardless of the number of shares you own and whether or not you plan
to attend, it is important that your shares be represented and voted at the
meeting. Accordingly, you are requested to sign, date and mail the
enclosed proxy at your earliest convenience. In the event you execute a
proxy and subsequently find you can attend the meeting, you may revoke your
proxy and vote at the meeting if you wish. Only shareholders of record as
of June __, 1995, are entitled to notice of and to vote on matters to be
transacted at the annual meeting.

Your Board of Directors is unanimously of the opinion that City
Holding Common Stock, which will be more widely traded than FMB Common
Stock following the proposed merger, is a desirable security for our
shareholders. Further, we believe that the depth of services and support
that the combination of FMB and City Holding can bring to our market area
exceed those which FMB alone can offer to its customers. Consequently, the
Board urges you to vote FOR the merger described in the accompanying Joint
Proxy Statement/Prospectus.

Sincerely,

George F. Davis
Chief Executive Officer
First Merchants Bancorp, Inc.

<PAGE>
FIRST MERCHANTS BANCORP, INC.
Fourth Avenue and Washington Street
Montgomery, West Virginia 25136

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held July __, 1995

TO THE SHAREHOLDERS OF FIRST MERCHANTS BANCORP, INC.:

Notice is hereby given that, pursuant to call of its Board of
Directors, a special meeting of shareholders of First Merchants Bancorp,
Inc. ("FMB") will be held at FMB's corporate headquarters at Fourth Avenue
and Washington Street on July __, 1995, at 4:30 p.m. for the following
purposes:

1. Proposed Merger. To consider and vote upon the Agreement and Plan
of Reorganization, dated as of March 14, 1995, and the Plan of Merger
attached thereto (the "Agreement") providing for the merger of FMB with
City Holding Company, a West Virginia corporation. The Agreement is
attached to the accompanying Joint Proxy Statement/Prospectus as Annex I.

2. Other Business. To consider and vote upon such other matters as
may properly come before the meeting.

Only those FMB shareholders of record at the close of business on June
__, 1995, shall be entitled to notice of and to vote at the meeting or any
adjournments or postponements thereof.

The Board of Directors of FMB unanimously recommends that the holders
of FMB Common Stock vote to approve the above proposal.

By Order of the Board of
Directors,

_______________________
Secretary

June __, 1995
Montgomery, West Virginia

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-
PAID ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED. SHAREHOLDERS
ATTENDING THE MEETING MAY PERSONALLY VOTE ON ALL MATTERS WHICH ARE
CONSIDERED, IN WHICH EVENT THE SIGNED PROXIES ARE REVOKED.
<PAGE>
[City Holding Company Letterhead]
3601 MacCorkle Avenue, S.E.
Charleston, West Virginia 25304

June __, 1995

Dear Shareholders:

We cordially invite you to attend the annual meeting of shareholders
of City Holding Company ("City Holding") to be held at City Holding's
corporate headquarters located at 3601 MacCorkle Avenue, S.E., Charleston,
West Virginia 25304, on July __, 1995, at 4:00 p.m. for the purpose of
considering the approval of an Agreement and Plan of Reorganization that
provides for the merger of First Merchants Bancorp, Inc., a West Virginia
corporation headquartered in Montgomery, West Virginia, into City Holding,
thereby allowing City Holding to acquire FMB's subsidiary, Merchants
National Bank, a national banking association. The approximately 918,000
additional shares to be issued in the merger represent approximately 24% of
the City Holding Common Stock outstanding on March 31, 1995, and
shareholder approval of the merger is a condition to consummation of the
acquisition.

Shareholders also will be asked to elect four Class III Directors to
the Board of Directors to serve three year terms, to ratify the Board of
Directors' appointment of Ernst & Young LLP as auditors for City Holding
for 1995, and to transact such other business as may properly come before
the meeting or any adjournment thereof.

If you cannot attend the meeting in person, please complete the
enclosed proxy and return it in the accompanying postage-paid envelope so
that your shares will be represented at the meeting. Only holders of City
Holding Common Stock of record at the close of business on June __, 1995
are entitled to notice of and to vote on matters to be transacted at the
Annual Meeting.

Your Board of Directors is unanimously of the opinion that the
proposed transaction with FMB would be beneficial to City Holding's
shareholders. Consequently, the Board urges you to vote FOR the merger
described in the accompanying Joint Proxy Statement/Prospectus.

Sincerely,

Steven J. Day
President and Chief Executive Officer,
City Holding Company

<PAGE>
CITY HOLDING COMPANY
3601 MacCorkle Avenue, S.E.
Charleston, West Virginia 25304

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held July __, 1995

TO THE SHAREHOLDERS OF CITY HOLDING COMPANY:

Notice is hereby given that, pursuant to call of its Board of
Directors, the annual meeting of shareholders of City Holding Company
("City Holding") will be held at City Holding's corporate headquarters
located at 3601 MacCorkle Avenue, S.E., Charleston, West Virginia 25304, on
July __, 1995, at 4:00 p.m. for the following purposes:

1. Proposed Merger. To consider and vote upon the Agreement and
Plan of Reorganization, dated as of March 14, 1995, and the Plan of Merger
attached thereto (the "Agreement") providing for the merger of First
Merchants Bancorp, Inc. into City Holding. The Agreement is attached to
the accompanying Joint Proxy Statement/Prospectus as Annex I.

2. Election of Directors. To elect four Class III Directors to the
Board of Directors to serve three-year terms.

3. Ratification of Auditors. To ratify the Board of Directors'
appointment of Ernst & Young LLP as auditors for City Holding for 1995; and

4. Other Business. To consider and vote upon such other matters as
may properly come before the meeting.

Only holders of City Holding Common Stock of record at the close of
business on June __, 1995 are entitled to notice of and to vote on matters
to be transacted at the Annual Meeting of any postponement or adjournment
thereof. All properly executed proxies delivered pursuant to this
solicitation will be voted at the Annual Meeting in accordance with
instructions, if any. In the absence of instructions, the proxies will be
voted FOR Items One through Three as described in the accompanying Joint
Proxy Statement/Prospectus.

By Order of the Board of
Directors,

Otis L. O'Connor
Secretary

June __, 1995
Charleston, West Virginia

City Holding Company First Merchants Bancorp, Inc.
Annual Meeting Special Meeting
to be Held on to be Held on
July __, 1995 July __, 1995

______________________

PROSPECTUS
OF
CITY HOLDING COMPANY

COMMON STOCK
_____________________

This Joint Proxy Statement/Prospectus is being furnished to the
holders of common stock, $2.00 par value (the "FMB Common Stock"), of First
Merchants Bancorp, Inc. a West Virginia corporation ("FMB"), in connection
with the solicitation of proxies by the Board of Directors of FMB for use
at a special meeting of FMB shareholders to be held at 4:30 p.m., on July
__, 1995, at FMB's corporate headquarters at Fourth Avenue and Washington
Street, Montgomery, West Virginia (the "FMB Special Meeting").

This Joint Proxy Statement/Prospectus is also being furnished to
holders of common stock, par value $2.50 per share (the "City Holding
Common Stock"), of City Holding Company, a West Virginia corporation ("City
Holding"), in connection with the solicitation of proxies by the Board of
Directors of City Holding for use at the annual meeting of City Holding's
shareholders to be held at City Holding's corporate headquarters located at
3601 MacCorkle Avenue, S.E., Charleston, West Virginia 25304, on July __,
1995, at 4:00 p.m. (the "City Holding Annual Meeting" and, together with
the FMB Special Meeting, the "Shareholder Meetings").

At the Shareholder Meetings, the shareholders of record of City
Holding Common Stock as of the close of business on June __, 1995, and the
shareholders of record of FMB Common Stock as of the close of business on
June __, 1995, will consider and vote upon, among other things, a proposal
to approve the Agreement and Plan of Reorganization (the "Agreement") dated
as of March 14, 1995, by and among City Holding, FMB and Merchants National
Bank ("Merchants"), a national banking association wholly-owned by FMB
pursuant to which FMB will merge into City Holding and the holders of
shares of FMB Common Stock will receive City Holding Common Stock in
exchange therefor. Upon consummation of the Merger, which is expected to
occur on July __, 1995, each outstanding share of FMB Common Stock (other
than shares held by City Holding or in FMB's treasury and other than shares
as to which dissenters' rights have been asserted and duly perfected in
accordance with West Virginia law ("Dissenting Shares")) shall be converted
into 1.60 shares of City Holding Common Stock. Based on the closing bid
price for City Holding Common Stock on The Nasdaq National Market on June
__, 1995, of $__________, each share of FMB Common Stock would have been
exchanged for City Holding Common Stock having a value of $__________.
City Holding will issue up to 918,400 shares of City Holding Common Stock
in the Merger. For a description of the Agreement, which is included
herein in its entirety as Annex I to this Joint Proxy Statement/Prospectus,
see "THE MERGER."

This Joint Proxy Statement/Prospectus also constitutes a prospectus of
City Holding with respect to the shares of City Holding Common Stock to be
issued to shareholders of FMB in connection with the Merger. The
outstanding shares of City Holding Common Stock are, and the shares offered
hereby will be, traded on The Nasdaq National Market.

All information contained in this Joint Proxy Statement/Prospectus
relating to City Holding and its subsidiaries has been supplied by City
Holding, and all information relating to FMB and Merchants has been
supplied by FMB and Merchants. This Joint Proxy Statement/Prospectus and
the accompanying proxy appointment cards are first being mailed to
shareholders of City Holding and FMB on or about June __, 1995.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

THE SHARES OF CITY HOLDING COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

The date of this Joint Proxy Statement/Prospectus is __________, 1995.
<PAGE>
AVAILABLE INFORMATION

City Holding. City Holding is subject to the reporting and
informational requirements of the Securities Exchange Act of 1934 (the
"Exchange Act") and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed
with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C., 20549, and at the Regional Offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and Seven World Trade Center (13th Floor), New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. As permitted by the Rules and Regulations
of the Commission, this Joint Proxy Statement/Prospectus does not contain
all the information set forth in the Registration Statement on Form S-4 and
the exhibits thereto (together with the amendments thereto, the
"Registration Statement"), which has been filed by City Holding with the
Commission under the Securities Act of 1933 (the "1933 Act") with respect
to the City Holding Common Stock and to which reference is hereby made for
further information.

This Joint Proxy Statement/Prospectus incorporates by reference
certain documents relating to City Holding that are not presented herein or
delivered herewith. Such documents are available without charge upon
request from Robert A. Henson, Chief Financial Officer, City Holding
Company, 3601 MacCorkle Avenue, S.E., Charleston, West Virginia 25304,
telephone (304) 925-6611. In order to ensure timely delivery of the
documents, any requests should be made by _________ __, 1995.

FMB. FMB is subject to the reporting and informational requirements
of the Exchange Act and in accordance therewith files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information filed with the Commission can be inspected
and copied at the public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C., 20549, and at the
Regional Offices located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511; and Seven World Trade
Center (13th Floor), New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

Incorporated by reference herein are (i) City Holding's Annual Report
on Form 10-K for the year ended December 31, 1994, (ii) City Holding's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, (iii)
City Holding's amendment on Form 8-K/A, filed February 21, 1995, to its
Current Report on Form 8-K, filed December 19, 1994, (iv) FMB's Annual
Report on Form 10-K for the year ended December 31, 1994, and (v) FMB's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995.

All documents filed by City Holding pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to
the date of the Shareholder Meetings are hereby incorporated by reference
in this Joint Proxy Statement/Prospectus and shall be deemed a part hereof
from the date of filing of such documents. Any statement contained in any
supplement hereto or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Joint Proxy Statement/Prospectus to the
extent that a statement contained herein, in any supplement hereto or in
any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Joint Proxy
Statement/Prospectus or any supplement hereto.

Also incorporated by reference is the Agreement, which is attached to
this Joint Proxy Statement/Prospectus as Annex I.

<PAGE>
No person has been authorized to give any information or to make any
representation other than as contained herein in connection with the offer
contained in this Prospectus, and if given or made, such information or
representation must not be relied upon. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any
securities other than the securities to which it relates, nor does it
constitute an offer to or solicitation of any person in any jurisdiction to
whom it would be unlawful to make such an offer or solicitation. The
delivery of this Prospectus at any time does not imply that the information
herein is correct as of any time subsequent to the date hereof.

TABLE OF CONTENTS

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . 10

THE SHAREHOLDER MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . 13
FMB Special Meeting. . . . . . . . . . . . . . . . . . . . . . . . 13
City Holding Annual Meeting. . . . . . . . . . . . . . . . . . . . 14
Votes Required . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . 16

THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Background and Reasons for the Merger. . . . . . . . . . . . . . . 18
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . 19
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Exchange Ratio and Conversion of Shares. . . . . . . . . . . . . . 22
Business of FMB and Merchants Pending the Merger . . . . . . . . . 24
Conditions to Consummation of the Merger . . . . . . . . . . . . . 24
Stock Option Agreements. . . . . . . . . . . . . . . . . . . . . . 26
Waiver and Amendment; Termination. . . . . . . . . . . . . . . . . 27
Management and Operations after the Merger . . . . . . . . . . . . 28
Interests of Certain Persons in the Merger . . . . . . . . . . . . 28
Certain Federal Income Tax Consequences. . . . . . . . . . . . . . 29

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) . . . 30

DISSENTERS' RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 37

CITY HOLDING CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . 39
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Preferred Stock Purchase Rights Plan; Change of Control. . . . . . 40
Reports to Shareholders. . . . . . . . . . . . . . . . . . . . . . 41
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 41

COMPARATIVE RIGHTS OF SHAREHOLDERS. . . . . . . . . . . . . . . . . . . 41
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Directors and Classes of Directors . . . . . . . . . . . . . . . . 42
Anti-Takeover Provisions . . . . . . . . . . . . . . . . . . . . . 43
Preemptive Rights. . . . . . . . . . . . . . . . . . . . . . . . . 43
Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Conversion; Redemption; Sinking Fund . . . . . . . . . . . . . . . 43
Liquidation Rights . . . . . . . . . . . . . . . . . . . . . . . . 44
Dividends and Other Distributions. . . . . . . . . . . . . . . . . 44
Shareholder Meetings . . . . . . . . . . . . . . . . . . . . . . . 44
Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 44
Director Exculpation . . . . . . . . . . . . . . . . . . . . . . . 45

SUPERVISION AND REGULATION. . . . . . . . . . . . . . . . . . . . . . . 46
Limits on Dividends and Other Payments . . . . . . . . . . . . . . 46
Capital Requirements . . . . . . . . . . . . . . . . . . . . . . . 47
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
FDICIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Bank Holding Companies . . . . . . . . . . . . . . . . . . . . . . 49
Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . 50
Governmental Policies. . . . . . . . . . . . . . . . . . . . . . . 50

BUSINESS OF CITY HOLDING. . . . . . . . . . . . . . . . . . . . . . . . 51

CITY HOLDING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION . . . . . . . . . . . . . . . . 54
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Interest-Earning Assets and Interest-Bearing Liabilities . . . . . 55
Net Interest Income. . . . . . . . . . . . . . . . . . . . . . . . 57
Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Loan Loss Analysis . . . . . . . . . . . . . . . . . . . . . . . . 61
Liquidity and Interest Rate Sensitivity. . . . . . . . . . . . . . 64
Other Income and Expenses. . . . . . . . . . . . . . . . . . . . . 67
Capital Resources. . . . . . . . . . . . . . . . . . . . . . . . . 68
Inflation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

CITY HOLDING MARKET PRICE AND DIVIDEND INFORMATION. . . . . . . . . . . 70

CITY HOLDING OWNERSHIP OF EQUITY SECURITIES . . . . . . . . . . . . . . 72

BUSINESS OF FMB . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

PROPERTIES OF FMB . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

FMB MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION . . . . . . . . . . . . . . . . . . . . . . . 74
Summary of Changes in Financial Position . . . . . . . . . . . . . 74
Summary of Results of Operations . . . . . . . . . . . . . . . . . 76
Net Interest Income. . . . . . . . . . . . . . . . . . . . . . . . 76

Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Provision for Loan Losses. . . . . . . . . . . . . . . . . . . . . 78
Noninterest Income and Expenses. . . . . . . . . . . . . . . . . . 79
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Capital Resources. . . . . . . . . . . . . . . . . . . . . . . . . 80
Liquidity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Inflation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

LEGAL PROCEEDINGS CONCERNING FMB. . . . . . . . . . . . . . . . . . . . 82

MARKET FOR FMB COMMON STOCK AND RELATED STOCKHOLDER MATTERS . . . . . . 82

DIRECTORS AND EXECUTIVE OFFICERS OF FMB . . . . . . . . . . . . . . . . 83
Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . 85

FMB EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . 86
FMB Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . 86

FMB CHANGE OF CONTROL AGREEMENTS. . . . . . . . . . . . . . . . . . . . 87

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF FMB. . . . . . 87

FMB CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . . 87

RESALE OF CITY HOLDING COMMON STOCK . . . . . . . . . . . . . . . . . . 90

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

LEGAL OPINIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

ELECTION OF CITY HOLDING DIRECTORS. . . . . . . . . . . . . . . . . . . 91
Committees of the Board of Directors . . . . . . . . . . . . . . . 93
Attendance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Compensation of Directors. . . . . . . . . . . . . . . . . . . . . 94

EXECUTIVE OFFICERS OF CITY HOLDING. . . . . . . . . . . . . . . . . . . 94

CITY HOLDING EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . 94
City Holding Compensation Committee Report on Executive
Compensation. . . . . . . . . . . . . . . . . . . . . . . . . 95
City Holding Company Stock Incentive Plan. . . . . . . . . . . . . 96
City Holding Company Profit Sharing and 401(k) Plan. . . . . . . . 98

CITY HOLDING PERFORMANCE GRAPH. . . . . . . . . . . . . . . . . . . . . 98

CITY HOLDING EMPLOYMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . 98

CITY HOLDING CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . 99

CITY HOLDING COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT . . . . . . 99

RATIFICATION OF APPOINTMENT OF CITY HOLDING'S AUDITORS. . . . . . . . . 99

CITY HOLDING SHAREHOLDER PROPOSALS. . . . . . . . . . . . . . . . . . . 100

CITY HOLDING AUDITED CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . F-14

FMB AUDITED FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . F-37

AGREEMENT AND PLAN OF REORGANIZATION. . . . . . . . . . . . . . . . Annex I

FMB STOCK OPTION AGREEMENT. . . . . . . . . . . . . . . . . . . . .Annex II

FMB DIRECTORS' STOCK OPTION AGREEMENT . . . . . . . . . . . . . . Annex III

SECTIONS 31-1-122 AND 31-1-123 OF THE WEST VIRGINIA
CORPORATION ACT RELATING TO DISSENTERS' RIGHTS . . . . . . . .Annex IV

FAIRNESS OPINION OF BAXTER FENTRISS AND COMPANY.. . . . . . . . . . Annex V
<PAGE>
SUMMARY

The following summary is qualified in its entirety by the more
detailed information and consolidated financial statements (including the
notes thereto) appearing elsewhere or incorporated by reference in this
Joint Proxy Statement/Prospectus.

Parties to the Merger

FMB. FMB is a one bank holding company which was incorporated in the
State of West Virginia on June 26, 1986. FMB commenced operations on March
5, 1987, acquiring Merchants in Montgomery, West Virginia and The Gauley
National Bank ("Gauley") in Gauley Bridge, West Virginia. FMB operated as
a multi-bank holding company from March 5, 1987 to March 1, 1990, at which
time it merged Gauley into Merchants. FMB expanded into Charleston, West
Virginia on September 17, 1993 when Merchants successfully bid for certain
assets and assumed the insured deposits and certain other liabilities of
Evergreen Federal Savings and Loan Association ("Evergreen"), a failed
thrift institution. Merchants' primary regulator is the Office of the
Comptroller of the Currency (the "OCC"); however, Merchants is also
regulated by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") and the Federal Deposit Insurance Corporation (the
"FDIC"). FMB is regulated by the Federal Reserve Board and the West
Virginia Board of Banking and Financial Institutions (the "West Virginia
Board"). At March 31, 1995, FMB had total assets of $108.1 million, total
deposits of $95.0 million and total shareholders' equity of $10.0 million.
See "BUSINESS OF FMB."

The principal executive office of FMB is located at Fourth Avenue and
Washington Street, Montgomery, West Virginia 25136 and its phone number is
(304) 442-2475.

City Holding. City Holding is a multi-bank holding company with its
principal office in Charleston, West Virginia. City Holding's eight
affiliate banks (the "Banking Subsidiaries"), The City National Bank of
Charleston, The Peoples Bank of Point Pleasant, First State Bank & Trust,
Bank of Ripley, The Home National Bank of Sutton, Blue Ridge Bank, Peoples
State Bank and the First National Bank of Hinton, operate 29 banking
offices in West Virginia, including six in the Charleston and Kanawha
County area, the state's capital and economic and financial center. City
National, which was formed in 1957, is City Holding's principal subsidiary
bank. City Holding acquired Point Pleasant in 1987, First State Bank &
Trust and Bank of Ripley in 1988, Home National and Peoples State in 1992
and First National Bank of Hinton in 1994. In 1992, City Holding opened
Blue Ridge Bank, a new bank in Martinsburg, West Virginia. In early 1995,
City Holding renamed Buffalo Bank of Eleanor to Peoples State Bank in
anticipation of moving its headquarters to Clarksburg, West Virginia, and
the transfer of its Putnam County operations to City National Bank. City
Holding's Banking Subsidiaries operate as separately-incorporated banks
with their own historical names and boards of directors. City Holding
operates three non-banking subsidiaries, City Mortgage Corporation, a
mortgage company with one office in Carnegie, Pennsylvania, City Financial
Corporation, a broker-dealer located in Charleston, West Virginia and
Hinton Financial Corporation, a bank holding company headquartered in
Hinton, West Virginia that owns all of the outstanding capital stock of the
First National Bank of Hinton. At March 31, 1995, City Holding had total
assets of $816 million, total deposits of $656 million and total
shareholders' equity of $59 million. City Holding is regulated by the
Federal Reserve Board and the West Virginia Board. See "BUSINESS OF CITY
HOLDING."

The principal executive office of City Holding is located at 3601
MacCorkle Avenue, S.E., Charleston, West Virginia 25304, and its phone
number is (304) 925-6611.

Shareholder Meetings

FMB. The FMB Special Meeting will be held on July __, 1995, at 4:30
p.m., at FMB's corporate headquarters located at Fourth and Washington
Streets, Montgomery, West Virginia 25136. The purpose of the FMB Special
Meeting is to consider and vote upon a proposal to approve the Agreement.

City Holding. The City Holding Annual Meeting will be held on July
__, 1995, at 4:00 p.m., at City Holding's corporate headquarters located at
3601 MacCorkle Avenue, S.E., Charleston, West Virginia 25304. The purpose
of the City Holding Annual Meeting is (i) to consider and vote upon a
proposal to approve the Agreement, (ii) to elect four Class III directors
and (iii) to ratify the Board of Directors' appointment of Ernst & Young
LLP as auditors for City Holding for 1995.

See "THE SHAREHOLDER MEETINGS."

Votes Required; Record Dates

FMB. Only FMB shareholders of record at the close of business on June
__, 1995 (the "FMB Record Date"), will be entitled to vote at the FMB
Special Meeting. The affirmative vote of the holders of a majority of the
shares of FMB Common Stock outstanding on such date is required to approve
the Agreement. See "THE SHAREHOLDER MEETINGS - Votes Required - FMB".

As of the FMB Record Date, there were 576,000 shares of FMB Common
Stock entitled to be voted. Consequently, 288,001 shares of FMB Common
Stock must vote for the approval of the Agreement for it to be adopted.
The directors and executive officers of FMB and their affiliates owned, as
of the FMB Record Date, 124,302 shares or approximately 21.58% of the
outstanding shares of FMB Common Stock. City Holding and the directors and
executive officers of City Holding and their affiliates beneficially owned,
as of the FMB Record Date, 2,000 of the outstanding shares of FMB Common
Stock. Directors of FMB have either agreed to vote in favor of the
Agreement or have given City Holding an option to purchase 87,438 shares or
approximately 15.2% of the outstanding shares of FMB Common Stock. See
"THE MERGER - Stock Option Agreements".

City Holding. Only City Holding shareholders of record at the close
of business on June __, 1995 (the "City Holding Record Date") will be
entitled to vote at the City Holding Annual Meeting. The affirmative vote
of the holders of a majority of the shares voting is required to approve
the Agreement, and the affirmative vote of a majority of the shares
represented and entitled to vote at the meeting is required to ratify the
Board of Directors' appointment of auditors. Directors are elected by a
plurality of votes cast. Shareholders may cumulate their votes in the
election of directors. See "THE SHAREHOLDER MEETINGS - Votes Required -
City Holding."

As of the City Holding Record Date, there were 3,777,933 shares of
City Holding Common Stock entitled to be voted. The directors and
executive officers of City Holding and their affiliates owned, as of the
City Holding Record Date, 355,770 shares or approximately 9.42% of the
outstanding shares of City Holding Common Stock. FMB and the directors and
executive officers of FMB and their affiliates beneficially owned, as of
the City Holding Record Date, none of the outstanding shares of City
Holding Common Stock.

See "THE SHAREHOLDER MEETINGS."

The Merger

Pursuant to the Agreement, FMB will merge with and into City Holding,
with City Holding as the surviving corporation. As a result of the Merger,
Merchants will be wholly-owned by City Holding. Upon consummation of the
Merger, each outstanding share of FMB Common Stock will be exchangeable for
1.60 shares of City Holding Common Stock (the "Exchange Ratio"). Up to
918,400 shares of City Holding Common Stock will be issued in the Merger,
which will constitute approximately 19.6% of the outstanding City Holding
Common Stock following the Merger, based upon shares outstanding on March
31, 1995.

In arm's length negotiations, FMB and City Holding valued FMB Common
Stock for purposes of exchange for City Holding Common Stock at $45.60 per
share. This value was determined based upon an evaluation of FMB's
historical deposit, assets and earnings growth and potential growth as well
as the book value and current sales prices for FMB Common Stock. The
$45.60 per share valuation represents a multiple of 2.63 times the book
value of the FMB Common Stock on March 31, 1995. To obtain the ratio at
which FMB Common Stock would be exchanged for City Holding Common Stock,
such value was divided by a valuation of City Holding Common Stock at
$28.50 per share, which was the average of the bid and asking prices of
City Holding Common Stock at the close of business on March 2, 1995, as
reported in The Nasdaq National Market.

The Exchange Ratio

City Holding and FMB have agreed to a fixed exchange ratio of 1.60-to-
one, which means that if the value of City Holding Common Stock or FMB
Common Stock should change prior to the Effective Date, FMB shareholders
could receive City Holding Common Stock worth more or less than $45.60 per
share of FMB Common Stock. For example, if the value of City Holding
Common Stock should be less than $25.00 per share on the date the Merger is
consummated, the value of shares of City Holding Common Stock received by
FMB shareholders in the Merger will be less than $40.00. The Agreement may
be terminated (i) by FMB if the average of the closing sales price of City
Holding Common Stock as reported by the National Association of Securities
Dealers Automated Quotation System ("Nasdaq") for the 20 trading days
following the later of (a) the receipt of the Federal Reserve Board
approval of the Merger and (b) the date on which the shareholders of FMB
approve the Merger, is less than $22.80 per share and (ii) by City Holding
if the average of the closing sales price of City Holding Common Stock as
reported by Nasdaq for the 20 trading days following the later of (a) the
receipt of Federal Reserve Board approval of the Merger and (b) the date on
which the shareholders of FMB approve the Merger, is greater than $34.20
per share, provided, however, that a further condition to either parties'
termination of the Agreement for such changes in the price of City Holding
Common Stock is that City Holding and FMB must be unable to agree on an
amendment to the Exchange Ratio. On June __, 1995, the last reported sale
price of City Holding Common Stock was $______. Based on this price and
the Exchange Ratio, FMB shareholders would receive City Holding Common
Stock worth $______ for each share of FMB Common Stock. See "THE MERGER -
Exchange Ratio and Conversion of Shares, - Waiver and Amendment;
Termination."

Effective Date

Assuming satisfaction of all conditions to consummation of the Merger,
the Merger is expected to become effective on July __, 1995. FMB and City
Holding each has the right, acting unilaterally, to terminate the Agreement
should the Merger not be consummated by December 31, 1995. See "THE MERGER
- - Conditions to Consummation of the Merger, - Waiver and Amendment;
Termination."

Dissenters' Rights

Pursuant to the West Virginia Corporation Act, as amended (the "West
Virginia Act"), City Holding and FMB shareholders will have dissenters'
rights if the Merger is consummated. If any holder of City Holding or FMB
Common Stock does not fully and precisely satisfy the statutory
requirements for dissenting shareholders, such holder's right to have the
fair value of such holder's shares judicially determined and paid in cash
will be lost. See "THE SHAREHOLDER MEETINGS," "DISSENTERS' RIGHTS" and
Annex IV.

Opinion of Financial Advisor

FMB. FMB has received the opinion of Baxter Fentriss and Company
("Baxter Fentriss"), dated March 14, 1995, that the Exchange Ratio results
in consideration that is fair, from a financial point of view, to the
holders of FMB Common Stock. The full text of Baxter Fentriss' opinion,
which describes the procedures followed, assumptions made, limitations on
the review taken, and other matters in connection with rendering such
opinion, is set forth in Annex V to this Joint Proxy Statement/Prospectus
and should be read in its entirety by FMB shareholders. For additional
information regarding the opinion of Baxter Fentriss and a discussion of
the qualifications of Baxter Fentriss, the method of their selection and
certain relationships between Baxter Fentriss and FMB, see "THE MERGER -
Opinion of Financial Advisor."

Baxter Fentriss, as part of its investment banking business, regularly
is engaged in the valuation of financial institutions and their securities
in connection with mergers and acquisitions and valuations for estate,
corporate and other purposes. Baxter Fentriss is an advisor to firms in
the financial services industry on mergers and acquisitions.

Conduct of Business Pending the Merger

FMB has agreed in the Agreement to operate its business in the
ordinary course and to refrain from taking certain actions relating to the
operation of its business pending consummation of the Merger without the
prior approval of City Holding, except as otherwise permitted by the
Agreement. See "THE MERGER - Business of FMB and Merchants Pending the
Merger."

Conditions to Consummation; Termination

Consummation of the Merger is contingent on, among other things, the
receipt of approvals from the West Virginia Board, which approval has been
received, and the Federal Reserve Board. All applications required for approval
of the Federal Reserve Board have been made and such approval is expected to be
received.

The Agreement may be terminated prior to the Effective Date, either
before or after approval by FMB and City Holding shareholders, under the
circumstances specified therein, including (i) by mutual consent of City
Holding and FMB, as expressed by their respective boards of directors; (ii)
by either City Holding or FMB, as expressed by their respective boards of
directors, after December 31, 1995; (iii) by City Holding in writing
authorized by its Board of Directors if FMB or Merchants has, or by FMB in
writing authorized by its Board of Directors if City Holding has, in any
material respect, breached (A) any covenant or agreement contained in the
Agreement, or (B) any representation or warranty contained herein, in any
case if such breach has not been cured by the earlier of 30 days after the
date on which written notice of such breach is given to the party
committing such breach or the Closing Date; provided that it is understood
and agreed that either party may terminate the Agreement on the basis of
any such material breach of any representation or warranty contained in the
Agreement notwithstanding any qualification therein relating to the
knowledge of the other party; (iv) either City Holding or FMB, as expressed
by their respective boards of directors, in the event that any of the
conditions precedent to the obligations of such party to consummate the
Merger have not been satisfied or fulfilled or waived by the party entitled
to so waive on or before the Closing Date, provided that neither party
shall be entitled to terminate the Agreement pursuant to this subparagraph
(iv) if the condition precedent or conditions precedent which provide the
basis for termination can reasonably be and are satisfied within a
reasonable period of time, in which case, the Closing Date shall be
appropriately postponed; (v) City Holding or FMB, if the Board of Directors
of either corporation shall have determined in their sole discretion,
exercised in good faith, that the Merger has become inadvisable or
impracticable by reason of the threat or the institution of any litigation,
proceeding or investigation to restrain or prohibit the consummation of the
transactions contemplated by the Agreement or to obtain other relief in
connection with the Agreement; (vi) City Holding or FMB, if any of the
Federal Reserve Board or the West Virginia Board deny approval of the
Merger and the time period for all appeals or requests for reconsideration
has run; (vii) City Holding, if holders of more than 10% of the outstanding
shares of FMB Common Stock exercise their rights to an appraisal of their
shares pursuant to Sections 31-1-122 and 31-1-123 of the West Virginia Act
in connection with the Merger; (viii) FMB, if (A) the average closing sales
price of City Holding Common Stock as reported by Nasdaq for the 20 trading
days following the later of (1) the receipt of Federal Reserve Board
approval of the Merger and (2) the date on which the shareholders of FMB
approve the Merger, is less than $22.80 per share, and (B) City Holding and
FMB cannot agree on an amendment to the Exchange Ratio; and (ix) City
Holding, if (A) the average closing sales price of City Holding Common
Stock as reported by Nasdaq for the 20 trading days following the later of
(1) the receipt of Federal Reserve Board approval of the Merger and (2) the
date on which the shareholders of FMB approve the Merger, is greater than
$34.20 per share, and (B) City Holding and FMB cannot agree on an amendment
to the Exchange Ratio. See "THE MERGER - Conditions to Consummation of the
Merger, - Waiver and Amendment; Termination."

Interests of Certain Persons in the Merger

Certain members of FMB's management and Board of Directors have
interests in the Merger in addition to their interests as shareholders of
FMB generally. The Agreement provides that all continuing employees of FMB
will be entitled to participate in City Holding's employee benefit plans
following the Merger and will receive credit under those plans for past
service with FMB. The Agreement also provides that George F. Davis,
President and Chief Executive Office of Merchants, will serve as Executive
Vice President of City Holding at annual compensation and benefits not less
than his current compensation package with FMB and Merchants and when he
retires on his seventieth birthday, City Holding will retain him in a
consulting capacity for three years and shall pay him an annual fee equal
to fifty percent of his last annual salary as an officer of Merchants.
Further, for five years after the Effective Date, the current Directors of
Merchants will continue as Directors unless removed for cause and no
employee of Merchants may be terminated without cause and no change may be
made in the compensation of such employees without the approval of the
continuing Directors of Merchants. All of the Directors and executive
officers of FMB listed below under the caption "Directors and Executive
Officers of FMB" will benefit from this arrangement. See "THE MERGER -
Management and Operations after the Merger, - Interests Of Certain Persons
In The Merger."

Federal Income Tax Consequences of the Merger

The Merger is intended to qualify as a tax-free reorganization as
defined in Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), so FMB shareholders will not recognize gain or loss on the
exchange of FMB Common Stock for City Holding Common Stock, except with
respect to the receipt of cash in lieu of fractional shares. City Holding
and FMB have received an opinion of Hunton & Williams, counsel to City
Holding, that the Merger qualifies as a tax-free reorganization and as to
certain other federal income tax consequences of the Merger. See "THE
MERGER - Conditions to Consummation of the Merger, - Certain Federal Income
Tax Consequences."

Stock Option Agreements

Pursuant to a Stock Option Agreement, dated as of March 14, 1995 (the
"FMB Stock Option Agreement"), FMB has granted City Holding an option to
purchase up to 114,600 shares of FMB Common Stock at $45.60 per share
exercisable upon the occurrence of a Purchase Event (as hereinafter
defined). The FMB Stock Option Agreement terminates in accordance with its
terms on the date on which occurs the earliest of: (i) the Effective Date;
(ii) a termination of the Agreement in accordance with its terms (other
than by City Holding under certain circumstances) prior to the occurrence
of a Purchase Event or a Preliminary FMB Purchase Event (as hereinafter
defined); (iii) 12 months following a termination of the Agreement by City
Holding under certain circumstances; (iv) 12 months after the termination
of the Agreement in accordance with its terms following the occurrence of a
Purchase Event or a Preliminary Purchase Event; (v) receipt of any order or
notice of the Federal Reserve Board, or the West Virginia Board denying
approval of the Merger; or (vi) June 30, 1996. The Stock Option Agreement
is attached hereto as Annex II. See also "THE MERGER - Stock Option
Agreements."

City Holding has also entered into Stock Option Agreements, dated as
of March 14, 1995 (the "FMB Director Stock Option Agreements") with three
directors of FMB pursuant to which such directors have granted City Holding
options to purchase, in the aggregate, up to 65,437 shares of FMB stock on
or before the earlier of (i) the date City Holding receives the approval of
the Merger from the Federal Reserve Board and the West Virginia Board, (ii)
December 31, 1995, if and only if, FMB receives an acquisition offer from a
third party and its board of directors determines in good faith that such
offer is materially better than that of City Holding. The FMB Director
Stock Option Agreement terminates in accordance with its terms upon the
Effective Date or the termination of the Agreement. A form of FMB
Directors Stock Option Agreement is attached hereto as Annex III. See also
"THE MERGER - Stock Option Agreements."

Market Prices Prior to Announcement of the Merger

The following is certain information regarding the price per share of
City Holding Common Stock and FMB Common Stock based on the last reported
sale price per share of City Holding Common Stock on the Nasdaq National
Market and the last price per share of FMB Common Stock known to FMB on
March 10, 1995, the last business day prior to public announcement of the
Merger.

City Holding FMB FMB
Historical Historical Equivalent
Price (a) Price (b) Price (c)
Common Stock. . . . $28.50 $27.25 $45.60
_____________
(a) City Holding Common Stock is included in The Nasdaq National Market
under the symbol "CHCO."
(b) The last sale of FMB Common Stock known to FMB occurring prior to
March 14, 1995 was on March 10, 1995.
(c) The equivalent price for FMB Common Stock is the product of
multiplying the Exchange Ratio of 1.60 by $28.50 per share.

Comparative Per Share Data

The following table presents historical per share data for City
Holding and FMB, pro forma combined per share data, and equivalent per
share data showing the value of one share of FMB Common Stock in the
combined corporation. Such data is based on historical financial
statements for City Holding and FMB, and pro forma combined amounts giving
effect to the exchange of 1.60 shares of City Holding Common Stock for each
share of FMB Common Stock. The per share data included in the following
table should be read in conjunction with the City Holding Audited
Consolidated Financial Statements included herein, the FMB Audited
Financial Statements included herein, the Pro Forma Condensed Consolidated
Financial Statements (unaudited) included herein and the notes accompanying
all such financial statements. The data presented below (i) is not
necessarily indicative of the results of operations which would have been
obtained if the Merger had been consummated in the past or which may be
obtainable in the future and (ii) does not include the additional shares of
City Holding Common Stock to be issued in exchange for the outstanding
options of FMB.

<TABLE>
Three Months Ended
March 31, Years Ended December 31,
1995 1994 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Income Before Cumulative Effect
of Accounting Change Per Share
City Holding - Historical $ 0.46 $ 0.44 $ 1.85 $1.71 $ 1.56
FMB - Historical 0.51 0.43 2.05 2.31 1.85
City Holding and FMB Pro Forma combined
based on 1.60-for-1 Exchange Ratio 0.43 0.41 1.73 1.66 1.48
Cash Dividends Declared Per Share (1)
City Holding - Historical 0.16 0.15 .59 .56 .49
FMB - Historical 0.13 0.13 .69 .65 .46
City Holding and FMB Pro Forma combined
based on 1.60-for-1 Exchange Ratio (2) 0.16 0.15 .59 .56 .49
Book Value Per Share at Period End
City Holding - Historical 15.61 - 15.05 - -
FMB - Historical 17.33 - 16.43 - -
City Holding and FMB Pro Forma combined
based on 1.60-for-1 Exchange Ratio 14.68 - 14.12 - -
Equivalent Per Share Data (3)
Based on 1.60-for-1 Exchange Ratio
Income Before Cumulative Effect
of Accounting Change 0.69 0.66 2.77 2.66 2.37
Cash Dividends Declared per Share 0.26 0.24 .94 .90 .78
Book Value per Share at period end 23.49 - 22.59 - -
__________
</TABLE>
(1) Cash dividends declared per share represent amounts declared by City
Holding and FMB, exclusive of cash dividends of acquired subsidiaries prior
to the dates of consummation.
(2) Pro forma combined cash dividends declared per share represent
historical dividends declared by City Holding.
(3) The equivalent per share data allows comparison of historical
information about one share of FMB Common Stock to the corresponding data
about what one share of FMB Common Stock will equate to in the combined
corporation after giving effect to the exchange of 1.60 shares of City
Holding Common Stock for each share of FMB Common Stock. The amounts are
computed by multiplying pro forma net income per share, the historical cash
dividends declared per share by City Holding, and pro forma book value per
share by the number of shares of City Holding Common Stock to be exchanged
for one share of FMB Common Stock.
<PAGE>
SELECTED FINANCIAL DATA

The following table sets forth certain selected financial data and
unaudited pro forma combined financial data for City Holding and FMB for
each of the five years in the period ended December 31, 1994, and for the
three month periods ended March 31, 1995, and March 31, 1994, giving effect
to the proposed transaction under the pooling-of-interests method of
accounting as if it had been effected at the beginning of the earliest
period presented, assuming that all the outstanding shares of FMB Common
Stock are converted into shares of City Holding Common Stock. The pro
forma financial data may not be indicative of the results that actually
would have occurred if the combination had been in effect on the dates
indicated or that may be obtained in the future. This information should
be read in conjunction with the City Holding Consolidated Financial
Statements and FMB Financial Statements, including the respective notes
thereto, and the Pro Forma Condensed Consolidated Financial Statements
(unaudited) included elsewhere herein.

<TABLE>
Three Months Ended
March 31, Year Ended December 31,
1995 1994 1994 1993 1992 1991 1990
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Total interest income
City Holding $14,785 $12,665 $55,148 $48,216 $43,527 $42,870 $41,110
FMB 2,001 1,820 7,614 7,086 7,353 8,103 8,470
City Holding and FMB pro forma $16,786 $14,485 $62,762 $55,302 $50,880 $50,973 $49,580
Total interest expense
City Holding $6,298 $5,095 $22,242 $19,547 $18,878 $21,927 $23,682
FMB 781 705 2,926 2,878 3,306 4,495 5,235
City Holding and FMB pro forma $7,079 $5,800 $25,168 $22,425 $22,184 $26,422 $28,917
Net interest income
City Holding $8,487 $7,570 $32,906 $28,669 $24,649 $20,943 $17,428
FMB 1,220 1,115 4,688 4,208 4,047 3,608 3,235
City Holding and FMB pro forma $9,707 $8,685 $37,594 $32,877 $28,696 $24,551 $20,663
Provision for loan losses
City Holding $183 $201 $953 $1,341 $2,222 $1,272 $898
FMB 18 25 87 93 103 73 135
City Holding and FMB pro forma $201 $226 $1,040 $1,434 $2,325 $1,345 $1,033
Total other income
City Holding $1,095 $885 $4,647 $3,004 $1,897 $1,797 $1,789
FMB 154 143 602 858 431 497 458
City Holding and FMB pro forma $1,249 $1,028 $5,249 $3,862 $2,328 $2,294 $2,247
Total other expenses
City Holding $6,842 $5,830 $26,448 $20,951 $15,909 $14,957 $12,477
FMB 960 915 3,668 3,225 2,980 2,897 2,727
City Holding and FMB pro forma $7,802 $6,745 $30,116 $24,176 $18,889 $17,854 $15,204
Income before income taxes and
cumulative effect adjustment
City Holding $2,557 $2,424 $10,152 $9,381 $8,415 $6,511 $5,842
FMB 396 318 1,535 1,748 1,395 1,135 831
City Holding and FMB pro forma $2,953 $2,742 $11,687 $11,129 $9,810 $7,646 $6,673
Net Income
City Holding $1,744 $1,658 $6,959 $6,432 $5,904 $4,373 $4,173
FMB 296 248 1,183 1,213 1,068 830 615
City Holding and FMB pro forma $2,040 $1,906 $8,142 $7,645 $6,972 $5,203 $4,788
PER SHARE DATA(1)
Cash dividends declared
City Holding $.16 $.15 $.59 $.56 $.49 $.42 $.35
FMB .13 .13 .69 .65 .46 .40 .38
City Holding and FMB pro forma(4) $.16 $.15 $.59 $.56 $.49 $.42 $.35
Net Income
City Holding $.46 $.44 $1.85 $1.71 $1.56 $1.16 $1.11
FMB .51 .43 2.05 2.11 1.85 1.44 1.07
City Holding and FMB pro forma $.43 $.41 $1.74 $1.63 $1.48 $1.11 $1.02

AVERAGE BALANCE SHEET SUMMARY
Total loans
City Holding $508,557 $415,959 $448,924 $362,313 $274,455 $239,305 $206,552
FMB 43,949 55,148 55,871 51,332 48,009 46,338 46,412
City Holding and FMB pro forma $552,506 $471,107 $504,795 $413,645 $322,464 $285,643 $252,964
Securities
City Holding $192,619 $233,286 $222,466 $221,463 $193,626 $181,415 $186,488
FMB 44,260 41,382 42,510 41,279 39,304 38,149 37,150
City Holding and FMB pro forma $236,879 $274,668 $264,976 $262,742 $232,930 $219,564 $223,638
Deposits
City Holding $650,946 $623,122 $640,900 $554,035 $446,429 $406,055 $377,012
FMB 94,046 94,598 95,215 85,445 77,059 73,929 72,407
City Holding and FMB pro forma $744,992 $717,720 $736,115 $639,480 $523,488 $479,984 $449,419
Long-term debt
City Holding $7,201 $5,875 $6,252 $4,387 $508 $373 $1,817
FMB 0 0 0 0 0 0 278
City Holding and FMB pro forma $7,201 $5,875 $6,252 $4,387 $508 $373 $2,095
Stockholders' equity
City Holding $56,591 $57,320 $57,220 $54,459 $50,458 $46,771 $43,669
FMB 9,714 9,900 9,727 9,052 8,148 7,280 6,757
City Holding and FMB pro forma $66,305 $67,220 $67,120 $63,511 $58,606 $54,051 $50,426
Total assets
City Holding $780,058 $710,204 $754,409 $636,842 $514,206 $467,242 $444,735
FMB 109,475 109,092 110,281 102,962 96,501 94,099 93,475
City Holding and FMB pro forma $889,533 $819,296 $864,690 $739,804 $610,707 $561,341 $538,210

</TABLE>
<PAGE>
<TABLE>

Three Months Ended
March 31, Year Ended December 31,
1995 1994 1994 1993 1992 1991 1990
(Dollars in thousands, except per share data)
AT QUARTER END AT YEAR END
<S> <C> <C> <C> <C> <C> <C> <C>
Net loans
City Holding $522,031 $412,742 $489,395 $407,990 $324,078 $252,072 $223,277
FMB 51,194 57,118 58,414 54,434 52,128 46,306 47,858
City Holding and FMB pro forma $573,225 $469,860 $547,809 $462,424 $376,206 $298,378 $271,135
Securities
City Holding $190,713 $228,576 $196,377 $241,637 $208,075 $189,508 $184,137
FMB 44,974 41,437 43,537 42,196 40,665 39,193 36,790
City Holding and FMB pro forma $235,687 $270,013 $239,914 $283,833 $248,740 $228,701 $220,927
Deposits
City Holding $655,966 $632,878 $651,264 $617,333 $526,315 $418,888 $395,340
FMB 95,039 95,798 95,541 92,625 79,083 75,049 72,677
City Holding and FMB pro forma $751,005 $728,676 $746,805 $709,958 $605,398 $493,937 $468,017
Long-term debt
City Holding $4,825 $5,875 $6,875 $5,875 $4,000 $0 $1,725
FMB 0 0 0 0 0 0 0
City Holding and FMB pro forma $4,825 $5,875 $6,875 $5,875 $4,000 $0 $1,725
Stockholders' equity
City Holding $58,981 $57,196 $56,869 $55,834 $52,317 $48,200 $45,185
FMB 9,980 9,588 9,462 9,771 8,541 7,560 6,861
City Holding and FMB pro forma $68,961 $66,784 $66,331 $65,605 $60,858 $55,760 $52,046
Total assets
City Holding $815,637 $719,339 $780,526 $707,078 $597,370 $480,921 $462,613
FMB 108,146 110,848 115,291 109,147 104,492 94,638 93,792
City Holding and FMB pro forma $923,783 $830,187 $895,817 $816,225 $701,862 $575,559 $556,405
Book value per share
City Holding $15.61 $15.17 $15.05 $14.80 $13.88 $12.82 $11.98
FMB 17.33 31.75 16.43 16.96 14.83 13.13 11.91
City Holding and FMB pro forma $14.68 $14.24 $14.12 $13.99 12.98 11.92 11.10

SELECTED RATIOS
Return on average assets(3)
City Holding .89% .93% .92% 1.01% 1.15% .94% .94%
FMB 1.08% .91% 1.07% 1.29% 1.11% .88% .66%
City Holding and FMB pro forma .92% .93% .94% 1.05% 1.14% .93% .89%
Return on average equity(3)
City Holding 12.33% 11.59% 12.01% 11.81% 11.70% 9.35% 9.56%
FMB 12.19% 10.02% 12.16% 14.69% 13.11% 11.40% 9.10%
City Holding and FMB pro forma 12.31% 11.36% 12.04% 12.22% 11.90% 9.63% 9.50%
Average equity to average assets
City Holding 7.25% 8.07% 7.68% 8.55% 9.81% 10.01% 9.82%
FMB 8.87% 9.07% 8.82% 8.79% 8.44% 7.74% 7.23%
City Holding and FMB pro forma 7.45% 8.20% 7.82% 8.58% 9.60% 9.63% 9.37%
Dividend payout ratio(3)
City Holding 34.78% 34.09% 27.06% 33.33% 31.97% 33.37% 30.15%
FMB 25.49% 30.23% 33.66% 28.14% 24.86% 27.78% 35.51%
City Holding and FMB pro forma(5) 34.78% 34.09% 27.06% 33.33% 31.97% 33.37% 30.15%
___________
</TABLE>
(1) All per share data for City Holding have been restated to reflect a
10% stock dividend effective January, 1995 and August, 1992.
(2) Cash dividends and the related pay out ratio are based on historical
results of City Holding and do not include cash dividends of acquired
subsidiaries prior to the dates of consummation.
(3) Determined using income before cumulative effect adjustment.
(4) Cash dividends declared per share represent amounts declared by City
Holding.
(5) Pro forma dividend payout ratio represents City Holding's historical
dividend payout ratio.

City Holding acquired 100% of the common stock of The Buffalo Bank of
Eleanor (Buffalo) in December 1992 for cash. In 1993, certain other
purchase acquisitions were consummated by City Holding. As more fully
discussed in Note 3 of the City Holding Audited Consolidated Financial
Statements, these acquisitions were accounted for using the purchase method
of accounting. Accordingly, the results of operations of the purchased
subsidiaries are included in the information presented above from the date
of acquisition forward, and prior year balance sheets have not been
restated for such transactions.
<PAGE>
THE SHAREHOLDER MEETINGS

FMB Special Meeting

Each copy of this Joint Proxy Statement/Prospectus mailed to holders
of FMB Common Stock is accompanied by a proxy appointment card furnished in
connection with the solicitation of proxies by the Board of Directors of
FMB for use at the FMB Special Meeting. The FMB Special Meeting is
scheduled to be held on July __, 1995, at 4:30 p.m., at FMB's corporate
headquarters at Fourth Avenue and Washington Street, Montgomery, West
Virginia. Only holders of record of FMB Common Stock at the close of
business on June __, 1995 (the "FMB Record Date"), are entitled to receive
notice of and to vote at the FMB Special Meeting. At the FMB Special
Meeting, shareholders will consider and vote upon a proposal to approve the
Agreement, and such other matters as may properly be brought before the FMB
Special Meeting. See "THE MERGER."

HOLDERS OF FMB COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ACCOMPANYING PROXY APPOINTMENT CARD AND RETURN IT PROMPTLY TO FMB IN
THE ENCLOSED, POSTAGE-PAID ENVELOPE. FAILURE TO RETURN YOUR PROPERLY
EXECUTED PROXY APPOINTMENT CARD OR TO VOTE AT THE MEETING WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE AGREEMENT.

Any holder of FMB Common Stock who has delivered a proxy appointment
may revoke it at any time before it is voted by attending and voting in
person at the FMB Special Meeting or by giving notice of revocation in
writing or submitting a signed proxy appointment bearing a later date to
First Merchants Bancorp, Inc., Fourth Avenue and Washington Street,
Montgomery, West Virginia 25136, Attention: Corporate Secretary, provided
such notice or proxy appointment is actually received by FMB before the
vote of shareholders. A proxy appointment will not be revoked by death or
supervening incapacity of the shareholder executing the proxy appointment
unless, before the shares are voted, notice of such death or incapacity is
filed with the Corporate Secretary or other person responsible for
tabulating votes on behalf of FMB. The shares of FMB Common Stock
represented by properly executed proxy appointments received at or prior to
the FMB Special Meeting and not subsequently revoked will be voted as
directed by the shareholders submitting such appointments. If instructions
are not given, proxy appointments received will be voted FOR approval of
the Agreement. If any other matters are properly presented for
consideration at the FMB Special Meeting or any adjournment, the persons
named in the FMB proxy appointment card enclosed herewith will have
discretionary authority to vote on such matters in accordance with their
best judgment. If necessary, and unless the shares represented by the
proxy were voted against the applicable proposal therein, the proxy holder
may also vote in favor of a proposal to adjourn the FMB Special Meeting to
permit further solicitation of proxies in order to obtain sufficient votes
to approve any of the matters being considered at the FMB Special Meeting.
FMB is unaware of any matter to be presented at the FMB Special Meeting
other than those indicated above.

The cost of soliciting proxies from holders of FMB Common Stock will
be borne by FMB. Such solicitation will be made by mail but also may be
made by telephone or in person by the directors, officers and employees of
FMB (who will receive no additional compensation for doing so).

FMB SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY APPOINTMENT CARDS.

City Holding Annual Meeting

Each copy of this Joint Proxy Statement/Prospectus mailed to holders
of City Holding Common Stock is accompanied by a proxy appointment card
furnished in connection with the solicitation of proxies by the Board of
Directors of City Holding for use at the City Holding Annual Meeting. The
City Holding Annual Meeting is scheduled to be held on July __, 1995, at
4:00 p.m., at City Holding's corporate headquarters located at 3601
MacCorkle Avenue, S.E., Charleston, West Virginia 25304. Only holders of
record of City Holding Common Stock at the close of business on June __,
1995 (the "City Holding Record Date"), are entitled to receive notice of
and to vote at the City Holding Annual Meeting. At the City Holding Annual
Meeting, shareholders will consider and vote upon (i) a proposal to approve
the Agreement, (ii) election of four Class III directors, (iii)
ratification of the Board of Directors' appointment of Ernst & Young LLP as
auditors for City Holding for 1995 and (iv) such other matters as may
properly be brought before the City Holding Annual Meeting. See "THE
MERGER," "ELECTION OF CITY HOLDING DIRECTORS" and "RATIFICATION OF
APPOINTMENT OF CITY HOLDING'S AUDITORS."

HOLDERS OF CITY HOLDING COMMON STOCK ARE REQUESTED TO COMPLETE, DATE
AND SIGN THE ACCOMPANYING PROXY APPOINTMENT CARD AND RETURN IT PROMPTLY TO
CITY HOLDING IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.

Any holder of City Holding Common Stock who has delivered a proxy
appointment may revoke it at any time before it is voted by attending and
voting in person at the City Holding Annual Meeting or by giving notice of
revocation in writing or submitting a signed proxy appointment bearing a
later date to City Holding Company, 3601 MacCorkle Avenue, S.E.,
Charleston, West Virginia 25304, Attention: Corporate Secretary, provided
such notice or proxy appointment is actually received by City Holding
before the vote of shareholders. A proxy appointment will not be revoked
by death or supervening incapacity of the shareholder executing the proxy
appointment unless, before the shares are voted, notice of such death or
incapacity is filed with the Corporate Secretary or other person
responsible for tabulating votes on behalf of City Holding. The shares of
City Holding Common Stock represented by properly executed proxy
appointments received at or prior to the City Holding Annual Meeting and
not subsequently revoked will be voted as directed by the shareholders
submitting such appointments. If instructions are not given, proxy
appointments received will be voted FOR approval of the Agreement, election
of the four nominees as Class III directors and ratification of the
appointment of Ernst & Young LLP. If any other matters are properly
presented for consideration at the City Holding Annual Meeting or any
adjournment, the persons named in the City Holding proxy appointment card
enclosed herewith will have discretionary authority to vote on such matters
in accordance with their best judgment. If necessary, and unless the
shares represented by the proxy were voted against the applicable proposal
therein, the proxy holder may also vote in favor of a proposal to adjourn
the City Holding Annual Meeting to permit further solicitation of proxies
in order to obtain sufficient votes to approve any of the matters being
considered at the City Holding Annual Meeting. City Holding is unaware of
any matter to be presented at the City Holding Annual Meeting other than
those indicated above.

The cost of soliciting proxies from holders of City Holding Common
Stock will be borne by City Holding. Such solicitation will be made by
mail but also may be made by telephone or in person by the directors,
officers and employees of City Holding (who will receive no additional
compensation for doing so). City Holding will make arrangements with
brokerage firms and other custodians, nominees and fiduciaries to send
proxy materials to their principals.

Votes Required

FMB. The holders of each share of FMB Common Stock outstanding will
be entitled to one vote for each share held of record as of the FMB Record
Date upon each matter properly submitted at the FMB Special Meeting and the
affirmative vote of a majority of the votes entitled to be cast by the
holders of the FMB Common Stock is required to approve the Agreement.

The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares of FMB Common Stock entitled to
vote at the FMB Special Meeting is necessary to constitute a quorum at the
FMB Special Meeting. Abstentions will be counted, but broker non-votes
will not be counted, as shares present for purposes of determining the
presence of a quorum. Neither abstentions nor broker non-votes will be
counted as votes cast for purposes of determining whether a particular
proposal has received sufficient votes for approval. A broker non-vote
will occur when a broker who holds shares in street name for a customer
does not have the authority to cast a vote on a particular matter because
its customer has not furnished voting instructions on the matter.

As of the FMB Record Date, there were 576,000 shares of FMB Common
Stock outstanding and entitled to vote at the FMB Special Meeting, with
each share being entitled to one vote. As of the FMB Record Date, the
directors and executive officers of FMB owned a total of 124,302 shares
(representing approximately 21.58% of the outstanding shares of FMB Common
Stock). Directors of FMB have either agreed to vote in favor of the
Agreement or have given City Holding an option to purchase 87,438 shares or
approximately 15.2% of the outstanding shares of FMB Common Stock. See
"THE MERGER - Stock Option Agreements." City Holding and the directors and
executive officers of City Holding and their affiliates owned 2,000 of the
outstanding shares of FMB Common Stock.

City Holding. The affirmative vote of a majority of the shares voting
at the City Holding Annual Meeting is required to approve the Agreement and
the affirmative vote of a majority of shares represented and entitled to
vote at the meeting is required to ratify the appointment of Ernst & Young
LLP. Directors are elected by a plurality of the votes cast. In all
elections of directors, each shareholder shall have the right to cast one
vote for each share of stock owned by him for as many persons as there are
directors to be elected, or upon notice to City Holding, he may cumulate
such votes and give one candidate as many votes as the number of directors
to be elected multiplied by the number of his shares of stock or he may
distribute them on the same principle among as many candidates and in such
manner as he shall desire. If one shareholder has given notice that he
intends to cumulate votes, all shareholders may do so.

The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares of City Holding Common Stock
entitled to vote at the City Holding Annual Meeting is necessary to
constitute a quorum at the City Holding Annual Meeting. Abstentions and
broker non-votes will be counted as shares present for purposes of
determining the presence of a quorum. Brokers cannot vote customer shares
without instruction on the proposed issuance of City Holding Common Stock
pursuant to the Agreement. Neither abstentions nor broker non-votes will
be counted as votes cast for purposes of determining whether the proposal
to approve the Agreement has received sufficient votes for approval.
Broker non-votes will not be counted as votes cast for purposes of
determining whether the proposals to ratify the appointment of Ernst &
Young LLP as auditors for City Holding for 1995 is approved. As a
consequence, broker non-votes and abstentions will be counted as votes
against the proposals. Because director nominees must receive a plurality
of the votes cast at the meeting, a vote withheld will not affect the
outcome of the election.

As of the City Holding Record Date, there were 3,777,933 shares of
City Holding Common Stock outstanding and entitled to vote at the City
Holding Annual Meeting, with each share being entitled to one vote, except
as described below. As of the City Holding Record Date, the directors and
executive officers of City Holding beneficially owned a total of 355,770
shares (representing approximately 9.42% of the outstanding shares of City
Holding Common Stock); FMB and the directors and officers of FMB and their
affiliates owned none of the outstanding shares of City Holding Common
Stock.

Recommendations

FMB. For the reasons described herein, the Board of Directors of FMB
has adopted the Agreement, believes the Merger is in the best interests of
FMB and its shareholders and unanimously recommends that shareholders of
FMB vote FOR approval of the Agreement. In making its recommendation, the
Board of Directors of FMB considered, among other things, the opinion of
Baxter Fentriss that the Exchange Ratio was and is fair to FMB shareholders
from a financial point of view.

City Holding. For the reasons described herein, the Board of
Directors of City Holding has adopted the Agreement, believes the Merger is
in the best interests of City Holding and its shareholders and unanimously
recommends that the shareholders of City Holding vote FOR approval of the
Agreement.

See "THE MERGER - Background and Reasons For the Merger" and "-
Opinion of Financial Advisor."
<PAGE>
THE MERGER

The detailed terms of the Merger are contained in the Agreement
attached as Annex I to this Joint Proxy Statement/Prospectus. The
following discussion describes the more important aspects of the Merger and
the terms of the Agreement. This description is qualified in its entirety
by reference to the Agreement which is incorporated by reference herein and
which FMB and City Holding shareholders are urged to read carefully.

Background and Reasons for the Merger

FMB. The FMB Board of Directors approved the Agreement after due
deliberation of a variety of considerations. The Board of Directors
considered whether FMB's present position in its market would enable it to
continue to grow and enhance value for its shareholders. The Board of
Directors considered whether FMB would want to seek target acquisitions,
remain in its present position, or seek to be acquired. In considering
these options, the Board of Directors reviewed the means of enhancing
shareholder value given the company's market, size, and potential for
growth through market expansion or acquisition. Having analyzed the
geographic location of FMB, the available acquisition targets for FMB and
the likelihood of continuing to increase shareholder value through either
or both means, the FMB Board of Directors determined that the shareholders
would be better served by an opportunity to affiliate with the larger
organization and to obtain a more liquid and more widely held security.

Having determined that it would seek an affiliation partner, the FMB
Board of Directors retained Baxter Fentriss to assist in the identification
of an acquisition partner. Baxter Fentriss assembled materials on FMB and
approached numerous potential buyers. In doing so, the FMB Board of
Directors learned of several viable candidates with an interest in
inquiring FMB. This process enabled the FMB Board of Directors, through
Baxter Fentriss, to negotiate an attractive purchase price with an
attractive acquiror. The end result of this process was the negotiated
transaction with City Holding. The FMB Board of Directors believes that
the City Holding franchise offers FMB shareholders significant value not
only in terms of the negotiated Exchange Ratio but also in terms of the
geographic diversity of City Holding, the growth potential of its markets,
as well as a more widely held and more easily tradeable security. City
Holding also offered an opportunity for FMB to continue to offer a
community banking service to its customers with a distinctive local flavor
and the opportunity to continue to utilize the FMB employees with
established ties to this customer base. For these reasons, the FMB Board
of Directors unanimously approve and recommend to the FMB shareholders the
transactions contemplated in the Agreement.

City Holding. The City Holding Board of Directors has approved the
Agreement and determined that the Merger and issuance of City Holding
Common Stock pursuant thereto are in the best interests of City Holding and
its shareholders. In approving the Agreement, the City Holding Board of
Directors considered the following factors: (i) a review of the business,
operations, earnings and financial condition of FMB, (ii) the opportunity
for City Holding to enter an economically sound market with better growth
prospects than its present area of operations, (iii) the terms of the
Agreement, including the Exchange Ratio, (iv) FMB's approximately $65.8
million in deposits and two attractive pieces of real estate in the same
market area as City Holding's lead bank and (v) consistency of the
acquisition with the long-term growth strategies employed by City Holding.
The City Holding Board of Directors did not assign specific or relative
weights to the factors considered.

Opinion of Financial Advisor

Baxter Fentriss has acted as financial advisor to FMB in connection
with the Merger. Baxter Fentriss previously assisted FMB in identifying
prospective acquirors. On March 14, 1995, Baxter Fentriss delivered to FMB
its opinion that as of such date, and on the basis of matters referred to
herein, the offer is fair, from a financial point of view, to the holders
of FMB Common Stock. In rendering its opinion Baxter Fentriss consulted
with the management of FMB and City Holding; reviewed the Agreement and
certain publicly-available information on the parties; and reviewed Board
minutes, examinations, Board reports, and budgets made available by the
management of the respective banks.

In addition Baxter Fentriss discussed with the management of FMB and
City Holding their respective businesses and outlooks. Baxter Fentriss was
involved in the negotiations with City Holding and initiated merger
discussions at the request of FMB. No limitations were imposed by FMB's
Board of Directors upon Baxter Fentriss with respect to the investigation
made or procedures followed by it in rendering its opinion. The full text
of Baxter Fentriss' written opinion is attached as Annex V to this Joint
Proxy Statement/Prospectus and should be read in its entirety with respect
to the procedures followed, assumptions made, matters considered, and
qualifications and limitations on the review undertaken by Baxter Fentriss
in connection therewith.

Baxter Fentriss' opinion is directed to FMB's Board of Directors, and
is directed only to the fairness, from a financial point of view, of the
Exchange Ratio. It does not address FMB's underlying business decision to
effect the proposed Merger.

Baxter Fentriss' opinion was one of many factors taken into
consideration by FMB's Board of Directors in making its determination to
approve the Merger Agreement, and the receipt of Baxter Fentriss' opinion
is a condition precedent to FMB consummating the Merger. The opinion of
Baxter Fentriss' does not address the relative merits of the Merger as
compared to any alternative business strategies that might exist for FMB or
the effect of any other business combination in which FMB might engage.

Baxter Fentriss, as part of its investment banking business, is
continually engaged in the valuation of financial institutions and their
securities in connection with mergers and acquisitions and valuations for
estate, corporate and other purposes. Baxter Fentriss is a nationally-
ranked advisor to firms in the financial services industry on mergers and
acquisitions. FMB selected Baxter Fentriss as its financial advisor
because Baxter Fentriss is an investment banking firm focusing on banking
transactions, and because of the firm's extensive experience and expertise
in transactions similar to the Merger. Baxter Fentriss is not affiliated
with City Holding or FMB.

In connection with rendering its opinion to FMB's Board of Directors,
Baxter Fentriss performed a variety of financial analyses. In conducting
its analyses and arriving at its opinion as expressed herein, Baxter
Fentriss considered such financial and other factors as it deemed
appropriate under the circumstances including, among others, the following:
(i) the historical and current financial condition and results of
operations of City Holding and FMB including interest income, interest
expense, interest sensitivity, noninterest income, noninterest expense,
earnings, book value, returns on assets and equity, capitalization, the
amount and type of non-performing assets, the impact of holding certain
non-earning real estate assets, the reserve for loan losses and possible
tax consequences resulting from the transaction; (ii) the business
prospects of City Holding and FMB; (iii) the economies of City Holding and
FMB's respective market areas; (iv) the historical and current market for
FMB Common Stock; and (v) the nature and terms of certain other merger
transactions that it believed to be relevant. Baxter Fentriss also
considered its assessment of general economic, market, financial and
regulatory conditions and trends as well as its knowledge of the financial
institutions industry, its experience in connection with similar
transactions, its knowledge of securities valuation generally, and its
knowledge of merger transactions in West Virginia.

In connection with rendering its opinion, Baxter Fentriss reviewed (i)
the Agreement; (ii) drafts of this Joint Proxy Statement/Prospectus; (iii)
the Annual Reports to shareholders, including the audited financial
statements of FMB and City Holding, and the Annual Reports of FMB and City
Holding for the year ended December 31, 1994; (iv) pro forma combined
unaudited condensed balance sheets as of December 31, 1994, pro forma
combined statements of income for the year ended December 31, 1994; (v)
Board minutes and reports of City Holding and FMB as it deemed appropriate.
Baxter Fentriss also (i) held discussions with members of the senior
management of City Holding and FMB regarding the historical and current
business operation, financial condition and future prospects of their
respective companies; (ii) reviewed the historical market prices and
trading activity for the Common Stock of FMB and City Holding; (iii)
compared the results of operations of FMB with those of certain banking
companies that it deemed to be relevant; (iv) analyzed the pro forma
financial impact of the Merger on City Holding; and (v) analyzed the pro
forma financial impact of the Merger on FMB.

The following is a summary of selected analyses performed by Baxter
Fentriss in connection with its opinion:

1. Stock Price History. Baxter Fentriss studied the history of the
trading prices and volume for FMB and City Holding Common Stock and
compared that to publicly traded banks in West Virginia and to the price
offered by City Holding. FMB stock is rarely traded. Given the activity
in City Holding stock the Merger will significantly improve the liquidity
of FMB's shareholders.

2. Comparative Analysis. Baxter Fentriss compared the price to
earnings multiple, price to book multiple, and price to assets multiple of
the City Holding offer with 33 other merger transactions in West Virginia
during the last three years after considering FMB's non-performing assets
and other variables. The comparative multiples included both bank and
thrift sales during the last four years. Baxter Fentriss concluded the
price paid for FMB as a multiple of book was the highest, as a multiple of
earnings the fourth highest, and as a percentage of assets the third
highest.

3. Pro Forma Analysis. Baxter Fentriss considered the pro forma impact
of the transaction and concluded the transaction would not have a material
long-term impact on City Holding's earnings, book value, and dividend paying
capacity. The acquisition could provide $.01 a share annual EPS improvement by
1998, .02% improvement in ROA, and .50% improvement in ROE, with less than 5%
dilution in book value per share. Equity to asset ratio could increase .17%.

4. Discounted Cash Flow Analysis. Baxter Fentriss performed a
discounted cash flow analysis to determine hypothetical present values for
a share of FMB's Common Stock as a five and 10 year investment. Under this
analysis, Baxter Fentriss considered various scenarios for the performance
of FMB's stock using (i) a range from 0% to 10% in the growth of FMB's
earnings and dividends and (ii) a range from eight times to 16 times
earnings as the terminal value for FMB's stock. A range of discount rates
from 11% to 15% were applied to these alternative growth and terminal value
scenarios. These ranges of discount rates, growth alternatives, and
terminal values were chosen based upon what Baxter Fentriss, in its
judgement, considered to be appropriate taking into account, among other
things, FMB's past and current performance, the general level of inflation,
rates of return for fixed income and equity securities in the marketplace
generally and for companies with similar risk profiles. In the scenarios
considered, the calculated present value of FMB's Common Stock was less
than the City Holding offer of $26,265,600. Thus, Baxter Fentriss'
discounted cash flow analysis indicated that FMB shareholders would be in a
better financial position by receiving the City Holding Common Stock
offered in the Merger transaction rather than continuing to hold FMB's
Common Stock.

Using publicly available information on City Holding and applying the
capital guidelines of banking regulators, Baxter Fentriss' analysis
indicated that the Merger would not seriously dilute the capital and
earnings capacity of City Holding and would, therefore, likely not be
opposed by the banking regulatory agencies from a capital perspective.
Furthermore, Baxter Fentriss considered the likely market overlap and the
Federal Reserve guidelines with regard to market concentration and did not
believe there to be an issue with regard to possible antitrust concerns.

Baxter Fentriss has relied, without any independent verification, upon
the accuracy and completeness of all financial and other information
reviewed. Baxter Fentriss has assumed that all estimates, including those
as to possible economies of scale, were reasonably prepared by management,
and reflect their best current judgments. Baxter Fentriss did not make an
independent appraisal of the assets or liabilities of either FMB or City
Holding, and has not been furnished such an appraisal.

Baxter Fentriss was paid an amount in cash equal to 1.5% of the
aggregate consideration to be paid to FMB shareholders in the Merger plus
reasonable out-of-pocket expenses for its services. FMB has agreed to
indemnify Baxter Fentriss against certain liabilities, including certain
liabilities under federal securities laws.

The full text of Baxter Fentriss' opinion as of the date hereof, which
sets forth the assumptions made, matters considered and limitations of the
review undertaken, is attached as Annex V to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference, and should be
read in its entirety in connection with this Joint Proxy
Statement/Prospectus. The summary of the opinion of Baxter Fentriss set
forth in this Joint Proxy Statement/Prospectus is qualified in its entirety
by reference to the full text of such opinion.

Effective Date

The Merger shall become effective on the date of the filing of the
Articles of Merger with the West Virginia Secretary of State (the
"Effective Date"). Assuming satisfaction of all conditions to consummation
of Merger, the Merger is expected to become effective on July __, 1995.
Either FMB or City Holding may terminate the Agreement if the Merger has
not been consummated by December 31, 1995. See "THE MERGER - Conditions to
Consummation of the Merger, - Waiver and Amendment; Termination."

Until the Effective Date occurs, FMB shareholders will generally
retain their rights as shareholders to receive dividends and to vote on
matters submitted to them by the FMB Board of Directors.

Exchange Ratio and Conversion of Shares

In arm's length negotiations, FMB and City Holding valued FMB Common
Stock for purposes of exchange for City Holding Common Stock at $45.60 per
share. This value was determined based upon an evaluation of FMB's
historical deposit, assets and earnings growth and potential growth as well
as the book value and recent sales prices for FMB Common Stock. In view of
the wide variety of factors considered, the parties did not find it
practicable to assign relative weights to each of these factors. The
$45.60 valuation represents a multiple of 2.63 times the book value of FMB
Common Stock at March 31, 1995. Each share of FMB Common Stock will be
exchanged for 1.60 shares of City Holding Common Stock. The Exchange Ratio
was determined by dividing $45.60 by a valuation of City Holding Common
Stock of $28.50, which was the average of the reported bid and asked prices
of the City Holding Common Stock at the close of business on March 2, 1995,
as quoted on The Nasdaq National Market.

Notwithstanding any other provisions of the Agreement, each holder of
shares of FMB Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of City
Holding Common Stock (after taking into account all certificates delivered
by such holder ) shall receive, in lieu thereof, cash (without interest) in
an amount equal to such fractional part of a share of City Holding Common
Stock multiplied by the market value of one share of City Holding Common
Stock at the Effective Date. The market value of one share of City Holding
Common Stock at the Effective Date shall be the average of the closing
sales price of such common stock on The Nasdaq National Market on the last
ten trading days immediately preceding the Effective Date.

City Holding and FMB have agreed to a fixed exchange ratio of 1.60-to-
one, which means that if the value of City Holding or FMB Common Stock
should change prior to the Effective Date, FMB shareholders could receive
City Holding Common Stock worth more or less than $45.60 per share of FMB
Common Stock. For example, if the value of City Holding Common Stock
should fall below $25.00 per share, the value of such stock will be less
than $40 per share of FMB Common Stock. The Agreement may be terminated by
(i) FMB if the average closing sales price of City Holding Common Stock as
reported by Nasdaq for the 20 trading days following the later of (a) the
receipt of Federal Reserve Board approval of the Merger and (b) the date on
which the shareholders of FMB approve the Merger, is less than $22.80 per
share, (ii) by City Holding if the average closing sales price of City
Holding Common Stock as reported by Nasdaq for the 20 trading days
following the later of (a) the receipt of Federal Reserve Board approval of
the Merger and (b) the date on which the shareholders of FMB approve the
Merger, is greater than $34.20 per share, provided, however, that a further
condition to either parties' termination of the Agreement for such changes
in the price of City Holding Common Stock is that City Holding and FMB must
be unable to agree on an amendment to the Exchange Ratio.

The last reported sale price of City Holding Common Stock on The
Nasdaq National Market was $_____ on June __, 1995. The closing bid and
asked prices for City Holding Common Stock as reported on The Nasdaq
National Market were $_____ and $_____, respectively, on that date. Based
on the last sale price on June __, 1995, and the 1.60-to-one exchange
ratio, FMB shareholders would receive City Holding Common Stock worth
$_____ for each share of FMB Common Stock. The last reported sale price of
FMB Common Stock of which FMB has knowledge was $27.50 per share on
February 23, 1995. FMB Common Stock is not widely traded and the volume of
trading is limited. There is no established market for FMB Common Stock.
Most transactions occur in the local area and bid and asked prices are not
available.

Following the Effective Date, former shareholders of FMB will be
mailed a Letter of Transmittal which will set forth the procedures that
should be followed for exchange of FMB Common Stock for City Holding Common
Stock.

FMB SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THE ENCLOSED
PROXY CARD.

Holders of FMB Common Stock, upon surrender of their certificates for
cancellation, will be entitled to receive certificates representing the
number of shares of City Holding Common Stock for which such shares have
been submitted for exchange.

Business of FMB and Merchants Pending the Merger

FMB and Merchants have agreed that from the date of the Agreement to
the Effective Date, they will operate their respective businesses
substantially as presently operated and only in the ordinary course, and,
consistent with such operation, they will use their best efforts to
preserve intact their present business organizations and relationships with
persons having business dealings with them. Without limiting the
generality of the foregoing, FMB and Merchants have agreed that they will
not, without the prior written consent of City Holding, unless consistent
with past practices and in the ordinary course of business (i) make any
material change in the compensation or title of any executive officer;
(ii) make any material change in the compensation or title of any other
employee, other than those permitted by current employment policies in the
ordinary course of business, any of which changes shall be promptly
reported to City Holding; (iii) enter into any new bonus, incentive
compensation, deferred compensation, profit sharing, thrift, retirement,
pension, group insurance or other benefit plan or (except as otherwise
specifically contemplated in the Agreement) any employment or consulting
agreement or amend any such plan or agreement to increase the benefits
accruing or payable thereunder; (iv) create or otherwise become liable with
respect to any indebtedness for money borrowed or purchase money
indebtedness except in the ordinary course of business; (v) amend FMB's
Amended Articles of Incorporation, Merchants' Articles of Association, or
their Bylaws except as may be necessary to consummate the Merger or give
effect to the FMB Stock Option Agreement; (vi) issue or contract to issue
any shares of FMB capital stock or securities exchangeable for or
convertible into capital stock other than pursuant to the FMB Stock Option
Agreement; (vii) purchase any shares of FMB capital stock; (viii) enter
into or assume any material contract or obligation, except in the ordinary
course of business; (ix) waive any right of substantial value; (x) propose
or take any other action which would make any representation or warranty in
Section 3.1 of the Agreement untrue; (xi) change securities portfolio
policies; (xii) enter into any new agreement, amendment or endorsement or
make any changes relating to insurance coverage, including coverage for its
directors and officers, which would result in an additional payment
obligation of $200,000 or more; or (xiii) propose or take any action with
respect to the closing of any branches. FMB and Merchants have further
agreed that, between the date of the Agreement and the Effective Date, they
will consult and cooperate with City Holding regarding (i) loan portfolio
management, including management and work-out of nonperforming assets, and
credit review and approval procedures, and (ii) securities portfolio and
funds management, including management of interest rate risk.

Conditions to Consummation of the Merger

Consummation of the Merger is conditioned upon the approval thereof by
(i) the holders of a majority of the outstanding FMB Common Stock entitled
to vote at the FMB Special Meeting and (ii) the holders of a majority of
the outstanding City Holding Common Stock voting at the City Holding Annual
Meeting. The Merger of FMB with and into City Holding must be approved by
the West Virginia Board, which approval has been received, and by the Federal
Reserve Board, which approval has been applied for and is expected to be
received.

There can be no assurance that the approval of the Federal Reserve Board
will be obtained or as to the timing of such approval. There can also be no
assurance that such approval will not contain a condition or requirement which
causes such approvals to fail to satisfy the conditions set forth in the
Agreement and described below.

City Holding and FMB are not aware of any material governmental
approvals or actions that are required for consummation of the Merger,
except as described above. Should any other approval or action be
required, it is presently contemplated that such approval or action would
be sought.

The obligations of City Holding and FMB to consummate the Merger are
further conditioned upon, among other things, (i) the accuracy of certain
representations contained in the Agreement, (ii) the performance of all
covenants and agreements contained in the Agreement, (iii) the receipt of
an opinion of Hunton & Williams, special counsel to City Holding, with
respect to certain of the tax consequences of the Merger described herein
under "THE MERGER - Certain Federal Income Tax Consequences," (iv) the
receipt of opinions of counsel with respect to certain legal matters,
including the organization and good standing of City Holding and FMB, the
due authorization of the Agreement by City Holding and FMB and the validity
of the shares of City Holding Common Stock being issued to FMB
shareholders, and (v) the execution by affiliates of FMB of undertakings
not to dispose of the City Holding Common Stock received by them in the
Merger except under certain circumstances. The obligations of FMB and City
Holding to consummate the Merger are also conditioned upon the absence of
any material adverse change in the financial condition or the results of
operations of City Holding or FMB and qualification of the Merger for
pooling-of-interests accounting treatment.

The Merger is expected to be treated as a pooling-of-interests for
accounting purposes in accordance with generally accepted accounting
principles. Under the pooling-of-interests method of accounting, the
historical basis of the assets and liabilities of City Holding and FMB will
be combined and carried forward at their previously recorded amounts.
Revenue and expenses of City Holding and FMB will be retroactively combined
for the entire fiscal period in which the combination occurs and for all
periods prior to the combination at historically recorded amounts. In
order for the Merger to qualify for pooling-of-interests accounting
treatment, 90% or more of the outstanding FMB Common Stock must be
exchanged for City Holding Common Stock and other pooling-of-interests
requirements of generally accepted accounting principles and the Commission
must be met.

In addition, as described below under "Waiver and Amendment;
Termination," City Holding and FMB are not obligated to effect the Merger
under certain circumstances related to the market price of City Holding
Common Stock.

It is anticipated that the foregoing conditions will be satisfied, but
FMB and City Holding may waive any condition to their obligations to
consummate the Merger except requisite approvals of FMB shareholders and
regulatory authorities. The Board of Directors of FMB will not, however,
waive any condition or agree to any amendment to the Agreement which, in
the opinion of the Board of Directors, will have any material adverse
effect on the shareholders of FMB.

Stock Option Agreements

City Holding and FMB entered into the FMB Stock Option Agreement,
dated as of March 14, 1995, pursuant to which FMB issued to City Holding an
option to purchase up to 114,600 shares of FMB Common Stock at a purchase
price of $45.60 per share (the "FMB Option").

The FMB Option is exercisable only upon the occurrence of a "Purchase
Event." A Purchase Event means any of the following events: (i) without
City Holding's prior written consent, FMB shall have authorized,
recommended, publicly proposed or publicly announced an intention to
authorize, recommend or propose, or entered into an agreement with any
person (other than City Holding or any subsidiary thereof) (A) to effect a
merger, consolidation or similar transaction involving FMB or Merchants,
(B) for the disposition, by sale, lease, exchange or otherwise, of 15% or
more of the consolidated assets of FMB and its subsidiaries or (C) for the
issuance, sale, exchange or other disposition of securities representing
25% or more of the voting power of FMB or any of its subsidiaries
(collectively referred to as an "Acquisition Transaction"); or (ii) any
person (other than City Holding or any subsidiary thereof) shall have
acquired beneficial ownership of 25% or more of FMB Common Stock.

The FMB Stock Option Agreement terminates on the date on which occurs
the earliest of: (i) the Effective Date; (ii) a termination of the
Agreement in accordance with its terms (other than by City Holding under
certain circumstances) prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event (as defined below); (iii) 12 months following a
termination of the Agreement by City Holding under certain circumstances;
(iv) 12 months after the termination of the Agreement in accordance with
its terms following the occurrence of a Purchase Event or a Preliminary
Purchase Event; (v) receipt of any order or notice of the Federal Reserve
Board or the West Virginia Board denying approval of the Merger; or
(vi) June 30, 1996.

An FMB Preliminary Purchase Event means any of the following events:
(i) any person (other than City Holding) shall have commenced a tender
offer or exchange offer to acquire 25% or more of FMB Common Stock (a
"Tender Offer"); or (ii) FMB's shareholders shall have failed to adopt the
Agreement at a meeting called for such purpose or such meeting shall not
have been held or shall have been canceled or the FMB Board shall have
withdrawn its recommendation to shareholders, in each case following the
public announcement of (A) a Tender Offer, (B) a proposal to engage in an
Acquisition Transaction, or (C) the filing of an application or notice for
regulatory approval to engage in an Acquisition Transaction.

City Holding has also entered into Stock Option Agreements, dated as
of March 14, 1995 (the "FMB Director Stock Option Agreements"), with three
directors of FMB pursuant to which such directors have granted City Holding
options to purchase, in the aggregate, up to 65,437 shares of FMB stock on
or before the earlier of (i) the date City Holding receives the approval of
the Merger from the Federal Reserve Board and the West Virginia Board, (ii)
December 31, 1995, if and only if, FMB receives an acquisition offer from a
third party and its board of directors determines in good faith that such
offer is materially better than that of City Holding (such conditions a
"Directors Purchase Event"). The FMB Director Stock Option Agreements
terminate upon the Effective Date or the termination of the Agreement. A
form of FMB Directors Stock Option Agreement is attached hereto as Annex
III.

Waiver and Amendment; Termination

Waiver and Amendment. Prior to the Effective Date, and to the extent
permitted by law, any provision of the Agreement may be (i) waived by any
party benefitted by the provision or (ii) amended or modified by an
agreement in writing between City Holding and FMB.

Management and Operations after the Merger

After the consummation of the Merger, FMB will cease to exist and
Merchants will become a direct wholly-owned subsidiary of City Holding.
For at least five years after the Effective Date, unless otherwise approved
by a majority of continuing directors of Merchants, Merchants will remain a
separately-incorporated bank operated under the name "Merchants National
Bank." All branches of Merchants will remain branches of Merchants
following the Effective Date except the Kanawha City branch of Merchants
located at 4315 MacCorkle Avenue, S.E. in Charleston, West Virginia and the
Bradford Street branch of Merchants located at 200 Bradford Street in
Charleston, West Virginia, both of which shall be consolidated into The
City National Bank of Charleston at the Effective Date or as soon as
practicable thereafter. Following the Effective Date, the Directors of
City Holding shall continue as Directors of City Holding. City Holding has
agreed to increase the number of members of the City Holding Board of
Directors by two and to appoint two persons approved by the continuing
directors of Merchants to fill the resulting vacancies. Following the
Effective Date, the Directors of Merchants shall continue as Directors of
Merchants for at least five years following the Effective Date unless
removed for cause and shall continue to receive Board fees at least equal
to the Board fees such persons received prior to the Effective Date. In
addition, for at least five years following the Effective Date, except with
the approval of the continuing directors of Merchants, no employee of
Merchants as of the date of the Agreement may be terminated by City Holding
without cause and no change will be made in the compensation levels, fringe
benefits or similar arrangements of such employees. All employees of FMB
and Merchants immediately prior to the Effective Date who are employed by
FMB and Merchants following the Effective Date ("Transferred Employees")
will be covered by City Holding's employee benefit plans with eligibility
based on their length of service, compensation, job classification, and
position with FMB and Merchants. City Holding's benefits plans will
recognize for purposes of eligibility to participate and for vesting, all
Transferred Employees' service with FMB and Merchants, subject to
applicable break in service rules. Eligible employees of FMB and Merchants
shall be permitted to contribute funds distributed on any termination of
FMB or Merchants benefit plans to similar City Holding benefit plans.

Interests of Certain Persons in the Merger

Certain members of FMB's management and the Board of Directors of FMB
have interests in the Merger in addition to their interests as shareholders
of FMB generally. The Agreement provides that all continuing employees of
FMB will be entitled to participate in City Holding's employee benefit
plans following the Merger and will receive credit under those plans for
past service with FMB. The Agreement also provides that George F. Davis,
President and Chief Executive Office of Merchants will serve as Executive
Vice President of City Holding at annual compensation and benefits not less
than his current compensation package with FMB and Merchants and when he
retires on his seventieth birthday, City Holding will retain him in a
consulting capacity for three years and shall pay him an annual fee equal
to fifty percent of his last annual salary as an officer of Merchants.
Further, for five years after the Effective Date, the Directors of
Merchants will continue as Directors unless removed for cause and no
employee of Merchants may be terminated without cause and no change may be
made in the compensation of such employees without the approval of the
continuing Directors of Merchants. All of the Directors and executive
officers of FMB listed below under the caption "Directors and Executive
Officers of FMB" will benefit from this arrangement. See "- Management and
Operations after the Merger," above.

Certain Federal Income Tax Consequences

City Holding and FMB have received an opinion of Hunton & Williams,
counsel to City Holding, to the effect that for federal income tax purposes
(i) the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, (ii) neither City Holding nor FMB will
recognize any taxable gain or loss upon consummation of the Merger, and
(iii) the Merger will result in the tax consequences summarized below for
FMB shareholders who receive City Holding Common Stock in exchange for FMB
Common Stock pursuant to the Merger. Such opinion has been filed as an
exhibit to the Registration Statement. Receipt of substantially the same
opinion of Hunton & Williams as of the Effective Time of the Merger is a
condition to consummation of the Merger. The following summary does not
discuss all potentially relevant federal income tax matters or consequences
to any foreign or other shareholders subject to special tax treatment. In
addition, the opinion of Hunton & Williams is based on, and the opinion to
be given as of the Effective Time of the Merger will be based on, certain
customary assumptions and representations regarding, among other things,
the lack of previous dealings between FMB and City Holding, the existing
and future ownership of FMB and City Holding stock, and the future business
plans for City Holding.

A FMB shareholder who receives solely City Holding Common Stock in
exchange for his shares of FMB Common Stock will not recognize any gain or
loss on the exchange. If a shareholder receives City Holding Common Stock
and cash in lieu of a fractional share of FMB Common Stock, the shareholder
will recognize taxable gain or loss solely with respect to such fractional
share as if the fractional share had been received and then redeemed for
cash. A shareholder will have an aggregate tax basis in shares of City
Holding Common Stock (including any fractional share interest) received in
the Merger equal to his tax basis in the shares of FMB Common Stock
exchanged therefor. A shareholder's holding period for shares of City
Holding Common Stock (including any fractional share interest) received in
the Merger will include his holding period for the shares of FMB Common
Stock exchanged therefor if they are held as a capital asset at the
Effective Date.

The receipt of cash for shares of FMB Common Stock or City Holding
Common Stock pursuant to the exercise of dissenters' rights will be a
taxable transaction. A shareholder who exercises dissenters' rights and
consequently receives cash for his shares will be treated as receiving the
cash in redemption of such shares. Such a dissenting shareholder
ordinarily will recognize gain or loss equal to the difference between the
amount of cash received and his tax basis in the redeemed shares, and such
gain or loss generally will be a capital gain or loss if the shares are
held as a capital asset. However, if a dissenting shareholder is treated
under Section 318 of the Code as constructively owning shares owned by one
or more other, non-dissenting shareholders, and if the redemption of shares
actually owned by the shareholder does not result (for purposes of Section
302 of the Code) in a meaningful reduction in the shareholder's total stock
interest represented by all shares actually or constructively owned by the
shareholder, the entire amount of the cash received could be taxed as a
dividend. Under Section 318(a) of the Code, a shareholder is treated as
owning stock that the shareholder has an option or other right to acquire,
stock owned by certain family members, stock owned by certain entities in
which the shareholder has an ownership interest, and if the shareholder is
an entity, stock owned by certain persons having an ownership interest in
the entity. Stock constructively owned by a person generally is treated as
being owned by that person for the purpose of attributing ownership to
another person. Any shareholder considering the exercise of dissenters'
rights should consult his tax advisor about the tax consequences of
receiving cash for his shares.

The preceding discussion summarizes the material federal income tax
consequences of the Merger. The tax consequences to any particular
shareholder may depend on the shareholder's circumstances. Shareholders
are urged to consult their own tax advisors with respect to specific
federal, state and local tax consequences of the Merger to shareholders.

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following pro forma condensed consolidated balance sheets as of
March 31, 1995, and December 31, 1994, and the related pro forma condensed
consolidated statements of income for the three months ended March 31,
1995, and for each of the three years in the period ended December 31,
1994, give effect to the acquisition of 100% of the outstanding shares of
FMB by City Holding. The pro forma financial statements are based on the
historical financial statements of City Holding and FMB, giving effect to
the proposed transaction under the pooling-of-interests method of
accounting as if it had been effected at the beginning of the earliest
period presented, assuming that all of the outstanding shares of FMB Common
Stock are converted into shares of City Holding Common Stock and excludes
nonrecurring expenses that are directly attributable to the transaction.
Such expenses are expected to approximate $400,000. The pro forma
financial statements may not be indicative of the results that actually
would have occurred if the combination had been in effect on the dates
indicated or that may be obtained in the future. The pro forma financial
statements should be read in conjunction with the City Holding Audited
Consolidated Financial Statements and FMB Audited Financial Statements,
including the respective notes thereto, included herein.

<PAGE>
CITY HOLDING COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(IN THOUSANDS)
<TABLE>
CITY HOLDING
AND FMB
CITY HOLDING FMB PRO FORMA PRO FORMA
AS REPORTED AS REPORTED ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS

Cash and due from banks $ 21,036 $ 4,520 $ 25,556
Interest bearing deposits with other banks 0 643 643
Federal funds sold 0 50 50
Securities available for sale 68,134 15,397 83,531
Investment securities 122,579 29,577 152,156
Total loans 528,071 51,668 579,739
Less allowance for possible
loan losses (6,040) (474) (6,514)

NET LOANS 522,031 51,194 573,225

Loans held for sale 44,833 0 44,833
Bank premises and equipment 18,432 3,572 22,004
Other assets 18,592 3,193 21,785

TOTAL ASSETS $815,637 $108,146 $923,783

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Deposits:
Noninterest bearing 81,424 14,001 95,425
Interest bearing 574,542 81,038 655,580

TOTAL DEPOSITS 655,966 95,039 751,005

Federal funds purchased and securities
sold under agreements to repurchase 88,796 1,972 90,768
Long-term debt 4,825 0 4,825
Other liabilities 7,069 1,155 8,224

TOTAL LIABILITIES 756,656 98,166 854,822

SHAREHOLDERS' EQUITY

Common stock 9,451 1,152 1,144 11,747
Capital surplus 18,887 649 (1,144) 18,392
Net unrealized loss on securities
available for sale (1,054) (492) (1,546)
Retained earnings 31,750 8,671 40,421
Treasury stock (53) 0 (53)

TOTAL SHAREHOLDERS' EQUITY 58,981 9,980 0 68,961

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $815,637 $108,146 $923,783
</TABLE>
<PAGE>
CITY HOLDING COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (unaudited)
QUARTER ENDED MARCH 31, 1995
(IN THOUSANDS EXCEPT PER SHARE)

CITY HOLDING
AND FMB
CITY HOLDING FMB PRO FORMA
AS REPORTED AS REPORTED COMBINED

Interest Income:
Interest and fees on loans $ 11,726 $ 1,255 $ 12,981
Interest on investment securities:
Taxable 2,639 550 3,189
Tax-exempt 420 169 589
Other interest income 0 27 27

TOTAL INTEREST INCOME 14,785 2,001 16,786

Interest expense:
Interest on deposits 5,369 725 6,094
Interest on short-term borrowings 799 56 855
Interest on long-term debt 130 0 130

TOTAL INTEREST EXPENSE 6,298 781 7,079

NET INTEREST INCOME 8,487 1,220 9,707

Provision for possible loan losses 183 18 201

NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 8,304 1,202 9,506

Other income 1,095 154 1,249

Other expense 6,842 960 7,802

INCOME BEFORE INCOME TAXES 2,557 396 2,953

Income taxes 813 100 913

NET INCOME $ 1,744 $ 296 $ 2,040

NET INCOME PER SHARE $ 0.46 $ 0.51 $ 0.43

AVERAGE SHARES OUTSTANDING 3,779 576 4,697
<PAGE>
CITY HOLDING COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS EXCEPT PER SHARE)

CITY HOLDING
AND FMB
CITY HOLDING FMB PRO FORMA
AS REPORTED AS REPORTED COMBINED
Interest Income:
Interest and fees on loans $ 41,167 $ 4,900 $ 46,067
Interest on investment securities:
Taxable 12,071 1,826 13,897
Tax-exempt 1,716 761 2,477
Other interest income 194 127 321

TOTAL INTEREST INCOME 55,148 7,614 62,762

Interest expense:
Interest on deposits 20,110 2,768 22,878
Short-term borrowings 1,687 159 1,846
Long-term debt 445 445

TOTAL INTEREST EXPENSE 22,242 2,927 25,169

NET INTEREST INCOME 32,906 4,687 37,593

Provision for possible loan losses 953 87 1,040

NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 31,953 4,600 36,553

Other income 4,647 602 5,249

Other expense 26,448 3,667 30,115

INCOME BEFORE INCOME TAXES 10,152 1,535 11,687

Income taxes 3,193 353 3,546

NET INCOME $ 6,959 $ 1,182 $ 8,141

NET INCOME PER SHARE $ 1.85 $ 2.05 $ 1.73

AVERAGE SHARES OUTSTANDING 3,773 576 4,691
<PAGE>

CITY HOLDING COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS EXCEPT PER SHARE)

CITY HOLDING
AND FMB
CITY HOLDING FMB PRO FORMA
AS REPORTED AS REPORTED COMBINED

Interest Income:
Interest and fees on loans $ 33,251 $ 4,349 $37,600
Interest on investment securities:
Taxable 12,650 1,843 14,493
Tax-exempt 1,839 807 2,646
Other interest income 476 86 562

TOTAL INTEREST INCOME 48,216 7,085 55,301

Interest expense:

Interest on deposits 18,849 2,664 21,513
Short-term borrowings 424 214 638
Long-term debt 274 274

TOTAL INTEREST EXPENSE 19,547 2,878 22,425

NET INTEREST INCOME 28,669 4,207 32,876

Provision for possible loan losses 1,341 93 1,434

NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 27,328 4,114 31,442

Other income 3,004 858 3,862

Other expense 20,951 3,224 24,175

INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 9,381 1,748 11,129

Income taxes 2,949 418 3,367

INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 6,432 1,330 7,762

Earnings per Common Share:
Income before cumulative effect of
change in accounting principle $ 1.71 2.31 1.66

AVERAGE COMMON SHARES OUTSTANDING 3,763 576 4,681

<PAGE>

CITY HOLDING COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1992
(IN THOUSANDS EXCEPT PER SHARE)

CITY HOLDING
AND FMB
CITY HOLDING FMB PRO FORMA
AS REPORTED AS REPORTED COMBINED

Interest Income:
Interest and fees on loans $ 28,222 $ 4,272 $32,494
Interest on investment securities:
Taxable 12,895 2,246 15,141
Tax-exempt 1,880 750 2,630
Other interest income 530 85 615

TOTAL INTEREST INCOME 43,527 7,353 50,880

Interest expense:

Interest on deposits 18,514 2,964 21,478
Short-term borrowings 329 342 671
Long-term debt 35 35

TOTAL INTEREST EXPENSE 18,878 3,306 22,184

NET INTEREST INCOME 24,649 4,047 28,696

Provision for possible loan losses 2,222 103 2,325

NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 22,427 3,944 26,371

Other income 1,897 431 2,328

Other expense 15,909 2,980 18,889

INCOME BEFORE INCOME TAXES 8,415 1,395 9,810

Income taxes 2,511 327 2,838

NET INCOME $ 5,904 $ 1,068 $ 6,972

NET INCOME PER SHARE $ 1.56 $ 1.85 $ 1.48

AVERAGE COMMON SHARES OUTSTANDING 3,779 576 4,697

<PAGE>
DISSENTERS' RIGHTS

Sections 31-1-122 and 31-1-123 of the West Virginia Act give holders of
City Holding and FMB Common Stock dissenters' rights in the Merger. City Holding
and FMB shareholders who object to the Merger and who comply with the provisions
of Section 31-1-123 of the West Virginia Act may demand the right to receive a
cash payment from City Holding and FMB, respectively, for the "fair value" of
their stock as determined as of the day prior to the date on which the Merger
was approved by the City Holding or FMB shareholders, as applicable. Under
Section 31-1-123 of the West Virginia Act, such "fair value" of City Holding or
FMB Common Stock shall not include any appreciation or depreciation of the price
of shares of City Holding or FMB Common Stock resulting from anticipation of the
Merger. Consequently, the amount received by a dissenting FMB shareholder may
be higher or lower than the consideration he would have received for such shares
in the Merger. City Holding shareholders are not receiving any consideration for
their shares in the Merger.

To exercise their dissenters' rights, FMB shareholders electing to
dissent ("Dissenting FMB Shareholders") must file with FMB at Fourth Avenue
and Washington Street, Montgomery, West Virginia 25136, Attention:
Secretary, prior to or at the FMB Special Meeting, a written objection to
the proposed Merger. To exercise their dissenters' rights, City Holding
shareholders electing to dissent ("Dissenting City Holding Shareholders"
and collectively with Dissenting FMB Shareholders, "Dissenting
Shareholders") must file with City Holding at 3601 MacCorkle Avenue, S.E.,
Charleston, West Virginia, Attention: Robert A. Henson, Chief Financial
Officer, prior to or at the City Holding Annual Meeting, a written
objection to the proposed Merger. A Dissenting Shareholder may dissent as
to less than all of shares of FMB Common Stock or City Holding Common Stock
owned beneficially by him. If the Merger is approved by the City Holding
and FMB shareholders, and a Dissenting Shareholder did not vote the related
shares in favor of the Merger, he must then, within ten days after the date
on which the vote was taken, file with City Holding a written demand for
payment of the fair value of such shares.

Within 20 days after demanding payment for his shares, each Dissenting
Shareholder must submit the certificate or certificates representing his
shares to City Holding for notation thereon that such demand has been made.
His failure to do so shall, at the option of City Holding, terminate his
rights under Section 3-1-122 and 3-1-123 of the West Virginia Act unless a
court of general civil jurisdiction, for good and sufficient cause shown,
shall otherwise direct. If shares of City Holding or FMB Common Stock
represented by a certificate on which notation has been so made shall be
transferred, each new certificate issued therefor shall bear similar
notation, together with the name of the original dissenting holder of such
shares, and a transferee of such shares shall acquire by such transfer no
rights in City Holding or FMB, as applicable, other than those which the
original Dissenting Shareholder had after making demand for payment under
Section 31-1-123 of the West Virginia Act.

A demand filed by a Dissenting Shareholder may not be withdrawn unless
City Holding consents. Within ten days after the Effective Date of the
Merger, City Holding shall give written notice thereof to each Dissenting
Shareholder who has made a demand as required by the West Virginia Act, and
shall make a written offer to each such Dissenting Shareholder to pay for
his related shares at a specified price deemed by City Holding to be the
fair value thereof. Such notice and offer shall be accompanied by a
balance sheet of FMB or City Holding, as applicable, as of the latest
available date and not more than 12 months prior to the making of such
offer, and a profit and loss statement for the 12 months' period ended on
the date of such balance sheet. If within 30 days after the Effective
Date, the fair value of such shares is agreed upon between any Dissenting
Shareholder and City Holding, payment therefor shall be made within 90 days
after the Effective Date, upon surrender of the certificate(s) representing
such share(s). Upon payment of the agreed value a Dissenting Shareholder
shall cease to have any interest in such shares.

If within the 30-day period described above, a Dissenting Shareholder
and City Holding do not agree as to the fair value of the shares, City
Holding shall within 30 days after receipt of written demand from any
Dissenting Shareholder, which written demand must be given within 60 days
after the Effective Date, file a complaint in a court of general civil
jurisdiction in the county where City Holding's or FMB's, as applicable,
principal office was located requesting that the fair value of such shares
be determined, or City Holding may file such a complaint within such 60-day
period at its own election. If City Holding fails to bring such action
within the 60-day period, and at this time it cannot predict whether it
would file such a complaint, any Dissenting Shareholder may do so in the
name of City Holding. If no complaint is filed, Dissenting Shareholders
may be deemed to have waived their rights under the West Virginia Act. All
Dissenting Shareholders, except those who have agreed upon a price to be
paid for their shares by City Holding, may be made parties to the
proceeding and may receive a copy of the petition or summons. All
Dissenting Shareholders who are parties to the proceeding shall be entitled
to judgment against City Holding for the amount of the fair value of their
shares plus accrued interest except any Dissenting Shareholder whom the
court determines not to be entitled to receive payment for his shares. The
judgment shall be payable only upon and concurrently with the surrender to
City Holding of the certificate(s) representing such share(s).

Section 31-1-123(e) of the West Virginia Act provides that any costs
and expenses of any such proceeding shall be determined by the court and
assessed against City Holding, except that all or any part of such costs
and expenses may be assessed against all or some Dissenting Shareholders,
in amounts the court finds equitable, to the extent the court finds the
Dissenting Shareholders did not act in good faith in contesting City
Holding's offer. Such expenses shall not include experts' or attorneys'
expenses and fees unless the court, in its discretion, awards such fees and
expenses.

Reference is made to Annex IV attached hereto for the complete text of
the provisions of Sections 31-1-122 and 33-1-123 of the West Virginia Act
relating to the rights of dissenting shareholders. The statements made in
this summary of such provisions are qualified in their entirety by
reference to Annex IV. The provisions of Section 31-1-123 of the West
Virginia Act are technical and complex and it is suggested that any
shareholder who desires to exercise his right to dissent consult counsel,
because failure to comply strictly with such provisions may defeat his
dissenters' rights.

CITY HOLDING CAPITAL STOCK

City Holding's Articles of Incorporation, authorize 20,000,000 shares
of Common Stock, par value $2.50, and 500,000 shares of Preferred Stock,
par value $25, including a series of 100,000 shares of Junior Participating
Cumulative Preferred Stock, Series A. As of March 31, 1995, 3,777,933
shares of Common Stock and no shares of Preferred Stock were outstanding
and entitled to vote. At such date, City Holding had 1,770 shareholders of
record.

Authority is given in the Articles of Incorporation to the Board of
Directors to issue shares of City Holding's Common Stock and Preferred
Stock from time to time for such consideration as the Board may deem
advisable.

The characteristics of City Holding's capital stock are summarized
below.

Common Stock

Dividend Rights. Common shareholders are entitled to dividends to the
extent funds are legally available and the Board of Directors declares
payment. City Holding's ability to pay dividends is largely contingent
upon the abilities of its subsidiary banks to pay dividends, and is subject
to various statutory limits. See "SUPERVISION AND REGULATION - Limits on
Dividends and Other Payments."

Voting Rights and Cumulative Voting. In all elections of directors,
each holder of City Holding Common Stock has the right to cast one vote for
each share of stock owned by him and entitled to vote for as many persons
as there are directors to be elected, or he may cumulate such votes and
give one candidate as many votes as the number of directors to be elected
multiplied by the number of his shares of stock shall equal; or he may
distribute such votes on the same principle among as many candidates and in
such manner as he desires. On any other question to be determined by a
vote of shares at any meeting of shareholders, each shareholder is entitled
to one vote for each share of stock owned by him and entitled to vote.

Liquidation Rights. Upon liquidation, after payment to all creditors
and holders of Preferred Stock, the remaining assets of City Holding would
be distributed to the holders of City Holding Common Stock pro rata.

Preemptive Rights. Holders of City Holding Common Stock have no
preemptive rights with respect to future issues of Common Stock.

Calls and Assessments. All City Holding Common Stock outstanding is
fully paid and nonassessable.

Preferred Stock

The Board of Directors has the authority, without any vote or action
by the shareholders, to issue Preferred Stock in one or more series and to
fix the designations, preferences, rights, qualifications, limitations and
restrictions thereof, including the voting rights, dividend rights,
dividend rate, conversion rights, terms of redemption (including sinking
fund provisions), redemption price or prices, liquidation preferences and
the number of shares constituting any series. Issuance of Preferred Stock
by the Board of Directors of City Holding could be utilized to render more
difficult, or discourage, an attempt to gain control of City Holding.
There are no shares of Preferred Stock outstanding, and there are no
agreements or understandings for the designation of any series of Preferred
Stock or the issuance of shares, except pursuant to the Preferred Stock
Purchase Rights Plan summarized below.

Preferred Stock Purchase Rights Plan; Change of Control

Pursuant to a Preferred Stock Purchase Rights Plan and a related
Amended and Restated Rights Agreement between City Holding and NationsBank,
N.A., as Rights Agent, each outstanding share of City Holding Common Stock
carries with it one Preferred Stock Purchase Right (a "Right"). In
general, the number of Rights outstanding will equal the number of shares
of City Holding Common Stock outstanding from time to time. The Rights
will expire on April 9, 2001, unless previously exercised or redeemed at
the option of the Board of Directors. Each share of City Holding Common
Stock offered hereby has one Right attached.

Generally, under the terms of the Rights Plan, the Rights will be
exercisable only if a person or group acquires 10% or more of City Holding
Common Stock or announces a tender offer, the consummation of which would
result in ownership by a person or group of 10% or more of City Holding
Common Stock. Each Right will entitle its holder to buy one one-thousandth
of a share of Junior Participating Cumulative Preferred Stock, Series A,
par value $25, at an exercise price of $53, subject to adjustment. If a
person or group acquires 20% or more of the outstanding City Holding Common
Stock, each Right will entitle its holder (other than such person or
members of such group) to purchase, at the then-current exercise price,
City Holding Common Stock having a market value equal to twice the exercise
price. If City Holding is acquired in a merger or other business
combination or if 50% or more of City Holding's assets or earning power is
sold or transferred, each Right will entitle its holder to purchase, at the
then-current exercise price, common stock of the acquiror having a value
equal to twice the exercise price.

City Holding's Articles of Incorporation provide that the Board of
Directors consist of three classes with staggered terms for directors.
City Holding has also adopted a by-law requiring advance notice from a
shareholder to nominate a director. The effect of these measures and the
Rights Plan could be to render more difficult or to discourage an attempt
to gain control of City Holding by means of a merger, tender offer, proxy
contest or otherwise, even if supported by holders of a majority of the
voting securities of City Holding, and thereby protect the current
management.

Reports to Shareholders

City Holding furnishes its shareholders with annual reports, including
audited financial statements, and with quarterly reports.

Transfer Agent

The transfer agent for City Holding Common Stock is City National Bank
of Charleston.

COMPARATIVE RIGHTS OF SHAREHOLDERS

At the Effective Date, FMB shareholders automatically will become
shareholders of City Holding, and their rights as shareholders will be
determined by City Holding's Articles of Incorporation and Bylaws. The
following is a summary of the material differences in the rights of
shareholders of City Holding and FMB.

Capitalization

City Holding. City Holding is authorized to issue 20,000,000 shares
of City Holding Common Stock, $2.50 par value, of which 3,779,818 shares,
including 1,885 treasury shares, were issued and outstanding as of the City
Holding Record Date. City Holding is also authorized to issue 500,000
shares of Preferred Stock, $25 par value, including a series of 100,000
shares of Junior Participating Cumulative Preferred Stock, Series A, of
which no shares were issued and outstanding as of the City Holding Record
Date.

Under City Holding's Articles of Incorporation, the Board of Directors
of City Holding has the power, without further action by City Holding's
shareholders, to provide for the issuance of City Holding Common Stock or
Preferred Stock from time to time for such consideration as the Board may
deem advisable.

FMB. FMB is authorized to issue 1,000,000 shares of FMB Common Stock,
$2.00 par value of which 576,000 shares were issued and outstanding as of
the FMB Record Date.

Merchants is authorized to issue 144,000 shares of Common Stock, $2.00
par value, all of which were issued and outstanding and owned by FMB as of
the FMB Record Date.

Voting Rights

City Holding. In all elections of directors, each holder of City
Holding Common Stock has the right to cast one vote for each share of stock
owned by him and is entitled to vote for as many persons as there are
directors to be elected, or he may cumulate such votes and give one
candidate as many votes as the number of directors to be elected multiplied
by the number of his shares of stock shall equal; or he may distribute
such votes on the same principle among as many candidates and in such
manner as he desires. On any other issue to be determined by a vote of
shares at any meeting of shareholders, each shareholder is entitled to one
vote for each share of stock owned by him and entitled to vote. The vote
of a majority of shares represented at a meeting and entitled to vote is
required to approve most actions requiring shareholder approval, except
that amendments to the Articles of Incorporation and certain fundamental
actions such as mergers, consolidations and sales of substantially all
assets outside the ordinary course of business must be approved by vote of
a majority of shares entitled to vote thereon.

FMB. In all elections of directors, each holder of FMB Common Stock
has the right to cast one vote for each share of stock owned by him and is
entitled to vote for as many persons as there are directors to be elected,
or he may cumulate such votes and give one candidate as many votes as the
number of directors to be elected multiplied by the number of his shares of
stock shall equal; or he may distribute such votes on the same principal
among as many candidates and in such manner as he desires. On any other
issue to be determined by a vote of shares at any meeting of shareholders,
each shareholder is entitled to one vote for each share of stock owned by
him and entitled to vote. The vote of the majority of shares represented
at a meeting and entitled to vote is required to approve most actions
requiring shareholder approval except that the West Virginia Act requires
that certain items, including amendments to the Articles of Incorporation,
must be approved by a vote of a majority of shares entitled to vote
thereon. Furthermore, the Articles of Incorporation of FMB and its Bylaws
requires the vote of the holders of at least two-thirds of the issued and
outstanding stock entitled to vote for certain "business combinations" as
defined in the Articles of Incorporation and Bylaws; provided, however,
that if 80% or greater of the directors of the corporation recommend the
"business combination" to the shareholders, only a simple majority vote of
the issued and outstanding stock entitled to vote thereon need be obtained
to approve the transaction. The Merger contemplated in the Agreement is a
"business combination" as defined in the Articles and Bylaws of FMB.
However, since the Agreement was unanimously approved by the FMB Board of
Directors, a simple majority of the shares entitled to vote thereon is the
vote requirement for the Merger presented to the shareholders in connection
with the Agreement.

Directors and Classes of Directors

City Holding. The City Holding Board of Directors presently comprises
14 members. Pursuant to the Agreement, following the Effective Date, City
Holding will increase the number of members of the City Holding Board by
two and will appoint two persons approved by the continuing directors of
Merchants to fill the resulting vacancies. The Board of Directors is
classified into three classes, with one class to be elected each year to a
three-year term.

FMB. The FMB Board of Directors presently comprises 12 members. The
Board of Directors is classified into three classes, with one class to be
elected each year to a three-year term.

Anti-Takeover Provisions

City Holding. City Holding's Board of Directors has adopted a Rights
Plan and City Holding's Articles of Incorporation provide that the Board of
Directors consist of three classes with staggered terms for members of the
Board of Directors. City Holding has also adopted a by-law requiring
advance notice from a shareholder to nominate a director. See "CITY
HOLDING CAPITAL STOCK - Preferred Stock Purchase Rights Plan; Change of
Control."

City Holding has not adopted other conventional anti-takeover
provisions such as, for example, a fair-price charter amendment, a super-
majority vote charter amendment, or an anti-greenmail charter amendment,
and has no current plans to submit further proposals with a possible "anti-
takeover" effect. In addition, the West Virginia Act does not contain any
provisions protecting a West Virginia corporation against hostile
takeovers, such as a fair price statute or a control share acquisition
statute.

FMB. FMB has adopted conventional anti-takeover provisions, including
certain super majority vote requirements for business combinations, a fair
price provision and an anti-green mail provision. Because of the unanimous
approval and recommendation by the FMB Board of Directors of the Merger,
these provisions are not applicable to the vote or procedures required in
connection with the Merger.

Preemptive Rights

Neither the shareholders of City Holding nor the shareholders of FMB
have preemptive rights. Thus, if additional shares of City Holding Common
Stock or FMB Common Stock were issued, holders of such stock, to the extent
that they did not participate in such additional issuance of shares, would
own proportionately smaller interests in a larger amount of outstanding
capital stock.

Assessment

City Holding. All outstanding shares of City Holding Common Stock
are, and those to be issued pursuant to the Agreement will be, fully paid
and nonassessable.

FMB. All outstanding shares of FMB Common Stock are fully paid and
nonassessable.

Conversion; Redemption; Sinking Fund

Neither City Holding Common Stock nor FMB Common Stock is convertible,
redeemable or entitled to any sinking fund.

Liquidation Rights

City Holding. Upon liquidation, after payment to all creditors and
holders of Preferred Stock, the remaining assets of City Holding would be
distributed to the holders of City Holding Common Stock pro rata.

FMB. Upon liquidation, after payment to all creditors, the remaining
assets of FMB would be distributed to the holders of FMB stock on a pro
rata basis.

Dividends and Other Distributions

City Holding. Holders of City Holding Common Stock are entitled to
dividends to the extent funds are legally available and the Board of
Directors declares payment. City Holding's ability to pay dividends is
largely contingent upon the abilities of its subsidiaries to pay dividends,
and is subject to various statutory limits. See "SUPERVISION AND
REGULATION - Limits on Dividends and Other Payments."

FMB. Holders of FMB Common Stock are entitled to dividends to the
extent funds are legally available therefore and the FMB Board of Directors
declares payment. FMB's ability to pay dividends is contingent entirely
upon the ability of Merchants, its subsidiary bank, to pay dividends. The
ability of Merchants to pay dividends is subject to various regulatory and
statutory limits. See "SUPERVISION AND REGULATION - Limits on Dividends
and Other Payments."

Shareholder Meetings

City Holding. City Holding's Bylaws provide that special meetings of
the shareholders may be called at any time by the Board of Directors or by
the President and Secretary, or by any three or more shareholders holding
together at least 10% of the capital stock of City Holding.

FMB. FMB's Bylaws provide that special meetings of the shareholders
may be called any time by the Board of Directors or by the President or
Secretary or by any number of shareholders holding together at least 10% of
the capital stock of FMB.

Indemnification

City Holding. Section 31-1-9 of the West Virginia Act provides in
part that each West Virginia corporation shall have power to indemnify any
director, officer, employee or agent or former director, officer, employee
or agent against expenses actually and reasonably incurred by him in
connection with the defense of any claim, action, suit or proceeding
against him by reason of being or having been such director, officer,
employee or agent other than an action by or in the right of the
corporation if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the corporation.
With respect to an action by or in the right of the corporation the
director, officer, employee or agent or former director, officer, employee
or agent may be indemnified if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation, except in relation to matters as to which he shall be finally
adjudged in such action, suit or proceeding against him by reason of being
or having been such director, officer, employee or agent to be liable for
negligence or misconduct in the performance of duty; and to make any other
or further indemnity to any such persons that may be authorized by the
articles of incorporation or any by-law made by the shareholders or any
resolution adopted, before or after the event, by the shareholders. The
By-laws of City Holding contain provisions pursuant to the foregoing
section of the West Virginia Act indemnifying the directors, officers,
employees and agents of City Holding in certain cases against expenses and
liabilities under judgments and reimbursements of amounts paid in
settlement.

City Holding has purchased directors and officers' liability insurance
policies. Within the limits of their coverage, the policies insure (i) the
directors and officers of City Holding against certain losses, to the
extent such losses are not indemnified by City Holding, and (ii) City
Holding, to the extent it indemnifies such directors and officers for
losses as permitted under the laws of West Virginia.

FMB. Section 31-1-9 of the West Virginia Act provides in part that
each West Virginia corporation shall have power to indemnify any director,
officer, employee or agent or former director, officer, employee or agent
against expenses actually and reasonably incurred by him in connection with
the defense of any claim, action, suit or proceeding against him by reason
of being or having been such director, officer, employee or agent other
than an action by or in the right of the corporation if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the corporation. With respect to an action by or in the
right of the corporation the director, officer, employee or agent or former
director, officer, employee or agent may be indemnified if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the corporation, except in relation to matters as to which
he shall be finally adjudged in such action, suit or proceeding against him
by reason of being or having been such director, officer, employee or agent
to be liable for negligence or misconduct in the performance of duty; and
to make any other or further indemnity to any such persons that may be
authorized by the articles of incorporation or any by-law made by the
shareholders or any resolution adopted, before or after the event, by the
shareholders.

Director Exculpation

City Holding. The West Virginia Act does not provide for limitation
of directors' monetary liability or director exculpation.

FMB. The West Virginia Act does not provide for limitation of
directors' monetary liability or director exculpation.

SUPERVISION AND REGULATION

The following generally describes the regulation to which City Holding
and its Banking Subsidiaries are subject. Bank holding companies and banks
are extensively regulated under both federal and state law. To the extent
that the following information describes statutory or regulatory
provisions, it is qualified in its entirety by reference to the particular
statutory provisions. Any change in applicable law or regulation may have
a material effect on the business and prospects of City Holding and the
Banking Subsidiaries.

Limits on Dividends and Other Payments

City Holding is a legal entity separate and distinct from its Banking
Subsidiaries. Most of City Holding's revenues result from dividends paid
to City Holding by the Banking Subsidiaries. The right of City Holding and
shareholders of City Holding, to participate in any distribution of the
assets or earnings of any Banking Subsidiary through the payment of such
dividends or otherwise is necessarily subject to the prior claims of
creditors of such Banking Subsidiary, except to the extent that claims of
City Holding in its capacity as a creditor may be recognized. Moreover,
there are various legal limitations applicable to the payment of dividends
to City Holding as well as the payment of dividends by City Holding to its
shareholders. Under federal law, the Banking Subsidiaries may not, subject
to certain limited exceptions, make loans or extensions of credit to, or
investments in the securities of, or take securities of City Holding as
collateral for loans to any borrower. The Banking Subsidiaries are also
subject to collateral security requirements for any loans or extensions of
credit permitted by such exceptions.

The Banking Subsidiaries are subject to various statutory restrictions
on their ability to pay dividends to City Holding. Under applicable
regulations, at March 31, 1995, the Banking Subsidiaries could have paid
aggregate dividends to City Holding of $6.1 million without obtaining prior
approval of their respective regulators. The payment of dividends by City
Holding and the Banking Subsidiaries may also be limited by other factors,
such as requirements to maintain adequate capital above regulatory
guidelines. The various regulators supervising the Banking Subsidiaries
have authority to prohibit any Banking Subsidiary under their jurisdiction
from engaging in an unsafe or unsound practice in conducting its business.
The payment of dividends, depending upon the financial condition of the
Banking Subsidiary in question, could be deemed to constitute such an
unsafe or unsound practice. The Federal Reserve Board and the OCC have
indicated their view that it generally would be an unsafe and unsound
practice to pay dividends except out of current operating earnings. The
Federal Reserve Board has stated that, as a matter of prudent banking, a
bank or bank holding company should not maintain its existing rate of cash
dividends on common stock unless (1) the organization's net income
available to common shareholders over the past year has been sufficient to
fund fully the dividends and (2) the prospective rate of earnings retention
appears consistent with the organization's capital needs, asset quality,
and overall financial condition. Moreover, the Federal Reserve Board has
indicated that bank holding companies should serve as a source of
managerial and financial strength to their subsidiary banks. Accordingly,
the Federal Reserve Board has stated that a bank holding company should not
maintain a level of cash dividends to its shareholders that places undue
pressure on the capital of bank subsidiaries, or that can be funded only
through additional borrowings or other arrangements that may undermine the
bank holding company's ability to serve as a source of strength.

The ability of the Banking Subsidiaries to pay dividends in the future
is, and is expected to continue to be, influenced by regulatory policies
and by capital guidelines. The bank regulatory agencies have broad
discretion in developing and applying policies and guidelines, in
monitoring compliance with existing policies and guidelines, and in
determining whether to modify such policies and guidelines.

Capital Requirements

As a bank holding company, City Holding is subject to regulation by
the Federal Reserve Board under the Bank Holding Company Act of 1956, as
amended (the "BHCA"). The Federal Reserve Board, the OCC and the FDIC have
issued substantially similar risk-based and leverage capital guidelines
applicable to United States banking organizations. In addition, those
regulatory agencies may from time to time require that a banking
organization maintain capital above the minimum levels whether because of
its financial condition or actual or anticipated growth. The Federal
Reserve Board guidelines define a two-tier capital framework. Tier 1
capital consists of common and qualifying preferred shareholders' equity,
less certain intangibles and other adjustments. Tier 2 capital consists of
subordinated and other qualifying debt, and the allowance for credit losses
of up to 1.25% of risk-weighted assets. The sum of Tier 1 and Tier 2
capital represents qualifying total capital, at least 50% of which must
consist of Tier 1 capital. Risk-based capital ratios are calculated by
dividing Tier 1 and total capital by risk-weighted assets. Risk-weighted
assets are determined by assigning assets and off-balance sheet exposures
to one of four categories of risk-weights, based primarily on relative
credit risk. The minimum Tier 1 capital ratio is 4% and the minimum total
capital ratio is 8%. City Holding's Tier 1 and total capital to risk-
weighted asset ratios as of March 31, 1995, were 10.15% and 11.30%,
respectively, exceeding the minimums required.

In addition, the Federal Reserve Board has established minimum
leverage ratio (Tier 1 capital to quarterly average tangible assets)
guidelines for bank holding companies. These guidelines provide for a
minimum ratio of 3 percent for bank holding companies that meet certain
specified criteria, including that they have the highest regulatory rating.
All other bank holding companies will be required to maintain a leverage
ratio of 3 percent plus an additional cushion of at least 100 to 200 basis
points. City Holding's leverage ratio as of March 31, 1995, was 6.94%.
The guidelines also provide that banking organizations experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels,
without significant reliance on intangible assets.

<PAGE>
The following table presents capital ratios for City Holding and FMB at March
31, 1995, and as adjusted to give effect to the Merger.

<TABLE>
Historical

Regulatory City Pro Forma
Minimums Holding FMB Combined
%/$ CHC/$FMB(1) %/$ Millions(2) %/$ Millions(3) %/$Millions(4)
<S> <C> <C> <C> <C>
Risk-based capital
Tier 1 4.00/21.2/2.4 10.15/53.7 15.69/9.43 10.69/63.06
Total 8.00/42.3/4.8 11.30/59.8 16.48/9.91 11.80/69.57
Leverage 3.00/23.2/3.2 6.94/53.7 8.62/9.32 7.15/63.06
Common shareholders'
equity to total assets -- 7.23/59.0 9.23/10.0 7.47/69.0
Total shareholders' equity
to total assets -- 7.23/59.0 9.23/10.0 7.47/69.0
</TABLE>
__________
(1) Dollars in millions.
(2) Calculated in accordance with the Federal Reserve Board's capital
rules.
(3) Calculated in accordance with the FDIC's capital rules.
(4) The pro forma risk-based capital ratios have been computed using pro
forma combined historical data for City Holding and FMB at March 31, 1995.

Bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current
levels. However, management is unable to predict whether higher capital
ratios would be imposed and, if so, at what levels and on what schedule.
Otherwise, management of City Holding is not aware of any known trends,
events or uncertainties that will have or that are reasonably likely to
have a material effect on the liquidity, capital resources or operations of
City Holding, nor is management aware of any current recommendations by the
regulatory authorities, which, if they were to be implemented, would have
such an effect.

FIRREA

Under the enactment of the Financial Institutions Reform, Recovery,
and Enforcement Act ("FIRREA") a depository institution insured by the FDIC
can be held liable for any loss incurred by, or reasonably expected to be
incurred by, the FDIC after August 9, 1989, in connection with (i) the
default of a commonly controlled FDIC-insured depository institution or
(ii) any assistance provided by the FDIC to a commonly controlled FDIC-
insured depository institution in danger of default. "Default" is defined
generally as the appointment of a conservator or receiver and "in danger of
default" is defined generally as the existence of certain conditions
indicating that a "default" is likely to occur in the absence of regulatory
assistance. Liability of any Bank Subsidiary under this "cross-guarantee
position could have a material adverse effect on the financial condition of
any other Bank Subsidiary and City Holding.

FDICIA

In December 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") became effective. FDICIA substantially
revised the depository institution regulatory and funding provisions of the
Federal Deposit Insurance Act and revised several other federal banking
statutes.

Bank Holding Companies

City Holding is registered as a "bank holding company" under the BHCA.
Bank holding companies are subject to regulation by the Federal Reserve
Board.

The BHCA requires the prior approval of the Federal Reserve Board in
any case where a bank holding company proposes to acquire direct or
indirect ownership or control of more than 5% of the voting shares of any
bank that is not already majority owned by it or to merge or consolidate
with any other bank holding company. The BHCA prohibits the Federal
Reserve Board from approving an application from a bank holding company to
acquire shares of a bank located outside the state in which the operations
of the holding company's banking subsidiaries are principally conducted,
unless such an acquisition is specifically authorized by statute of the
state in which the bank whose shares are to be acquired is located. West
Virginia has adopted legislation permitting such acquisitions by bank
holding companies located in states that have reciprocal agreements with
West Virginia.

The BHCA also prohibits a bank holding company, with certain
exceptions, from acquiring more than 5% of the voting shares of any company
that is not a bank and from engaging in any business other than banking or
managing or controlling banks. Under the BHCA, the Federal Reserve Board
is authorized to approve the ownership of shares by a bank holding company
in any company the activities of which the Federal Reserve Board has
determined to be so closely related to banking or to managing or
controlling banks as to be a proper incident thereto. The Federal Reserve
Board has by regulation determined that certain activities are closely
related to banking within the meaning of the BHCA. These activities
include: operating a mortgage company, finance company, credit card
company or factoring company; performing certain data processing
operations; providing investment and financial advice; and acting as an
insurance agent for certain types of credit-related insurance.

Banks

City National Bank of Charleston, The Home National Bank of Sutton,
and the First National Bank of Hinton are national banking associations,
and are subject to supervision and regulation by the OCC, the Federal
Reserve Board and the FDIC. The Peoples Bank of Point Pleasant, First
State Bank & Trust, The Bank of Ripley, Peoples State and Blue Ridge Bank
are supervised and regulated by the West Virginia Board of Banking and
Financial Institutions, the FDIC and the Federal Reserve Board. The
various laws and regulations administered by the regulatory agencies affect
corporate practices, such as payment of dividends, incurring debt and
acquisition of financial institutions and other companies, and affect
business practices, such as payment of interest on deposits, the charging
of interest on loans, types of business conducted and location of offices.

FDIC Insurance Assessments

City Holding's Bank Subsidiaries are subject to FDIC deposit insurance
assessments. Effective in January 1993, deposit insurance premium rates
range from $.23 to $.31 per $100 of deposits and depend on both the
institution's capital adequacy and a supervisory judgment of overall risk
posed by the institution. Prior to January 1993, FDIC insurance premiums
were charged at a flat rate. Because of decreases in the reserves of the
Bank Insurance Fund due to the increased number of bank failures in recent
years, it is possible that insurance assessments will increase and that
there may be special additional assessments. Additional assessments could
have an adverse impact on City Holding's results of operations.

Governmental Policies

The operations of City Holding and its Banking Subsidiaries are
affected not only by general economic conditions, but also by the policies
of various regulatory authorities. In particular, the Federal Reserve
Board regulates money and credit and interest rates in order to influence
general economic conditions. These policies have a significant influence
on overall growth and distribution of bank loans, investments and deposits
and affect interest rates charged on loans or paid for time and savings
deposits. Federal Reserve monetary policies have had a significant effect
on the operating results of commercial banks in the past and are expected
to continue to do so in the future.

Among other things, FDICIA requires the federal banking regulators to
take prompt corrective action with respect to depository institutions that
do not meet minimum capital requirements. FDICIA establishes five capital
tiers: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized.

The Federal Reserve Board has adopted regulations establishing
relevant capital measures and relevant capital levels for banks. The
relevant capital measures are the total risk-adjusted capital ratio, Tier 1
risk-adjusted capital ratio and the leverage ratio. Under the regulations,
a bank is considered (i) well capitalized if it has a total capital ratio
of ten percent or greater, a Tier 1 capital ratio of six percent or greater
and a leverage ratio of five percent or greater and is not subject to any
order or written directive by such regulator to meet and maintain a
specific capital level for any capital measure, (ii) adequately capitalized
if it has a total capital ratio of eight percent or greater, a Tier 1
capital ratio of four percent or greater and a leverage ratio of four
percent or greater (three percent in certain circumstances) and is not well
capitalized, (iii) undercapitalized if it has a total capital ratio of less
than eight percent, a Tier 1 capital ratio of less than four percent or a
leverage ratio of less than four percent (three percent in certain
circumstances), (iv) significantly undercapitalized if it has a total
capital ratio of less than six percent, a Tier 1 capital ratio of less than
three percent or a leverage ratio of less than three percent, and (v)
critically undercapitalized if its tangible equity is equal to or less than
two percent of average quarterly tangible assets. As of December 31, 1994,
each of the Banking Subsidiaries had capital levels that qualify them as
being well capitalized under such regulations.

FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions
are subject to restrictions on borrowing from the Federal Reserve Board,
effective December 19, 1993. In addition, undercapitalized depository
institutions are subject to growth limitations and are required to submit
capital restoration plans. In order to obtain acceptance of a capital
restoration plan, a depository institution's holding company must guarantee
the capital plan, up to an amount equal to the lesser of 5% of the
depository institution's assets at the time it becomes undercapitalized or
the amount of the capital deficiency when the institution fails to comply
with the plan. Furthermore, in the event of a bankruptcy of the parent
holding company, such guarantee would take priority over the parent's
general unsecured creditors. The federal banking agencies may not accept a
capital plan without determining, among other things, that the plan is
based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. If a depository institution fails to
submit an acceptable plan, it is treated as if it is significantly
undercapitalized.

Significantly undercapitalized depository institutions may be subject
to a number of requirements and restrictions, including orders to sell
sufficient voting stock to become adequately capitalized, requirements to
reduce total assets, and cessation of receipt of deposits from
correspondent banks. Critically undercapitalized depository institutions
are subject to appointment of a receiver or conservator.

Under FDICIA, a depository institution that is not well capitalized is
generally prohibited from accepting brokered deposits and offering interest
rates on deposits higher than the prevailing rate in its market. In
addition, pass through insurance coverage may not be available for certain
employee benefit accounts.

Various other legislation, including proposals to overhaul the banking
regulatory system and to limit the investments that a depository
institution may make with insured funds are from time to time introduced in
Congress. City Holding cannot determine the ultimate effect that FDICIA
and the implementing regulations adopted thereunder, or any other potential
legislation, if enacted, would have upon its financial condition or
operations.

BUSINESS OF CITY HOLDING

City Holding, a West Virginia corporation headquartered in Charleston,
commenced operations in November 1983. City Holding currently has eight
banking subsidiaries and three non-banking subsidiaries. All of the
subsidiaries are wholly-owned. In addition to City Holding's periodic
filings with the Commission, each of the Banking Subsidiaries is subject to
certain regulatory guidelines at the applicable federal and state level.
As such, the banks are routinely examined by these regulatory bodies and
certain information is required to be submitted to them each quarter. City
Holding operates retail and consumer-oriented community banks that
emphasize personal service. At March 31, 1995, City Holding had total
assets of $816 million, total deposits of $656 million and total
stockholders' equity of $59 million.

City Holding's principal subsidiary bank is The City National Bank of
Charleston ("City National"), which was organized in 1957 and had $290
million in total assets at March 31, 1995. Through its main office, City
National serves the Kanawha City section of Charleston and municipalities
and rural areas east of the city. City National operates full service
branch banks in downtown Charleston, western Charleston, the South Hills
district of Charleston, St. Albans and Cross Lanes.

The Charleston metropolitan area served by City National is the
largest in West Virginia, with a population of approximately 270,000. The
state's capital city, Charleston, is served by three interstate highways
and the area's economy is diverse and strong in relation to the economy of
the state as a whole (which is less developed, with many regions relying on
a limited number of industries). A service center, Charleston provides
governmental, medical, financial and other services for the entire state.
Major chemical companies and educational institutions also contribute to
the local economy.

City Holding completed its acquisition of The Peoples Bank of Point
Pleasant ("Point Pleasant") in June 1987. Point Pleasant, a
state-chartered bank organized in 1965, conducts a general banking business
through its main office and two branch offices located in Mason County,
West Virginia, which has a population of approximately 27,000. The Mason
County economy primarily consists of dairy and crop farming industries.
Point Pleasant had total assets of $108 million at March 31, 1995.

In September 1988, City Holding acquired First State Bank & Trust of
Rainelle, West Virginia ("Rainelle"). Rainelle, a state-chartered bank
incorporated in 1973, operates a full-service bank and two branch offices
in Greenbrier County, West Virginia. In 1994, City Holding acquired the
remaining 33% of First National Bank-Beckley which was subsequently merged
into Rainelle. The merger expanded Rainelle into Beckley (Raleigh County),
West Virginia by adding two additional branches. The Greenbrier County
economy is primarily supported by the mining, timber and farming industries
and Raleigh County is primarily supported by the mining, retail and
government industries. Rainelle had total assets of $74 million at March
31, 1995.

In October 1988, City Holding acquired Bank of Ripley ("Ripley").
Ripley, a state-chartered institution organized in 1891, is located in
Jackson County, West Virginia. Ripley operates a full-service bank with an
emphasis on retail or consumer banking. The Jackson County economy is
primarily supported by the farming and timber industries. Ripley had $65
million in total assets at March 31, 1995.

City Holding acquired Home National Bank of Sutton, West Virginia
("Home National") in May 1992. Home National, organized in 1909, operates
a full service bank and one branch office in Braxton County, West Virginia.
The Braxton County economy is primarily supported by the mining, timber,
and farming industries. Home National had total assets of $62 million at
March 31, 1995.

In August 1992, City Holding began operations of Blue Ridge Bank
("Blue Ridge"), a de novo institution chartered as a state nonmember bank.
Blue Ridge, a full-service bank, is located in Martinsburg, West Virginia.
In October 1993, Blue Ridge assumed the insured deposits and purchased
certain facilities and an insignificant amount of performing loans of the
former Shenandoah Federal Savings Association in a cash transaction with
the Resolution Trust Corporation. This acquisition, which added
approximately $40 million in deposits, expanded Blue Ridge from two offices
to six, located in Berkeley, Jefferson, Morgan and Grant counties. The
economy of Martinsburg and surrounding communities is primarily supported
by the wholesale and retail trade, service, and government industries.
Blue Ridge had total assets of $91 million at March 31, 1995.

City Holding acquired The Buffalo Bank of Eleanor in December 1992 and
changed its name to Peoples State Bank ("Peoples") in early 1995. Peoples,
a state-chartered bank organized in 1919 (as "The Buffalo Bank of
Eleanor"), operates a full-service bank and a branch office in Putnam
County, West Virginia. The Putnam County economy consists of agriculture,
retail and governmental industries. Peoples had total assets of $61
million at March 31, 1995. City Holding anticipates that it will move
Peoples headquarters to Clarksburg, West Virginia and merge Peoples' Putnam
County operations into City National sometime in the second quarter of
1995.

City Holding acquired Hinton Financial Corporation ("Hinton") and The
First National Bank of Hinton ("Hinton National") in December 1994. Hinton
owns all of the outstanding capital stock of Hinton National. Hinton
National, organized in 1974, operates a full service bank in Summers
County, West Virginia. Summers County is primarily supported by the
railroad and government industries. Hinton had total assets of $66 million
at March 31, 1995.

During 1993, City Holding formed two non-banking subsidiaries. City
Mortgage Corporation was approved by the Federal Reserve Bank of Richmond
to operate as a full service mortgage banking company in December 1993.
Headquartered in a suburb of Pittsburgh, Pennsylvania, this company
originates, services and sells long-term fixed-rate mortgage loans. City
Financial Corporation was approved by the Federal Reserve Bank of Richmond
in November 1993 and by the National Association of Securities Dealers in
February 1994, to serve as a full service securities brokerage and
investment advisory company. City Financial Corporation is headquartered
in Charleston, West Virginia with its primary office located in City
National's main location. Both of these companies were formed primarily to
generate fee income in order to lessen City Holding's reliance on net
interest margin and to enable City Holding to offer a full array of
financial services to its customers. Hinton, City Holding's third non-
banking subsidiary, owns all of the outstanding capital stock of Hinton
National and does not conduct any other business activities.

City Holding continually seeks strategic acquisition opportunities for
small to medium-sized banks, but currently is not a party to any agreement
or understanding regarding any such acquisition other than the Agreement.
City Holding's acquisition policy has permitted the Banking Subsidiaries to
operate as entities with their historical names and boards of directors.
City Holding believes that this policy maintains community loyalty to the
Banking Subsidiaries and improves operating performance while providing the
services and efficiencies of a larger holding company.

CITY HOLDING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION

The following discussion should be read in conjunction with the
Selected Financial Data for City Holding and City Holding Audited
Consolidated Financial Statements included elsewhere herein.

Overview

Three Months Ended March 31, 1995, Compared to Three Months Ended
March 31, 1994

Total assets increased $35.1 million or approximately 4.5% during the
first three months of 1995. Net loans increased $32.6 million or 6.7%.
Loans held for sale, consisting primarily of loans received through City
Holding's participation in a short-term whole loan bulk purchasing program,
increased $14.6 million or 48%. As of March 31, 1995, program loans owned
by City Holding had an outstanding principal balance of approximately $34.6
million. City Holding earned interest income of approximately $394,000 on
program loans during the first quarter of 1995. The increases in net loans
and loans held for sale were funded by an increase in short-term borrowings
of $31.3 million Net stockholders' equity increased $2.1 million during
the first three months of 1995 representing City Holding's retained net
profits, plus the $1 million change in the net unrealized loss on
securities available for sale.

City Holding reported net income of $1,744,000 for the three months
ended March 31, 1995 compared to net income of $1,658,000 for the quarter
ended March 31, 1994. This increase of $86,000, or 5.19%, was primarily
due to an increase of $916,000 in City Holding's net interest income during
the first quarter of 1995 as compared to the same period of 1994. However,
the increase in net interest income did not translate into a corresponding
increase in net income because of the level of non-interest expense
associated with Company expansion, which increased $1,012,000 or 17% during
the first quarter of 1995 as compared to the same period of 1994. Earnings
per share were $.46 and $.44 for the first quarter of 1995 and 1994,
respectively. Total other income, excluding securities transactions,
increased $276,000 or 34% primarily due to fees generated from increased
loan volume and return item fees on deposits collected through the ordinary
course of business.

The return on average assets ("ROA"), a measure of the effectiveness
of asset utilization, for the first quarter of 1995 was .89% compared to
.93% in the first quarter of 1994. The return on average shareholder's
equity ("ROE"), which measures the return on shareholders' investment, for
the first quarter of 1995 was 12.33% compared to 11.59% ROE for the first
quarter of 1994. The dividend payout ratio of 34.78% for the quarter ended
March 31, 1995 represents a slight increase of 2.02% from the quarter ended
March 31, 1994. Since 1988, City Holding has paid dividends on a quarterly
basis, and expects to continue to do so in the future.

Year Ended December 31, 1994, Compared to Year Ended December 31, 1993

City Holding reported total assets of $781 million at December 31,
1994, and achieved $7.0 million in net income for the year then ended.
Total assets increased 10.5% over the 1993 total of $707 million, roughly
half of which increase was the result of City Holding's loan growth, as
more fully discussed in "Interest-Earning Assets and Interest-Bearing
Liabilities." Net income was up significantly over the $6.4 million and
$5.9 million reported for 1993 and 1992, respectively.

City Holding's acquisition of Hinton was accounted for using the
pooling of interests method of accounting. Accordingly, City Holding's
consolidated financial statements and related Notes, as well as the
information presented herein, have been restated to include Hinton as
though it were acquired at the beginning of the earliest period presented.
For further information concerning the 1994 acquisition, see Note 3 of the
City Holding Audited Consolidated Financial Statements.

City Holding's ROA and ROE were .92% and 12.01%, respectively in
1994. City Holding's ROA and ROE were 1.01% and 11.81%, respectively in
1993. Earnings per share for 1994 were $1.85, an increase of approximately
8.2% from the $1.71 per share reported in 1993. The main reason for the
increase in earnings per share is increased net interest income, which is
principally the result of increased loan volume and continued growth of
City Holding.

The following sections discuss in more detail information with respect
to City Holding for the years ended December 31, 1994, 1993 and 1992, as
summarized in "SELECTED FINANCIAL DATA."

Interest-Earning Assets and Interest-Bearing Liabilities

Average interest-earning assets increased $108.6 million from 1993 to
1994 and $113.8 million from 1992 to 1993. These increases are
attributable to the loan volume generated by City Holding's subsidiary
banks, which was accompanied by a comparable increase in deposits and
short-term borrowings. A significant part of the increase in net earning
assets for 1994 is attributable to City Holding's participation in a short-
term, whole loan bulk purchasing program. Under the program, City Holding
purchases from a third party whole loans secured by residential mortgages
and insured by an Agency of the United States government. The loans
typically have balances of less than $25,000 and are not concentrated
geographically. Additionally, the program permits City Holding to require
the seller to repurchase or replace certain non-performing loans. The
loans are generally repurchased from City Holding within 30 to 90 days.
Although the loans usually are located outside City Holding's primary
market areas, management believes that these loans pose no greater risk
than similar "in-market" loans because of City Holding's review of the
loans, the credit support associated with the loans, the short duration of
City Holding's investment and the other terms of the program. The loans
are serviced by third parties and City Holding earns a fixed rate of return
on the loans. City Holding earned approximately $1.9 million during 1994
on an average balance of approximately $21.2 million. These loans are
being funded through short-term borrowings which consist primarily of
securities sold under agreement to repurchase.

Average short-term borrowings increased $24.9 million from 1993 to
1994. The average rate paid by City Holding for short-term borrowings
increased 156 basis points in 1994 due to general increases in market
interest rates.

Most of the internal growth in deposits has been in response to City
Holding's service-oriented philosophy and its active involvement in the
local communities it serves. City Holding also continues to establish
additional commercial relationships, with an emphasis on "in-market"
lending to businesses owned and operated by established customers. City
Holding believes its decentralized management style appeals to retail
consumers and small businesses. These lending arrangements are in
furtherance of City Holding's mission of being a high quality service
provider retaining strong ties to the local communities in which its
subsidiary banks operate. In 1994, City Holding's subsidiaries had an
aggregate increase in loans of approximately $80.7 million or 19%.
Rainelle and Blue Ridge generated the most loan volume in 1994, with
increases of 43% and 198%, respectively.

In response to the significant growth in loans, average investment
securities had a slight increase of $1.0 million from $221 million in 1993
to $222 million in 1994. The overall yield on investments has decreased
from 1993 as a result of a more liquid portfolio and the reinvestment in
1994 of proceeds from matured or called securities during a period of
declining market interest rates.

Average investment securities increased $27.8 million from $194
million in 1992 to $221 million in 1993, principally because of the
increase in deposits and short-term borrowings as well as a reduction in
federal funds sold for the same period.

Long-term debt, representing obligations of the Parent Company,
consists of amounts borrowed to fund the purchase of Buffalo common stock
and the related recapitalization of Buffalo, and to provide Blue Ridge with
additional capital in connection with its 1993 acquisition of certain
assets and deposits of the former Shenandoah Federal Savings Association.
For further details with respect to long-term debt, see Note 8 of the City
Holding Audited Consolidated Financial Statements.

Net Interest Income

Net interest income, on a fully federal tax-equivalent basis,
increased $4.2 million during 1994. The average yield on earning assets
decreased from 8.23% in 1993 to 7.94% in 1994, while the average cost of
interest-bearing liabilities decreased from 3.81% to 3.68% over this same
period. This had the effect of decreasing the net yield on earning assets
from 4.96% in 1993 to 4.79% in 1994.

The $2.1 million decrease in net interest income due to rate, as shown
in Table Three which follows, was coupled with a $6.3 million increase in
net interest income due to volume. The major components of this favorable
volume change were increased average loans and investment securities as
more fully discussed under "Interest-Earning Assets and Interest-Bearing
Liabilities."

Net interest income, on a fully federal tax-equivalent basis,
increased $4.0 million in 1993. The $5.8 million increase caused by
changes in volume was offset by a $1.8 million decrease in net interest
income due to rate.

The following tables summarize the average balances, interest earned
or paid and yield or rate for City Holding's earning assets and interest-
bearing liabilities for each of the three years ended December 31, 1994,
1993 and 1992 and changes in net interest income and expense due to changes
in volume and rate during the same periods.
<TABLE>
Table One
Earning Assets and Interest-Bearing Liabilities
(in thousands)

1994 1993 1992
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EARNING ASSETS:
Loans (1)
Commercial and industrial $ 128,777 $ 10,912 8.47% $ 101,187 $ 8,687 8.59% $ 66,703 $ 5,972 8.95%
Real estate 211,463 17,301 8.18 158,554 14,183 8.95 108,343 11,067 10.21
Consumer obligations 108,684 10,579 9.73 102,572 10,381 10.12 99,409 11,183 11.25

Total loans 448,924 38,792 8.64 362,313 33,251 9.18 274,455 28,222 10.28

Loans held for sale 27,655 2,375 8.59

Securities
Taxable 192,288 12,071 6.28 192,143 12,650 6.58 166,451 12,895 7.75
Tax-exempt (2) 30,178 2,600 8.62 29,320 2,786 9.50 27,175 2,848 10.48

Total securities 222,466 14,671 6.59 221,463 15,436 6.97 193,626 15,743 8.13

Federal funds sold 6,930 194 2.80 13,632 476 3.49 15,566 530 3.40

Total earning assets 705,975 56,032 7.94 597,408 49,163 8.23 483,647 44,495 9.20

Cash and due from banks 21,397 19,292 14,047
Bank premises and equipment 16,323 13,140 9,403
Other assets 16,630 12,366 10,089
Less allowance for possible
loan losses (5,916) (5,364) (2,980)

Total assets $ 754,409 $ 636,842 $ 514,206

INTEREST-BEARING LIABILITIES:
Demand deposits $ 83,587 $ 2,641 3.16% $ 73,965 $ 2,293 3.10% $ 65,136 $ 2,666 4.09%
Savings deposits 221,305 6,861 3.10 189,328 6,338 3.35 125,554 5,217 4.16
Time deposits 250,090 10,608 4.24 227,342 10,218 4.49 204,158 10,631 5.21
Short-term borrowings 42,559 1,687 3.96 17,641 424 2.40 10,605 329 3.10
Long-term debt 6,252 445 7.12 4,387 274 6.25 508 35 6.89

Total interest-bearing
liabilities 603,793 22,242 3.68 512,663 19,547 3.81 405,961 18,878 4.65
Demand deposits 85,918 63,400 51,581
Other liabilities 6,773 6,320 6,206
Shareholders' equity 57,925 54,459 50,458
Total liabilities and
shareholders' equity $ 754,409 $ 636,842 $ 514,206

Net interest income $ 33,790 $ 29,616 $ 25,617

Net yield on earning assets 4.79% 4.96% 5.30%
</TABLE>
______________
(1) For purposes of this table, nonaccruing loans have been included in
average balances and loan fees, which are immaterial, have been
included in interest income.
(2) Computed on a fully federal tax-equivalent basis assuming a tax rate
of 34% in all years.
<PAGE>

Table Two
Rate Volume Analysis of
Changes in Interest Income and Expense
(in thousands)
<TABLE>

1994 VS. 1993 1993 VS. 1992
Increase (Decrease) Increase (Decrease)
Due to Change In: Due to Change In:

Volume Rate Net Volume Rate Net
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME FROM:
Loans
Commercial and industrial $ 2,339 $ (114) $ 2,225 $ 2,970 $ (255) $ 2,715
Real estate 4,411 (1,293) 3,118 4,626 (1,510) 3,116
Consumer obligations 604 (406) 198 347 (1,149) (802)

Total 7,354 (1,813) 5,541 7,943 (2,914) 5,029

Loans held for sale 2,375 0 2,375 0 0 0
Investment securities
Taxable 10 (589) (579) 1,839 (2,084) (245)
Tax-exempt (1) 80 (266) (186) 215 (277) (62)

Total 90 (855) (765) 2,054 (2,361) (307)

Federal funds sold (201) (81) (282) (67) 13 (54)
Total interest-earning assets $ 9,618 $(2,749) $ 6,869 $ 9,930 $ (5,262) $ 4,668

INTEREST EXPENSE ON:
Demand deposits $ 303 $ 45 $ 348 $ 330 $ (703) $ (373)
Savings deposits 1,015 (492) 523 2,277 (1,156) 1,121
Time deposits 986 (596) 390 1,132 (1,545) (413)
Short-term borrowings 865 398 1,263 182 (87) 95
Long-term debt 129 42 171 243 (4) 239

Total interest-bearing liabilities $ 3,298 $ (603) $ 2,695 $ 4,164 $ (3,495) $ 669

NET INTEREST INCOME $ 6,320 $(2,146) $ 4,174 $ 5,766 $ (1,767) $ 3,999
</TABLE>
______________
(1) Fully federal taxable equivalent using a tax rate of 34% in all years.

The change in interest due to both rate and volume has been allocated
to volume and rate changes in proportion to the relationship of the
absolute dollar amounts of the change in each.
<PAGE>
Loan Portfolio

The following table summarizes the composition of City Holding's loan
portfolio.

Table Three
Loan Portfolio
(in thousands)

DECEMBER 31
1994 1993 1992 1991 1990

Commercial, financial
and agricultural $ 137,425 $ 125,568 $ 80,806 $ 76,179 $ 58,180
Real estate-mortgage 238,231 184,602 141,079 92,539 85,241
Installment loans to
individuals 129,300 114,110 120,324 97,768 95,434

Total loans $ 504,956 $ 424,280 $ 342,209 $ 266,486 $ 238,855

City Holding had $15.3 million and $15.1 million outstanding in real
estate construction loans at December 31, 1994 and 1993, respectively, the
majority of which related to one to four family residential properties.
Real estate construction loans were not material in all other periods
presented.

The following table shows the contractual maturity of loans
outstanding as of December 31, 1994.

MATURING

After One
Within But Within After
One Year Five Years Five Years Total
Commercial, financial &
agricultural $ 29,233 $ 59,614 $ 47,065 $ 135,912
Real estate-mortgage 41,122 60,060 141,535 242,717
Installment loans to
individuals 18,468 92,446 15,413 126,327

Total loans $ 88,823 $ 212,120 $ 204,013 $ 504,956

Loans maturing after one year with:

Fixed interest rates $ 273,961
Variable interest rates 142,172

Total $ 416,133
<PAGE>
Loan Loss Analysis

During 1994, City Holding charged-off $1,093,000 of loans that were
doubtful as to collection and had recoveries of $393,000. The resulting
net charge-offs of $700,000, decreased 34% from that reported in 1993. Net
charge-offs decreased approximately 15%, or $138,000 in 1993 versus 1992.
Approximately half of the 1993 net charge-offs was related to pre-
acquisition loans at Buffalo. Net charge-offs as a percent of average
total loans decreased 13 basis points when comparing 1994 to 1993. City
Holding's asset quality continues to compare favorably with that of peer
banks.

The provision for possible loan losses charged to operations each year
is dependent upon many factors, including loan growth, historical charge-
off experience, size and composition of the loan portfolio, delinquencies
and general economic trends. The provision of $953,000 in 1994 represents
.21% of average loans as compared to a $1,341,000 or .37% provision in
1993. The decreased provision for 1994 is primarily due to lower net
charge-offs as discussed above. Loan volume has continued to increase in
recent years as a result of City Holding's more active solicitation of
commercial loan business as well as general volume increases applicable to
the traditional borrowing segment from which City Holding has generated
loans in the past. City Holding has successfully attracted more commercial
customers, while continuing to obtain noncommercial, lower risk collateral
such as residential properties. City Holding's collateral position with
respect to real estate loans has typically been less volatile than its
peers, particularly banks located outside of its region where dramatic
escalations in real estate values took place in certain prior years.

The allowance for loan losses was $6,017,000, or 1.23% of net loans,
as of December 31, 1994, compared to $5,764,000 or 1.41% of net loans in
1993. As detailed in Table Six, as of December 31, 1994, the allowance for
loan losses is allocated 30% to commercial, financial and agricultural
loans, 43% to real estate-mortgage loans and 27% to installment loans to
individuals. These amounts reflect management's assessment of the risk in
each specific portfolio in relation to the total. These percentages
compare to 34%, 37% and 29%, respectively, as of December 31, 1993. The
portion of the allowance related to commercial credits is based primarily
upon specific credit review with minor weighting being given to past
charge-off history. Conversely, due to the homogenous nature of the
portfolios and consistency in underwriting standards, the portions of the
allowance allocated to the real estate-mortgages and installment loans to
individuals are based primarily upon prior charge-off history with minor
weighting being given to specific credit reviews. Management has however
increased the portion of the allowance allocated to real estate-mortgages
above the trend in net charge-off history for that portfolio. This
increase is primarily due to management's concern that rapid increases in
real estate lending within City Holding over the past several years have
led to a portfolio that may not be seasoned enough for past net charge-offs
to represent current risk. In addition, City Holding's adjustable rate
mortgages have grown from $22.3 at December 31, 1992, to $92.7 million at
December 31, 1994, an increase of 316% in three years. Management feels
that additional allocations were also warranted due to the unknown effect
that rises in short term interest rates would have on the risk
characteristics of the real estate-mortgages portfolio. In management's
opinion, the consolidated allowance for loan losses is adequate to provide
for any potential losses on existing loans. See Note 5 to the City Holding
Audited Consolidated Financial Statements for a discussion of
concentrations of credit risk.

Nonperforming loans, consisting of nonaccrual, past due and
restructured credits, increased approximately $914,000 in 1994. While the
general economy remains soft in certain of the subsidiary banks' market
areas, management does not anticipate material loan losses since loan to
collateral ratios remain favorable. At December 31, 1994, loans
aggregating $529,000 are considered by management to represent possible
future credit problems. These loans are generally contractually current,
but information is available to management which indicates that serious
doubt may exist as to the ability of such borrowers to comply with the
present loan repayment terms. The ratio of the allowance for loan losses
to nonperforming loans, including potential problem loans, was 131% at
December 31, 1994, as compared to 125% and 102% at December 31, 1993 and
1992, respectively.

Tables Four, Five and Six detail loan performance and analyze the
allowance for loan losses.

Table Four
Analysis of the Allowance for Loan Losses
(in thousands)
<TABLE>
DECEMBER 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 5,764 $ 5,380 $ 2,401 $ 1,929 $ 1,721
Charge-offs:
Commercial, financial and agricultural (300) (684) (244) (302) (270)
Real estate-mortgage (151) (239) (292) (247) (186)
Installment loans to individuals (642) (614) (627) (452) (463)
Totals (1,093) (1,537) (1,163) (1,001) (919)

Recoveries:
Commercial, financial and agricultural 110 58 20 49 77
Real estate-mortgage 11 218 65 26 50
Installment loans to individuals 272 200 155 126 102
Totals 393 476 240 201 229

Net charge-offs (700) (1,061) (923) (800) (690)
Provision for possible loan losses 953 1,341 2,222 1,272 898
Balance of acquired subsidiary 104 1,680

Balance at end of period $ 6,017 $ 5,764 $ 5,380 $ 2,401 $ 1,929

AS A PERCENT OF AVERAGE TOTAL LOANS
Net charge-offs .16% .29% .34% .33% .33%
Provision for possible loan losses .21 .37 .81 .53 .43

AS A PERCENT OF NONPERFORMING
AND POTENTIAL PROBLEM LOANS
Allowance for loan losses 130.55% 125.06% 102.34% 65.37% 70.89%
</TABLE>

Table Five
Nonaccrual, Past Due and Restructured Loans
(in thousands)
<TABLE>
DECEMBER 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $ 2,600 $ 1,524 $ 1,473 $ 1,367 $ 874
Accruing loans past due 90 days or more 1,218 643 1,293 1,780 1,446
Restructured loans 262 999 1,475 526 401
$ 4,080 $ 3,166 $ 4,241 $ 3,673 $ 2,721
</TABLE>

During 1994, City Holding recognized approximately $119,000 of
interest income received in cash on nonaccrual and restructured loans.
Approximately $229,000 of interest income would have been recognized during
the year if such loans had been current in accordance with their original
terms. There were no commitments to provide additional funds on
nonaccrual, restructured, or other potential problem loans at December 31,
1994.

Interest on loans is accrued and credited to operations based upon the
principal amount outstanding. The accrual of interest income is generally
discontinued when a loan becomes 90 days past due as to principal or
interest unless the loan is well collateralized and in the process of
collection. When interest accruals are discontinued, interest credited to
income in the current year that is unpaid and deemed uncollectible is
charged to operations. Prior year interest accruals that are unpaid and
deemed uncollectible are charged to the allowance for loan losses, provided
that such amounts were specifically reserved.

Table Six
Allocation of the Allowance for Loan Losses
(in thousands)
<TABLE>
DECEMBER 31
1994 1993 1992 1991 1990
Percent Percent Percent Percent Percent
of Loans of Loans of Loans of Loans of Loans
in Each in Each in Each in Each in Each
Category Category Category Category Category
to Total to Total to Total to Total to Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 1,816 27% $ 1,943 30% $ 1,959 24% $ 1,020 28% $ 709 24%
Real estate-mortgage 2,600 47 2,131 43 1,745 41 494 35 457 36
Installment loans to
individuals 1,601 26 1,690 27 1,676 35 887 37 763 40
$ 6,017 100% $5,764 100% $ 5,380 100% $ 2,401 100% $ 1,929 100%

</TABLE>
The portion of the allowance for loan losses that is not specifically
allocated to individual credits has been apportioned among the separate
loan portfolios based on the relative risk of each portfolio.

Liquidity and Interest Rate Sensitivity

City Holding has a strong liquidity position and does not anticipate
any material adverse changes in 1995. There are no known trends, demands,
commitments or uncertainties that have resulted or are reasonably likely to
result in material changes in liquidity.

Interest Rate Sensitivity. City Holding seeks to maintain a strong
liquidity position to reduce interest rate risk, which is the
susceptibility of assets and liabilities to declines in value as a result
of changes in general market interest rates. City Holding minimizes this
risk through asset and liability management, where the goal is to optimize
earnings while managing interest rate risk. City Holding measures this
interest rate risk through interest sensitivity gap analysis as illustrated
in Table Seven. At December 31, 1994, the one year period shows a
negative gap (liability sensitive) of $328 million. This analysis is a
"static gap" presentation and movements in deposit rates offered by City
Holding's subsidiary banks lag behind movements in the prime rate. Such
time lags affect the repricing frequency of many items on City Holding's
balance sheet. Accordingly, the sensitivity of deposits to changes in
market rates may differ significantly from the related contractual terms.
Table Seven is first presented without adjustment for expected repricing
behavior. Then, as presented in the "management adjustment" line, these
balances have been notionally distributed over the first three periods to
reflect those portions of such accounts that are expected to reprice fully
with market rates over the respective periods. The distribution of the
balances over the repricing periods represents an aggregation of such
allocations by each of the affiliate banks, and is based upon historical
experience with their individual markets and customers. Management expects
to continue the same pricing methodology in response to the future market
rate changes; however, management adjustments may change as customer
preferences, competitive market conditions, liquidity, and loan growth
change. Also presented in the management adjustment line are loan
prepayment assumptions which may differ from the related contractual term
of the loans. These balances have been distributed over the four periods
to reflect those loans that are expected to be repaid in full prior to
their maturity date over the respected period. After management
adjustments, Table Seven shows a negative gap in the one year period of
$137 million. A negative gap position is advantageous when interest rates
are falling because interest-bearing liabilities are being repriced at
lower rates and in greater volume, which has a positive affect on net
interest income. However, when interest rates are rising, this position
produces the converse effect. Consequently, City Holding has experienced a
decline in its net interest margin during the past two years and is
somewhat vulnerable to a rapid rise in interest rates in 1995. These
declines in the net interest margin did not translate into declines in net
interest income because of increases in the volume of interest-earning
assets. In any event, City Holding intends to increase the repricing
frequency of interest-earning assets, particularly through variable-rate
loan products, to achieve a less volatile gap position.

Table Seven
Interest Rate Sensitivity Gaps
(in thousands)
<TABLE>
1 TO 3 3 TO 12 1 TO 5 OVER 5
MONTHS MONTHS YEARS YEARS TOTAL
<S> <C> <C> <C> <C> <C>
ASSETS
Gross loans $105,619 $ 59,186 $249,727 $ 87,824 $502,356
Loans held for sale 30,227 0 0 0 30,227
Securities 16,014 19,887 98,799 61,677 196,377
Total interest-earning assets 151,860 79,073 348,526 149,501 728,960

LIABILITIES
Savings and NOW accounts 308,100 0 0 0 308,100
All other interest-bearing deposits 76,619 110,180 72,917 2,754 262,470
Short-term borrowings 57,483 0 0 0 57,483
Long-term borrowings 6,875 0 0 0 6,875

Total interest-bearing liabilities 449,077 110,180 72,917 2,754 634,928
Interest sensitivity gap $ (297,217) $ (31,107) $ 275,609 $146,747 $(94,032)
Cumulative sensitivity gap $ (297,217) $(328,324) $ (52,715) $ 94,032
Management adjustments $ 262,434 $ (71,241) $(181,057) $(10,136)
Cumulative management
adjusted gap $ (34,783) $(137,131) $(42,579) $94,032
</TABLE>

The table above includes various assumptions and estimates by
management as to maturity and repricing patterns. Future interest margins
will be impacted by balances and rates which are subject to change
periodically throughout the year.

Liquidity. City Holding also seeks to maintain adequate liquidity in
order to generate sufficient cash flows to fund operations on a timely
basis. City Holding manages its liquidity position to provide for asset
growth and to ensure that the funding needs of depositors and borrowers can
be met promptly. City Holding does not have a high concentration of
volatile funds, and all such funds are invested in assets of comparable
maturity to mitigate liquidity concerns.

At December 31, 1994, City Holding had $6,875,000 in long-term debt
outstanding. These funds were used primarily to provide Blue Ridge with
additional capital in connection with its 1993 acquisition of certain
assets and deposits of the former Shenandoah Federal. Total debt service
for City Holding in 1995 will approximate $560,000 million at current
interest rates. Other than long-term debt, the cash needs of City Holding
consist of routine payroll and benefit expenses of City Holding personnel,
expenses for certain professional services, debt service on affiliate
advances and dividends to shareholders.

City Holding has approximately $6.2 million available for transfer
from its subsidiary banks as of January 1, 1995. Subsidiary bank earnings
in 1995 through the date of dividend declaration are also available for
transfer upstream. Such subsidiary bank dividends are City Holding's
primary source of cash. Management anticipates that the cash flow
requirements of City Holding will be adequately met in the normal course of
business. For more specific information regarding restrictions on
subsidiary dividends, see Note 9 to the City Holding Audited Consolidated
Financial Statements.

City Holding's cash and cash equivalents, represented by cash, due
from banks and federal funds sold, are a product of its operating,
investing and financing activities. These activities are set forth in City
Holding's Consolidated Statements of Cash Flows included elsewhere herein.
Cash was used in operating activities during 1994 due to the purchase of
loans held for sale and was generated from operating activities in 1993 and
1992. Net cash was used in investing activities for each year presented
which is indicative of City Holding's loan volume over this period and net
increases in the investment portfolio. The majority of this loan growth
and investment activity was funded by the net cash provided by financing
activities, principally in the form of increased interest-bearing deposits.

The following tables present information regarding City Holding's
investment portfolio.
<TABLE>
Table Eight
Investment Portfolio
(in thousands)

Held to Available Book Values as of December 31
Maturity For Sale
1994 1994 1993 1992
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. government
corporations and agencies $92,372 $56,751 $193,284 $168,821
States and political subdivisions 32,056 790 33,984 31,769
Other 3,669 10,379 14,353 7,467
Total $128,457 $67,920 $241,621 $208,057
</TABLE>

At December 31, 1994, there were no securities of any issuers whose
aggregate carrying or market value exceeded 10% of shareholders' equity.

<TABLE>
MATURING
Within After One But After Five But After
One Year Within Five Years Within Ten Years Ten Years
Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and other
U.S. government
corporations and agencies $ 24,744 6.83% $ 83,565 6.71% $ 39,119 6.47% $ 2,055 6.15%
State and political
subdivisions(1) 2,422 11.19 11,586 8.93 16,018 8.10 2,820 8.86
Other 8,735 6.11 3,648 7.46 1,665 7.70 0 0.00
Total $ 35,901 6.95% $ 98,799 6.98% $ 56,802 6.97% $ 4,875 7.72%
</TABLE>
____________
(1) Weighted average yields on tax-exempt obligations of states and political
subdivisions have been computed on a fully federal tax-equivalent basis
using a tax rate of 34%.

At December 31, 1994, City Holding's net unrealized loss on securities
available for sale was $2.1 million. This decline is considered temporary,
given the market conditions as of year end, and management has no reason to
believe that the market value will not recover prior to the sale of such
securities. As of March 31, 1995, the net unrealized loss on securities
available for sale was $1.1 million. As of December 31, 1994, City Holding
had $9.7 million in structured notes. All structured notes are federal agency
securities that are classified as available-for-sale. They have a weighted
average coupon of 5.29% and a weighted average maturity of approximately three
years. Approximately 67% of these securities were obtained through the Company's
acquisitions and management has no plans to purchase any additional structured
notes in the future. The impact of holding these securities on the results of
operations was immaterial as of December 31, 1994.

Other Income and Expenses

Other income continues to be an area of management emphasis.
Recognizing the importance of non-interest income to future operating
performance, City Holding is aggressively pursuing additional service
opportunities by offering a variety of services and products to its
customers which include trust, brokerage, mortgage banking and related
services.

The loan and deposit growth at City Holding's subsidiary banks, which
includes a greater mix of commercial relationships than certain prior
years, has positioned City Holding to increase other income in areas such
as service charges. Service charge income increased approximately $503,000
or 27% when comparing 1994 to 1993. Approximately half of this increase is
attributable to fees charged in the normal course of business on the
additional $40 million in deposits acquired by Blue Ridge from the former
Shenandoah Federal Savings Association in late 1993.

Other income increased $2.3 million during 1994. This increase was
related to an insurance recovery of $1.4 million at one of City Holding's
subsidiary banks. An additional $280,000 in fees was generated from
services provided by City Financial and City Mortgage during their first
year of operations and approximately $360,000 in fees were generated from
overall loan growth during 1994.

During the fourth quarter of 1994, City Holding took the opportunity
to restructure its available-for-sale investment portfolio that resulted in
an $885,000 securities loss. Gains/losses from securities transactions
were not significant in 1993 or 1992. As more fully described in City
Holding's securities policy in Note 1 to the City Holding Audited
Consolidated Financial Statements, management determines the appropriate
classification of securities at the time of purchase. Historically, sales
of securities have been infrequent. See Note 4 to the City Holding Audited
Consolidated Financial Statements for a discussion of securities available-
for-sale.

Total other expenses increased $5.5 million, or 26.2%, during 1994 due
primarily to $1.1 million in expenses incurred by City Financial and City
Mortgage with no expenses for these new subsidiaries included in the 1993
results. In addition, Blue Ridge had an increase of approximately $1.9
million in non-interest expense associated with growth and the 1993
acquisition of Shenandoah Federal Savings Association. The additional
increase of $2.5 million is attributable to City Holding's overall growth
during 1994, which produced higher personnel costs throughout the
organization. Total other expenses increased $5.0 million or 31.7%, during
1993 due primarily to $1.9 million in expenses incurred by Buffalo and
Beckley with no expenses for these purchased Subsidiaries included in the
1992 results. In addition, Blue Ridge had $157,000 in other expenses in
1992 for the first four months of operation compared to $1.2 million in
1993 for a full year. The additional increase of $2.1 million in 1993 is
attributable to City Holding's overall growth during that year.

Capital Resources

As a bank holding company, City Holding is subject to regulation by
the Federal Reserve Board under the BHCA. At March 31, 1995, the Federal
Reserve Board's minimum ratio of qualified total capital to risk-weighted
assets was 8%. At least half of the total capital is required to be
comprised of Tier 1 capital, or the equity of the holders of City Holding
Common Stock less intangibles. The remainder ("Tier 2 capital") may
consist of certain other prescribed instruments and a limited amount of
loan loss reserves.

In addition, the Federal Reserve Board has established minimum
leverage ratio (Tier 1 capital to quarterly average tangible assets)
guidelines for bank holding companies. These guidelines provide for a
minimum ratio of three percent for bank holding companies that meet certain
specified criteria, including that they have the highest regulatory rating.
All other bank holding companies are required to maintain a leverage ratio
of three percent plus an additional cushion of at least 100 to 200 basis
points. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets.

The following table presents comparative capital ratios and related
dollar amounts of capital for City Holding:

Table Nine
Regulatory Capital
(Dollars in Thousands)

December 31,
March 31, 1995 1994 1993
CAPITAL COMPONENTS
Tier 1 risk-based capital $53,753 $52,408 $50,821
Total risk-based capital 59,793 58,425 55,832
CAPITAL RATIOS
Tier 1 risk-based 10.16% 10.65% 12.70%
Total risk-based 11.30 11.88 13.95
Leverage 6.94 6.65 7.31

REGULATORY MINIMUM
Tier 1 risk-based (dollar/ratio) $21,161/4.00% $19,677/4.00% $16,036/4.00%
Total risk-based (dollar/ratio) 42,323/8.00 39,354/8.00 32,072/8.00
Leverage (dollar/ratio) 23,222/3.00 23,628/3.00 20,862/3.00

The strong capital position of City Holding is indicative of
management's emphasis on asset quality and a history of retained net
income. The ratios enable City Holding to continually pursue acquisitions
and other growth opportunities. Improvements in operating results and a
consistent dividend program, coupled with an effective management of credit
risk, have been, and will be, the key elements in maintaining City
Holding's present capital position.

City Holding does not anticipate any material capital expenditures in
1995. Earnings from subsidiary bank operations are expected to remain
adequate to fund payment of shareholders' dividends and internal growth.
In management's opinion, subsidiary banks have the capability to upstream
sufficient dividends to meet the cash requirements of City Holding.
Maturities of time certificates of deposit of $100,000 or more outstanding
at December 31, 1994, are summarized as follows:

Table Ten
Maturity Distribution Of Certificates Of
Deposits In Amounts Of $100,000 Or More
(in thousands)

Amounts Percentage

Three months or less $ 11,195 32%
Over three months through six months 5,727 16
Over six months through twelve months 7,540 22
Over twelve months 10,585 30

Total $ 35,047 100%

Inflation

Since the assets and liabilities of the subsidiary banks are primarily
monetary in nature (payable in fixed, determinable amounts), the
performance of banks is affected more by changes in interest rates than by
inflation. Interest rates generally increase as the rate of inflation
increases, but the magnitude of the change in rates may not be the same.

While the effect of inflation on banks is normally not as significant
as its influence on those businesses which have large investments in plant
and inventories, it does have an effect. During periods of high inflation,
there are normally corresponding increases in the money supply, and banks
will normally experience above-average growth in assets, loans and
deposits. Also, general increases in the price of goods and services will
result in increased operating expenses.

Income Taxes

Income tax expense was $3,193,000 in 1994, resulting in an effective
tax rate of 31.5% for the year. Such rates were 31.4% and 29.8% in 1993
and 1992, respectively. The effective tax rate from 1993 to 1994 remained
relatively unchanged. The increase effective tax rate from 1992 to 1993 is
principally the result of a decreased mix of tax-exempt income relative to
total earnings.

As more fully discussed in Note 10 to the City Holding Audited
Consolidated Financial Statements, City Holding prospectively adopted the
liability method of accounting for income taxes during 1992, without
material effect. At December 31, 1994, gross deferred tax assets total
approximately $5.0 million. Such assets are primarily attributable to the
allowance for loan losses ($2 million), acquired net operating loss ("NOL")
carryforwards ($777,000) certain nonqualified deferred compensation
arrangements sponsored by subsidiary banks ($436,000) and securities
available for sale ($1.4 million). Pursuant to management's evaluation for
the quarter ended December 31, 1994, no valuation allowance has been
allocated to the deferred tax assets. The quarterly evaluation process
employed by management is based upon the expected reversal period of the
assets, in consideration of taxes paid by City Holding in the carryback
years, expected reversals of existing taxable temporary differences, and
historical trends in taxable income.

Those assets for which realization is expected to be dependent on
future events are subjected to further evaluation. Management's analysis
has shown that realization of certain deferred tax assets, principally the
acquired NOL, will be dependent on future events. After considering such
factors as the magnitude of the asset relative to historical levels of
financial reporting income and taxable income, the period over which future
taxable income would have to be earned to realize the asset, and budgeted
future results of operations, management has concluded that it is more
likely than not that all other deferred tax assets existing at December 31,
1994, will be realized. At present, management does not expect that
implementation of tax planning strategies will be necessary to ensure
realization. The need for a valuation allowance will continue to be
addressed by management each quarter and any changes in the valuation
allowance will be reported contemporaneously therewith in City Holding's
quarterly results of operations.

CITY HOLDING MARKET PRICE AND DIVIDEND INFORMATION

City Holding Common Stock is included on The Nasdaq National Market
under the symbol CHCO. The following table sets forth the cash dividends
paid per share and information regarding the market prices per share of
City Holding's Common Stock for the periods indicated. The price ranges
are based on transactions as reported on The Nasdaq National Market. At
March 31, 1995, there were 1,770 stockholders of record.

Cash
Dividends Market Price Range
Per Share Low High

1995
Second Quarter (through June __)
First Quarter $ .16 $26.75 $30.00

1994
Fourth Quarter $ .15 $27.00 $31.82
Third Quarter .15 28.18 31.82
Second Quarter .15 23.64 31.82
First Quarter .15 24.55 31.82

1993
Fourth Quarter $ .15 $25.91 $30.45
Third Quarter .15 23.18 30.45
Second Quarter .14 20.00 26.82
First Quarter .14 18.64 21.59

See "SUPERVISION AND REGULATION" and Note 9 to the City Holding
Audited Consolidated Financial Statements for a discussion of restrictions
on subsidiary dividends. All per share data have been restated to reflect
a 10% stock dividend effective January 1995. Cash dividends represent
amounts declared by City Holding and do not include cash dividends of
acquired subsidiaries prior to the dates of acquisition.

CITY HOLDING OWNERSHIP OF EQUITY SECURITIES

The table below presents certain information as of June __, 1995
regarding beneficial ownership of shares of City Holding Common Stock by
Directors, nominees for Director, all Directors and officers as a group and
each person known by City Holding to own more than five percent (5%) of the
outstanding City Holding Common Stock.

Aggregate
Sole Voting and Percentage
Name Investment Power Other (1) Owned

Samuel M. Bowling 19,858 43,224 1.67

C. Scott Briers 5,422 2,057 .20

Dr. D. K. Cales 72,458 - 1.92

Steven J. Day 20,154 10,455 .81

Robert D. Fisher 4,128 - .11

Jack E. Fruth 28,076 391 .75

Jay Goldman 7,880 242 .21

Carlin K. Harmon 23,344 4,168 .73

C. Dallas Kayser 27,246 181 .73

Dale Nibert 35,365 - .94

Otis L. O'Connor 2,942 12 .08

Bob F. Richmond 8,415 - .22

Mark Schaul 23,958 1,270 .67

Van R. Thorn, II 1,452 1,125 .07

Directors and Officers
As a group (17 persons) 286,732 69,038 9.42

(1) Includes shares (a) owned by or with certain relatives; (b) held in
various fiduciary capacities; (c) held by certain corporations; or (d) held
in trust by City Holding's 401(k) and Profit Sharing Plan.
<PAGE>
BUSINESS OF FMB

FMB is a one bank holding company which was incorporated in the State
of West Virginia on June 26, 1986. FMB commenced operations on March 5,
1987, acquiring Merchants in Montgomery, West Virginia and Gauley in Gauley
Bridge, West Virginia. FMB operated as a multi-bank holding company from
March 5, 1987 to March 1, 1990, at which time it merged Gauley into
Merchants. FMB expanded into Charleston, West Virginia on September 17,
1993 when Merchants successfully bid for certain assets and assumed the
insured deposits and certain other liabilities of Evergreen, a failed
thrift institution. FMB is subject to the routine filing requirements of
the Commission and the subsidiary bank is subject to various regulatory
guidelines at the federal and state levels. Merchants' primary regulator
is the OCC; however, the bank is also regulated by the Federal Reserve
Board and the FDIC. FMB is regulated by the Federal Reserve Board and the
West Virginia Board.

As a bank holding company, FMB's operations consist of the operations
of its bank subsidiary. Merchants is a consumer-oriented community bank
which offers a full range of deposit and lending services to customers in
its primary market area. The markets in which it operates are determined
by the locations of its main facility and its branches. Merchants' main
facility is located in Montgomery, West Virginia; however, it also operates
branches in Cedar Grove/Glasgow, Gauley Bridge, and Charleston, West
Virginia.

As of December 31, 1994, FMB had a total of 78 employees, as compared
with a total of 78 and 64 employees at December 31, 1993 and 1992,
respectively. Management does not anticipate any material change in FMB's
workforce.

The principal executive office of FMB is located at Fourth Avenue and
Washington Street, Montgomery, West Virginia 25136 and its phone number is
(304) 442-2475.

PROPERTIES OF FMB

The principal offices of FMB are located at the same location as the
offices of Merchants, at Fourth Avenue and Washington Street, in
Montgomery, Fayette County, West Virginia. This facility consists of a
full-service banking lobby as well as office space for the various other
banking services offered by Merchants. In November, 1987, Merchants placed
in service a new facility which connects with the main structure via an
aerial walkway. This new facility features a full-service walkup lobby and
five drive through lanes at ground level and additional office space on the
second floor.

Merchants opened its first full-service branch in Glasgow, Kanawha
County, West Virginia on January 2, 1987. This facility offers a full-
service banking lobby as well as five drive through lanes. On March 1,
1990, FMB merged its two subsidiary banks, Merchants and Gauley. Gauley,
which is now a branch of Merchants, is located at One Main Street, Gauley
Bridge, Fayette County, West Virginia. This facility consists of a full-
service banking lobby and three drive through lanes at ground level and
additional office space on the second floor.

On September 17, 1993, Merchants acquired two locations in Charleston,
West Virginia. These facilities, which formerly operated as the main
office and branch office of Evergreen, opened as branches of Merchants on
September 20, 1993. One office is located at 200 Bradford Street,
Charleston, Kanawha County, West Virginia. This facility consists of a
full-service banking lobby and two drive through lanes at ground level and
additional office space in the basement. The second facility is located at
4315 MacCorkle Avenue, SE, Charleston, Kanawha County, West Virginia. This
office consists of a full-service banking lobby and two drive through
lanes.

Merchants currently operates four automatic teller machines at the
following locations: (i) at the main banking facility, (ii) at the Glasgow,
West Virginia branch, (iii) at the Gauley Bridge, West Virginia branch, and
(iv) at the MacCorkle Avenue, Charleston, West Virginia branch. Merchants
owns all of its banking facilities.

FMB MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

Summary of Changes in Financial Position

As of March 31, 1995

First Merchants' total assets as of March 31, 1995, decreased
approximately $7.1 million or 6.2% when compared with December 31, 1994.
This decrease was primarily due to a decline in short-term financial
instruments classified as loans of approximately $10.5 million. This
decrease was the result of a decrease in the level of securities sold under
agreement to repurchase of approximately $6.9 million and an increase in
outstanding loans of approximately $3.3 million.

Net loans outstanding, exclusive of certain short-term instruments
classified as loans, increased approximately $3.3 million during the first
three months of 1995. The majority of this increase can be attributed to
an increase in the installment (or consumer) loan portfolio of
approximately $2.6 million and a $.7 million increase in the real estate
loan portfolio. For financial statement purposes, purchases of commercial
loan participations and commercial paper are classified as net loans
outstanding. The following table provides a comparative analysis of the
loan portfolio segregated by the typical loan products offered by Merchants
to its customers and short-term financial instruments classified as loans:

<TABLE>
December 31,
March 31, 1995 1994 1993 1992
<S> <C> <C> <C> <C>
Loans, net of unearned income
and allowance for loan losses $51,194,083 $47,913,738 $45,115,039 $36,957,493
Short-term financial instruments
classified as loans 0 10,500,455 9,318,614 15,170,749

Net loans outstanding $51,194,083 $58,414,193 $54,433,653 $52,128,242
</TABLE>

Historically, the Company has purchased the short-term financial
instruments classified as loans to match the maturities of repurchase
agreements and volatile deposits. With the decrease in repurchase
agreements and increase in loan volume previously discussed, management has
reduced its holdings of these instruments. Management has directed its
marketing efforts towards generating additional loan demand through more
competitive pricing of its loan products in an effort to preserve its net
yield on earning assets.

Securities sold under agreement to repurchase decreased during the
first quarter of 1995. This was a result of more aggressive bidding by
other banks of public funds during the first three months of 1995.

Net unrealized (loss) gain, on securities available for sale increased
by approximately $297,000 during the first three months of 1995. This
increase can be attributed to a decline in interest rates during the first
three months of the year which has resulted in increasing market values of
securities classified as available for sale.

As of March 31, 1995, management is not aware of any current
recommendations by regulatory authorities, which if implemented, would have
or are reasonably likely to have a material effect on the Company's
liquidity, capital resources or operations. There are also no known
trends, demands, commitments, or uncertainties that have had, or that are
reasonably expected to have, a material favorable or unfavorable impact on
the financial results of the Company.

As of December 31, 1994

Total deposits as reflected in the consolidated balance sheets
increased approximately $2.9 million during 1994. This increase in FMB's
primary source of funds was complimented by an increase in the level of
securities sold under agreements to repurchase of approximately $3.7
million.

Net loans outstanding, exclusive of certain short-term instruments
classified as loans, increased approximately $2.8 million or 6.2% during
1994. This compares with the loan growth experienced in 1993 of $2.7
million or 7.22%, exclusive of the loans purchased from Evergreen. For
financial statement purposes, purchases of commercial loan participations
and commercial paper are classified as net loans outstanding.

Net unrealized (loss) gain, on securities available for sale declined
by approximately $1,095,000 (net of related taxes) during 1994. This
decline can be attributed to the rising interest rate environment in effect
throughout the year which has resulted in declining market values of
securities classified as available for sale.

Summary of Results of Operations

First Merchants' consolidated net income for the three months ended
March 31, 1995 increased approximately $48,000 or 19.26% when compared with
the corresponding period of the preceding year. Net income for 1994 was
$1,182,560, as compared to $1,212,677 and $1,067,712 for 1993 and 1992,
respectively.

Net Interest Income

FMB's net interest income increased approximately $480,000 or 11.4%
during 1994 when compared with 1993 and approximately $160,000 or 4.0%
during 1993 when compared with 1992. The increase in net interest income
in 1994 from 1993 resulted primarily from higher volumes of loans in the
commercial category. Additionally, the rates earned on loans increased by
38 basis points over 1993 reflecting the repricing of loans in a rising
interest rate environment. At the same time, rate-sensitive liabilities
reprices slower than the assets, further contributing to the increase in
the 1994 net interest income. The increase in net interest income
increased in 1993 from 1992 reflects the effects of volume increases in
both loans and deposits, which were more than offset by declining rates as
compared to 1992. FMB's net yield on earning assets increased to a level
of 5.09% in 1994 from 4.90% in 1993 after decreasing from a level of 4.98%
in 1992. The following table presents the weighted yield on earning
assets, weighted cost of funds and net yield on earning assets for each of
the periods presented:

1994 1993 1992

WEIGHTED YIELD ON EARNING ASSETS (1) 8.02% 7.93% 8.68%

WEIGHTED COST OF RATE SENSITIVE LIABILITIES 3.38 3.53 4.26

NET YIELD ON EARNING ASSETS 5.10 4.90 4.98

(1) Weighted average yields on assets exempt from federal income taxes
have been computed on a fully tax equivalent basis assuming a tax rate of
34 percent.
<PAGE>
Interest Rate Sensitivity

<TABLE>
<CAPTION>
REPRICING FREQUENCY
at December 31, 1994
0-30 31-90 91-365 365+
DAYS DAYS DAYS DAYS TOTAL
<S> <C> <C> <C> <C> <C>
(Dollars in thousands)
Interest bearing
deposits with other banks. . . . . . $ 29 $ 642 $ 671
Federal funds sold. . . . . . . . . . 810 810
Securities available for sale . . . . 7,246 7,247 $ 396 14,889
Securities held to maturity . . . . . 750 $ 510 1,001 26,387 28,648
Loans . . . . . . . . . . . . . . . . 20,262 6,612 12,000 19,540 58,414

Total Earning Assets. . . . . . . . . $29,097 $ 7,122 $20,890 $46,323 $103,432

Interest bearing demand deposits. . . $13,942 $ 13,942
Savings deposits. . . . . . . . . . . 32,361 32,361
Time deposits . . . . . . . . . . . . 4,457 5,525 13,803 $11,779 35,564
Short-term borrowings . . . . . . . . 5,952 3,192 9,144

Total Rate Sensitive Liabilities. . . $56,712 $8,717 $13,803 $11,779 $ 91,011

Asset (Liability) Sensitivity . . . . (27,615) (1,595) 7,087 34,544 12,421

Cumulative gap. . . . . . . . . . . . (27,615) (29,210) (22,123) 12,421

Management Adjustments. . . . . . . . 1,521 (8,045) (15,599) 35,544

Cumulative Management Adjustment Gap. 1,521 (6,524) (22,123) 12,421

<CAPTION>
REPRICING FREQUENCY
at December 31, 1993
0-30 31-90 91-365 365+
DAYS DAYS DAYS DAYS TOTAL
<S> <C> <C> <C> <C> <C>
(Dollars in thousands)
Interest bearing
deposits with other banks . . . . . $ 1,215 $ 1,215
Federal funds sold. . . . . . . . . . 710 710
Securities available for sale . . . . 21,056 21,056
Securities held to maturity . . . . . 564 $ 190 $ 2,227 $18,159 21,140
Loans . . . . . . . . . . . . . . . . 20,745 4,083 11,679 18,455 54,962

Total Earning Assets. . . . . . . . . $44,290 $ 4,273 $13,906 $36,614 $99,083

Interest bearing demand deposits. . . $13,176 $13,176
Savings deposits. . . . . . . . . . . 34,209 34,209
Time deposits . . . . . . . . . . . . 4,280 $ 6,328 $13,573 $10,177 34,358
Short-term borrowings . . . . . . . . 3,893 1,650 5,543

Total Rate Sensitive Liabilities. . . $55,558 $ 7,978 $13,573 $10,177 $87,286

Asset (Liability) Sensitivity . . . . (11,268) (3,705) 333 26,437 11,797

Cumulative gap. . . . . . . . . . . . (11,268) (14,973) (14,640) 11,797
</TABLE>

The above analysis is a "static gap" analysis and movements in categories
are presented in the earliest period in which they could reprice. For
example, savings deposits and securities available for sale are presented
as repricing on the 0-30 day period when, in fact, they are not expected to
fully reprice in that period. The above table is first presented without
regard for expected repricing behaviors. Then, as presented in the
"management adjustment" line, the balances have been notionally adjusted
over the first three periods presented to reflect portions of savings
accounts which are expected to reprice over those periods. The
distribution of the balances over those periods is based upon the
historical experience with City Holding's customers.

Loan Portfolio

For the most part, credit is extended in Merchant's primary market area
that extends eastward from and including Charleston to Gauley Bridge. Merchant's
will lend on an unsecured basis for short terms to consumers and commercial
borrowers when their creditability and ability to pay support such loans. It is
also Merchant's policy to make secured loans that do not exceed specified
maximum loan values expressed as a percentage of collateral value. Collective
values are determined by appraisal or other accepted means that reasonably
reflect the market value of the collateral. Forms of collateral (and the related
maximum loan-to-value guidlines) include marketable securities (60% of fair
market value), residential and commercial real estate (80% of appraised value or
cost), equipment (70% of appraised value), inventory (50% of fair market value),
accounts receivable (75% of face amount) and titled vehicles (80-90% of the
sticker price). Merchant's long term goal is to achieve a loan to deposit ratio
of 70-75% divided equally between commercial, consumer and real estate loans.

At the end of 1994 commercial loans amounted to approximately $16.4
million and were secured by commercial real estate and other forms of
collateral such as equipment and receivables. Consumer loans totaling
approximately $11.4 million are secured by titled vehicles and other forms
of personal property. Residential real estate loans, secured by deeds of
trust on residential property, amounted to about $20.7 million.

Provision for Loan Losses

The provision for loan losses is an estimate based upon management's
continuing assessment of the adequacy of the allowance for loan losses in
relation to anticipated losses. The provision for loan losses is
determined based on quarterly reviews of the adequacy of the allowance,
given current trends and existing economic conditions, along with estimates
of exposure to losses applicable to specific higher risk loans.

During 1994, loans totaling approximately $87,000 were charged-off and
recoveries of previously charged-off amounts totaled approximately $15,000.
The resulting net charge-offs of $72,000 are higher than net charge-offs
for 1993 of $59,000 and lower than 1992 net charge-offs of $113,000. The
provision charged to operations in 1994 was $86,699 as compared with
$93,193 and $103,155 in 1993 and 1992, respectively.

The allowance for loan losses represented 0.96%, .099%, and 0.94% of
outstanding loans at December 31, 1994, 1993, and 1992, respectively.
Management is not aware of any significant potential problem loans as of
December 31, 1994. For purposes of calculating the percentage of the
allowance for loan losses to outstanding loans, short-term financial
instruments classified as loans were excluded from total loans outstanding.
In management's opinion, these are extremely low risk instruments which do
not warrant an allocation in terms of the allowance for loan losses.

Nonperforming loans at December 31, 1994, approximated $216,000 as
compared with $179,000 and $322,000 at December 31, 1993 and 1992,
respectively. The ratio of the allowance for loan losses to nonperforming
loans was 213% at December 31, 1994, as compared to a coverage ratio of
229% at December 31, 1993. Management does not anticipate significant
ultimate losses on any of these nonperforming credits.

The average balance of nonaccrual loans was approximately $31,000 and
$33,000 for 1994 and 1993, respectively. Therefore, the interest earnings
foregone on these funds were immaterial, as was the income collected and
recorded in interest income on the cash basis.

Noninterest Income and Expenses

Total noninterest income decreased approximately $256,000 during 1994
when compared with 1993 as a result of a decline in securities gains of
approximately $278,000. The increase in total noninterest income from 1992
to 1993 also resulted primarily from securities gains and losses. The 1992
net gains are inclusive of a write-down (other than temporary loss) of
approximately $200,000 on certain equity securities.

Total noninterest expenses increased approximately $443,000 during
1994 when compared with 1993, and approximately $245,000 during 1993 when
compared with 1992. The increase in total noninterest expenses during 1994
is attributable to increases in salaries and employee benefits, occupancy
expense of premises, and other operating expenses. The primary reason for
these increases is that 1994 was the first full year of ownership and
operation of the two former Evergreen locations. The increase in total
noninterest expense during 1993 is primarily attributable to expenses
incurred in connection with the acquisition of Evergreen.

As more fully discussed in Note I to the audited consolidated
financial statements, FMB adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," effective January 1, 1993.
The adoption of the Statement decreased 1993 net income by approximately
$124,000 consisting of a one-time charge in the first quarter of
approximately $117,000 and additional expense during the year for the
excess of expense under SFAS no. 106 over amounts resulting from the cash
method of accounting previously employed. FMB's capital strength
influenced management's decision to recognize the SFAS No. 106 transition
Liability immediately, which will reduce reported benefit costs in future
periods.

Income Taxes

FMB's effective income tax rate for 1994 was 22.97% as compared with
23.91% and 23.47% for 1993 and 1992, respectively. The principal reason
for the difference between the effective and statutory tax rates during
each period was tax-exempt interest income.

As more fully discussed in Note J to the audited consolidated
financial statements, FMB prospectively adopted the liability method of
accounting for income taxes during 1993, without material effect. As of
December 31, 1994 gross deferred tax assets total approximately $840,000 as
compared to $342,000 as of December 31, 1993. The increase in these
assets, as well as their composition, is primarily unrealized losses on
securities available for sale. Pursuant to management's evaluation for the
quarter ended December 31, 1994, no valuation allowance has been allocated
to the deferred tax assets. The quarterly evaluation process employed by
management is based upon the expected reversal period of the assets, in
consideration of taxes paid by FMB in the carry back years and expected
reversals of existing taxable temporary differences.

Those assets for which realization is expected to be dependent on
future events are subjected to further evaluation. Management's analysis
has shown that realization of the deferred tax asset related to the OPEB
accrual will likely be dependent on future events. After considering such
factors as the magnitude of the asset relative to historical levels of
financial reporting income and taxable income, the period over which future
taxable income would have to be earned to realize the asset, and budgeted
future results of operations, management has concluded it is more likely
than not that the asset arising from the OPEB accrual and all other
deferred tax assets existing at December 31, 1994, will be realized. At
present, management does not expect implementation of tax planning
strategies will be necessary to ensure realization. The need for a
valuation allowance will continue to be addressed by management each
quarter and any changes in the valuation allowance will be reported
concurrently in FMB's quarterly results of operations.

Capital Resources

The ratio of average equity to average assets was 8.87% and 8.82 % for
the three months ended March 31, 1995 and the year ended December 31, 1994,
respectively. Merchant's total risk-based capital ratio approximated
16.48% at March 31, 1995, while the ratio of Tier One capital to risk-
weighted assets approximated 15.69%. Both of these ratios were above the
regulatory minimums of 8% for qualifying total capital to risk-weighted
assets and 4% for Tier One capital to risk-weighted assets. FMB is not
subject to the risk-based capital guidelines since consolidated total
assets are less than $150 million.

FMB's primary source of funds for payment of dividends to stockholders
is dividends received from Merchants; however, certain restrictions exist
regarding the ability of the subsidiary bank to transfer funds to FMB in
the from of cash dividends. Federal banking regulations require regulatory
approval prior to declaring dividends in excess of the current year's
retained net profits, combined with retained net profits for the two
preceding years.

As of March 31, 1995, the Bank's retained net profits available for
distribution to FMB as dividends without regulatory approval approximate
$1.6 million plus retained net profits for the interim period through the
date of declaration.

Liquidity

FMB currently has a strong liquidity position and material changes in
such position are not expected. In addition to assuring the availability
of adequate funds to meet its cash flow requirements, FMB's management
closely monitors its liquidity position in order to reduce exposure to
interest rate risk. This is accomplished largely by matching maturities of
assets and liabilities, particularly volatile funds such as securities sold
under agreements to repurchase and large denomination certificates of
deposit.

The major internal sources of liquidity are balances maintained by
Merchants with its correspondent banks as well as cash on hand. A
significant volume of U.S. Government securities for which there is an
active national market and various short-term financial instruments
classified as loans complement the balance of cash and cash equivalents.
FMB has also demonstrated the ability to obtain external financing in the
event such needs arise.

In order to reduce Merchant's liability sensitive financial position,
management has attempted to invest more heavily in short-term financial
instruments and has generally shortened the maturities of securities
purchased for the long-term portion of the investment portfolio. Merchants
does not invest in any derivative instruments.

In management's opinion, the liquidity of FMB is adequate to
accommodate any anticipated cash requirements, and exposure to future
changes in market interest rates has been effectively minimized through its
asset/liability practices described above.

Inflation

Since their assets and liabilities are primarily monetary in nature
(payable in fixed, determinable amounts), the performance of banks is
affected more by changes in interest rates than by inflation. Interest
rates generally increase as the rate of inflation increases, but the
magnitude of the change in rates may not be the same.

While the effect of inflation on banks is normally not as significant
as its influence on those businesses which have large investments in plant
and inventories, it does have an effect. During periods of high inflation,
there are normally corresponding increases in the money supply and banks
will normally experience above-average growth in assets, loans and
deposits.

As the result of Merchant's negative gap position significant
inflation would affect interest margins unfavorably. However, in the
recent past Merchant's has adjusted very well to rising interest rates.
This results principally from the fact that a major portion of commercial
loans are on a variable rate basis, adjusting in accordance with prime rate
changes. Also reflected in loans is over $10 million in short term
financial instruments that are available for repricing. While a
significant portion of Merchant's deposits are in savings accounts that are
subject to market rate adjustments, historically these deposits have been
relatively insensitive to changes in interest rates. Merchant's has
shortened the maturities of its long term portfolio to further reduce its
exposure to interest rate fluctuations.

LEGAL PROCEEDINGS CONCERNING FMB

FMB is not a party to any legal proceedings. Merchants is presently a
party to certain legal proceedings arising from transactions occurring in
the normal course of business. In the opinion of Merchants' management,
based on the advice of legal counsel, the ultimate resolution of these
proceedings will not have a material effect on FMB's financial position.

MARKET FOR FMB COMMON STOCK AND RELATED STOCKHOLDER MATTERS

FMB is authorized to issue 1,000,000 shares of common stock with a par
value of $2 per share. As of March 31, 1995, there were 576,000 shares
issued and outstanding. FMB's stockholders are entitled to one vote for
each share of FMB Common Stock owned on all matters subject to a vote of
the stockholders. The unissued portion of FMB Common Stock is available
when and if the Board of Directors deems advisable. There are no present
plans to issue additional shares. FMB stockholders do not have preemptive
rights; therefore, shares of the authorized, but unissued stock of FMB may
be issued without first offering the shares to FMB's stockholders. FMB
Common Stock was held by approximately 223 stockholders of record as of
December 31, 1994.

FMB has only one class of stock, common stock, and all voting rights
are in the holders of that stock. FMB paid cash dividends on its common
stock as follows in 1994 and 1993:

1995:
Declared 03-21-95, paid 04-06-95 - $.13 per share

1994:

Declared 03-17-94, paid 04-05-94 - $.13 per share
Declared 06-21-94, paid 07-01-94 - $.13 per share
Declared 09-20-94, paid 10-04-94 - $.13 per share
Declared 12-20-94, paid 01-06-95 - $.30 per share

1993

Declared 03-23-93, paid 04-01-93 - $.13 per share
Declared 06-15-93, paid 10-01-93 - $.13 per share
Declared 09-21-93, paid 10-01-93 - $.13 per share
Declared 12-22-93, paid 01-03-94 - $.27 per share

Dividends paid by Merchants to FMB are the primary source of funds
available to FMB for the payment of dividends to its stockholders. There
are certain restrictions on the payment of dividends to FMB from Merchants
as described in "FMB MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION" and Note H of Notes to FMB's
Consolidated Financial Statements.

FMB Common Stock is not widely traded and the volume of trading is
limited. There is no established market for FMB Common Stock. Most
transactions occur in the local area and bid and ask prices are not
available. The following table presents, on a historical basis, the high
and low prices of FMB Common Stock, for the periods indicated, for the
transactions of which FMB has knowledge.

Stock Prices Number of Shares
High Low Bought/Sold*

1995
First Quarter $27.50 27.50 1,858
Second Quarter (through
June __)
1994
First Quarter $26 $21 4,828
Second Quarter 26 25 2,840
Third Quarter 26 25 80
Fourth Quarter 28 27 400

1993
First Quarter $ - $ - -
Second Quarter 16 15 3,120
Third Quarter 20 16 3,734
Fourth Quarter 21 20 1,670
________________________

* The number of shares bought and sold indicated in this column does not
include shares transferred without monetary consideration, such as a
transfer by an estate to an heir.

All per share data have been restated to reflect a stock split
effected in the form of a 3-for-1 stock dividend which occurred in
1993.

DIRECTORS AND EXECUTIVE OFFICERS OF FMB

Directors

The following is a listing of the names and ages of the directors of
FMB and the year each individual began continuous service as a director of
FMB. Also shown are their principal occupations at present and during the
past five years, as well as any other directorships they may hold.

Linda G. Aguilar, age 47, has been a director of FMB since 1994. She
currently serves as Secretary of FMB and Vice President of Merchants
and has done so over the past five years.

Gordon Billheimer, age 70, has been a director of FMB since 1987. He
is currently in the practice of law in Montgomery, West Virginia, and
has served in that capacity during the past five years. Mr.
Billheimer serves as President of The Kanawha Water Company and also
as a director of Merchants.

Thomas L. Carson, age 67, has been a director of FMB since 1987. He
is a pharmacist and President of College Drug Store, Inc. in
Montgomery, West Virginia, and has served in that capacity during the
past five years. Mr. Carson also serves as a director of Merchants,
the Upper Kanawha Valley Chamber of Commerce, the Upper Kanawha Valley
Economic Development Corporation and the West Virginia Pharmacists
Association.

Hugh R. Clonch, age 55, has been a director of FMB since 1991. He is
President of Clonch Industries, Inc. in Dixie, West Virginia, and has
served in that capacity during the past five years. Mr. Clonch also
serves as a director of Merchants.

George F. Davis, age 67, has been a director of FMB since 1987. He is
currently President, Chief Executive Officer and Chairman of the Board
of FMB and Merchants, as well as Chief Financial Officer of FMB.
During the past five years, he has served as President and Chief
Executive Officer of Merchants. Mr. Davis also serves as a director
of Merchants, the Upper Kanawha Valley Economic Development
Corporation, the Upper Kanawha Valley Chamber of Commerce, the
Buckskin Council of the Boy Scouts of America and West Virginia Tech
Foundation, on which he also serves as President.

Kenneth R. Fultz, age 59, has been a director of FMB since 1987. He
is currently President of Montgomery General Hospital in Montgomery,
West Virginia, and has served in that capacity during the past five
years. Mr. Fultz also serves as a director of Merchants, Montgomery
General Hospital, Montgomery General Elderly Care, Montgomery General
Health Care System, Laird Health Care Foundation, West Virginia
Hospital Service, Inc., Valley Emergency Medical Service and the West
Virginia Institute of Technology Advisory Board.

Robert C. Gillespie, age 52, has been a director of FMB since 1987.
During the past five years, Dr. Gillespie has served as President of
West Virginia Institute of Technology in Montgomery, West Virginia,
having resigned from his position in August 1992. Dr. Gillespie is
currently serving West Virginia Institute of Technology as Regents
Professor, developing plans to meet the growing need for engineering
and technical education brought about by the development of West
Virginia. In addition to his duties as a Regents Professor, Dr.
Gillespie consults in the areas of education, educational technology
and artificial intelligence. Dr. Gillespie also serves as a director
of Merchants, the Private Industry Council of West Virginia, the West
Virginia Experimental Program to Stimulate Competitive Research, the
State Council on Vocational Education, on which he also serves as Vice
Chair.

Robert L. Hardy, Sr., age 69, has been a director of FMB since 1987.
He is currently the owner of Hardy Realty in Smithers, West Virginia,
and has served in that capacity during the past five years. Mr. Hardy
also serves as a director of Merchants.

Thomas A. Jacobs, age 66, has been a director of FMB since 1987. He
is a Public Accountant and Tax Consultant. Prior to December 1993,
Mr. Jacobs was a consultant to the accounting firm of Trainer, Wright
& Paterno in Charleston, West Virginia, and has served in that
capacity since 1987. He also serves as a director of Merchants.

Carl L. Kennedy, age 61, has been a director of FMB since 1987. He is
a dentist, doing business as Kennedy Dental Office, a partnership, in
Montgomery and Whitesville, West Virginia, and has served in that
capacity during the past five years. Dr. Kennedy also serves as a
director of Merchants.

Giles E. Musick, age 67, has been a director of First merchants since
1987. He is currently President of Brown Chevrolet, Oldsmobile,
Pontiac-Buick, Inc. in Montgomery, West Virginia, and has served in
that capacity during the past five years. Mr. Musick also serves as a
director of Merchants.

James F. Neil, age 56, has been a director of FMB since 1987. Mr.
Neil has served as a hydro licensing consultant for Elkem Metals Co.
in Alloy, West Virginia from 1989 to 1991. Mr. Neil also serves as a
director of Merchants, the Upper Kanawha Valley Economic Development
Corporation, Summersville Memorial Hospital, the Gauley River national
Recreation Area Advisory Board and as Vice Chairman of the West
Virginia Institute of Technology Advisory Board.

Executive Officers

The following is a listing of the names and ages of the executive
officers of FMB and the year each individual began continuous service as an
executive officer of FMB. Also shown is their business experience during
the past five years.

George F. Davis, age 67, has been President, Chief Executive Officer
and Chief Financial Officer of FMB since 1987. During the past five
years, he has also served as President and Chief Executive Officer of
Merchants.

Robert P. McDowell, age 48, has been Vice President of FMB since 1987.
He has served as Vice President of Merchants since 1989 and was
President of Gauley from 1987 to 1989.

Robert L. Neal, age 38, has been Vice President of FMB since
September, 1988. During the past five years he has served as Vice
President of Merchants.

Linda G. Aguilar, age 47, has been Secretary of FMB since 1989. She
served as Secretary-Treasurer from 1987 to 1989. During the past five
years, she has also served as Vice President of Merchants.

Steven D. Nunley, age 36, has been Treasurer of FMB since 1989. He
has also served as Vice President and Cashier of Merchants since 1991,
Cashier of Gauley from 1988 to 1990 and Cashier of Merchants from 1987
to 1990.

FMB EXECUTIVE COMPENSATION

All forms of compensation paid to the officers and directors of FMB
are paid by the subsidiary bank. The individual officers do not receive
additional compensation for their services with FMB. The following
information is given with respect to the executive officers of FMB whose
direct aggregate case remuneration exceeded $100,000 in 1994.

Name of Individual Principal
and Number of Persons Capacities in Cash
in Group Which Served Compensation

George F. Davis President $140,000

Executive Officers as a Executive Officers $408,000
Group (5 persons in
group, including the
person listed above)

There was no other compensation paid to Mr. Davis or the executive
officers as a group during 1994.

FMB Pension Plan

FMB maintains a defined benefit pension plan for its employees.
Benefits under the plan are determined under the following career average
formula: past service and future service benefits accrued through October
31, 1994, plus future service benefits for each plan year after October 31,
1994 (1 1/2% of the first $9,600 of W-2 earnings for the calendar year
ending in such plan year, and 2% of W-2 earnings in excess of $9,600). The
plan year ends October 31.

The normal retirement age under the plan is 65. Estimated annual
benefits payable upon retirement for FMB's executive officers are as
follows:
Estimated
Executive Officer Annual Benefit
George F. Davis $26,988.00

Total $173,436.00

George F. Davis is older than 65 years of age but has not begun to
receive his retirement benefit. The amount shown for his estimated annual
benefit is an estimate as of the close of the most recent plan year which
ended October 31, 1994.

FMB CHANGE OF CONTROL AGREEMENTS

In view of the changing banking environment and the desire of FMB to
encourage its executive management to continue with FMB, the FMB Board of
Directors unanimously approved the entering into Change of Control
Agreements with the executive officers of FMB. Change of Control
Agreements were entered into as of March 1, 1995, between FMB and George F.
Davis, President, Chief Executive Officer and Chairman of FMB; Linda G.
Aguilar, Secretary of FMB; Robert P. McDowell, Vice President of FMB;
Robert L. Neal, Vice President of FMB and Steven D. Nunley, Treasurer of
FMB. The Change of Control Agreements for Ms. Aguilar and Messrs.
McDowell, Neal and Nunley, provide that in the event of a Change of
Control, as defined therein, the executive may thereafter only be
terminated for Good Cause, as defined therein, for the period of twenty-
four (24) months after the consummation of the Change of Control. A
termination for any other reason during the twenty-four (24) month period
would entitle the executive to compensation, based upon an average of W-2
earnings, for the period between the date of the termination and the date
that is twenty-four (24) months after the date of the consummation of the
Change of Control. The contracts permit an executive to resign for any
reason upon thirty (30) days prior written notice. The contracts also
provide for continuation of certain benefits during the twenty-four (24)
month period after the date of the consummation of the Change of Control.
In the event of a termination of the executive during the twenty-four (24)
month period, he or she may seek and obtain other employment without
reducing the amount of any payment made under the terms of the Change of
Control Agreement. Mr. Davis' contract is substantially the same as the
other executives, except that it is effective for a thirty-six (36) month
term following a Change of Control and also provides that Mr. Davis will
have the use of a car during that period. The Change of Control Agreements
are binding upon any successor in interest to FMB and will be binding upon
City Holding upon consummation of the transactions contemplated in the
Agreement, as recognized in the Agreement.

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF FMB

The following individuals are known to management to beneficially own
greater than five percent of the issued and outstanding shares of FMB
Common Stock.

Amount and Nature
Name and Address of of Beneficial Percent
Title of Class Beneficial Owner Ownership (1) of Class

Common Hugh R. Clonch 52,484 9.11%
Box 93
Belva, WV

Common Beatrice K. Kincaid 31,248 5.43%
Drawer 149
Charlton Heights, WV

Common Giles E. Musick 30,568 5.31%
503 Fourth Ave.
Montgomery, WV

In addition, two families own in excess of five percent of FMB Common
Stock, though no one member exercises voting and investment power over
greater than five percent. Three siblings and the widow of a fourth
sibling of the Morton family own common stock as follows: Sadie M.
Harlan - 6,432 shares; F. Hurxthal Morton, Jr. and Frances Garnett Morton -
5,600 shares; Paul Morton - 12,899 shares; and Lois W. Morton - 10,272
shares. Collectively, these individuals own 6.09% of FMB Common Stock.
Similarly, members of the Blackwell family own in excess of five percent of
FMB Common Stock as follows: Mary F. Blackwell - 12,000 shares; Lyle M.
Blackwell - 5,200 shares; Matthew F. Blackwell - 2,000 shares; Walter J.
Fitzgerald - 4,800 shares and Walter J. Fitzgerald and Margaret B.
Fitzgerald - 7,200 shares. Collectively, these individuals own 5.42% of
FMB Common Stock.

The following table presents the number of shares beneficially owned
by each director (excluding qualifying shares), and the number of shares
beneficially owned by each director and executive officer of FMB (excluding
qualifying shares) as a group.

Amount and Nature
Name and Address of of Beneficial Percent
Title of Class Beneficial Owner Ownership (1) of Class

Common Linda G. Aguilar 9,076 1.58%
P.O. Box 195
Ansted, WV

Common Gordon Billheimer 891 .15%
311 Washington St.
Montgomery, WV

Common Thomas L. Carson 5,924 1.08%
501 Monroe St.
Montgomery, WV

Common Hugh L. Clonch 52,396 9.10%
Box 93
Belva, WV

Common George F. Davis 3,987 .69%
Box 325
Charlton Heights, WV

Common Kenneth R. Fultz 1,907 .33%
307 E. Seventh St.
Belle, WV

Common Robert C. Gillespie 263 .05%
2050 Oak Ridge Drive
Charleston, WV

Common Robert L. Hardy, Sr. 1,907 .33%
Box 241
Smithers, WV

Common Thomas A. Jacobs 2,307 .40%
Box 219
Pratt, WV

Common Carl L. Kennedy 2,427 .42%
410 Fourth Ave.
Montgomery, WV

Common Giles E. Musick 30,475 5.29%
503 Fourth Ave.
Montgomery, WV

Common James F. Neil 2,307 .40%
626 Holley Dr.
Summersville, WV

Common Directors and 124,302 21.58%
executive officers
as a group (15
persons)
__________________

(1) All of the shares reported are owned individually by each director and
executive officer unless otherwise indicated below:

(a) Thomas L. Carson - 4,404 shares are owned individually, 720
shares are owned by College Drug Store, Inc., of which he is
President, 480 shares are owned by his brother and 320
shares are owned jointly with his wife.

(b) Hugh R. Clonch - 5,756 shares are owned individually, 42,932
shares are owned by Clonch Industries, Inc., of which he is
President, 3,456 shares are owned jointly with his wife, 252
shares are owned by his children. In addition, 7,368 shares
are owned by his brother and his wife. Mr. Clonch exercises
no voting or investment power over the shares owned by his
brother and his wife.

(d) Robert C. Gillespie - 107 shares are owned individually and
156 shares are owned by his wife.

(e) Carl L. Kennedy - 2,307 shares are owned individually and
120 shares are owned by his wife.

(f) Giles E. Musick - 25,875 shares are owned individually,
3,600 shares are owned by his wife and 1,000 shares are
owned by his children.

FMB CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 1994, FMB and its subsidiaries had, and expect to have in the
future, banking transactions with officers and directors of FMB, their
immediate families and entities in which they are principal owners (more
than 10% interest). The transactions are in the ordinary course of
business and on substantially the same terms, including interest rates and
security, as those prevailing at the same time for comparable transactions
with others and do not involve more than the normal risk of collectability
or present other unfavorable factors.

RESALE OF CITY HOLDING COMMON STOCK

The shares of City Holding Common Stock offered hereby have been
registered under the 1933 Act, thereby allowing such shares to be traded
freely and without restriction by those holders of FMB Common Stock who
receive such shares following consummation of the Merger and who are not
deemed to be "affiliates" (as defined under the 1933 Act, but generally
including directors, certain executive officers and 10% or more
shareholders) of FMB or City Holding. The Agreement provides that each
holder of FMB Common Stock who is deemed by FMB to be an affiliate of it
will enter into an agreement with City Holding prior to the Effective Date
providing, among other things, that such affiliate will not transfer any
City Holding Common Stock received by such holder in the Merger except in
compliance with the 1933 Act. This Joint Proxy Statement/Prospectus does
not cover any resales of City Holding Common Stock received by affiliates
of FMB.

EXPERTS

The consolidated financial statements of FMB at December 31, 1994 and
1993, and for each of the three years in the period ended December 31,
1994, incorporated by reference in this Joint Proxy Statement/Prospectus
and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon incorporated by
reference herein, and are included in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of City Holding at December 31,
1994 and 1993, and for each of the three years in the period ended December
31, 1994, incorporated by reference in this Joint Proxy
Statement/Prospectus and Registration Statement have been audited by Ernst
& Young LLP, independent auditors, as set forth in their reports thereon
incorporated by reference herein. As to the year ended December 31, 1994,
Ernst & Young LLP's report is based in part on the report of Persinger &
Company LLC, independent auditors. The financial statements referred to
above are included in reliance upon such reports given upon the authority
of such firms as experts in accounting and auditing.

LEGAL OPINIONS

The validity of City Holding Common Stock issued in the Merger will be
passed on for City Holding by Steptoe & Johnson, Charleston, West Virginia.
Otis L. O'Connor, a partner of Steptoe & Johnson, is a director of City
Holding.

ELECTION OF CITY HOLDING DIRECTORS

The Board of Directors of City Holding presently comprises fourteen
members. The Board of Directors is classified into three classes, with one
class to be elected each year to a three-year term.

Proxies will be voted for the election of the following nominees as
Class III directors to serve until the 1998 City Holding Annual Meeting.
Each nominee is currently a director of City Holding and has been employed
as indicated below for at least the past five years. The Board of
Directors has no reason to believe that any of the nominees will be
unavailable to serve if elected, but in such event, proxies will be voted
for such substitutes as the Board may designate. The Proxies may cumulate
votes at their discretion.

Principal Occupation Director
Name (Age) and Business Experience Since

Class III (to serve until the
1998 Annual Meeting)

Dr. D. K. Cales (65) Dentist, Rainelle, WV. 7/90

Jay Goldman (51) President, Goldman 8/88
Associates (real estate),
Charleston, WV.

C. Dallas Kayser (43) C. Dallas Kayser, L.C. 1/95
(attorney), Point Pleasant,
WV.

Robert D. Fisher (42) Partner, Adams Fisher & 8/94
Evans (attorney), Ripley,
WV.

The terms of the following Class I and Class II Directors do not
expire at the 1995 Annual Meeting. Each of the Class I and Class II
Directors has been employed as indicated below for at least the past
five years.

Principal Occupation Director
Name (Age) and Business Experience Since

Class I (to serve until the
1996 Annual Meeting)

Samuel M. Bowling (57) President, Dougherty
Company, Inc. (mechanical
contractor) since 1977; 3/83
Chairman of City Holding
since 1990.

Steven J. Day (41) President and Chief
Executive Officer of City
Holding since 1990;
Treasurer and Chief 11/88
Financial Officer of City
Holding from 1983 to 1990.

Jack E. Fruth (66) Principal Owner, Fruth
Pharmacies 4/87
Point Pleasant, WV.

Otis L. O'Connor (59) Partner, Steptoe & Johnson
(attorneys) 1/76
Charleston, WV.

Bob F. Richmond (54) Chief Executive Officer,
First National Bank of
Hinton since 1981; Vice
President of First National 1/95
Bank of Hinton since 1972.

Director
Name (Age) Principal Occupation Since
and Business Experience
Class II (to serve until the
1997 Annual Meeting)

C. Scott Briers (59) President of the Board,
First National Bank of
Hinton since 1994; Owner, 1/95
Briers Furniture since 1977.

Carlin K. Harmon (58) President & Chief Executive
Officer, First State Bank &
Trust, Rainelle, WV, since
1972; Executive Vice 9/88
President of City Holding
since 1990.

Dale Nibert (67) Dairy Farmer,
Point Pleasant, WV. 4/88

Mark Schaul (64) President, Charmar Realty
Company, Charleston, WV. 3/76

Van R. Thorn, II (46) Chief Executive Officer, The
Home National Bank of
Sutton, Sutton, WV, since
1992; Cashier of Home 5/92
National Bank from 1979 to
1992.

Committees of the Board of Directors

The entire Board of Directors functions as a nominating committee by
considering nominees for election as Directors of City Holding. The Board
will consider nominees recommended by shareholders if such recommendations
are submitted in writing and delivered or sent by first class registered or
certified mail to the President of City Holding not later than November 15,
1995, for consideration at the 1996 Annual Meeting. Such recommendations
should include information to enable City Holding's Board to evaluate the
proposed nominee's qualifications, including the name, address, occupation
and City Holding share ownership of the nominee, and the name, address and
City Holding share ownership of the nominating shareholder.

City Holding has a standing Audit Committee consisting of three
members, Dr. D. K. Cales, Jack E. Fruth and Mark Schaul. The Audit
Committee has the responsibility of meeting with and reviewing the scope of
work performed by internal and external auditors. Significant matters are
discussed with the full Board of Directors. This committee meets on a
quarterly basis as needed and met four times during 1994.

City Holding has a Compensation Committee consisting of Dr. D. K.
Cales, Jack E. Fruth and Jay Goldman, none of whom is an employee of City
Holding. The Compensation Committee makes recommendations to the Board
with respect to the compensation of executive officers and certain junior
officers who participate in the City Holding Company Stock Incentive Plan.
This committee meets once a year.

Attendance

City Holding's Board of Directors held 12 meetings during the fiscal
year ended December 31, 1994. No director attended fewer than 75% of the
meetings of City Holding's Board, all members of the Audit Committee
attended all of the Audit Committee meetings, and all members of the
Compensation Committee attended its meeting.

Compensation of Directors

Directors of City Holding are paid a fee of $500 for each meeting of
the full board, regardless of attendance. Directors who are also officers
of City Holding and its subsidiaries receive no fee.

EXECUTIVE OFFICERS OF CITY HOLDING

The executive officers of City Holding are as follows:

Steven J. Day, President and Chief Executive Officer.

Carlin K. Harmon, Executive Vice President.

Matthew B. Call, 37, has been Senior Vice President of City Holding
Company since August 1994. Prior to joining City Holding, he was Senior
Vice President and Cashier for Bank One, West Virginia.

Robert A. Henson, CPA, 33, has been Chief Financial Officer of City
Holding since May 1990. He was Chief Accounting Officer from 1988 to 1990
and has been employed by City Holding since 1987. Prior to joining City
Holding, he was an Audit Manager with Ernst & Young LLP in Charleston, West
Virginia.

F. Eric Nelson, Jr., 34, has been Treasurer and Investment Portfolio
Manager of City Holding Company since October 1994. He was Chief
Operations Officer and Investment Portfolio Manager of City Holding Company
from 1992 to 1994 and Vice President and Investment Portfolio Manager from
1990 to 1992. Prior to joining City Holding, he was a Director with the
Corporate Finance Department of Crestar Bank in Richmond, Virginia.

CITY HOLDING EXECUTIVE COMPENSATION

The following table presents information relating to compensation of
executive officers of City Holding whose compensation exceeded $100,000
during the fiscal year ended December 31, 1994.
<TABLE>
Summary Compensation Table
Annual Compensation

Name and All Other
Principal Position Year Salary ($) Bonus ($) (1) Compensation (3)
<S> <C> <C> <C> <C>
Steven J. Day
President and Chief
Executive Officer 1994 $179,763 $72,952 $22,045
1993 167,803 58,070(2) 22,988
1992 156,606 40,000(2) 15,400

Carlin K. Harmon
Executive Vice President 1994 143,328 40,132 21,410
1993 132,709 5,597 16,080
1992 120,108 4,816 11,800

Robert A. Henson
Chief Financial Officer 1994 90,300 35,080 18,259
1993 70,300 25,995 10,339
1992 67,000 18,860 7,291

F. Eric Nelson, Jr.
Treasurer and
Investment Portfolio Manager 1994 83,347 32,570 16,963
1993 68,222 25,511 10,135
1992 65,000 18,410 7,112
</TABLE>
___________
(1) Includes bonus awards under City Holding's Incentive Plan.
(2) Includes a bonus award under the Incentive Plan of 975 shares and
1,162 shares of Common Stock having a fair market value at the time of
grant of $20.68 per share and $25.23 per share for 1992 and 1993,
respectively.
(3) Includes Company matching and profit-sharing contributions under City
Holding's Profit-Sharing and 401(k) Plan, which was implemented January 1,
1991.

City Holding Compensation Committee Report on Executive Compensation

The Compensation Committee of the Board of Directors of City Holding
(the "Committee") is comprised of three outside directors, none of whom
serves on the board of any other Committee member's company or
organization. The Committee has access to both outside legal counsel and
consultants.

To the Board of Directors of City Holding Company:

The Compensation Committee of the Board of Directors of City Holding
submits the following report of its deliberations with respect to
compensation of City Holding executives for 1994:

City Holding executives are compensated under the City Holding Company
Incentive Plan (the "Incentive Plan") adopted in 1992. The Incentive Plan
is designed to link executive compensation to the performance of City
Holding and to provide levels of compensation adequate to attract and to
retain quality management. In 1994, four members of Executive management
of City Holding, including Mr. Day, participated in the Incentive Plan.

Compensation under the Incentive Plan includes base salaries with
provisions for annual increases and bonuses based on individual and
corporate performance. Bonuses are paid one-half in cash and one-half in
City Holding Common Stock. Maximum salary increases (as a percentage of
the percentage increase in the Consumer Price Index) and bonuses (as a
percentage of salary) are calculated under the Incentive Plan based on City
Holding's performance as measured by annual return on average assets and
return on average equity. The Committee believes these ratios best measure
performance that is likely to translate into increased shareholder value.
Participants automatically are awarded 40% of their maximum base salary
increase and bonus, if any. The remaining 60% of the maximum base salary
increase and bonus is awarded based on individual performance during the
prior year. The Incentive Plan may be amended or rescinded at any time.

Base Salaries. Base salaries for 1994 were determined primarily in
accordance with the formula that was adopted as part of the Incentive Plan.
The average increase in base pay for 1994 was approximately 13%. Mr. Day's
increase in base compensation was determined in accordance with the
Incentive Plan formula. Mr. Henson's and Mr. Nelson's increase in base
compensation exceeded that of the Incentive Plan formula as a result of
their increased responsibilities coincidental to the growth in asset size
and market capitalization of City Holding. Mr. Harmon's compensation
increase for 1994 was calculated under an agreement as described below
under "City Holding Employment Agreements." As of February 1995, Mr.
Harmon is compensated under the City Holding Incentive Plan.

Annual Bonuses. For performance in 1994, the four members of
management eligible to participate, including Mr. Day, were awarded
approximately $181,000 in annual bonuses under the Incentive Plan. Based
on the high level of individual performance during the year as reflected in
City Holding's return on average assets and return on average equity, this
amount included awards of 100% of the maximum bonuses payable under the
Incentive Plan, including an award of $72,952 to Mr. Day.
Respectfully submitted,

Dr. D.K. Cales
Jack E. Fruth
Jay Goldman

City Holding Company Stock Incentive Plan

The Committee administers City Holding's 1993 Stock Incentive Plan
(the "Stock Incentive Plan"). The Committee may delegate its authority to
administer the Stock Incentive Plan to an officer of City Holding.

Key employees of City Holding and its related entities and individuals
who provide services to City Holding and its related entities are eligible
to participate in the Stock Incentive Plan. The class of eligible
personnel is selected by the Committee and includes approximately 20
people, including Messrs. Day, Harmon, Henson and Nelson. The Committee
may, from time to time, grant stock options, stock appreciation rights
("SARs"), or stock awards to Stock Incentive Plan Participants.

Options granted under the Stock Incentive Plan may be incentive stock
options ("ISOs") or nonqualified stock options. The option price will be
fixed by the Committee at the time the option is granted, but in the case
of an ISO, the price cannot be less than the shares' fair market value on
the date of grant. The option price may be paid in cash, or, with the
Committee's consent, with shares of City Holding Common Stock, a
combination of cash and Common Stock or in installments.

SARs entitle the participant to receive the excess of the fair market
value of a share of City Holding Common Stock on the date of exercise over
the initial value of the SAR. The initial value of the SAR is the fair
market value of a share of City Holding Common Stock on the date of grant.

SARs may be granted in relation to option grants ("Corresponding
SARs") or independently of option grants. The difference between these two
types of SARs is that to exercise a Corresponding SAR, the participant must
surrender unexercised that portion of the stock option to which the
Corresponding SAR relates.

Participants may also be awarded shares of City Holding Common Stock
pursuant to a stock award. The Committee may prescribe that a
participant's right in a stock award shall be nontransferable or
forfeitable or both unless certain conditions are satisfied. These
conditions may include, for example, a requirement that the participant
continue employment with City Holding for a specified period or that City
Holding or the participant achieve stated objectives.

The Stock Incentive Plan provides that outstanding options and SARs
will become exercisable and outstanding stock awards will be earned in full
and nonforfeitable upon a change in control.

A maximum of 300,000 shares of City Holding Common Stock may be issued
upon the exercise of options and SARs and stock awards. This limitation
will be adjusted, as the Committee determines is appropriate, in the event
of a change in the number of outstanding shares of City Holding Common
Stock by reason of a stock dividend, stock split, combination,
reclassification, recapitalization or other similar events. The terms of
outstanding awards also may be adjusted by the Committee to reflect such
changes.

No option, SAR or stock award may be granted under the Stock Incentive
Plan after March 8, 2003. City Holding's Board of Directors may, without
further action by shareholders, terminate or suspend the Stock Incentive
Plan in whole or in part. The Board of Directors may also amend the Stock
Incentive Plan except that no amendment that increases the number of shares
of City Holding Common Stock that may be issued under the Stock Incentive
Plan or changes the class of individuals who may be selected to participate
in the Plan will become effective until it is approved by shareholders.
During 1994, no awards were made under the Stock Incentive Plan.

City Holding Company Profit Sharing and 401(k) Plan

Under City Holding's Profit Sharing and 401(k) Plan (the "Plan"), a
deferred compensation plan under the Internal Revenue Code, eligible
participants, including Messrs. Day Harmon, Henson and Nelson may
contribute from 1% to 15% of pre-tax earnings to their Plan accounts.
Contributions may be invested in any of four options selected by the
participant, including City Holding Common Stock. City Holding matches, in
City Holding Common Stock, 50% of the first 6% of earnings contributed by
each participant. Profit-sharing contributions are discretionary as
determined annually by the Board of Directors and vest 20% for each year of
service after the first year. Based on corporate performance in 1994,
profit-sharing contributions equalled 12% of participant's gross salary in
1994. Contributions to all executive officers of City Holding aggregated
$81,000, including contributions of $22,000 to Mr. Day, $21,000 to Mr.
Harmon, $18,000 to Mr. Henson and $17,000 to Mr. Nelson.

CITY HOLDING PERFORMANCE GRAPH

The following graph portrays a comparison of the yearly percentage
change in City Holding's cumulative total shareholder return on City
Holding Common Stock (as measured by dividing (i) the sum of (A) the
cumulative amount of dividends, assuming dividend reinvestment during the
periods presented and, (B) the difference between the City Holding Common
Stock share price at the end and the beginning of the periods presented; by
(ii) the share price at the beginning of the periods presented) with The
Nasdaq Stock Market Index and a Peer Group Index. The Peer Group consists
of publicly-traded financial institutions under $1 billion in assets
headquartered in Florida, Georgia, North Carolina, Ohio, Pennsylvania,
South Carolina, Virginia, Washington, D.C. and West Virginia.

Graph showing the following data points:

1989 1990 1991 1992 1993 1994
City Holding $100 $99.57 $115.46 $169.33 $272.05 $268.83

Peer Group Index $100 $77.61 $ 92.26 $138.60 $182.09 $177.76

The Nasdaq Stock
Market Index $100 $84.92 $136.28 $158.58 $180.93 $176.92

CITY HOLDING EMPLOYMENT AGREEMENTS

City Holding has an executive severance agreement with Mr. Day
providing that if his employment is terminated (either voluntarily or
involuntarily other than as a normal consequence of death, disability or
retirement at a normal retirement age) at any time within a period of two
years from a change in control of City Holding, he will receive as
compensation for services a lump sum payment (subject to any applicable
payroll and other taxes) generally equal to 2.99 times his annual
compensation. A "change of control" shall be deemed to have taken place if
(i) a third person acquires shares of City Holding Common Stock that,
aggregated with shares of City Holding Common Stock previously held by such
person, have 30% or more of the total number of votes that may be cast for
the election of directors of City Holding; or (ii) as the result of any
cash tender or exchange offer, merger or other business combination or sale
of assets, shares of City Holding Common Stock are converted into cash or
securities of another corporation.

Under an agreement with City Holding, Mr. Harmon's base salary
increases annually pursuant to a formula based on the net income of First
State Bank & Trust, the wholly-owned subsidiary of City Holding of which
Mr. Harmon is the President and Chief Executive Officer. As of February
1995, Mr. Harmon is compensated under the City Holding Incentive Plan.

CITY HOLDING CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 1994, City Holding and its subsidiaries had, and expect to have
in the future, banking transactions with officers and directors of City
Holding, their immediate families and entities in which they are principal
owners (more than 10% interest). The transactions are in the ordinary
course of business and on substantially the same terms, including interest
rates and security, as those prevailing at the same time for comparable
transactions with others and do not involve more than the normal risk of
collectability or present other unfavorable factors.

Otis L. O'Connor, Secretary and Director of City Holding, is a partner
in Steptoe & Johnson, Charleston, West Virginia, which performed legal
services for City Holding in 1994 and is expected to continue to perform
similar services in the future.

CITY HOLDING COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT

City Holding's executive officers, directors and 10% shareholders are
required under the Exchange Act to file reports of ownership and changes in
ownership with the Commission. Copies of these reports must also be
furnished to City Holding. Based solely on review of the copies of such
reports furnished to City Holding through the date hereof, or written
representations that no reports were required, City Holding believes that
during 1994, all filing requirements applicable to its officers, directors
and 10% shareholders were met except that Dr. Cales, a director of City
Holding, was late in filing one report on Form 4 with the Commission.

RATIFICATION OF APPOINTMENT OF CITY HOLDING'S AUDITORS

The City Holding Board of Directors has appointed Ernst & Young LLP to
audit the consolidated financial statements of City Holding for the year
ending December 31, 1995. The holders of City Holding Common Stock are
being asked to ratify this appointment at the City Holding Annual Meeting.
Ernst & Young LLP has been City Holding's independent auditor since 1982.
The Board of Directors unanimously recommends that shareholders vote FOR
such ratification.

Representatives of Ernst & Young LLP are expected to be present at the
City Holding Annual Meeting and will be given an opportunity to make a
statement if they desire to do so. They are expected to be available to
respond to appropriate questions.

CITY HOLDING SHAREHOLDER PROPOSALS

Holders of City Holding Common Stock having proposals which they
desire to present at next year's Annual Meeting should, if they desire that
such proposals be included in City Holding's proxy and proxy statement
relating to such meeting, submit such proposals in time to be received by
City Holding at its principal executive offices in Charleston, West
Virginia, no later than November 15, 1995. To be so included, all such
submissions must comply with the requirements of Rule 14a-8 of the
Commission under the Exchange Act and the Board of Directors directs the
close attention of interested shareholders to that Rule.

INDEX TO FINANCIAL STATEMENTS

City Holding Company

Consolidated Balance Sheets as of March 31, 1995 and
December 31, 1994 (Unaudited) F-

Consolidated Statements of Income for the Three Month
Period ended March 31, 1995 and 1994 (Unaudited) F-

Statement of Changes in Stockholders' Equity for the Three
Months ended March 31, 1995 (Unaudited) F-

Consolidated Statements of Cash Flows for the Three Month
Period ended March 31, 1995 and 1994 (Unaudited) F-

Notes to Consolidated Financial Statements (Unaudited) F-

First Merchants Bancorp, Inc.: Consolidated Balance Sheets as
of March 31, 1995 and December 31, 1994 (Unaudited) F-

Consolidated Statements of Income for the Three Months
ended March 31, 1995 and March 31, 1994 (Unaudited) F-

Consolidated Statements of Stockholders' Equity for
March 31, 1995 and March 31, 1994 (Unaudited) F-

Consolidated Statements of Cash Flows for the Three Months
ended March 31, 1995 and March 31, 1994 (Unaudited) F-

Notes to Consolidated Financial Statements (Unaudited) F-

City Holding Company: Independent Auditors' Reports F-

Consolidated Balance Sheets for the Years ended
December 31, 1994 and 1993 F-

Consolidated Statements of Income for the Years ended
December 31, 1994, 1993 and 1992 F-

Consolidated Statements of Changes in Stockholders' Equity
for the Years ended December 31, 1994, 1993 and 1992 F-

Consolidated Statements of Cash Flows for the Years ended
December 31, 1994, 1993 and 1992 F-

Notes to Consolidated Financial Statements F-

First Merchants Bancorp, Inc.: Independent Auditors' Report F-

Consolidated Balance Sheets for the Years ended
December 31, 1994 and 1993 F-

Consolidated Statements of Income for the Years ended
December 31, 1994, 1993 and 1992 F-

Consolidated Statements of Stockholders' Equity for the
Years ended December 31, 1994, 1993 and 1992 F-

Consolidated Statements of Cash Flows for the Years ended
December 31, 1994, 1993 and 1992 F-

Notes to Consolidated Financial Statements F-

<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
CITY HOLDING COMPANY AND SUBSIDIARIES

Item I. MARCH 31 DECEMBER 31
1995 1994
<S> <C> <C>
ASSETS (unaudited)
Cash and due from banks $ 21,036,000 $ 27,591,000
Securities available for sale, at fair value 68,134,000 67,920,000
Investment securities (approximate market values:
March 31, 1995--$120,552,000; December 31, 1994--$123,995,000) 122,579,000 128,457,000
Loans
Gross loans 537,147,000 504,956,000
Unearned income (9,076,000) (9,544,000)
Allowance for possible loan losses (6,040,000) (6,017,000)
NET LOANS 522,031,000 489,395,000
Loans held for sale 44,833,000 30,227,000
Bank premises and equipment 18,432,000 17,678,000
Accrued interest receivable 5,643,000 5,922,000
Other assets 12,949,000 13,336,000
TOTAL ASSETS $ 815,637,000 $ 780,526,000

LIABILITIES
Deposits:
Noninterest-bearing $ 81,424,000 $ 80,694,000
Interest-bearing 574,542,000 570,570,000
TOTAL DEPOSITS 655,966,000 651,264,000
Short-term borrowings 88,796,000 57,483,000
Long-term debt 4,825,000 6,875,000
Other liabilities 7,069,000 8,035,000
TOTAL LIABILITIES 756,656,000 723,657,000

STOCKHOLDERS' EQUITY
Preferred stock, par value $25 a share:
Authorized-500,000 shares; none issued
Common stock, par value $2.50 a share: authorized
20,000,000 shares; issued and outstanding
3,779,818 shares as of March 31, 1995 and
December 31, 1994, including 1,885 shares in
treasury at March 31, 1995. 9,451,000 9,451,000
Capital Surplus 18,887,000 18,887,000
Retained Earnings 31,750,000 30,605,000
Cost of common stock in treasury (53,000) NONE
Net unrealized loss on securities available for sale,
net of deferred income taxes (1,054,000) (2,074,000)
TOTAL STOCKHOLDERS' EQUITY 58,981,000 56,869,000
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 815,637,000 $ 780,526,000

See notes to consolidated financial statements
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
CITY HOLDING COMPANY AND SUBSIDIARIES
THREE MONTH PERIOD ENDED
March 31
1995 1994
INTEREST INCOME
Interest and fees on loans $ 11,726,000 $ 8,985,000
Interest and dividends on securities:
Taxable 2,639,000 3,135,000
Tax-exempt 420,000 447,000
Other interest income 0 98,000
TOTAL INTEREST INCOME 14,785,000 12,665,000

INTEREST EXPENSE
Interest on deposits 5,369,000 4,889,000
Interest on short-term borrowings 799,000 109,000
Interest on long-term debt 130,000 97,000
TOTAL INTEREST EXPENSE 6,298,000 5,095,000

NET INTEREST INCOME 8,487,000 7,570,000
PROVISION FOR POSSIBLE LOAN LOSSES 183,000 201,000

NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 8,304,000 7,369,000

OTHER INCOME
Securities gains(losses) 3,000 69,000
Service charges 620,000 498,000
Other 472,000 318,000
TOTAL OTHER INCOME 1,095,000 885,000

OTHER EXPENSES
Salaries and employee benefits 3,565,000 3,024,000
Net occupancy expense 1,093,000 969,000
Other 2,184,000 1,837,000
TOTAL OTHER EXPENSES 6,842,000 5,830,000

INCOME BEFORE INCOME TAXES 2,557,000 2,424,000
INCOME TAXES 813,000 766,000

NET INCOME $ 1,744,000 $ 1,658,000
Net income per common share $ .46 $ .44
Average common shares outstanding 3,778,965 3,772,006

See notes to consolidated financial statements
<PAGE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
CITY HOLDING COMPANY AND SUBSIDIARIES
Three months Ended March 31, 1995
<TABLE>
<CAPTION>
NET
UNREALIZED
GAIN/(LOSS)
SECURITIES TOTAL
COMMON CAPITAL RETAINED AVAILABLE TREASURY STOCKHOLDERS'
STOCK SURPLUS EARNINGS FOR SALE STOCK EQUITY

<S> <C> <C> <C> <C> <C> <C>
Balances
at December 31, 1994 $9,451,000 $18,887,000 $30,605,000 ($2,074,000) 0 $56,869,000

Net income 1,744,000 1,744,000

Cash dividends
declared ($.16/share) (599,000) (599,000)

Change in unrealized gain/(loss)
net of income taxes of $719,000 1,020,000 1,020,000

Cost of 2,313 shares of
common stock acquired
for treasury (65,000) (65,000)

Issuance of 428 shares
of treasury stock 12,000 12,000
Balances
at March 31, 1995 $9,451,000 $18,887,000 $31,750,000 $(1,054,000) ($53,000) $58,981,000

NET
UNREALIZED
Three months Ended March 31, 1994 GAIN/(LOSS)
SECURITIES TOTAL
COMMON CAPITAL RETAINED AVAILABLE TREASURY STOCKHOLDERS'
STOCK SURPLUS EARNINGS FOR SALE STOCK EQUITY

<S> <C> <C> <C> <C> <C> <C>
Balances
at December 31, 1993 $8,846,000 $13,999,000 $35,222,000 ($23,000) ($2,210,000) $55,834,000

Net income 1,658,000 1,658,000

Cash dividends
declared ($.15/share) (476,000) (476,000)

Adjustment to beginning balance
of unrealized gain on securities
for change in accounting method,
net of income taxes of $704,000 1,055,000 1,055,000

Changes in net unrealized
gain/(loss), net of income
taxes of $597,000 (905,000) (905,000)

Issuance of 1,053 shares of
treasury stock 5,000 25,000 30,000

Balances
at March 31, 1994 $8,846,000 $14,004,000 $36,404,000 $ 127,000 ($2,185,000) $57,196,000
</TABLE>
See notes to consolidated financial statements
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
CITY HOLDING COMPANY AND SUBSIDIARIES
<TABLE>
THREE MONTH PERIOD ENDED
MARCH 31

1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $1,744,000 $1,658,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Net amortization 236,000 237,000
Provision for depreciation 534,000 389,000
Provision for loan losses 183,000 201,000
Realized securities gains (3,000) (69,000)
Loan originated for sale (9,114,000) (2,418,000)
Purchases of loans held for sale (43,448,000) (15,861,000)
Proceeds from loans sold 37,998,000 0
Realized gains on loans sold (42,000) 0
Minority interest in income of subsidiary 0 17,000
Decrease (increase) in accrued interest receivable 279,000 (85,000)
Increase in other assets (444,000) (1,233,000)
Decrease (increase) in other liabilities (966,000) 425,000

NET CASH USED IN OPERATING ACTIVITIES (13,043,000) (16,739,000)

INVESTING ACTIVITIES
Proceeds from sales of securities available for sale 10,533,000 3,305,000
Proceeds from maturities of securities available for sale 2,325,000 10,656,000
Purchases of securities available for sale (11,273,000) (9,074,000)
Proceeds from sales of securities 0 0
Proceeds from maturities of securities 6,697,000 56,722,000
Purchases of securities (1,000,000) (48,330,000)
Net increase in loans (32,819,000) (4,953,000)
Purchases of premises and equipment (1,288,000) (541,000)

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (26,825,000) 7,785,000

FINANCING ACTIVITIES
Net increase in noninterest bearing deposits 730,000 2,027,000
Net increase in interest-bearing deposits 3,972,000 13,519,000
Net increase (decrease) in short-term borrowings 31,313,000 (5,089,000)
Proceeds from long-term-debt 2,150,000 0
Repayment of long-term debt (4,200,000) 0
Purchases of treasury stock (65,000) 0
Proceeds from sales of treasury stock 12,000 30,000
Cash dividends paid (599,000) (476,000)

NET CASH PROVIDED BY FINANCING ACTIVITIES 33,313,000 10,011,000

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (6,555,000) 1,057,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 27,591,000 27,436,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD $21,036,000 $28,493,000
</TABLE>

See notes to consolidated financial statement
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

March 31, 1995

NOTE A - BASIS OF PRESENTATION

The accompanying consolidated financial statements, which are
unaudited, include all the accounts of City Holding Company (the Parent
Company) and its wholly owned subsidiaries (collectively, the Company).
All material intercompany transactions have been eliminated. The
consolidated financial statements include all adjustments which, in the
opinion of management, are necessary for a fair presentation of the results
of operations and financial condition for each of the periods presented.
Such adjustments are of a normal recurring nature. The results of
operations for the three months ended March 31, 1995, are not necessarily
indicative of the results of operations that can be expected for the year
ending December 31, 1995. The Company's accounting and reporting policies
conform with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. For further information, refer to the consolidated
financial statements and footnotes thereto included in the City Holding
Company annual report on Form 10-K for the year ended December 31, 1994.

NOTE B - INCOME TAXES

The consolidated provision for income taxes is based upon
financial statement earnings. The effective tax rate for the three months
ended March 31, 1995, of 31.80% varied from the statutory federal income
tax rate primarily due to state income taxes and the tax effects of
nontaxable interest income and the amortization of goodwill.

NOTE C - COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business, there are various
commitments and contingent liabilities, such as commitments to extend
credit and standby letters of credit, that are not included in the
consolidated financial statements. These commitments approximate
$49,248,000 at March 31, 1995. These arrangements, consisting principally
of unused lines of credit issued in the normal course of business, have
credit risks essentially the same as that involved in extending loans to
customers and are subject to the Company's standard credit policies.
Standby letters of credit, which total $3,662,000, have historically
expired unfunded.

NOTE D - STOCKHOLDERS' EQUITY

In April 1994, the Company announced the implementation of
an Open Market Stock Purchase Plan (the Plan). The Board of Directors
allocated $5 million to be used over the next two years to purchase shares
of the Company's common stock. The Plan was authorized to commence May 1,
1994. The Plan as of March 31, 1995 has not reacquired a material number
of shares.

NOTE E - ACCOUNTING PRONOUNCEMENT WITH DELAYED EFFECTIVE DATE

On January 1, 1995, the Company adopted Statement of
Financial Accounting Standards (FAS) No. 114, "Accounting by Creditors for
Impairment of a Loan", which requires that impaired loans be identified and
measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate on the fair value of the
collateral if the loan is collateral dependent. FAS No. 114 did not have a
material impact on the Company's financial position or results of
operations.

NOTE F - PENDING MERGER

In March 1995, the Company signed a definitive agreement to
acquire First Merchants Bancorp, Montgomery, West Virginia (Merchants). At
March 31, 1995, Merchants reported total assets of approximately $108
million. Under the definitive agreement signed by the parties, Merchants
shareholders will receive 1.60 shares of the Company's common stock for
each share of Merchants' 576,000 outstanding shares. It is anticipated
that the transaction will be accounted for under the pooling of interests
method of accounting. It is expected that the merger will be consummated
in the third quarter of 1995. The following condensed unaudited proforma
financial information presents selected balance sheet amounts and operating
results of the Company and Merchants as though they had been combined
during all periods indicated below.
(In thousands, except per share data)

December 31 March 31 March 31
1994 1995 1994
AT PERIOD END
Net loans $547,809 $573,225 $469,860
Total deposits 746,805 751,005 728,676
Total assets 895,817 923,783 830,187

SUMMARY OF OPERATIONS Year Ended Three months
December 31 March 31
1994 1995 1994

Net interest income $ 37,594 $ 9,707 $ 8,685
Net income 8,142 2,040 1,906
Net income per common share 1.74 .43 .41

NOTE G - LONG-TERM BORROWINGS

Long-term debt consists of a $10,000,000 revolving line of credit
of the Parent Company with a variable rate based on the lesser of the adjusted
LIBOR rate plus 1.875% per annum or the lender's base rate less .25% per annum
(8.00% at March 31, 1995) due on June 30, 1995. The lender has the option to
extend the maturity date for an additional twelve months. As of March 31, 1995,
the outstanding balance was equal to $4,825,000. Interest on this obligation is
payable quarterly, and the Parent Company has pledged the common stock of The
City National Bank of Charleston and the Peoples Bank of Point Pleasant as
security for the loan. Management intends to refinance this loan according to
the provisions provided in the agreement.

CONSOLIDATED BALANCE SHEETS
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY
MARCH 31 DECEMBER 31
1995 1994
(UNAUDITED)
ASSETS ------------ ------------
Cash and due from banks $4,520,275 $5,211,650
Federal funds sold 50,000 810,000
------------ ------------
CASH AND CASH EQUIVALENTS 4,570,275 6,021,650

Interest-bearing deposits in other banks 643,304 670,734
Securities available for sale (cost: 03-31-95 -
$16,217,850: 12-31-94 - $16,204,906) 15,397,296 14,888,731
Securities held to maturity (approximate market
value: 3-31-95 - $29,914,923;
12-31-94 - $28,304,476) 29,576,766 28,648,209
Loans - gross 51,808,607 59,015,396
Less: Unearned income (140,358) (141,203)
Allowance for loan losses (474,166) (460,000)
------------ ------------
LOANS - NET 51,194,083 58,414,193

Premises and equipment 3,572,119 3,452,390
Other assets 3,192,401 3,195,202
------------ ------------
TOTAL ASSETS $108,146,244 $115,291,109
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest bearing $14,001,035 $13,674,107
Interest bearing 81,038,184 81,867,045
------------ ------------
TOTAL DEPOSITS 95,039,219 95,541,152
Short-term borrowings:
Securities sold under agreements
to repurchase 1,697,766 8,634,139
Other short-term borrowings 274,217 509,881
------------ ------------
TOTAL SHORT-TERM BORROWINGS 1,971,983 9,144,020
Other liabilities 1,154,957 1,144,151
------------ ------------
TOTAL LIABILITIES 98,166,159 105,829,323
Stockholders' equity:
Common stock, $2 par value, 1,000,000 shares
authorized, 576,000 shares issued and
outstanding 1,152,000 1,152,000
Surplus 649,343 649,343
Retained earnings 8,671,075 8,450,153
Net unrealized (loss) gain on Securities
available for sale, net of related taxes
of $(328,221) and $(526,465), respectively (492,333) (789,710)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 9,980,085 9,461,786
------------ ------------,
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $108,146,244 $115,291,109
============ ============
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY

THREE MONTHS ENDED
MARCH 31
1995 1994
---------- ----------
INTEREST INCOME
Interest and fees on loans $1,255,395 $1,158,982
Interest and dividends on securities:
Taxable 549,750 432,004
Nontaxable 168,826 194,909
Interest on federal funds sold 11,497 10,997
Interest on deposits with other banks 15,849 23,273
---------- ----------
TOTAL INTEREST INCOME 2,001,317 1,820,165

INTEREST EXPENSE
Interest on deposits 724,923 679,740
Interest on short-term borrowings 56,881 25,033
---------- ----------
TOTAL INTEREST EXPENSE 781,804 704,773
---------- ----------
NET INTEREST INCOME 1,219,513 1,115,393
PROVISION FOR LOAN LOSSES 18,000 25,500
---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,201,513 1,089,892

OTHER INCOME
Service charges on deposit accounts 88,276 73,117
Other service charges and fees 10,831 11,395
Other income 55,140 49,707
Investment securities gains, net 0 8,300
---------- ----------
TOTAL OTHER INCOME 154,247 142,519

OTHER EXPENSE
Salaries and employee benefits 471,142 461,057
Occupancy expense of premises 80,113 71,758
Furniture and equipment expense 71,446 71,802
Other operating expenses 337,282 310,072
---------- ----------
TOTAL OTHER EXPENSE 959,983 914,689
---------- ----------
INCOME BEFORE INCOME TAXES 395,777 317,722
INCOME TAXES 99,975 69,699
---------- ----------

NET INCOME $295,802 $248,023
========== ==========

EARNINGS PER COMMON SHARE :

Net income $.51 $.43
======== ========

AVERAGE SHARES OUTSTANDING 576,000 576,000
======== ========

See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY

Net
Unrealized
(Loss) Gain Total
Common Retained on St'holders'
Stock Surplus Earnings Securities Equity
---------- ---------- ---------- ---------- ----------
Balance at
Dec. 31, 1994 $1,152,000 $649,343 $8,450,153 $(789,710) $9,461,786

Net income 295,802 295,802

Cash dividends
declared
($.13 per share) (74,880) (74,880)

Change in net
unrealized gain
(loss) on
Securities AFS
net of taxes of
$(198,244) 297,377 297,377
---------- ---------- ---------- ---------- ----------
Balance at
March 31, 1995 $1,152,000 $649,343 $8,671,075 $(492,333) $9,980,085
========== ========== ========== ========== ==========

Balance at
Dec. 31, 1993 $1,152,000 $649,343 $7,665,033 $304,990 $9,771,366

Net income 248,023 248,023

Cash dividends
declared
($.13 per share) (74,880) (74,880)

Change in net
unrealized gain
(loss) on
securities AFS
net of taxes
of (237,772) (356,679) (356,679)
---------- ---------- ---------- ---------- ----------
Balance at
March 31, 1994 $1,152,000 $649,343 $7,838,176 $(51,689) $9,587,830
========== ========== ========== ========== ==========

See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY

THREE MONTHS ENDED
MARCH 31 MARCH 31
1995 1994
---------- ----------
OPERATING ACTIVITIES
Net income $295,802 $248,023
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Net amortization (11,811) 39,474
Provision for loan losses 18,000 25,500
Depreciation 50,665 51,900
Securities, gain net 0 (8,300)
Purchases of trading securities 0 0
Proceeds from sales of trading securities 0 0
Increase in other assets (186,153) (127,285)
Increase (Decrease) in other liabilities 108,725 (26,783)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 275,228 202,529

INVESTING ACTIVITIES
Purchases of securities held to maturity (2,237,949) (669,238)
Purchases of securities available for sale (18,500) (698,238)
Proceeds from maturities and calls of securities
held to maturity 1,326,768 1,038,389
Proceeds from sales of securities
held to maturity 0 0
Proceeds from sales of securities
available for sale 0 500,000
Net decrease in short-term investments 27,430 587,531
Net decrease (increase) in loans 7,185,628 (2,710,101)
Purchases of premises and equipment (170,394) (10,479)
Proceeds from sale of other real estate owned 7,185 0
---------- ----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 6,120,168 (1,962,136)

FINANCING ACTIVITIES
Net increase in noninterest-bearing deposits 326,928 1,727,574
Net (decrease) increase in
interest-bearing deposits (828,861) 1,445,110
Net (decrease) in repurchase agreements (6,936,374) (1,124,862)
Net (decrease) in other short-term borrowings (235,664) (55,920)
Cash dividends paid (172,800) (155,520)
---------- ----------
NET CASH (USED IN ) PROVIDED BY
FINANCING ACTIVITIES (7,846,771) 1,836,382
---------- ----------

NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (1,451,375) 76,775

Cash and cash equivalents at beginning of period 6,021,650 5,146,864
---------- ----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD 4,570,275 5,223,639
========== ==========

See notes to consolidated financial statements.
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY
March 31, 1995

NOTE A - GENERAL

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information, and with the instructions to Form 10-Q and
Article 10 of Regulation S-X, and conform to general reporting practices
within the banking industry. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. The accounting and reporting
policies followed in the preparation of these financial statements are
consistent with those applied in the preparation of the Consolidated
Financial Statements of First Merchants Bancorp, Inc. and Subsidiary (the
Company) as of and for the year ended December 31, 1994. The notes
included herein should be read in conjunction with the notes to
consolidated financial statements included in the 1994 annual report on
Form 10-k.

In the opinion of management, all adjustments necessary for a fair
presentation of financial position and results of operations for the
interim periods have been made. Such adjustments are of a normal recurring
nature. Operating results for the three months ended March 31, 1995 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1995.

NOTE B - INCOME TAXES

The principal reasons for the difference between the effective tax rate and
the statutory federal tax rate are tax exempt interest and state income tax
expense.

At the end of each month, the Company makes its best estimate of the
effective tax rate expected for the year and uses this rate in providing
for income taxes on an interim basis.

NOTE C - COMMITMENTS AND CONTINGENCIES

In the normal course of business, there are various commitments to extend
credit under standby letters of credit and lines of credit which are not
reflected in the accompanying financial statements. As of March 31, 1995
the Company's subsidiary had commitments outstanding to extend credit under
standby letters of credit and lines of credit of approximately $422,051 and
$2,288,323, respectively. Such commitments have essentially the same
credit risk as that involved in extending loans to customers and are
subject to the Company's standard credit policies. Historically,
substantially all standby letters of credit expire unfunded. Management
does not anticipate any material losses as a result of these commitments.

NOTE D - ACCOUNTING PRONOUNCEMENTS WITH DELAYED EFFECTIVE DATES

The Company adopted the provisions of FASB Statement No. 114, "Accounting
by Creditors for Impairment of a Loan," effective January 1, 1995.
Statement 114 requires that certain impaired loans be measured based on the
present value of expected future cash flows, discounted at the effective
interest rate of the loan, or, as a practical expedient, the loan may be
valued at the fair value of the collateral if the loan is collateral
dependent. Adoption of the Statement was not material to the Company's
financial condition.

NOTE E - PENDING MERGER

On March 14, 1995, the Company's Board of Directors approved a plan of
merger whereunder the Company will be acquired by City Holding Company.
The merger is subject to approval of shareholders and regulators and is
expected to be consummated in the summer of 1995.
<PAGE>

REPORT OF INDEPENDENT AUDITORS

BOARD OF DIRECTORS AND STOCKHOLDERS
CITY HOLDING COMPANY

We have audited the accompanying consolidated balance sheets of City
Holding Company and subsidiaries as of December 31, 1994 and 1993, and
the related consolidated statements of income, changes in stockholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits. We did not audit the
1994, 1993 or 1992 consolidated financial statements of Hinton Financial
Corporation and subsidiary which statements reflect total revenues
constituting 8%, 10% and 12% of the 1994, 1993 and 1992 consolidated
totals, respectively. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it
relates to data included for Hinton Financial Corporation and
subsidiary, is based solely on the report of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits and the report of other auditors provide a reasonable
basis for our opinion.

In our opinion, based on our audits and the report of other auditors,
the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of City Holding
Company and subsidiaries at December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles.

As discussed in NOTE FOUR to the consolidated financial statements,
City Holding Company changed its method of accounting for certain debt
and equity securities as of January 1, 1994.

/s/ Ernst & Young LLP

Charleston, West Virginia
January 20, 1995
<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Hinton Financial Corporation
Hinton, West Virginia

We have audited the accompanying consolidated balance sheets of Hinton
Financial Corporation and Subsidiary as of December 31, 1994, and 1993, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the years in the three-year period ended December 31, 1994, (not
presented separately, herein). These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Hinton
Financial Corporation and Subsidiary as of December 31, 1994, and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994, in conformity with generally accepted
accounting principles.

/S/ PERSINGER & COMPANY, L.L.C.

Beckley, West Virginia
January 6, 1995

<TABLE>

CONSOLIDATED BALANCE SHEETS
CITY HOLDING COMPANY AND SUBSIDIARIES

DECEMBER 31
1994 1993
<S> <C> <C>
ASSETS
CASH AND DUE FROM BANKS $ 27,591,000 $ 23,966,000
FEDERAL FUNDS SOLD 3,470,000
SECURITIES AVAILABLE FOR SALE, AT FAIR VALUE 67,920,000
SECURITIES AVAILABLE FOR SALE (APPROXIMATE MARKET
VALUES AT DECEMBER 31, 1993, $77,286,000) 75,527,000
INVESTMENT SECURITIES (APPROXIMATE MARKET VALUES:
1994-$123,995,000; 1993-$170,745,000) 128,457,000 166,110,000
LOANS:
GROSS LOANS 504,956,000 424,280,000
UNEARNED INCOME (9,544,000) (10,526,000)
ALLOWANCE FOR POSSIBLE LOAN LOSSES (6,017,000) (5,764,000)
NET LOANS 489,395,000 407,990,000
LOANS HELD FOR SALE 30,227,000
BANK PREMISES AND EQUIPMENT 17,678,000 15,426,000
ACCRUED INTEREST RECEIVABLE 5,922,000 5,292,000
OTHER ASSETS 13,336,000 9,297,000
TOTAL ASSETS $ 780,526,000 $ 707,078,000

LIABILITIES
DEPOSITS:
NONINTEREST-BEARING $ 80,694,000 $ 67,633,000
INTEREST-BEARING 570,570,000 549,700,000
TOTAL DEPOSITS 651,264,000 617,333,000
SHORT-TERM BORROWINGS 57,483,000 21,669,000
LONG-TERM DEBT 6,875,000 5,875,000
OTHER LIABILITIES 8,035,000 5,863,000
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 504,000
TOTAL LIABILITIES 723,657,000 651,244,000

STOCKHOLDERS' EQUITY
PREFERRED STOCK, PAR VALUE $25 A SHARE: AUTHORIZED -
500,000 SHARES; NONE ISSUED
COMMON STOCK, PAR VALUE $2.50 A SHARE: AUTHORIZED -
20,000,000 SHARES; ISSUED AND OUTSTANDING: 1994 -
3,780,477 SHARES; 1993 - 3,538,671 SHARES
INCLUDING
109,761 SHARES IN TREASURY AT DECEMBER 31, 1993 9,451,000 8,846,000
CAPITAL SURPLUS 18,887,000 13,999,000
RETAINED EARNINGS 30,605,000 35,222,000
NET UNREALIZED LOSS ON SECURITIES AVAILABLE FOR SALE,
NET OF DEFERRED INCOME TAXES (2,074,000) (23,000)
56,869,000 58,044,000
COST OF COMMON STOCK IN TREASURY (2,210,000)
TOTAL STOCKHOLDERS' EQUITY 56,869,000 55,834,000
COMMITMENTS AND CONTINGENT LIABILITIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 780,526,000 $ 707,078,000

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

</TABLE>

<TABLE>

CONSOLIDATED STATEMENTS OF INCOME
CITY HOLDING COMPANY AND SUBSIDIARIES

YEAR ENDED DECEMBER 31

1994 1993 1992
<S> <C> <C> <C>
INTEREST INCOME
INTEREST AND FEES ON LOANS $ 41,167,000 $ 33,251,000 $ 28,222,000
INTEREST ON INVESTMENT SECURITIES:
TAXABLE 12,071,000 12,650,000 12,895,000
TAX-EXEMPT 1,716,000 1,839,000 1,880,000
OTHER INTEREST INCOME 194,000 476,000 530,000
TOTAL INTEREST INCOME 55,148,000 48,216,000 43,527,000

INTEREST EXPENSE
INTEREST ON DEPOSITS 20,110,000 18,849,000 18,514,000
INTEREST ON SHORT-TERM BORROWINGS 1,687,000 424,000 329,000
INTEREST ON LONG-TERM DEBT 445,000 274,000 35,000
TOTAL INTEREST EXPENSE 22,242,000 19,547,000 18,878,000
NET INTEREST INCOME 32,906,000 28,669,000 24,649,000
PROVISION FOR POSSIBLE LOAN LOSSES 953,000 1,341,000 2,222,000
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN
LOSSES 31,953,000 27,328,000 22,427,000
OTHER INCOME
INVESTMENT SECURITIES (LOSSES) GAINS (803,000) 322,000 9,000
SERVICE CHARGES 2,396,000 1,893,000 1,362,000
OTHER INCOME 3,054,000 789,000 526,000
TOTAL OTHER INCOME 4,647,000 3,004,000 1,897,000

OTHER EXPENSES
SALARIES AND EMPLOYEE BENEFITS 13,122,000 10,172,000 7,695,000
OCCUPANCY, EXCLUDING DEPRECIATION 2,452,000 1,486,000 1,360,000
DEPRECIATION 1,829,000 1,386,000 988,000
OTHER EXPENSES 9,045,000 7,907,000 5,866,000
TOTAL OTHER EXPENSES 26,448,000 20,951,000 15,909,000
INCOME BEFORE INCOME TAXES 10,152,000 9,381,000 8,415,000
INCOME TAXES 3,193,000 2,949,000 2,511,000
NET INCOME $ 6,959,000 $ 6,432,000 $ 5,904,000
NET INCOME PER COMMON SHARE $ 1.85 $ 1.71 $ 1.56
AVERAGE COMMON SHARES OUTSTANDING 3,772,638 3,762,783 3,779,502

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY
CITY HOLDING COMPANY AND SUBSIDIARIES
<TABLE>
UNREALIZED LOSS
COMMON ON SECURITIES TOTAL
STOCK CAPITAL RETAINED AVAILABLE TREASURY STOCKHOLDERS'
(PAR VALUE) SURPLUS EARNINGS FOR SALE STOCK EQUITY
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1992 $ 7,978,000 $ 8,913,000 $ 31,649,000 $ (25,000) $ (330,000) $ 48,185,000
NET INCOME 5,904,000 5,904,000
COST OF 31,422 SHARES OF
COMMON STOCK
ACQUIRED FOR TREASURY (548,000) (548,000)
SALE OF 38,107 SHARES
OF TREASURY STOCK 287,000 378,000 665,000
CHANGE IN NET UNREALIZED LOSS
ON MARKETABLE EQUITY
SECURITIES (70,000) (70,000)
ISSUANCE OF 10% STOCK DIVIDEND 681,000 4,098,000 (4,779,000)
CASH DIVIDENDS--$.49 A SHARE (1,522,000) (1,522,000)
CASH DIVIDENDS OF ACQUIRED
SUBSIDIARIES (299,000) (299,000)

BALANCES AT DECEMBER 31, 1992 8,659,000 13,298,000 30,953,000 (95,000) (500,000) 52,315,000
NET INCOME 6,432,000 6,432,000
CASH DIVIDENDS--$.56 A SHARE (1,833,000) (1,833,000)
CASH DIVIDENDS OF ACQUIRED
SUBSIDIARY (330,000) (330,000)
COMMON STOCK ISSUED IN
ACQUISITION 187,000 644,000 831,000
CHANGE IN NET UNREALIZED LOSS
ON MARKETABLE EQUITY SECURITIES 72,000 72,000
COST OF 96,072 SHARES OF
COMMON STOCK ACQUIRED FOR
TREASURY (2,218,000) (2,218,000)
SALE OF 22,801 SHARES OF
TREASURY STOCK 57,000 508,000 565,000
BALANCES AT DECEMBER 31, 1993 8,846,000 13,999,000 35,222,000 (23,000) (2,210,000) 55,834,000

NET INCOME 6,959,000 6,959,000
CASH DIVIDENDS
DECLARED-- $.59 A SHARE (1,930,000) (1,930,000)
CASH DIVIDENDS OF
ACQUIRED SUBSIDIARY (366,000) (366,000)
ADJUSTMENT TO BEGINNING BALANCE
FOR CHANGE IN ACCOUNTING
METHOD, NET OF INCOME
TAXES OF $704,000 1,055,000 1,055,000
CHANGE IN UNREALIZED GAIN/(LOSS)
NET OF INCOME TAXES OF $1,761,000 (3,106,000) (3,106,000)
REDEMPTION OF FRACTIONAL AND
DISSENTER SHARES (1,843,000) (1,843,000)
COST OF 7,002 SHARES OF
COMMON STOCK ACQUIRED FOR TREASURY (193,000) (193,000)
SALE OF 14,898 SHARES OF
TREASURY STOCK 131,000 328,000 459,000
RETIREMENT OF 101,865 SHARES
OF COMMON STOCK HELD IN TREASURY (255,000) (1,820,000) 2,075,000
ISSUANCE OF 10% STOCK DIVIDEND 860,000 8,420,000 (9,280,000)
BALANCES AT DECEMBER 31, 1994 $ 9,451,000 $ 18,887,000 $ 30,605,000 $ (2,074,000) $ 0 $ 56,869,000

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
CITY HOLDING COMPANY AND SUBSIDIARIES

<TABLE> YEAR ENDED DECEMBER 31
1994 1993 1992

<S> <C> <C> <C>
OPERATING ACTIVITIES
NET INCOME $ 6,959,000 $ 6,432,000 $ 5,904,000
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
NET AMORTIZATION 960,000 725,000 306,000
PROVISION FOR DEPRECIATION 1,829,000 1,386,000 988,000
PROVISION FOR POSSIBLE LOAN LOSSES 953,000 1,341,000 2,222,000
DEFERRED INCOME TAX BENEFIT (303,000) (153,000) (402,000)
MINORITY INTEREST IN INCOME OF SUBSIDIARY 10,000
LOANS ORIGINATED FOR SALE (24,729,000)
PURCHASES OF LOANS HELD FOR SALE (189,719,000)
PROCEEDS FROM LOANS SOLD 184,221,000
REALIZED INVESTMENT SECURITIES LOSSES (GAINS) 803,000 (322,000) (9,000)
LOSS ON SALE OF FORECLOSED PROPERTIES 22,000
(INCREASE) DECREASE IN ACCRUED INTEREST
RECEIVABLE (630,000) (132,000) 165,000
(INCREASE) DECREASE IN OTHER ASSETS (2,961,000) 721,000 (212,000)
INCREASE (DECREASE) IN OTHER LIABILITIES 2,172,000 157,000 (651,000)
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (20,445,000) 10,165,000 8,333,000

INVESTING ACTIVITIES
PROCEEDS FROM SALES OF INVESTMENT SECURITIES 9,218,000 5,304,000
PROCEEDS FROM MATURITIES AND CALLS OF INVESTMENT
SECURITIES 75,181,000 142,801,000 119,936,000
PURCHASES OF INVESTMENT SECURITIES (52,758,000) (184,643,000) (131,466,000)
PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE 33,946,000
PROCEEDS FROM MATURITIES AND CALLS OF SECURITIES
AVAILABLE FOR SALE 13,093,000 5,539,000
PURCHASES OF SECURITIES AVAILABLE FOR SALE (28,791,000)
NET INCREASE IN LOANS (82,358,000) (77,007,000) (43,989,000)
NET CASH (PAID) ACQUIRED IN ACQUISITIONS (504,000) 41,454,000 2,564,000
SALE OF FORECLOSED PROPERTIES 10,000 125,000
PURCHASES OF PREMISES AND EQUIPMENT (4,081,000) (5,166,000) (2,299,000)
NET CASH USED IN INVESTING ACTIVITIES (46,272,000) (67,794,000) (49,825,000)

FINANCING ACTIVITIES
NET INCREASE IN NONINTEREST-BEARING DEPOSITS 13,061,000 2,456,000 18,509,000
NET INCREASE IN INTEREST-BEARING DEPOSITS 20,870,000 30,091,000 40,607,000
NET INCREASE IN SHORT-TERM BORROWINGS 35,814,000 12,175,000 1,110,000
PROCEEDS FROM LONG-TERM DEBT 6,875,000 5,225,000 4,000,000
REPAYMENT OF LONG-TERM DEBT (5,875,000) (3,350,000)
PURCHASES OF TREASURY STOCK (193,000) (2,218,000) (548,000)
PROCEEDS FROM SALES OF TREASURY STOCK 459,000 565,000 665,000
REDEMPTION OF DISSENTER AND FRACTIONAL SHARES (1,843,000)
CASH DIVIDENDS PAID (2,296,000) (2,163,000) (1,821,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES 66,872,000 42,781,000 62,522,000
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 155,000 (14,848,000) 21,030,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 27,436,000 42,284,000 21,254,000
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 27,591,000 $ 27,436,000 $ 42,284,000

</TABLE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

DECEMBER 31, 1994

NOTE ONE
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES: The
accounting and reporting policies of City Holding Company and its
subsidiaries (the Company) conform with generally accepted accounting
principles. The following is a summary of the more significant
policies.

PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include the accounts of City Holding Company and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS: The Company considers cash and due from
banks and federal funds sold as cash and cash equivalents. The carrying
amounts reported in the December 31, 1994 and 1993, consolidated balance
sheets for cash and cash equivalents approximate those assets' fair
values.

SECURITIES: Management determines the appropriate classification of
securities at the time of purchases. If management has the intent and
the Company has the ability at the time of purchase to hold debt
securities to maturity, they are classified as investments and are
stated at cost, adjusted for amortization of premiums and accretion of
discounts. At December 31, 1994, debt securities for which the Company
does not have the intent or ability to hold to maturity are classified
as available for sale along with the Company's investment in equity
securities. Securities available for sale are carried at fair value,
with the unrealized gains and losses, net of tax, reported in a separate
component of stockholders' equity. Securities classified as available
for sale include securities that management intends to use as part of
its asset/liability management strategy and that may be sold in response
to changes in interest rates, resultant prepayment risk, and other
factors.

At December 31, 1993, equity securities were stated at the lower of
cost or market value, while debt securities were carried at amortized
cost. Gains and losses on the sale of securities are computed by the
specific identification method and are reported separately in the
consolidated statements of income.

LOANS: Interest income on loans is accrued and credited to operations
based upon the principal amount outstanding, using methods which
generally result in level rates of return. The accrual of interest
income generally is discontinued when a loan becomes 90 days past due as
to principal or interest. When interest accruals are discontinued,
unpaid interest recognized in income in the current year is reversed,
and interest accrued in prior years is charged to the allowance for loan
losses. Management may elect to continue the accrual of interest when
the estimated net realizable value of collateral exceeds the principal
balance and related accrued interest, and the loan is in process of
collection.

LOANS HELD FOR SALE: Loans held for sale represent mortgage loans the
Company has either purchased or originated with the intent to sell on
the secondary market and are carried at the lower of cost or estimated
fair value.

ALLOWANCE FOR LOAN LOSSES: The provision for possible loan losses
included in the consolidated statements of income is based upon
management's evaluation of individual credits in the loan portfolio,
historical loan loss experience, current and expected future economic
conditions, and other relevant factors. These provisions, less net
charge-offs, comprise the allowance for loan losses. In management's
judgment, the allowance for loan losses is maintained at a level
adequate to provide for probable losses on existing loans.

BANK PREMISES AND EQUIPMENT: Bank premises and equipment are stated
at cost less accumulated depreciation. Depreciation is computed
primarily by the straight-line method over the estimated useful lives of
the assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE ONE
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (CONTINUED)

INTANGIBLES: Intangible assets, which are included in other assets in
the consolidated balance sheets, are comprised of goodwill and core
deposits which are amortized using straight-line (15 year life) and
accelerated methods (10 year life), respectively, over their estimated
useful lives.

During 1994, the Company purchased mortgage loan servicing rights
totaling $1,200,000 which are also included in other assets in the
consolidated balance sheets. The servicing rights are being amortized
using an accelerated method over the period of estimated net servicing
income.

INCOME TAXES: The consolidated provision for income taxes is based
upon reported income and expense. Deferred income taxes (included in
other assets) are provided for temporary differences between financial
reporting and tax bases of assets and liabilities. The Company files a
consolidated income tax return. The respective subsidiaries generally
provide for income taxes on a separate return basis and remit amounts
determined to be currently payable to the Parent Company.

NET INCOME PER COMMON SHARE: Net income per common share is based on
the weighted average common shares outstanding during each year. On
December 12, 1994, a 10% stock dividend was declared by the Board of
Directors for shareholders of record on January 2, 1995. The stock
dividend was paid on January 15, 1995, and all stock related data in the
consolidated financial statements reflects the stock dividend.A 10%
stock dividend was also declared in 1992. For each declaration an
amount equal to the fair value of the additional shares issued was
transferred from retained earnings to the common stock and capital
surplus accounts.

LOAN FEES AND COST: Loan origination and commitment fees and direct
loan origination costs are principally being recognized as collected and
incurred. The use of this method of recognition does not produce
results that are materially different from results which would have been
produced if such costs and fees were deferred and amortized as an
adjustment of loan yield over the life of the related loan.

STATEMENTS OF CASH FLOWS: Cash paid for interest, including long-term
debt, was $21,998,000, $19,693,000 and $19,996,000 in 1994, 1993, and
1992, respectively. Cash paid for income taxes was $3,219,000,
$2,877,000, and $2,957,000 in 1994, 1993, and 1992, respectively. NOTE
TWO RESTRICTIONS ON CASH AND DUE FROM BANKS

Certain of the subsidiary banks are required to maintain average
reserve balances with the Federal Reserve Bank. The average amount of
those balances for the year ended December 31, 1994, was approximately
$4,366,000.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE THREE
ACQUISITIONS

On December 5, 1994, the Company acquired 100% of the common stock of
Hinton Financial Corporation and subsidiary (Hinton) in exchange for
460,047 shares of the Company's common stock. The transaction has been
accounted for as a pooling of interests and, accordingly, the
consolidated financial statements for all periods presented have been
restated to include the accounts of Hinton. Previously reported results
of the Company have been restated as follows:

<TABLE>

NINE MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1994 DECEMBER 31, 1993 DECEMBER 31, 1992

<S> <C> <C> <C>
NET INTEREST INCOME AS PREVIOUSLY
REPORTED BY THE COMPANY $ 22,235,000 $ 25,813,000 $ 21,761,000
HINTON'S PREVIOUSLY REPORTED RESULTS 2,048,000 2,856,000 2,888,000
RESTATED NET INTEREST INCOME $ 24,283,000 $ 28,669,000 $ 24,649,000

NET INCOME AS PREVIOUSLY REPORTED
BY THE COMPANY $ 4,431,000 $ 5,503,000 $ 5,039,000
HINTON'S PREVIOUSLY REPORTED RESULTS 596,000 929,000 865,000
RESTATED NET INCOME $ 5,027,000 $ 6,432,000 $ 5,904,000

NET INCOME PER COMMON SHARE AS
PREVIOUSLY REPORTED BY THE COMPANY
AS ADJUSTED FOR THE 10% STOCK
DIVIDEND IN 1995 $ 1.34 $ 1.69 $ 1.53
EFFECT OF HINTON RESTATEMENT (.01) .02 .03
RESTATED NET INCOME PER COMMON SHARE $ 1.33 $ 1.71 $ 1.56

</TABLE>

In June 1994, the Company acquired the remaining 33% interest in the
common stock of First National Bank-Beckley, West Virginia (FNB) for
which consideration included $530,000. As a result, FNB became a
wholly-owned subsidiary of the Company. Minority interest, representing
the equity interest in FNB owned by stockholders other than the Company,
appears in the 1993 balance sheet as a liability.

On October 15, 1993, Blue Ridge Bank, a wholly-owned subsidiary of the
Company, was declared the successful bidder for the purchase of certain
assets and the assumption of the insured deposits and certain other
liabilities of a failed thrift which had been in conservatorship with
the Resolution Trust Corporation (RTC). Blue Ridge Bank assumed insured
deposits of approximately $43 million in exchange for assets
(principally cash and cash equivalents) of approximately $40 million
from the RTC.

The FNB and RTC transactions were accounted for under the purchase
method of accounting. Accordingly, the results of operations
attributable to such acquisitions have been included in the consolidated
totals from the respective dates of acquisition. Due to the
immateriality of the transactions and the significant assets retained by
the RTC with respect to the failed thrift, proforma financial
information has not been presented herein.

Intangible assets arising from prior year purchase business
combinations consist of core deposits and goodwill which have an
aggregate unamortized balance at December 31, 1994 and 1993, of
$4,978,000 and $5,538,000, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES
NOTE FOUR
INVESTMENTS

The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," effective January 1, 1994. In accordance with SFAS No. 115, prior
years' financial statements have not been restated to reflect the change in
accounting method and there was no cumulative effect of adopting the Statement.
Under SFAS No. 115, investment securities are carried at amortized cost and
securities available for sale are carried at fair value with the after-tax net
unrealized gain or loss recorded in stockholders' equity. The adoption of SFAS
No. 115 resulted in an increase in stockholders' equity of $1,055,000 and a
transfer of approximately $15 million from investment securities to securities
available for sale.

As of December 31, 1994, the Company had $9.7 million in structured notes.
These securities consist of federal agency securities with an average maturity
of less than 3 years and meet regulatory price sensitivity guidelines.

The aggregate carrying and approximate market values of securities
follow. Fair values are based on quoted market prices, where available.
If quoted market prices are not available, fair values are based on
quoted market prices of comparable instruments.

<TABLE>
AVAILABLE-FOR-SALE SECURITIES
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
U.S. TREASURY SECURITIES AND OBLIGATIONS
OF U.S. GOVERNMENT CORPORATIONS AND AGENCIES $ 47,900,000 $ 9,000 $ 2,735,000 $ 45,174,000
OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS 790,000 1,000 1,000 790,000
MORTGAGE-BACKED SECURITIES 11,835,000 101,000 359,000 11,577,000
OTHER DEBT SECURITIES 1,003,000 39,000 964,000

TOTAL DEBT SECURITIES 61,528,000 111,000 3,134,000 58,505,000
EQUITY SECURITIES 9,828,000 18,000 431,000 9,415,000
$ 71,356,000 $ 129,000 $ 3,565,000 $ 67,920,000

HELD-TO-MATURITY SECURITIES
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
U.S. TREASURY SECURITIES AND OBLIGATIONS
OF U.S. GOVERNMENT CORPORATIONS AND AGENCIES $ 87,836,000 $ 13,000 $ 3,461,000 $ 84,388,000
OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS 32,056,000 355,000 883,000 31,528,000
MORTGAGE-BACKED SECURITIES 4,896,000 414,000 4,482,000
OTHER DEBT SECURITIES 3,669,000 23,000 95,000 3,597,000
$ 128,457,000 $ 391,000 $ 4,853,000 $ 123,995,000

</TABLE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES
NOTE FOUR
INVESTMENTS (CONTINUED)
<TABLE>

AVAILABLE-FOR-SALE SECURITIES
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
DECEMBER 31, 1993
U .S. TREASURY SECURITIES AND OBLIGATIONS
OF U.S. GOVERNMENT CORPORATIONS AND AGENCIES $ 45,280,000 $ 859,000 $ 58,000 $ 46,081,000
OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS 95,000 1,000 94,000
MORTGAGE-BACKED SECURITIES 20,492,000 981,000 101,000 21,372,000
OTHER DEBT SECURITIES 1,809,000 50,000 1,859,000

TOTAL DEBT SECURITIES 67,676,000 1,890,000 160,000 69,406,000
EQUITY SECURITIES 7,851,000 29,000 0 7,880,000
$ 75,527,000 $ 1,919,000 $ 160,000 $ 77,286,000
</TABLE>
<TABLE>

HELD-TO-MATURITY SECURITIES
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
DECEMBER 31, 1993
U.S. TREASURY SECURITIES AND OBLIGATIONS OF U.S.
GOVERNMENT CORPORATIONS AND AGENCIES $ 127,512,000 $ 2,588,000 $ 158,000 $ 129,942,000
OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS 33,889,000 1,969,000 26,000 35,832,000
OTHER DEBT SECURITIES 4,709,000 262,000 4,971,000
$ 166,110,000 $ 4,819,000 $ 184,000 $ 170,745,000
</TABLE>

The amortized cost and estimated fair value of debt securities at
December 31, 1994, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because the issuers
of the securities may have the right to prepay obligations without
prepayment penalties.
<TABLE>

ESTIMATED
COST FAIR VALUE
<S> <C> <C>
AVAILABLE-FOR-SALE
DUE IN ONE YEAR OR LESS $ 6,047,000 $ 5,851,000
DUE AFTER ONE YEAR THROUGH FIVE YEARS 22,093,000 21,056,000
DUE AFTER FIVE YEARS THROUGH TEN YEARS 20,848,000 19,404,000
DUE AFTER TEN YEARS 705,000 617,000
49,693,000 46,928,000
MORTGAGE-BACKED SECURITIES 11,835,000 11,577,000
$ 61,528,000 $ 58,505,000
HELD-TO-MATURITY
DUE IN ONE YEAR OR LESS $ 18,010,000 $ 17,813,000
DUE AFTER ONE YEAR THROUGH FIVE YEARS 69,920,000 67,668,000
DUE AFTER FIVE YEARS THROUGH TEN YEARS 32,993,000 31,521,000
DUE AFTER TEN YEARS 2,638,000 2,511,000
123,561,000 119,513,000
MORTGAGE-BACKED SECURITIES 4,896,000 4,482,000
$ 128,457,000 $ 123,995,000
</TABLE>
Gross gains of $100,000 and gross losses of $903,000 were realized on
sales and calls of securities during 1994. During 1993 and 1992,
respectively, gross gains of $390,000 and $72,000 and gross losses of
$68,000 and $63,000 were realized on sales of securities. The book value
of securities pledged to secure public deposits and for other purposes
as required or permitted by law approximated $70,318,000 and $51,146,000
at December 31, 1994 and 1993, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE FIVE
LOANS

DECEMBER 31
1994 1993
COMMERCIAL, FINANCIAL AND AGRICULTURAL $ 137,425,000 $ 125,568,000
RESIDENTIAL REAL ESTATE 238,231,000 184,602,000
INSTALLMENT LOANS TO INDIVIDUALS 129,300,000 114,110,000
$ 504,956,000 $ 424,280,000

The Company grants loans to customers generally within the market
areas of its subsidiary banks. There is no significant concentration of
credit risk by industry or by related borrowers. There are no foreign
loans outstanding and highly leveraged loan transactions are
insignificant. The effects on income of nonaccrual loans, as well as
their outstanding balances, were not material.

During 1994, the Company began participation in a short-term, whole-loan bulk
purchasing program whereby the Company purchases from a third party whole loans
secured by residential mortgages. The loans, generally, are repurchased from
the Company within 90 days. The Company earns a fixed rate of return on loans
purchased under the program. During 1994, the annualized rate was 9% and
aggregate income from loans purchased under the program was
approximately $1.9 million, which was reflected in interest income.
Additionally, the Company began originating residential mortgage loans
to be sold on the secondary market. Due to the short-term nature of
these loans, the recorded value approximates fair value. At December
31, 1994, the Company's investment in loans held for sale approximated
$30,227,000. A summary of changes in the allowance for possible loan
losses follows:

<TABLE>

1994 1993 1992
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $ 5,764,000 $ 5,380,000 $ 2,401,000
PROVISION FOR POSSIBLE LOAN LOSSES 953,000 1,341,000 2,222,000
CHARGE-OFFS (1,093,000) (1,537,000) (1,163,000)
RECOVERIES 393,000 476,000 240,000
ALLOWANCE OF PURCHASED SUBSIDIARY 0 104,000 1,680,000
BALANCE AT END OF YEAR $ 6,017,000 $ 5,764,000 $ 5,380,000

</TABLE>
The Financial Accounting Standards Board (FASB) has issued SFAS No.
114, "Accounting By Creditors for Impairment of a Loan," which was
amended by SFAS No. 118. The provisions of SFAS No. 114 and SFAS No. 118
are effective for fiscal years beginning after December 15, 1994. SFAS
No. 114 requires that impaired loans be measured based on the present
value of expected future cash flows discounted at the loan's effective
interest rate or, as a practical expedient, at the loan's observable
market price or fair value of the collateral if the loan is collateral
dependent. The Company will adopt this Statement on January 1, 1995 and
it will not have a material effect on the Company's financial
statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE SIX
BANK PREMISES AND EQUIPMENT

A summary of bank premises and equipment follows:

DECEMBER 31
1994 1993
BANK PREMISES $ 17,865,000 $ 14,325,000
FURNITURE, FIXTURES, AND EQUIPMENT 11,009,000 9,806,000
28,874,000 24,131,000
LESS ALLOWANCE FOR DEPRECIATION 11,196,000 8,705,000
$ 17,678,000 $ 15,426,000
NOTE SEVEN
SHORT-TERM BORROWINGS

Short-term borrowings consist primarily of advances from the Federal
Home Loan Bank of Pittsburgh (the FHLB) and securities sold under
agreement to repurchase. A summary of the Company's short-term
borrowings is set forth below:
<TABLE>
<S> <C> <C>
1994:
AVERAGE AMOUNT OUTSTANDING DURING THE YEAR $ 42,559,000
MAXIMUM AMOUNT OUTSTANDING AT ANY MONTH END 78,263,000
WEIGHTED AVERAGE INTEREST RATE:
DURING THE YEAR 3.96%
END OF THE YEAR 5.50%
1993:
AVERAGE AMOUNT OUTSTANDING DURING THE YEAR $ 17,641,000
MAXIMUM AMOUNT OUTSTANDING AT ANY MONTH END 24,539,000
WEIGHTED AVERAGE INTEREST RATE:
DURING THE YEAR 2.40%
END OF THE YEAR 2.65%
1992:
AVERAGE AMOUNT OUTSTANDING DURING THE YEAR $ 10,605,000
MAXIMUM AMOUNT OUTSTANDING AT ANY MONTH END 16,272,000
WEIGHTED AVERAGE INTEREST RATE:
DURING THE YEAR 3.10%
END OF THE YEAR 2.18%
</TABLE>
NOTE EIGHT
LONG-TERM DEBT AND UNUSED LINES OF CREDIT

Long-term debt, which represents an obligation of the Parent Company,
consists of a $10,000,000 revolving credit loan with an unrelated party.
The loan has a variable rate (7.9375% at December 31, 1994) with
interest payments due quarterly and principal due at maturity in June
1995. Management intends to refinance the loan according to provisions
provided in the agreement.

The loan agreement contains certain restrictive provisions applicable
to the Parent Company including limitations on additional long-term
debt. The parent company has pledged the common stock of its
wholly-owned subsidiaries, The City National Bank (City National) and
The Peoples Bank of Point Pleasant, as collateral for the revolving
credit loan.

During 1994, five of the Company's subsidiaries were approved for
membership, joining City National who was approved in 1993, in the FHLB.
On a consolidated basis, the Company has purchased 44,000 shares of the
FHLB stock at par value. Such purchases entitle the Company to
dividends declared by the FHLB and provide an additional source of
short-term and long-term funding, in the form of collateralized
advances. At December 31, 1994, the subsidiaries have been issued one
year flexline commitments of $61,725,000, at prevailing interest rates,
from the FHLB with maturities ranging from June to December 1995. Such
commitments are subject to satisfying the Capital Stock Requirement
provisions, as defined, in the agreement with the FHLB. As of December
31, 1994, amounts outstanding pursuant to the agreements totaled
$12,707,000.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE NINE
RESTRICTIONS ON SUBSIDIARY DIVIDENDS

Certain restrictions exist regarding the ability of the subsidiary
banks to transfer funds to the Parent Company in the form of cash
dividends. The approval of the bank's applicable primary regulator is
required prior to the payment of dividends by a subsidiary bank in
excess of its earnings retained in the current year plus retained net
profits for the preceding two years. During 1995, the subsidiary banks
can, without prior regulatory approval, declare dividends of
approximately $6,214,000 to the Parent Company, plus retained net
profits for the interim period through the date of such dividend
declaration.

NOTE TEN
INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax assets
and liabilities are as follows:

DECEMBER 31
1994 1993
DEFERRED TAX ASSETS:
ALLOWANCE FOR LOAN LOSSES $ 2,208,000 $ 2,168,000
ACQUIRED NET OPERATING LOSS CARRY FORWARD 777,000 885,000
DEFERRED COMPENSATION PAYABLE 436,000 435,000
SECURITIES AVAILABLE FOR SALE 1,356,000 0
OTHER 200,000 155,000
TOTAL DEFERRED TAX ASSETS 4,977,000 3,643,000
DEFERRED TAX LIABILITIES:
FEDERAL INCOME TAX ALLOWANCE FOR LOAN LOSSES 630,000 861,000
PREMISES AND EQUIPMENT 746,000 734,000
CORE DEPOSIT INTANGIBLE 482,000 544,000
INVESTMENTS 139,000 172,000
LOANS 272,000 278,000
PREPAIDS 111,000 111,000
OTHER 8,000 13,000
TOTAL DEFERRED TAX LIABILITIES 2,388,000 2,713,000

NET DEFERRED TAX ASSETS $ 2,589,000 $ 930,000

SIGNIFICANT COMPONENTS OF THE PROVISION FOR INCOME TAXES ARE AS FOLLOWS:

LIABILITY METHOD
1994 1993 1992
FEDERAL:
CURRENT $ 2,876,000 $ 2,667,000 $ 2,469,000
DEFERRED (303,000) (153,000) (402,000)

2,573,000 2,514,000 2,067,000
STATE 620,000 435,000 444,000

TOTAL $ 3,193,000 $ 2,949,000 $ 2,511,000

Current income tax expense (benefit) attributable to investment
securities transactions approximated $(321,000), $129,000, and $4,000 in
1994, 1993, and 1992, respectively. As of December 31, 1994, the Company
has approximately $ 1.7 million and $2.3 million, respectively, of
federal and state income tax credit carryforwards which expire in 2006.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE TEN
INCOME TAXES (CONTINUED)

A reconciliation between income taxes as reported and the amount
computed by applying the statutory federal income tax rate to income
before income taxes follows:

<TABLE>

LIABILITY METHOD
1994 1993 1992
<S> <C> <C> <C>
COMPUTED FEDERAL TAXES AND STATUTORY RATE $ 3,497,000 $ 3,189,000 $ 2,861,000
STATE INCOME TAXES, NET OF FEDERAL TAX BENEFIT 340,000 314,000 320,000
TAX EFFECTS OF:
NONTAXABLE INTEREST INCOME (611,000) (593,000) (606,000)
OTHER ITEMS, NET (33,000) 39,000 (64,000)
$ 3,193,000 $ 2,949,000 $ 2,511,000
</TABLE>

NOTE ELEVEN
RETIREMENT PLAN

The City Holding Company Profit Sharing and 401(k) Plan (the Plan) is
a deferred compensation plan under section 401(k) of the Internal
Revenue Code. All employees who complete one year of service are
eligible to participate in the Plan. Participants may contribute from
1% to 15% of pre-tax earnings to their respective accounts. These
contributions may be invested in any of four investment options selected
by the employee, one of which is City Holding Company common stock. The
Company matches 50% of the first 6% of compensation deferred by the
participant with City Holding Company common stock. Profit sharing
contributions are discretionary, as determined annually by the Company's
Board of Directors. The Company's total expense associated with the
Plan approximated $881,000, $562,000, and $403,000 in 1994, 1993, and
1992, respectively. The total number of shares of the Company's common
stock held by the Plan is 120,492. Other than the Plan, the Company
offers no postretirement benefits.

In May 1993, the Company formed the 1993 Stock Incentive Plan
(Incentive Plan) applicable to key employees. Under the Incentive Plan,
stock options are granted at an amount no less than the fair value of
the Company's common stock on the date of the grant. Participants in
the Incentive Plan may also be granted stock appreciation rights and
stock awards, at the discretion of the Company's Compensation Committee
of the Board of Directors. A maximum of 300,000 shares of the Company's
common stock may be issued pursuant to the provisions of the Incentive
Plan. Since its inception, no awards have been made under the Incentive
Plan.

NOTE TWELVE
TRANSACTIONS WITH DIRECTORS AND OFFICERS

Subsidiaries of the Company have granted loans to the officers and
directors of the Company and its subsidiaries, and to their associates.
The loans were made in the ordinary course of business and on
substantially the same terms, including interest rates and collateral,
as those prevailing at the same time for comparable transactions with
unrelated persons and did not involve more than normal risk of
collectibility. The aggregate amount of loans outstanding as of
December 31, 1994 and 1993, attributable directly and indirectly to
these parties, was approximately $20,089,000 and $18,898,000,
respectively. During 1994, $6,693,000 of new loans were made and
repayments totaled $5,502,000.

A director of one of the Company's subsidiaries is the President of a
non-affiliated financial institution that participates in the whole-loan
bulk purchasing program (See NOTE FIVE).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES
NOTE THIRTEEN
INCOME

Included in other income in 1994 is $1,400,000 related to an insurance
recovery at one of the Company's subsidiary banks. Additionally, in
1994 the Company became involved in the secondary market for mortgage
loans which generated fee income of $317,000.

NOTE FOURTEEN
EXPENSES

The following items of other expenses exceeded one percent of total
revenue for the respective years:

1994 1993 1992

INSURANCE, INCLUDING FDIC PREMIUMS $ 1,545,000 $ 1,324,000 $ 1,068,000
ADVERTISING 868,000 606,000 419,000
BANK SUPPLIES 887,000 783,000 573,000
LEGAL AND ACCOUNTING FEES 952,000 475,000 335,000
NOTE FIFTEEN
COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business, certain financial products are
offered by the Company to accommodate the financial needs of its
customers. Loan commitments (lines of credit) represent the principal
off-balance-sheet financial product offered by the Company. At December
31, 1994 and 1993, commitments outstanding to extend credit totaled
approximately $45,776,000 and $25,252,000, respectively. To a much
lesser extent, the Company offers standby letters of credit which
require payments to be made on behalf of customers when certain
specified future events occur. Amounts outstanding pursuant to such
standby letters of credit were $3,161,000 and $780,000 as of December
31, 1994 and 1993, respectively. Historically, substantially all
standby letters of credit have expired unfunded.

Both of the above arrangements have credit risks essentially the same
as that involved in extending loans to customers and are subject to the
Company's standard credit policies. Collateral is obtained based on
management's credit assessment of the customer. Management does not
anticipate any material losses as a result of these commitments.

NOTE SIXTEEN
PREFERRED STOCK AND SHAREHOLDER RIGHTS PLAN

The Company's Board of Directors has the authority to issue
preferred stock, and to fix the designation, preferences, rights,
dividends and all other attributes of such preferred stock, without any
vote or action by the shareholders. As of December 31, 1994, there are
no such shares outstanding, nor are any expected to be issued, except as
might occur pursuant to the Stock Rights Plan discussed below.

The Company's Stock Rights Plan provides that each share of common
stock carries with it one right. The rights would be exercisable only
if a person or group, as defined, acquired 10% or more of the Company's
common stock, or announces a tender offer for such stock. Under
conditions described in the Stock Rights Plan, holders of rights could
acquire shares of preferred stock or additional shares of the Company's
common stock, or in the event of a 50% or more change-in-control, shares
of common stock of the acquiror. The value of shares acquired under the
plan would equal twice the exercise price.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES
NOTE SEVENTEEN
FAIR VALUES OF FINANCIAL INSTRUMENTS

FASB Statement No. 107, "Disclosures about Fair Value of Financial
Instruments," requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet,
for which it is practicable to estimate that value. In cases where
quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard,
the derived fair value estimates cannot be substantiated by comparison
to independent markets and, in many cases, could not be realized in
immediate settlement of the instrument. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.

The following table represents the estimates of fair value of financial
instruments:
<TABLE>
FAIR VALUE OF FINANCIAL INSTRUMENTS
1994 1993
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE

<S> <C> <C> <C> <C>
ASSETS
CASH AND SHORT-TERM INVESTMENTS $ 27,591,000 $ 27,591,000 $ 27,436,000 $ 27,436,000
LOANS HELD FOR SALE 30,227,000 30,227,000
SECURITIES 199,813,000 191,915,000 241,637,000 248,031,000
NET LOANS 489,395,000 478,324,000 407,990,000 412,587,000
LIABILITIES
DEMAND DEPOSITS 388,794,000 388,794,000 400,099,000 400,099,000
TIME DEPOSITS 262,470,000 255,190,000 217,234,000 249,526,000
SHORT-TERM BORROWINGS 57,483,000 57,483,000 21,669,000 21,669,000
LONG-TERM DEBT 6,875,000 6,875,000 5,875,000 5,875,000
</TABLE>

The following methods and assumptions were used in estimating fair
value amounts for financial instruments:

The fair values for the loan portfolio are estimated using discounted
cash flow analyses at interest rates currently being offered for loans
with similar terms to borrowers of similar credit quality. The carrying
values of accrued interest approximate fair value.

The fair values of demand deposits (i.e interest and
noninterest-bearing checking, regular savings, and other types of money
market demand accounts) are, by definition, equal to their carrying
amounts. Fair values for certificates of deposit are estimated using a
discounted cash flow calculation that applies interest rates currently
being offered on certificates to a schedule of aggregate expected
monthly maturities of time deposits.

Securities sold under agreements to repurchase represent borrowings
with original maturities of less than 90 days. The carrying amounts of
short-term borrowings approximate their fair values.

The fair values of long-term borrowings are estimated using
discounted cash flow analyses based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements.

The fair values of commitments are estimated based on fees currently
charged to enter into similar agreements, taking into consideration the
remaining terms of the agreements and the counterparties' credit
standing. The fair value of letters of credit is based on fees currently
charged for similar agreements or on the estimated cost to terminate them
or otherwise settle them or otherwise settle the obligations with the
counterparties at the reporting date. The fair values approximated the
carrying values of these commitments and letters of credit as of December
31, 1994 and 1993 and were not material.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE EIGHTEEN
CITY HOLDING COMPANY (PARENT COMPANY ONLY)FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

DECEMBER 31
1994 1993
ASSETS
CASH $ 77,000 $ 188,000
SECURITIES AVAILABLE-FOR-SALE 1,726,000 1,603,000
INVESTMENT IN SUBSIDIARIES 67,009,000 60,630,000
FIXED ASSETS 1,745,000 1,768,000
OTHER ASSETS 1,262,000 490,000
TOTAL ASSETS $ 71,819,000 $ 64,679,000

LIABILITIES
LONG-TERM DEBT $ 6,875,000 $ 5,875,000
ADVANCES FROM AFFILIATES 5,807,000 2,234,000
OTHER LIABILITIES 2,268,000 736,000
TOTAL LIABILITIES 14,950,000 8,845,000

STOCKHOLDERS' EQUITY 56,869,000 55,834,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 71,819,000 $ 64,679,000

Advances from affiliates, which eliminate for purposes of the
Company's consolidated financial statements, represent amounts borrowed
from banking subsidiaries to fund the purchase of certain bank premises
and to meet other cash needs of the parent. Such debt is collateralized
by the securities and fixed assets of the Parent Company. Interest is
due quarterly at prime with principal due at maturity in 1997. The
maximum available credit under the advance is subject to the
subsidiaries' legal lending limit which approximated $6,356,000 at year
end.

CONDENSED STATEMENTS OF INCOME

<TABLE>
YEAR ENDED DECEMBER 31
1994 1993 1992

<S> <C> <C> <C>
INCOME
DIVIDENDS FROM BANK SUBSIDIARIES $ 5,231,000 $ 10,906,000 $ 4,476,000
INTEREST AND DIVIDENDS ON SECURITIES 111,000 117,000 12,000
OTHER INCOME 1,604,000 146,000 -
6,946,000 11,169,000 4,488,000
EXPENSES
INTEREST EXPENSE 735,000 349,000 5,000
OTHER EXPENSES 3,159,000 2,505,000 1,508,000
3,894,000 2,854,000 1,513,000
INCOME BEFORE INCOME TAX
BENEFIT AND EQUITY IN UNDISTRIBUTED NET INCOME
(EXCESS DIVIDENDS) OF SUBSIDIARIES 3,052,000 8,315,000 2,975,000
INCOME TAX BENEFIT (1,344,000) (991,000) (605,000)
INCOME BEFORE EQUITY
IN UNDISTRIBUTED NET INCOME (EXCESS DIVIDENDS)
OF SUBSIDIARIES 4,396,000 9,306,000 3,580,000
EQUITY IN UNDISTRIBUTED NET INCOME
(EXCESS DIVIDENDS) OF SUBSIDIARIES 2,563,000 (2,874,000) 2,324,000
NET INCOME $ 6,959,000 $ 6,432,000 $ 5,904,000

</TABLE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE EIGHTEEN

CITY HOLDING COMPANY (PARENT COMPANY ONLY)
FINANCIAL INFORMATION (CONTINUED)

CONDENSED STATEMENTS OF CASH FLOWS

<TABLE> YEAR ENDED DECEMBER 31
1994 1993 1992
<S> <C> <C> <C>
OPERATING ACTIVITIES
NET INCOME $ 6,959,000 $ 6,432,000 $ 5,904,000
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
PROVISION FOR DEPRECIATION 149,000
DECREASE (INCREASE) IN OTHER ASSETS 44,000 (128,000) 190,000
INCREASE (DECREASE) IN OTHER LIABILITIES 1,532,000 430,000 (98,000)
(EQUITY IN UNDISTRIBUTED NET INCOME) EXCESS DIVIDENDS
OF SUBSIDIARIES (2,563,000) 2,874,000 (2,324,000)
OTHER 99,000 32,000
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,121,000 9,707,000 3,704,000

INVESTING ACTIVITIES
PROCEEDS FROM MATURITIES OF INVESTMENT SECURITIES 6,551,000 250,000
PROCEEDS FROM SALES OF SECURITIES 250,000
PURCHASES OF INVESTMENT SECURITIES (148,000) (6,407,000) (2,246,000)
PURCHASES OF MORTGAGE LOANS (808,000)
CASH PAID FOR ACQUIRED SUBSIDIARY (532,000) (193,000) (2,250,000)
CASH INVESTED IN SUBSIDIARIES (5,318,000) (8,767,000) (2,000,000)
PURCHASES OF PREMISES AND EQUIPMENT (126,000) (1,706,000)
NET CASH USED IN INVESTING ACTIVITIES (6,932,000) (10,272,000) (6,246,000)

FINANCING ACTIVITIES
PROCEEDS FROM LONG-TERM DEBT 6,875,000 5,225,000 4,000,000
PRINCIPAL REPAYMENTS ON LONG-TERM DEBT (5,875,000) (3,350,000)
ADVANCES FROM BANK SUBSIDIARIES, NET 3,573,000 2,234,000
CASH DIVIDENDS PAID (2,298,000) (1,833,000) (1,611,000)
PURCHASES OF TREASURY STOCK (193,000) (2,218,000) (548,000)
PROCEEDS FROM SALES OF TREASURY STOCK 461,000 565,000 665,000
REDEMPTION OF DISSENTER AND FRACTIONAL SHARES (1,843,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES 700,000 623,000 2,506,000
(DECREASE) INCREASE IN CASH (111,000) 58,000 (36,000)
CASH AT BEGINNING OF YEAR 188,000 130,000 166,000
CASH AT END OF YEAR $ 77,000 $ 188,000 $ 130,000

</TABLE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CITY HOLDING COMPANY AND SUBSIDIARIES

NOTE NINETEEN

SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

A summary of selected quarterly financial information for 1994 and
1993 follows:

<TABLE>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER

<S> <C> <C> <C> <C>
1994
INTEREST INCOME $ 12,665,000 $ 13,359,000 $ 14,295,000 $ 14,829,000
INTEREST EXPENSE 5,095,000 5,259,000 5,682,000 6,206,000
NET INTEREST INCOME 7,570,000 8,100,000 8,613,000 8,623,000
PROVISION FOR POSSIBLE LOAN LOSSES 201,000 215,000 215,000 322,000
INVESTMENT SECURITIES GAINS (LOSSES) 69,000 3,000 (20,000) (855,000)
NET INCOME 1,658,000 1,644,000 1,725,000 1,932,000
NET INCOME PER COMMON SHARE 0.44 0.44 0.45 0.52

1993
INTEREST INCOME $ 11,760,000 $ 11,877,000 $ 11,891,000 $ 12,688,000
INTEREST EXPENSE 4,774,000 4,781,000 4,761,000 5,231,000
NET INTEREST INCOME 6,986,000 7,096,000 7,130,000 7,457,000
PROVISION FOR POSSIBLE LOAN LOSSES 343,000 320,000 295,000 383,000
INVESTMENT SECURITIES GAINS 87,000 99,000 84,000 52,000
NET INCOME 1,661,000 1,646,000 1,678,000 1,447,000
NET INCOME PER COMMON SHARE 0.44 0.44 0.45 0.38

</TABLE>

NOTE TWENTY
PENDING MERGER

In March 1995, the Company signed a definitive agreement to acquire
First Merchants Bancorp in Montgomery, West Virginia (Merchants). At
December 31, 1994, Merchants reported total assets of approximately $115
million. The merger, which is expected to be consummated in the third
quarter of 1995, involves the exchange of approximately 920,000 shares
of Company common stock for all of Merchants' outstanding shares. It is
anticipated that the transaction will be accounted for under the pooling
of interests method of accounting. The following condensed unaudited
proforma financial information presents selected balance sheet amounts
and operating results of the Company and Merchants as though they had
been combined during all periods indicated below.

<TABLE>

(IN THOUSANDS, EXCEPT PER SHARE DATA)
1994 1993 1992
<S> <C> <C> <C>
AT YEAR END
NET LOANS $ 547,809 $ 462,424 $ 376,206
TOTAL DEPOSITS 746,805 709,958 605,398
TOTAL ASSETS 895,817 816,225 701,862

SUMMARY OF OPERATIONS
NET INTEREST INCOME $ 37,594 $ 32,876 $ 28,696
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE 8,142 7,762 6,972
NET INCOME 8,142 7,645 6,972
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE PER SHARE 1.74 1.63 1.48
NET INCOME PER COMMON SHARE 1.74 1.63 1.48

</TABLE>

<PAGE>

Report of Ernst & Young LLP
Independent Auditors

Board of Directors and Stockholders
First Merchants Bancorp, Inc.

We have audited the accompanying consolidated balance sheets of
First Merchants Bancorp, Inc. and subsidiary as of December 31, 1994 and
1993, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
First Merchants Bancorp, Inc. and subsidiary at December 31, 1994 and
1993, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994,
in conformity with generally accepted accounting principles.

As discussed in the footnotes to the consolidated financial
statements, in 1993 First Merchants Bancorp, Inc. changed its method of
accounting for securities (Note D), postretirement benefits other than
pensions (Note I), and income taxes (Note J).

Ernst & Young LLP

Charleston, West Virginia

January 27, 1995, except as to
Note O, the date of which is March 14, 1995

<PAGE>

<TABLE>

CONSOLIDATED BALANCE SHEETS
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY
DECEMBER 31
1994 1993
ASSETS ------------ ------------
<S> <C> <C>
Cash and due from banks $5,211,650 $4,436,864
Federal funds sold 810,000 710,000
------------ ------------
CASH AND CASH EQUIVALENTS 6,021,650 5,146,864

Interest-bearing deposits in other banks 670,734 1,215,307
Securities available for sale (cost: 12-31-94 -
$16,204,906: 12-31-93 - $20,547,829) 14,888,731 21,056,123
Securities held to maturity (approximate market
value: 12-31-94 - $28,304,476;
12-31-93 - $22,312,255) 28,648,209 21,139,938

Loans - gross 59,015,396 55,067,019
Less: Unearned income (141,203) (188,366)
Allowance for loan losses (460,000) (445,000)
------------ ------------
LOANS - NET 58,414,193 54,433,653

Premises and equipment 3,452,390 3,551,457
Other assets 3,195,202 2,603,663
------------ ------------
TOTAL ASSETS $115,291,109 $109,147,005
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest bearing $13,674,107 $10,882,479
Interest bearing 81,867,045 81,742,940
------------ ------------
TOTAL DEPOSITS 95,541,152 92,625,419
Short-term borrowings:
Securities sold under agreements
to repurchase 8,634,139 4,947,012
Other short-term borrowings 509,881 595,807
------------ ------------
TOTAL SHORT-TERM BORROWINGS 9,144,020 5,542,819
Other liabilities 1,144,151 1,207,401

------------ ------------
TOTAL LIABILITIES 105,829,323 99,375,639
Stockholders' equity:
Common stock, $2 par value, 1,000,000 shares
authorized, 576,000 shares issued and
outstanding 1,152,000 1,152,000
Surplus 649,343 649,343
Retained earnings 8,450,153 7,665,033
Net unrealized (loss) gain on Securities
available for sale, net of related tax effect:
1994 $(526,465); and 1993 $203,304 (789,710) 304,990
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 9,461,786 9,771,366
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $115,291,109 $109,147,005
============ ============
See notes to consolidated financial statements.
</TABLE>

CONSOLIDATED STATEMENTS OF INCOME
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY
YEAR ENDED DECEMBER 31
1994 1993 1992
INTEREST INCOME ---------- ---------- ----------
Interest and fees on loans $4,899,930 4,349,508 4,272,442
Interest and dividends on securities:
Taxable 1,825,918 1,842,861 2,245,531
Nontaxable 761,162 806,764 750,040
Interest on federal funds sold 47,284 48,616 61,228
Interest on deposits with other banks 79,781 38,050 23,604
---------- ---------- ----------
TOTAL INTEREST INCOME 7,614,075 7,085,799 7,352,845
INTEREST EXPENSE
Interest on deposits 2,767,583 2,664,333 2,964,063
Interest on short-term borrowings 158,949 213,973 341,558
---------- ---------- ----------
TOTAL INTEREST EXPENSE 2,926,532 2,878,306 3,305,621
---------- ---------- ----------
NET INTEREST INCOME 4,687,543 4,207,493 4,047,224
PROVISION FOR LOAN LOSSES 86,699 93,193 103,155
---------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,600,844 4,114,300 3,944,069
OTHER INCOME
Service charges on deposit accounts 326,698 306,879 272,619
Other service charges and fees 50,509 48,746 41,210
Securities gains, net 73,829 351,522 6,122
Other 151,024 151,001 111,205
---------- ---------- ----------
TOTAL OTHER INCOME 602,060 858,148 431,156
OTHER EXPENSE
Salaries and employee benefits 1,752,089 1,573,371 1,444,818
Occupancy expense of premises 298,126 237,402 204,785
Furniture and equipment expense 291,738 283,545 303,201
Other operating expenses 1,325,789 1,130,605 1,027,317
---------- ---------- ----------
TOTAL OTHER EXPENSE 3,667,742 3,224,923 2,980,121
---------- ---------- ----------
INCOME BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF
CHANGE IN METHOD OF ACCOUNTING 1,535,162 1,747,525 1,395,104
INCOME TAXES 352,602 417,918 327,392
---------- ---------- ----------
Income Before Cumulative Effect
of Change in Method of Accounting $1,182,560 $1,329,607 1,067,712

Cumulative Effect as of January 1,
1993 of change in Method of
Accounting for Other Postretirement
Benefits, Net of income tax benefit
of $77,953 (116,930)
---------- ---------- ----------
NET INCOME $1,182,560 $1,212,677 1,067,712
EARNINGS PER COMMON SHARE : ========== ========== ==========
Income before cumulative
effect of change in method of
accounting $2.05 $2.31 $1.85

Cumulative effect of change
in method of accounting (.20)
-------- -------- --------

Net income $2.05 $2.11 $1.85
======== ======== ========

AVERAGE SHARES OUTSTANDING 576,000 576,000 576,000
======== ======== ========

See notes to consolidated financial statements.

<TABLE>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY

Net
Unrealized Total
Gain
Common Retained (Loss) on Stockholders'
Stock Surplus Earnings Securities Equity
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1992 $288,000 $649,343 $6,889,444 ($266,818) $7,559,969

Net income 1,067,712 1,067,712

Cash dividends declared
($0.46 per share) (266,400) (266,400)

Change in net unrealized
loss on marketable equity
securities 179,721 179,721
---------- ---------- ---------- ---------- ----------
Balance at December 31, 1992 $288,000 $649,343 $7,690,756 $(87,097) $8,541,002

Net income 1,212,677 1,212,677

Cash dividends declared
($ .65 per share) (374,400) (374,400)

Change in net unrealized
loss on marketable equity
securities (9,880) (9,880)

Stock split effected in
the form of a 3 for 1
stock dividend 864,000 (864,000)

Change in accounting method
for securities, net of taxes
of $203,304 401,967 401,967
---------- ---------- ---------- ---------- ----------
Balance at Dec. 31, 1993 $1,152,000 $649,343 $7,665,033 $304,990 $9,771,366

Net income 1,182,560 1,182,560

Change in net unrealized loss
on securities (1,094,700) (1,094,700)

Cash dividends
($.69 per share) (397,440) (397,440)
---------- ---------- ---------- ---------- ----------

Balance at December 31, 1994 $1,152,000 $649,343 $8,450,153 $(789,710) $9,461,786
========== ========== ========== ========== ==========

See notes to consolidated financial statements.
</TABLE>

<TABLE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY
THE YEAR ENDED DECEMBER 31
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $1,182,560 $1,212,677 $1,067,712
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Cumulative effect of change in
accounting principle 116,930
Net amortization (8,846) (2,589) 41,013
Provision for loan losses 86,699 93,193 103,155
Depreciation 204,392 220,057 222,056
Deferred income tax expense (benefit) (5,547) 13,257 (124,951)
Securities, gain net 73,829 (351,522) (6,122)
Purchases of trading securities 0 (2,880,211) (5,177,674)
Proceeds from sales of trading
securities 0 2,880,211 5,177,674
Increase in other assets 160,973 2,158 63,613
Decrease in other liabilities (63,250) (212,551) (129,869)
---------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,483,152 1,091,610 1,236,607

INVESTING ACTIVITIES
Purchases of investment securities (11,588,316) (14,976,841) (17,392,904)
Purchases of securities AFS (1,955,534)
Proceeds from sales of securities AFS 6,361,604 6,303,206
Proceeds from maturities of sec. AFS 1,591,843
Proceeds from maturities of invest. sec. 3,610,085 2,763,236 6,760,446
Proceeds from calls of invest. sec. 1,034,050 3,736,543 8,945,230
Net decrease in short-term investments 1,295,068
Net (increase) decrease in loans (4,141,203) 3,478,477 (5,960,120)
Net cash received in acquisition 5,843,968
Purchases of premises and equipment (105,325) (209,854) (200,848)
Proceeds from sale of OREO 56,779 40,919 9,500
---------- ---------- ----------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (6,727,860) 9,866,565 (7,838,696)

FINANCING ACTIVITIES
Net inc. in noninterest-bearing deposits 2,791,628 655,298 1,332,764
Net inc. (dec.)in interest-bearing dep. 124,105 (1,879,103) 2,701,535
Net inc. (dec.) in repurchase agreements 3,687,128 (10,248,121) 4,738,724
Net increase (decrease) in other

short-term borrowings (85,927) 12,111 198,045
Cash dividends paid (397,440) (420,479) (234,720)
---------- ---------- ----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 6,119,494 (11,880,294) 8,736,348
---------- ---------- ----------
NET (DEC.) INC. IN CASH AND CASH EQUIV. 874,786 (922,119) 2,134,259

Cash and cash equiv. at start of period 5,146,864 6,068,983 3,934,724
---------- ---------- ----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $6,021,650 $5,146,864 $6,068,983
========== ========== ==========

See notes to consolidated financial statements.
</TABLE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FIRST MERCHANTS BANCORP, INC. AND SUBSIDIARY
DECEMBER 31, 1994

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

The accounting and reporting policies of First Merchants Bancorp, Inc. and
subsidiary (First Merchants) conform with generally accepted accounting
principles. The following is a summary of the more significant policies:

PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of First Merchants Bancorp, Inc. and its wholly-owned
subsidiary, the Merchants National Bank(Merchants National). All significant
intercompany balances and transactions have been eliminated.

STATEMENT OF CASH FLOWS: For purposes of the statement of cash flows, First
Merchants considers cash and due from banks and federal funds sold as cash and
cash equivalents. Income taxes paid approximated $348,000 in 1994, $529,000 in
1993, and $453,000 in 1992. Interest paid on deposits and short-term borrowings
approximated $2,888,000 in 1994, $2,886,000 in 1993, and $3,461,000 in 1992.

SECURITIES: Management determines the appropriate classification of debt
securities at the time of purchase and reevaluates such designation as of each
balance sheet date. Debt securities are classified as held-to-maturity when
First Merchants has the positive intent and ability to hold the securities to
maturity. Held-to-maturity securities are stated at amortized cost. Trading
account securities are held for resale in anticipation of short-term market
movements and are stated at fair value. Gains and losses on trading securities,
both realized and unrealized, are included in other income. No securities were
held in the trading account at December 31, 1994 or 1993. Debt securities not
classified as held-to-maturity or trading and marketable equity securities not
classified as trading are classified as available-for-sale. Available-for-sale
securities are stated at fair value with the unrealized gains and losses, net of
tax, reported in a separate component of stockholders' equity. The amortized
cost of debt securities classified as held-to-maturity or available-for-sale is
adjusted for amortization of premiums and accretion of discounts to maturity, or
in the case of mortgage-backed securities, over the estimated life of the
security. Realized gains and losses, and declines in value estimated to be
other-than-temporary, are included in net securities gains (losses). The cost
of securities sold is based on the specific identification method.

REVENUE RECOGNITION: Interest on loans is accrued and credited to operations
based upon the principal amount outstanding. The accrual of interest generally
is discontinued when a loan becomes 90 days past due as to principal or
interest. when interest accruals are discontinued, unpaid interest recognized
in income in the current year is reversed, and interest accrued in prior years
is charged to the allowance for loan losses. Management may elect to continue
the accrual of interest when the estimated net realizable value of collateral is
sufficient to cover principal and accrued interest, and the loan is in the
process of collection.

ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is established through
a provision charged to operations. The allowance for loan losses is established
through a provision charged to operations. The allowance represents an amount
which, in management's judgement, will be adequate to absorb potential losses on
existing loans which may become uncollectible. Management's judgement in
determining the adequacy of the allowance is based on quarterly evaluations
which take into consideration such factors as changes in the nature and volume
of the loan portfolio, current economic conditions which may affect the
borrower's ability to pay, overall portfolio quality, and review of specific
problem loans. Loans deemed to be uncollectible are charged against the
allowance for loan losses.

PREMISES AND EQUIPMENT: Premises and equipment are stated at cost less
accumulated depreciation. The provision for depreciation is computed
principally by the straight-line method over the estimated useful lives of the
assets.

INCOME TAXES: The consolidated provision for income taxes is based upon
reported income and expense. Deferred income taxes (included in other assets or
other liabilities, as applicable) are provided for temporary differences between
the financial reporting and tax basis of assets and liabilities.

First Merchants and its subsidiary file a consolidated income tax return. The
subsidiary provides for income taxes on a separate return basis and remits
amounts determined to be currently payable to First Merchants.

Loan Fees and Costs: Loan origination fees and direct loan origination costs
are being recognized as collected and incurred. The use of this method of
recognition does not produce results that are materially different from results
which would have been produced if such costs and fees were deferred and
amortized as an adjustment of loan yield over the life of the related loan.

NET INCOME PER COMMON SHARE: Net income per common share is based on the
weighted average common shares outstanding during each year. Net income per
share has been restated for all periods presented prior to 1993 to reflect a
stock split, effected in the form of a 3 for 1 stock dividend, which occurred in
1993.

NOTE B - ACQUISITION

In March, 1987, First merchants acquired Gauley National Bank (Gauley
National), which has subsequently been merged with and into Merchants National.
The acquisition was accounted for under the purchase method of accounting.
Accordingly, the identifiable tangible and intangible assets and liabilities of
Gauley National were adjusted to their estimated fair market values at the date
the transaction was consummated.

In September, 1993, Merchants National, was declared the successful
bidder for the purchase of certain assets and the assumption of the
insured deposits and certain other liabilities of Evergreen Federal
Savings and Loan Association (Evergreen) following its closure by the
Office of Thrift Supervision. Merchants National assumed deposits and
other liabilities of approximately $15 million in exchange for net loans
of $6 million, and cash and cash equivalents (net of premium paid by
Merchants National of approximately $900,000) of approximately $6
million and certain other assets. This acquisition was accounted for
under the purchase method of accounting. Accordingly, the results of
operations of Evergreen have been included in the consolidated totals
from the date of acquisition.

Intangible assets representing the present value of future net income to be
earned from the acquired deposits of Gauley National and Evergreen ($459,000)
are being amortized on an accelerated basis over ten and seven years,
respectively. Accumulated amortization approximated $221,000 and $149,000 at
December 31, 1994 and 1993, respectively. The excess of purchase price over the
fair market value of the net assets acquired in the Gauley National and
Evergreen transactions ($1,008,000) is being amortized on a straight-line basis
over 15 years. Accumulated amortization approximated $259,000 and $193,000 at
December 31, 1994 and 1993, respectively.

NOTE C - RESTRICTIONS ON CASH AND DUE FROM BANKS

Merchants National is required to maintain balances in cash on hand or on
deposit with the Federal Reserve Bank. The average amount of required reserve
balances was approximately $737,000 for the year ended December 31, 1994.

NOTE D - SECURITIES

In May 1993, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 115, "Accounting For Certain Investments in
Debt and Equity Securities." First Merchants elected to adopt the provisions of
the new standard at the end of 1993. The cumulative effect as of December 31,
1993 of adopting Statement 115 had no effect on the results of operation. The
ending balance of stockholder' equity was decreased as of December 31, 1994 by
$789,710 (net of $526,465 in deferred income taxes) to reflect the net
unrealized holding loss and increased as of December 31, 1993 by $401,967 (net
of $203,304 in deferred income taxes) to reflect the net unrealized holding gain
on securities classified as available-for-sale.

The aggregate carrying and approximate market values of securities follow. Fair
values are based on quoted market prices, where available. If quoted market
prices are not available, fair values are based on quoted market prices of
comparable instruments.

December 31, 1994
----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------------------------------------------------
HELD-TO-MATURITY
U.S. Treasury sec. and
oblig. of U.S. Govern't
Corp's and agencies $15,059,378 $ 8,812 $(332,508) $14,735,682
Oblig. of states and
political subdivisions 10,928,045 262,041 (160,170) 11,029,916
Mortgage-backed securities 2,400,786 (112,788) 2,287,998
Other debt securities 260,000 (9,120) 250,880
-----------------------------------------------------
Totals $28,648,209 $270,853 $(614,586) $28,304,476
=====================================================
AVAILABLE-FOR-SALE
U.S. Treasury sec. and
oblig. of U.S. Govern't
corp's and agencies $13,152,520 $ 7,278 $(1,042,429) $12,117,369
Obligations of state and
political subdivisions 1,308,011 5,478 (45,579) 1,267,910
-----------------------------------------------------
Total debt securities 14,460,531 12,756 (1,088,008) 13,385,279
Equity securities 1,744,375 (240,923) 1,503,452
-----------------------------------------------------
Totals $16,204,906 $ 12,756 $(1,328,931) $14,888,731
=====================================================

December 31, 1993
-----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-----------------------------------------------------
HELD-TO-MATURITY
U.S. Treasury sec. and
oblig. of U.S. Govern't
corp's and agencies $ 6,497,581 $ 127,669 $ (20,207) $ 6,605,043
Obligations of state and
political subdivisions 11,904,049 985,913 (3,401) 12,886,561
Mortgage-backed securities 2,168,308 81,193 2,249,501
Other debt securities 570,000 3,550 (2,400) 571,150
-----------------------------------------------------

Totals $21,139,938 $1,198,325 $ (26,008) $22,312,255
=====================================================
AVAILABLE-FOR-SALE
U.S. Treasury sec. and
oblig. of U.S. Govern't
corp's and agencies $ 15,216,839 $419,682 $ (67,594) $15,568,927
Obligations of states and
political subdivisions 2,395,685 219,433 2,615,118
-----------------------------------------------------
Total debt securities 17,612,524 639,115 (67,594) 18,184,045
Equity securities 2,935,305 33,750 (96,977) 2,872,078
-----------------------------------------------------
Totals $ 20,547,829 $672,865 $(164,571) 21,056,123
=====================================================

The amortized cost and estimated market value of debt securities at December 31,
1994, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because the issuers of the securities may have the
right to call or prepay obligations with or without call or prepayment
penalties.

ESTIMATED
AMORTIZED MARKET
COST VALUE
HELD-TO-MATURITY -----------------------------
Due in one year or less $ 2,510,693 $ 2,503,105
Due after one year through five years 14,381,652 13,992,987
Due after five years through ten years 10,248,204 10,369,524
Due after ten years 1,507,660 1,438,860
-----------------------------
$28,648,209 $28,304,476
=============================
AVAILABLE-FOR-SALE
Due in one year or less $ - $ -
Due after one year through five years 10,403,167 9,611,325
Due after five years through ten years 2,249,353 2,043,444
Due after ten years 1,808,011 1,730,510
-----------------------------
$14,460,531 $13,385,279
=============================

During 1994, gross gains of approximately $134,000 and gross losses of
approximately $96,000 were realized on securities sales. During 1993 and 1992
respectively, gross gains of approximately $353,000 and $209,000, and gross
losses of $1,000 and $2,000 were realized on securities sales.

Securities with a carrying value of approximately $11,086,030 and $8,089,179,
respectively, have been pledged to secure public deposits and for other purposes
as required or permitted by law as of December 31, 1994 and 1993, respectively.

NOTE E - LOANS

Major classifications of loans as of December 31, are summarized as follows:
1994 1993
Commercial loans: ---------------------------------
Commercial paper and loan participations $10,500,455 $ 9,318,614
Other commercial and industrial 16,440,210 14,225,357
---------------------------------
26,940,665 23,543,971
Consumer loans:
Installment loans 10,615,351 9,851,982
Revolving credit 780,551 528,513
---------------------------------
11,395,902 10,380,495
Residential real estate loans 20,678,829 21,142,553
---------------------------------
Total Loans 59,015,396 55,067,019
Less unearned income on loans 141,203 188,366
---------------------------------

58,874,193 54,878,653
Less allowance for loan losses 460,000 445,000
---------------------------------
Net loans $58,414,193 $54,443,653
=================================

Changes in the allowance for loan losses for each of the three years ended
December 31 were as follows:
1994 1993 1992

----------------------------------
Balance, January 1 $445,000 $350,000 $360,000
Allowance on acquired loans 61,000
Provision for loan losses 86,699 93,193 103,155
Charge-offs (87,182) (77,852) (128,201)
Recoveries 15,483 18,659 15,046
----------------------------------
Balance, December 31 $460,000 $445,000 $350,000
==================================

Certain directors and executive officers of First Merchants, including their
immediate families and companies in which they are principal owners, are loan
customers of Merchants National. Such loans were made in the ordinary course of
business on the Bank's normal credit terms including interest rate and
collateralization and did not represent more than a normal risk of collection.
The aggregate amount of loans outstanding at December 31, 1994 and 1993,
attributable directly and indirectly to these parties was approximately
$3,150,000 and $3,090,000, respectively. During 1994, $733,000 of new loans
were made and repayments totaled $673,000.

The FASB has issued SFAS No. 114, "Accounting By Creditors for Impairment of a
Loan". The provisions of SFAS No.114 are effective for fiscal years beginning
after December 15, 1994. SFAS No. 114 requires that impaired loans be measured
based on the present value of expected future cash flows discounted at the
loan's effective interest rate or, as a practical expedient, at the loan's
observable market price or fair value of the collateral in the loan is
collateral dependent. First merchants has not yet completed the complex
analysis required to estimate the impact of these new rules and does not expect
it implement SFAS No. 114 prior to its first quarter 1995 effective date.

NOTE F - PREMISES AND EQUIPMENT

The major categories of premises and equipment are summarized as follows:

December 31
1994 1993
---------------------------
Land $ 913,561 $ 913,561
Buildings 3,171,351 3,126,560
Furniture and equipment 2,144,560 2,084,026
---------------------------
6,229,472 6,124,147
Less accumulated depreciation 2,777,082 2,572,690
---------------------------
Premises and Equipment - Net $3,452,390 3,551,457
===========================

NOTE G - DEPOSITS

The major categories of deposits are summarized as follows:

December 31
1994 1993
---------------------------
Demand deposits
Non-interest-bearing $13,674,107 $10,882,479
Interest-bearing 13,942,620 13,176,640
Savings deposits 32,360,660 34,209,274
Certificates of deposits < $100,000 31,869,979 30,835,601
Certificates of deposits > $100,000 3,693,786 3,521,425
---------------------------

Total Deposits $95,541,152 $92,625,419
===========================

NOTE H - RESTRICTIONS ON SUBSIDIARY DIVIDENDS

First Merchant's primary source of funds for payment of dividends to
stockholders is dividends received from Merchants National. Certain restrictions
exist regarding the ability of Merchants National to transfer funds to First
Merchants in the form of cash dividends. Federal banking regulations require
regulatory approval prior to declaring dividends in excess of the current year's
net income, combined with retained net income for the two preceding years.
During 1995, Merchants National can, without prior regulatory approval, declare
dividends of approximately $1,610,000 to First Merchants, plus retained net
profits for the interim period through the date of such dividend declaration.

NOTE I - EMPLOYEE BENEFITS

Merchants National participates in a noncontributory defined benefit retirement
plan which covers all full-time employees with one year of service who have
attained the age of 21. Employee benefits are based on years of service and
employee compensation earned during employment. The Bank's funding policy is to
contribute annually the maximum amount that can be deducted for federal income
tax purposes. Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be earned in the
future.

The following table sets forth the plans funded status and the amounts
recognized in First Merchant's balance sheets at December 31, based on
actuarial valuations performed as of November 1:

1994 1993
----------------------
Actuarial present value of accumulated benefit
obligations - (substantially vested in full) $1,143,000 $1,191,000
======================

Proj. benefit oblig. for service rendered to date $1,341,000 $1,402,000
Plan assets at fair value, primarily listed
common stocks and investments is various
mutual bond and stock funds 1,702,000 1,777,000
----------------------
Funded status - Plan Assets in Excess of
Projected Benefit Obligation 361,000 375,000
Unrecognized net gain from past experience
different from that assumed and effects of
changes in assumptions (239,000) (263,000)
Unrecognized prior service cost (23,000) (25,000)
Unrecognized net asset (overfunding) at date of
adoption of FASB No. 87 (145,000) (95,000)
----------------------
Net Accrued pension Cost Included
in Other Liabilities $ (46,000) $ (8,000)
======================

Net periodic pension cost for each of the three years ended December 31 included
the following components:

1994 1993 1992
------------------------------
Service cost-benefits earned during the period $ 42,000 $ 65,000 $ 76,000
Interest cost on projected benefit obligation 102,000 97,000 90,000
Actual return on plan assets 34,000 (207,000) (157,000)
Deferred gains (181,000) 68,000 20,000
Amortization of unrecognized net gains (6,000) (14,000) (14,000)
Amortization of unrecognized prior service
cost (2,000) (2,000) (2,000)
Amortization of plan overfunding at date of
adoption (16,000) (10,000) (10,000)
------------------------------
Net Periodic Pension (Benefit) Expense $(27,000) $ (3,000) $ 3,000
==============================

The weighted-average discount rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligation were 8.5% and 6%, respectively, at November 1, 1994 and 1993. The
expected long-term rate of return on plan assets was 8.5% in 1994, 1993, and
1992. The overfunding as of the date of adoption of FASB No. 87, the net
deferred gain from past experience different from that assumed, and the effects
of changes in assumptions are being amortized as a net credit against pension
cost over the average future working lifetime of the participants expected to
receive benefits under the plan which approximates 17 years.

In addition to the defined benefit pension plan, Merchants National sponsors
contributory defined benefit health care and life insurance plans that provide
postretirement medical and life insurance benefits to qualifying retirees.
Full-time employees who retire on or after age 62 with 15 years of service, or
after age 65 with 10 years of service are eligible for medical benefits. The
postretirement medical plan covers a stated percentage of eligible expenses,
reduced by deductibles and other coverage, as applicable. The cost-sharing
provisions of the medical plan require covered retirees to fund 50% of the total
cost of employee coverage and 100% of any dependent coverage. Life insurance
coverage is available only to employees who retired prior to January 1, 1993 and
otherwise met the service requirements indicated above for medical benefits.
The cost-sharing provisions of the postretirement life insurance plan require
covered retirees to fund 50% of the total cost. Effective January 1, 1993,
First Merchants adopted FASB Statement No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions". The cumulative effect as of
January 1, 1993 of adopting Statement 106 decreased net income by $116,930 (net
of $77,953 in deferred income tax benefit), or $.20 per share. Adoption of the
Statement also increased 1993 net periodic postretirement benefit cost by
approximately $11,000. Postretirement benefit costs for 1992, Which was
recorded on a cash basis, has not been restated.

The following table presents combined details of the amounts recognized in First
Merchant's statement of financial position relative to the respective unfunded
postretirement benefit plans:

DECEMBER 31
1994 1993
-------------------------
Accumulated postretirement benefit obligation:
Retirees $136,441 $128,789
Fully eligible active plan participants 17,657 16,665
Other active plan participants 63,894 60,321
-------------------------
Accrued Postretirement Benefit Cost $217,992 $205,775
=========================

Net periodic postretirement benefit cost for the years ended December 31,
included the following components:

1994 1993
--------------------------
Service cost 6,777 6,477
Interest cost 15,291 14,616
--------------------------
Net Periodic Postretirement Benefit Cost 22,068 21,093
==========================

The weighted-average annual assumed rates of increase in the per capita cost of
covered benefits are 11% (pre-age 65 benefits) and 9% (post-age 65 benefits) for
1994 (the rates previously assumed for 1993 were 11.5% and 9,5%, respectively)
and are assumed to decrease .5% annually to an ultimate level of 5%. The annual
assumed rate of increase in per capita cost of life insurance benefits (i.e.
salary increases) is %5. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example, increasing the assumed
health care cost trend rates by one percentage point in each year would increase
the accumulated postretirement benefit obligation as of December 31, 1994 by
approximately $30,000, and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for 1994 by approximately
$5,000. The weighed- average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% at December 31, 1994 and 1993.

NOTE J - INCOME TAXES

Effective January 1, 1993, First Merchants changed its method of accounting for
income taxes from the deferred method to the liability method required by FASB
Statement No. 109, "Accounting for Income Taxes". The cumulative effect of
adopting Statement 109 as of January 1, 1993, was not material to First
Merchant's consolidated financial statements.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of asset and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of First Merchant's deferred tax liabilities and assets as of December 31 are as
follows:

Deferred tax liabilities 1994 1993
-----------------------
Unrealized gains on securities
available for sale $ - $(203,000)
Premises and equipment (179,000) (185,000)
Federal income tax allowance for loan losses (166,000) (167,000)
Other (42,000) (34,000)
-----------------------
Total Deferred Liabilities (387,000) (589,000)

Deferred tax assets:
Unrealized losses on sec. available-for-sale 526,000 -
Allowance for loan losses 180,000 176,000
OPEB liability 86,000 81,000
Accrued liabilities 10,000 31,000
Other 38,000 54,000
-----------------------
Total Deferred Tax Assets 840,000 342,000
-----------------------
Net Deferred Tax Assets (Liabilities) $ 483,000 $(247,000)
=======================

Income taxes included in earnings for each of the three years ended December 31
are composed of:
<TABLE>
Deferred
Liability Method Method
1994 1993 1992
<S> <C> <C> <C>
------------------------------
Federal:
Current $275,564 $306,289 $340,343
Deferred (benefit) expense (5,547) 13,257 (124,951)
------------------------------
270,017 319,546 215,392
State 82,585 98,372 112,000
------------------------------
Total $352,602 $417,918 $327,392
==============================
</TABLE>
Current income tax expense attributable to securities transactions approximated
$29,000, $141,000, and $2,000 in 1994, 1993, and 1992, respectively.

The provision for income taxes differs from the federal statutory rate for the
following reasons:
<TABLE>

LIABILITY METHOD DEFERRED METHOD
-------------------------------------------------
1994 % 1993 % 1992 %
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Comp. tax at stat. fed. rate $521,955 34.00 $594,159 34.00 $474,335 34.00
Add state income taxes net
of federal tax benefit 53,478 3.48 63,789 3.65 59,469 4.26
Increase (decrease) in taxes
resulting from:
Tax-exempt interest (239,141) (15.58) (252,876)(14.47) (231,801)(16.62)
Amortization of purchase
accounting adjustments - - - - 20,003 1.43
Other 16,310 1.06 12,846 .73 5,386 .40
-------------------------------------------------
$352,602 22.96 $417,918 23.91 $327,392 23.47
=================================================
</TABLE>

NOTE K - COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business, Merchants National offers a variety of
financial products to customers to aid them in meeting their requirements for
liquidity and credit enhancement. Generally accepted accounting principles
recognize these transactions as contingent liabilities and, accordingly, they
are not reflected in the accompanying financial statements. Following is a
discussion of the transactions.

Standby letters of credit: These transactions are used by the Bank's
customers as a means of improving their credit standing in their dealings
with others. Under these agreements, the Bank agrees, in exchange for a
fee, to honor certain financial commitments in the event that its customers
are unable to do so. Amounts outstanding pursuant to such standby letters
of credit as of December 31, 1994 and 1993 were $388,000 and $213,000,
respectively. Management conducts regular reviews of these instruments on
an individual customer basis, and the results are considered in assessing
the adequacy of the allowance for loan losses.

Loan Commitments: As of December 31, 1994 and 1993, Merchants National had
commitments outstanding to extend credit totaling approximately $2,633,000
and $682,000, respectively. These commitments (lines of Credit) generally
require the customers to maintain certain credit standards.

Both of the above arrangements have credit risk essentially the same as that
involved in extending loans to customers and are subject to the Company's
standard credit policies. Collateral is obtained based on management's credit
assessment of the customer. Management does not anticipate any material losses
as a result of these commitments.

The following items of other income and expense exceeded one percent of total
revenue for the periods indicated:

1994 1993 1992
----------------------------
Other Expense:
FDIC assessment $213,000 $179,000 $170,000
Marketing 96,000 87,000 65,000
Directors and committee fees 94,000 88,000 63,000
Printing stationery and supplies 102,000 93,000 75,000

Other income:
Credit life insurance premiums 97,000 94,000 88,000

NOTE M - FAIR VALUE OF FINANCIAL INSTRUMENTS

In December 1991, the FASB issued Statement No. 107, Disclosures about Fair
Values of Financial Instruments". This statement requires the disclosure of the
fair value of substantially all financial instruments, whether recognized or not
recognized in the balance sheet. The statement does not change any of the
present requirements for recognition, measurement, or classification of
financial instruments in the financial statements. Statement 107 is effective
for financial statements issued for fiscal years ending after December 15, 1995,
for entities with less than $150 million in total assets.

NOTE N - FIRST MERCHANTS BANCORP, INC (PARENT ONLY) FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

December 31
1994 1993
-------------------------
ASSETS
Cash $ 56,137 $ 51,297
Investment in bank subsidiary 9,518,838 9,830,978
Other assets 175,000 160,000
-------------------------
Total Assets $9,749,975 $10,042,275
=========================

LIABILITIES
Other liabilities $ 288,189 $ 270,909
-------------------------
Total Liabilities $ 288,189 $ 270,909
=========================

STOCKHOLDERS' EQUITY 9,461,786 9,771,366
-------------------------
Total Liabilities and Stockholders' Equity $9,749,975 $10,042,275
=========================

CONDENSED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31
1994 1993 1992
----------------------------------
INCOME
Dividends from bank subsidiary $ 400,000 $ 385,000 $ 275,000

Equity in undistributed earnings of sub 782,560 827,677 792,712
----------------------------------
Net Income $1,182,560 $1,212,677 $1,067,712
==================================

CONDENSED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31
1994 1993 1992
----------------------------------
OPERATING ACTIVITIES
Net income $1,182,560 $1,212,677 $1,067,712
Adjustments to reconcile net income to
cash provided by operating activities:
Equity in undistributed
earnings of subsidiary (782,560) (827,677) (792,713)
(Increase) Decrease in other assets (15,000) 45,000 (205,000)
----------------------------------
Cash Provided by Operating Activities 385,000 430,000 69,999

FINANCING ACTIVITIES
Cash dividends paid (380,160) (420,479) (234,720)
----------------------------------
Cash Used in Financing Activities (380,160) (420,479) (234,720)
==================================

Increase (Decrease) in Cash 4,840 9,521 (164,721)

Cash at beginning of year 51,297 41,776 206,497
----------------------------------
Cash at End of Year $ 56,137 $ 51,297 $ 41,776
==================================

NOTE O - PENDING MERGER

On March 14, 1995, the Company's board of directors approved a plan of merger
whereunder the Company will be acquired by City Holding Company. The merger is
subject to approvals of shareholders and regulators, and is expected to be
consummated in the summer of 1995.
<PAGE>

Annexes previously filed with
Pre-Effective Amendment No. 1

<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Officers and Directors

Section 31-1-9 of the West Virginia Corporation Act provides in part
that each West Virginia corporation shall have the power to indemnify any
director, officer, employee or agent or former director, officer, employee
or agent against expenses actually and reasonably incurred by him in
connection with the defense of any claim, action, suit or proceeding
against him by reason of being or having been such director, officer,
employee or agent other than an action by or in the right of the
corporation if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the corporation.
With respect to an action by or in the right of the corporation the
director, officer, employee or agent or former director, officer, employee
or agent may be indemnified if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation, except in relation to matters as to which he shall be finally
adjudged in such action, suit or proceeding against him by reason of being
or having been such director, officer, employee or agent to be liable for
negligence or misconduct in the performance of duty; and to make any other
or further indemnity to any such persons that may be authorized by the
articles of incorporation or any by-law made by the shareholders or any
resolution adopted, before or after the event, by the shareholders. The
By-laws of City Holding contain provisions pursuant to the foregoing
section of the West Virginia Corporation Act indemnifying the directors,
officers, employees and agents of City Holding in certain cases against
expenses and liabilities under judgments and reimbursements of amounts paid
in settlement.

City Holding has purchased directors and officers' liability insurance
policies. Within the limits of their coverage, the policies insure (l) the
directors and officers of City Holding against certain losses, to the
extent such losses are not indemnified by City Holding, and (2) City
Holding, to the extent it indemnifies such directors and officers for
losses as permitted under the laws of West Virginia.

Item 21. Exhibits and Financial Statement Schedules

(a) Exhibits

2* Agreement and Plan of Reorganization dated March 14, 1995,
among City Holding, Merchants, and FMB (attached to the Joint
Proxy Statement/Prospectus as Annex I)

5* Opinion of Steptoe & Johnson

8* Opinion of Hunton & Williams with respect to tax consequences
of the Merger

23(a) Consent of Ernst & Young LLP

23(b) Consent of Ernst & Young LLP

23(c)* Consent of Steptoe & Johnson (included in Exhibit 5)

23(d)* Consent of Hunton & Williams (included in Exhibit 8)

23(e) Consent of Persinger & Company, L.L.C.

23(f)* Consent of Baxter Fentriss and Company

24* Power of Attorney

99(a)* Form of FMB Proxy

99(b)* Form of City Holding Proxy

(b) Financial Statement Schedules -- None

____________________
* Previously filed.

Item 22. Undertakings

(a) The undersigned Registrant hereby undertakes as follows:

1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:

(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration;

(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.

2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

3. To remove from registration by means of a post-effective
amendment any of the securities being registered in which
remain unsold at the termination of the offering.

4. That prior to any public reoffering of the securities
registered hereunder through the use of a prospectus which
is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the
meaning of Rule 145(c), the Registrant undertakes that
such reoffering prospectus will contain, or will be
amended to contain, the information called for by the
applicable registration form with respect to reoffering by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the
applicable form;

5. That every prospectus (i) that is filed pursuant to the
paragraph immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and
is used in connection with an offering of securities
subject to Rule 415, will be filed as part of an amendment
to the registration statement and will not be used until
such amendment is effective, and that for the purposes of
determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof;

6. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the
Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.

(b) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one
business day of receipt of such request, and to send the incorporated
documents by first-class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.

(c) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was not
the subject of and included in the registration statement when it became
effective.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this
Pre-Effective Amendment No. 2 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Charleston, State of West Virginia, on
June 14, 1995.

CITY HOLDING COMPANY

By /s/ Steven J. Day

Steven J. Day, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Pre-Amendment No. 2 has been signed by the following persons in the capacities
indicated on June 14, 1995.

Signature Title and Capacity

/s/ Steven J. Day President and Chief
Steven J. Day Executive Officer; Director
(Principal Executive Officer)

/s/ Robert A. Henson* Chief Financial Officer (Principal
Robert A. Henson Financial Officer and Principal
Accounting Officer)

Chairman of the Board; Director
Samuel M. Bowling

Scott Briers Director

/s/ Otis L. O'Connor* Secretary; Director
Otis L. O'Connor

/s/ Darrell K. Cales* Director
Darrell K. Cales

/s/ Robert D. Fisher* Director
Robert D. Fisher

/s/ Jack E. Fruth* Director
Jack E. Fruth

/s/ Jay Goldman* Director
Jay Goldman

/s/ Carlin K. Harmon* Director
Carlin K. Harmon

/s/ C. Dallas Kayser* Director
C. Dallas Kayser

/s/ Dale Nibert* Director
Dale Nibert

Bob Richmond Director

/s/ Mark Schaul* Director
Mark Schaul

/s/ Van R. Thorn* Director
Van R. Thorn

*By: /s/ Steven J. Day
Attorney-in-Fact

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Exhibit Index

Exhibit

23(a) Consent of Ernst & Young LLP

23(b) Consent of Ernst & Young LLP

23(e) Consent of Persinger & Company, L.L.C.

Exhibit 23(a)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of City Holding Company
for the registration of up to 918,400 shares of its common stock and to the use
of our report dated January 27, 1995, except as to Note O, the date of which is
March 14, 1995, included herein, with respect to the Consolidated Financial
Statements of First Merchants Bancorp.

/s/ Ernst & Young LLP

Charleston, West Virginia
June 14, 1995

Exhibit 23(b)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of City Holding Company
for the registration of up to 918,400 shares of its common stock and to the use
of our report dated January 20, 1995, included herein, with respect to the
Consolidated Financial Statements of City Holding Company.

/s/ Ernst & Young LLP

Charleston, West Virginia
June 14, 1995

Exhibit 23(e)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 6, 1995, with respect to the consolidated
financial statements of Hinton Financial Corporation, included in this
Registration Statement (Form S-4) and related prospectus of City Holding Company
for the registration of up to 918,400 shares of its common stock.

/s/ Persinger & Company, L.L.C.

Beckley, West Virginia
June 15, 1995