CITY HOLDING CO
DEF 14A, 1997-04-16
NATIONAL COMMERCIAL BANKS
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                                 April 21, 1997





Dear Shareholder:

         We cordially invite you to attend the annual meeting of shareholders of
City Holding  Company to be held at City Holding's  principal  office located at
3601 MacCorkle Avenue, S.E.,  Charleston,  West Virginia 25304, on May 13, 1997,
at 3:00 p.m. Your Board of Directors and  management  look forward to personally
greeting those of you who are able to attend the meeting.

         Shareholders will be asked to elect six Class II 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 1997,  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 April 15, 1997 are  entitled
to notice of and to vote on matters to be transacted at the Annual Meeting.

         City Holding thanks you for your consideration and continued support.


                                    Sincerely,



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



<PAGE>






                              CITY HOLDING COMPANY
                            3601 MacCorkle Avenue, SE
                         Charleston, West Virginia 25304

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                             To Be Held May 13, 1997

        Notice is hereby given that,  pursuant to all of its Board of Directors,
the annual meeting of shareholders of City Holding Company ("City Holding") will
be held at City Holding's  principal  office  located at 3601 MacCorkle  Avenue,
S.E.,  Charleston,  West Virginia  25304,  on May 13, 1997, at 3:00 p.m. for the
following purpose:

          1.   Election of  Directors.  To elect six Class II  Directors  to the
               Board of Directors to serve three-year terms.

          2.   Ratification  of  Auditors.  To ratify  the  Board of  Directors'
               appointment of Ernst & Young LLP as auditors for City Holding for
               1997; and

          3.   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 April 15,  1997 are  entitled to notice of and to vote on matters to
be transacted at the Annual Meeting or 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 and Two as
described in the accompanying Proxy Statement.

                                    By Order of the Board of
                                    Directors,



                                    Otis L. O'Connor
                                    Secretary

April 21, 1997
Charleston, West Virginia




<PAGE>





                       1997 ANNUAL MEETING OF SHAREHOLDERS


                                 PROXY STATEMENT





                                     GENERAL

        Proxies in the form enclosed are solicited by the Board of Directors for
the 1997 City  Holding  Company  Annual  Meeting of  Shareholders  (the  "Annual
Meeting")  to be held at 3:00 p.m.  on May 13, 1997 at the  principal  office of
City Holding Company (the "Company")  located at 3601 MacCorkle  Avenue,  S. E.,
Charleston,  West Virginia.  The Company  anticipates  that this Proxy Statement
will be mailed to shareholders on or about April 21, 1997.

        Any  shareholder  giving a proxy may revoke it at any time  before it is
voted by written notice to the Company, P.O. Box 4168, Charleston, West Virginia
25364-4168,  Attention: Assistant Secretary, or by the execution of a proxy with
a  later  date,  or by  voting  in  person  at the  Annual  Meeting  the  shares
represented by the proxy. All shares  represented by a proxy,  when executed and
not so revoked, will be voted in accordance with such instructions. If the proxy
contains no  instructions,  it will be voted FOR Items One and Two as  described
herein.

        The  affirmative  vote  of a  majority  of the  shares  represented  and
entitled to vote at the Annual 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 the Company,  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 Proxies may cumulate their votes at their
discretion.

        The presence, in person or by properly executed proxy, of the holders of
a majority of the outstanding  shares of the Company's  Common Stock entitled to
vote at the Annual  Meeting is  necessary  to  constitute a quorum at the Annual
Meeting.  Abstentions  will  be  counted  as  shares  present  for  purposes  of
determining  the presence of a quorum.  As a  consequence,  abstentions  will be
counted as votes against the proposal.  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.



                                        1

<PAGE>



        The cost of  solicitation  of proxies will be borne by the  Company.  In
addition to the use of the mails,  proxies  may be  solicited  personally  or by
telephone by regular employees of the Company,  but no special compensation will
be paid to any person for personal  solicitation  of proxies.  Banks,  brokerage
houses and other  institutions,  nominees and  fiduciaries  will be requested to
forward the soliciting material to beneficial owners and to obtain authorization
for the execution of proxies.  The Company will,  upon request,  reimburse  such
parties for their reasonable expenses in forwarding proxy material to beneficial
owners.



                                        2

<PAGE>



                         OWNERSHIP OF EQUITY SECURITIES

        The  Company's  only  authorized  voting  equity  security is its Common
Stock,  par value $2.50 per share (the  "Common  Stock").  As  discussed  on the
preceding page, the Company's Common Stock has one vote per share on all matters
except the election of Directors.  On April 15, 1997,  the date for  determining
shareholders  entitled to vote at the Annual Meeting (the "Record Date"),  there
were outstanding and entitled to vote 6,068,488 shares of Common Stock.

        The table  below  presents  certain  information  as of the Record  Date
regarding beneficial ownership of shares of Common Stock by Directors,  nominees
for Director, and all Directors and officers as a group. The Company knows of no
person that owns more than 5% of the outstanding Common Stock.
<TABLE>
<CAPTION>
<S> <C>
                                                                                                  Aggregate
                                           Sole Voting and                                        Percentage
Name                                       Investment Power             Other (1)                 Owned
- ----                                       ----------------             ---------                 -----

Samuel M. Bowling                                 24,191                   55,141                  1.31%
C. Scott Briers                                    6,808                    2,487                  0.15%
Dr. D. K. Cales                                   88,152                        0                  1.45%
Hugh R. Clonch                                    18,647                   87,167                  1.74%
George F. Davis                                    7,417                      933                  0.14%
Steven J. Day                                     30,044                   15,990                  0.76%
Robert D. Fisher                                   6,440                        0                  0.11%
William M. Frazier                                32,976                   51,251                  1.39%
Jack E. Fruth                                     33,970                        0                  0.56%
Jay Goldman                                        9,972                      304                  0.17%
Carlin K. Harmon                                  29,280                    6,736                  0.59%
C. Dallas Kayser                                  33,028                      438                  0.55%
Dale Nibert                                       42,790                        0                  0.71%
Otis L. O'Connor                                   3,559                       14                  0.06%
Leon K. Oxley                                     27,474                   43,482                  1.17%
Bob F. Richmond                                   10,478                      564                  0.18%
Mark Schaul                                       28,988                    1,609                  0.50%
Van R. Thorn, II                                   1,756                    1,738                  0.06%
Directors and Officers
  as a group (21 persons)                        448,431                  279,138                 11.99%
- --------------
</TABLE>

(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
the  Company's  401(k)  and  Profit  Sharing  Plan;  or (e) held in trust by the
Company's Employee Stock Ownership Plan (ESOP).







                                        3

<PAGE>



                       ELECTION OF THE COMPANY'S DIRECTORS

        The Company's Board of Directors  presently  comprises eighteen 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 II  directors  to serve  until the  Company's  2000 Annual  Meeting.  Each
nominee is  currently a director of the Company.  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.


<TABLE>
<CAPTION>
<S> <C>

                                    Principal Occupation                                Director
Name (Age)                          and Business Experience                             Since
- ----------                          -----------------------                             -----

Class II Nominees (to serve until the
        2000 Annual Meeting)

Carlin K. Harmon (60)               President & Chief Executive Officer,                9/88
                                    First State Bank & Trust, Rainelle, WV,
                                    since 1972; Executive Vice President of
                                    the Company since 1990.

Dale Nibert (69)                    Dairy Farmer,                                       4/88
                                    Point Pleasant, WV

Mark Schaul (66)                    President, Charmar Realty Company,                  3/76
                                    Charleston, WV

Van R. Thorn (48)                   Chief Executive Officer, The Home                   5/92
                                    National Bank of Sutton, Sutton, WV,
                                    since 1992; Cashier from 1979 to 1992.

C. Scott Briers (61)                President of the Board, First National              1/95
                                    Bank of Hinton since 1994; Owner,
                                    Briers Furniture since 1977

Hugh R. Clonch (57)                 President of Clonch                                 9/95
                                    Industries, Inc. (timber) in
                                    Dixie, WV, since 1975



                                        4

<PAGE>
<CAPTION>

                                    Principal Occupation                                Director
Name (Age)                          and Business Experience                             Since
- ----------                          -----------------------                             -----

Class III Directors (to serve until the
                  1998 Annual Meeting)

Dr. D. K. Cales (67)                Dentist, Rainelle, WV                               7/90

Jay Goldman (53)                    President, Goldman Associates (real                 8/88
                                    estate) Charleston, WV

C. Dallas Kayser (45)               C. Dallas Kayser, L.C. (attorney)                   1/95
                                    Point Pleasant, WV

Robert D. Fisher (44)               Partner, Adams Fisher & Evans                       8/94
                                    (attorney) Ripley, WV

George F. Davis (69)                President and Chief Executive Officer               9/95
                                    of Merchants National Bank,
                                    Montgomery, WV, since 1979

William M. Frazier (68)             Attorney, Frazier & Oxley, LC;                      2/97
                                    President and Chief Executive Officer
                                    of The Old National Bank of Huntington,
                                    Huntington, WV, since 1984



Class I Directors (to serve until the
                  1999 Annual Meeting)

Samuel M. Bowling (59)              President, Dougherty Company, Inc.                  3/83
                                    (mechanical contractor) since 1977,
                                    Chairman of the Company since 1990.

Steven J. Day (43)                  President and Chief Executive Officer of            11/88
                                    the Company since 1990; Treasurer and
                                    Chief Financial Officer from 1983 to 1990.

Jack E. Fruth (68)                  Principal Owner, Fruth Pharmacies                   4/87
                                    Point Pleasant, WV.



                                        5

<PAGE>



Otis L. O'Connor (61)               Partner, Steptoe & Johnson (attorneys)              1/76
                                    Charleston, WV.

Bob F. Richmond (56)                Chief Executive Officer, First National             1/95
                                    Bank of Hinton since 1981; Vice President
                                    from 1972 to 1981

Leon K. Oxley (48)                  Attorney, Frazier & Oxley, LC;                      2/97
                                    Secretary of the Old National Bank
                                    of Huntington, Huntington, WV, since 1981
</TABLE>


                                        6

<PAGE>




Committees of the Board of Directors

        The entire  Board of Directors  functions  as a nominating  committee by
considering  nominees for  election as Directors of the Company.  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 the Company not less than 14 days and no more
than 50 days  prior to the date of include  the name,  address,  occupation  and
ownership of shares of Common Stock of the  nominee,  and the name,  address and
ownership of shares of Common Stock 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 1996.

        The Company 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 Company's Stock Incentive Plan. This committee meets once a year.

Attendance

        The Company's Board of Directors held 12 meetings during the fiscal year
ended December 31, 1996. No director  attended fewer than 75% of the meetings of
the  Company's  Board,  all members of the Audit  Committee  attended all of the
Audit Committee meetings, and all members of the Compensation Committee attended
the Compensation Committee meeting.

Compensation of Directors

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


                               EXECUTIVE OFFICERS

        The executive officers of City Holding are as follows:

        Steven J. Day, President and Chief Executive Officer.

        George F. Davis, Executive Vice President.

        Carlin K. Harmon, Executive Vice President.

                                        7

<PAGE>




        Matthew B. Call,  39, has been Senior  Vice  President  of City  Holding
Company since August 1994. Prior to joining City Holding Company,  he was Senior
Vice President and Cashier for Bank One, West Virginia.

        Robert A.  Henson,  CPA,  35, 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 the Company since 1987.  Prior to joining the Company,  he
was an Audit Manager with Ernst & Young  LLP in Charleston, West Virginia.

        F. Eric Nelson,  Jr., 35, has been  Treasurer and  Investment  Portfolio
Manager of the Company since October 1994. He was Chief  Operations  Officer and
Investment Portfolio Manager from 1992 to 1994 and Vice President and Investment
Portfolio  Manager  from 1990 to 1992.  Prior to joining the  Company,  he was a
Director  with the  Corporate  Finance  Department  of Crestar Bank in Richmond,
Virginia.


                                       8

<PAGE>



                             EXECUTIVE COMPENSATION

        The following  table presents  information  relating to  compensation of
executive  officers of the Company whose  compensation  exceeded $100,000 during
the fiscal year ended December 31, 1996.
<TABLE>

                                            Summary Compensation Table
                                                Annual Compensation
<CAPTION>
<S> <C>
        Name and                                                                                          All Other
        Principal Position             Year            Salary ($)           Bonus ($) (1)           Compensation(2)
        ------------------             ----            ----------           -------------           ---------------

        Steven J. Day
          President and Chief          1996              $194,057              $90,444                $23,597
          Executive Officer            1995               187,043               80,718                 22,127
                                       1994               179,763               72,952                 22,045


        Carlin K. Harmon
          Executive Vice               1996               154,726               69,574                 23,613
          President                    1995               149,133               57,764                 22,408
                                       1994               143,328               40,132                 21,410



        George F. Davis
          Executive Vice               1996               132,480               37,094                 20,857
          President                    1995               123,500               19,000    (3)           9,203


        Robert A. Henson               1996                97,481               46,302                 22,168
          Chief Financial Officer      1995                93,957               40,602                 20,572
                                       1994                90,300               35,080                 18,259



        F. Eric Nelson, Jr.
          Treasurer and
          Investment Portfolio         1996                89,975               42,904                 22,187
          Manager                      1995                86,723               37,560                 19,127
                                       1994                83,347               32,570                 16,963

</TABLE>

(1) Includes bonus awards under the Company's Incentive Plan.
(2)  Includes  Company  matching  and  profit-sharing  contributions  under  the
Company's Profit-Sharing and 401(k) Plan, which was implemented January 1, 1991,
and the Company's ESOP, which was implemented  January 1, 1996. 
(3)  During  1995,  Mr.  Davis'   compensation   was  calculated  based  on  the
recommendations  of the Senior Personnel  Committee of Merchants  National Bank.
Beginning in January 1996, Mr. Davis'  compensation  is calculated in accordance
with City Holding's Incentive Plan.



                                       9

<PAGE>



Stock Options Granted




The following  table sets forth  certain  information  concerning  stock options
granted during 1996 to the named executives:
<TABLE>
<CAPTION>
<S> <C>
                                                                                                        Potential Realizable Value 
                                                                                                        at Assumed Annual Rates of
                                                                                                        Stock Price Appreciation for
                                                                                                        Option Term
                                 Individual Grants
- ---------------------------------------------------------------------------------------------------------------------------------

Name                Number of Securities        % of Total Stock Options     Exercise
                    Underlying Stock            Granted to Employees         Price        Expiration
                    Options Granted             During the Year              per Share    Date            5%           10%
- ---------------------------------------------------------------------------------------------------------------------------------


Steven J. Day              15,000                    39%                     24.50        12/19/2001    101,550      224,400

Carlin K. Harmon            2,000                     5%                     24.50        12/19/2001     13,540       29,920

Matthew B. Call             5,000                    10%                     24.50        12/19/2001     33,850       74,800

Robert A. Henson            7,000                    18%                     24.50        12/19/2001     47,390      104,720

F. Eric Nelson              5,000                    10%                     24.50        12/19/2001     33,850       74,800
</TABLE>

Option values  reflect Black Scholes model output for options.  The  assumptions
used in the model were expected volatility of .237,  risk-free rate of return of
6.04%, dividend yield of 2.75%, and time to exercise of five years.

Prior to  1996,  no  stock  options  had been  awarded.  No stock  options  were
exercised through December 31, 1996.

The stock options vest and become fully exercisable immediately.


                                       10

<PAGE>






Option Values


The following table sets forth certain  information  concerning option values at
December 31, 1996:




                      Number of Securities                Value of Unexercised
                      Underlying Unexercised Options      In-The-Money Options
                      At Fiscal Year-End                  At Fiscal Year-End
- -------------------------------------------------------------------------------


Steven J. Day                15,000                             $13,125

Carlin K. Harmon              2,000                               1,750

Matthew B. Call               5,000                               4,375

Robert A. Henson              7,000                               6,125

F. Eric Nelson                5,000                               4,375



Based on closing sales price of $25.375 on December 31, 1996.

                                       11

<PAGE>


Compensation Committee Report on Executive Compensation

        The Compensation Committee of the Board of Directors of the Company (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 the Company
submits the following report of its  deliberations  with respect to compensation
of the Company executives for 1996:

        City Holding  executives are compensated  under the Company's  Incentive
Plan (the  "Incentive  Plan") adopted in 1992. The Incentive Plan is designed to
link  executive  compensation  to the  performance of the Company and to provide
levels of compensation adequate to attract and to retain quality management. For
1996,  twenty-five  members  of the  Company's  consolidated  management  group,
including  six members of Executive  Management,  participated  in the Incentive
Plan.

        Compensation  under the  Incentive  Plan  includes  base  salaries  with
provisions for annual increases and bonuses,  including stock options,  based on
individual  and  corporate  performance.  Bonuses are paid  one-half in cash and
one-half in Common  Stock,  while stock  options are awarded at the  Committee's
discretion. Maximum salary increases (as a percentage of the percentage increase
in the  Consumer  Price  Index) and  bonuses,  including  stock  options,  (as a
percentage  of  salary)  are  calculated  under the  Incentive  Plan  based upon
performance as measured by annual return on average assets and return on average
equity. The Committee  believes that these ratios best measure  performance that
is likely to  translate  into  increased  shareholder  value.  Participants  are
automatically  awarded 40% of their  maximum base salary 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 1996 were determined in accordance with
the formula that was adopted as part of the Incentive Plan. The average increase
in base pay for 1996 was 4.95%.

        Annual  Bonuses.  For  performance in 1996, the six members of Executive
Management   eligible  to   participate,   including   Mr.  Day,   were  awarded
approximately  $314,802 in annual bonuses under the Incentive Plan. Based on the
level of  individual  performance  during the year as reflected in the Company'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  approximately  $90,000 to Mr.  Day.  In light of various
activities,  including  the formation of a mortgage  servicing  division and the
acquisition of a $600 million loan servicing portfolio, the Committee elected to
award

                                       12

<PAGE>



approximately  34,000  additional  stock options to members of the  consolidated
management  group,  32,000 of which  were  awarded  to the  Company's  Executive
Officers.  Stock option awards  calculated  under the Company's  Incentive  Plan
totaled approximately 4,600 options with 2,300 of those options being awarded to
the Company's Executive Officers.

                                                       Respectfully submitted,

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





                                       13

<PAGE>



Stock Incentive Plan

        The Committee  administers  the Company'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 the Company.

        Key  employees of the Company and its related  entities and  individuals
who provide  services to the Company 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  25 people,  including
Messrs.  Day, Harmon,  Davis,  Henson,  Nelson and Call. 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 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 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
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 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 the Company for a specified period or that
the Company 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  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  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.

                                       14

<PAGE>




        No option,  SAR or stock award may be granted under the Stock  Incentive
Plan after March 8, 2003. The Company'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 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.

Employee Benefit Plans

        Under the  Company's  Profit  Sharing  & 401(k)  Plan  (the  "Plan"),  a
deferred   compensation   plan  under  the  Internal   Revenue  code,   eligible
participants, including Messrs. Day, Harmon, Davis, Henson, Nelson and Call, may
contribute  from  1%  to  15%  of  pre-tax  earnings  to  their  Plan  accoutns.
Contributions  may be invested in any of five investment  options as selected by
the participant,  including  Company Common Stock.  The Company matches,  in its
Common Stock, 50% of the first 6% of earnings  contributed by each  participant.
Although the profit sharing  features of this Plan remain intact,  future profit
sharing  contributions,  if any, are  expected to be made to the Employee  Stock
Ownership Plan.

        City Holding Company's Employees' Stock Ownership Plan ("ESOP"),  covers
all eligible employees, including Messrs. Day, Harmon, Davis, Henson, Nelson and
Call,  who have  completed  one year of service and have attained the age of 21.
The ESOP plan was created  January 1, 1996,  and includes both a Money  Purchase
and a Stock Bonus feature.  Annually,  the Company will  contribute to the Money
Purchase account an amount equal to 9% of eligible compensation. The Stock Bonus
account  contributions  are  discretionary  and are  determined  annually by the
Company's  Board of  Directors.  For the year  ended  December  31,  1996,  ESOP
contributions  for Messrs.  Call and Davis  equaled  13% of their gross  salary,
while  contributions for Messrs.  Day, Harmon,  Henson and Nelson equaled 13% of
the 1996  maximum  contribution  limit  as set  forth  by the  Internal  Revenue
Service.  Contributions  to all  executive  officers of the  Company  aggregated
$109,543,  and included  contributions  of $19,500 each to Messrs.  Day, Harmon,
Henson,  and  Nelson  and  $13,833  and  $17,710  to  Messrs.  Call  and  Davis,
respectively.

                                       15

<PAGE>



                                PERFORMANCE GRAPH

        The  following  graph  compares  the  yearly  percentage  change  in the
Company's  cumulative total  shareholder  return on 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 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 the old and new Peer Group Index.  Prior
to 1996, the old Peer Group consisted 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. The new Peer Group consists of publicly-traded  financial institutions
over $1  billion  but less  than $5  billion  in assets  headquartered  in Ohio,
Pennsylvania, Virginia, Kentucky, and Maryland.



                  1991     1992       1993       1994       1995       1996
                  ----     ----       ----       ----       ----       ----
CHCO              100     146.65     235.62     232.83     226.41     260.31
OLD PEER          100     149.63     195.39     185.40     228.88     291.48
NEW PEER          100     146.00     180.19     173.82     213.29     260.20
NASDAQ            100     116.38     133.59     130.59     184.67     227.16




                                       16
<PAGE>



                              EMPLOYMENT AGREEMENTS

        The Company 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 the Company,  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 Common  Stock that,
aggregated with shares of 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 the  Company;  or (ii) as the result of any cash tender or exchange
offer, merger or other business combination or sale of assets,  shares of Common
Stock are converted into cash or securities of another corporation.

        The Company also has an agreement with Mr. Davis  providing that he will
serve as  Executive  Vice  President of the Company at annual  compensation  and
benefits not less than his last  compensation  package with  Merchants  National
Bank prior to their acquisition.  Additionally, the agreement provides that when
Mr. Davis retires on his seventieth  birthday,  the Company will retain him in a
consulting  capacity  for three  years  and will pay him an annual  fee equal to
fifty percent of his last annual salary.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        During 1996, the Company and its subsidiaries had, and expect to have in
the future,  banking  transactions  with  officers and directors of the Company,
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 collectibility or present other unfavorable
factors.

        Otis L. O'Connor, Secretary and Director of the Company, is a partner in
Steptoe & Johnson, Charleston, West Virginia, which performed legal services for
the Company in 1996 and is expected to continue to perform  similar  services in
the future.

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        The Company's  executive  officers,  directors and 10%  shareholders are
required under the Securities  Exchange Act of 1934 to file reports of ownership
and changes in ownership  with the  Securities  Exchange  Commission.  Copies of
these reports must also be furnished to City Holding.  Based solely on review of
the copies of such reports  furnished to the Company through the date hereof, or
written representations that no reports were required, the Company believes that
during 1996, all filing requirements  applicable to its officers,  directors and
10% shareholders were met.


                                       17

<PAGE>



                     RATIFICATION OF APPOINTMENT OF AUDITORS

        The Company's  Board of Directors has  appointed  Ernst & Young   LLP to
audit the consolidated  financial  statements of the Company for the year ending
December  31,  1997.  The holders of Common Stock are being asked to ratify this
appointment  at the Annual  Meeting.  Ernst & Young  LLP  has been the Company'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
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.

                              SHAREHOLDER PROPOSALS

        Holders of 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 the Company's  proxy and proxy  statement  relating to such meeting,
submit such  proposals  in time to be  received by the Company at its  principal
executive offices in Charleston, West Virginia, no later than December 31, 1997.
To be so included,  all such  submissions  must comply with the  requirements of
Rule 14a-8 of the  Commission  under the  Exchange  Act.  The Board of Directors
directs the close attention of interested shareholders to that Rule.

                                  OTHER MATTERS

        At the date of this Proxy Statement,  the Board of Directors knows of no
matter to come before the meeting  other than those  stated in the notice of the
meeting. As to other matters, if any, that may come properly before the meeting,
it is intended that proxies in the accompanying form will be voted in accordance
with the best judgment of the person or persons named therein.

        We hope that you will be able to attend this  meeting in person,  but if
you cannot be present,  please  execute the enclosed  proxy and return it in the
accompanying envelope (no postage required) as promptly as possible.

                                           Otis L. O'Connor
                                           Secretary




April 21, 1997
Charleston, West Virginia



                                       18

<PAGE>



                                      PROXY

                              CITY HOLDING COMPANY

                              Post Office Box 4168
                         Charleston, West Virginia 25364-4168

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints W. Harold Toothman and Dan W. Mooney as Proxies,
each with the power to appoint his  substitute,  and hereby  authorizes  them to
represent and to vote, as  designated  below,  all the shares of Common Stock of
City Holding  Company held of record by the undersigned on April 15, 1997 at the
1997  Annual  Meeting  of  Shareholders  to be  held  on  May  13,  1997  or any
adjournment thereof.

Management and the Board of Directors recommends a vote FOR Proposals 1 and 2.


1.      PROPOSAL TO ELECT SIX CLASS II DIRECTORS TO THE BOARD OF DIRECTORS
        TO SERVE THREE-YEAR TERMS

        ( ) FOR          (except as marked to                  ( )WITHHOLD
                         the contrary below)                      AUTHORITY

                         Carlin K. Harmon                      Van R. Thorn, II
                         Dale Nibert                           C. Scott Briers
                         Mark H. Schaul                        Hugh R. Clonch

        To withhold authority to vote for any individual nominee,  strike a line
        through the nominee's name above.

2.      PROPOSAL TO RATIFY THE BOARD OF DIRECTORS' APPOINTMENT OF ERNST
        & YOUNG LLP AS AUDITORS FOR THE COMPANY FOR 1997

        ( ) FOR                ( ) AGAINST                  ( ) ABSTAIN

3.      In their discretion, the Proxies are authorized to vote upon such other 
        business as may properly come before the meeting.

This proxy, when properly executed,  will be voted in the manner directed herein
by the  undersigned  shareholder.  If no direction  is made,  this proxy will be
voted FOR  Proposals 1 and 2. You may revoke this proxy at any time prior to the
time it is voted at the Annual Meeting.
                           (continued on reverse side)




<PAGE>


Please sign  exactly as your name appears  below.  When shares are held by joint
tenants,  both should sign. When signing as attorney,  executor,  administrator,
trustee or guardian,  please give full title as such. If a  corporation,  please
sign in full corporate name by president or other authorized officer.
If a partnership, please sign in partnership name by authorized person.


                                        DATED:  __________________________, 1997



                                        ----------------------------------------
                                        Signature



                                        ----------------------------------------
                                        Signature if held jointly


                                        Please mark,  sign,  date and return the
                                        proxy   promptly   using  the   enclosed
                                        envelope.



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