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 CHARLESTON, W.Va., Jan. 6 /PRNewswire/ -- City Holding Company (NASDAQ: CHCO) and Lincoln Savings Bank (NASDAQ: LNSB) announced today the signing of a definitive agreement to merge in a stock swap valued at approximately $68 million, based on the Jan. 5 closing price of City Holding Company.
 Terms of the agreement call for the tax-free exchange of 2.25 shares of City Holding Company ("City") common stock for each share of Lincoln Savings Bank ("Lincoln") common stock. Based on the Jan. 5 closing price of City, shareholders of Lincoln will receive City common stock worth $75.94 per share. The transaction is expected to be completed in mid-1994 and is subject to the approval of regulatory authorities and the shareholders of both Lincoln Savings Bank and City Holding Company. The combination will be accounted for as a pooling-of-interests and will result in a market capitalization of approximately $169 million. Following the merger, Lincoln will operate as a wholly-owned subsidiary of City Holding Company.
 Lincoln operates through seven branches serving the Greater Pittsburgh market. At Sept. 30, 1993, Lincoln had total assets of $247 million and shareholders' equity of $30 million. Total non-performing assets equaled .28 percent of total assets and its loan loss reserve equaled 345 percent of non-performing assets.
 "We are excited by the opportunities presented with the combination of our two companies," noted Steven J. Day, president and chief executive officer of City Holding Company. "Lincoln Savings Bank is one of the top-performing thrifts in the Mid-Atlantic region, with excellent management, and we feel that there are significant ways in which we can leverage their franchise." David B. Hartman, chairman of the board and chief executive officer of Lincoln Savings Bank, added, "This combination presents significant advantages to our shareholders and our customers. By offering a fuller array of products through our branch system we can better serve the Pittsburgh community."
 As part of the transaction, City will add four representatives from Lincoln to its board of directors, which will be expanded to 16 members. Also, Lincoln will add two representatives of City Holding Company to its board of directors, which will be expanded to 10 members. The combined companies will have approximately $875 million in total assets. The combination will be accretive to City's tangible book value and is expected to be immediately accretive to its earnings per share.
 City Holding Company Merger with Lincoln Savings Bank
 Jan. 6, 1994
 Analysts' Supplemental Material
 City Holding Company's acquisition strategy is to build shareholder value by combining with healthy institutions in growing markets. The combination with Lincoln Savings Bank satisfies these criteria, as the transaction is accretive to City Holding Company's tangible book value and earnings and as it allows the company to enter the vibrant Pittsburgh market.
 By adding Pittsburgh to its franchise, City Holding Company will tap into a large, economically sound market with better growth prospects than its present area of operations. Pennsylvania's Allegheny and Washington counties have average family income 13 percent higher and unemployment 40 percent lower than City Holding Company's West Virginia markets. Allegheny County alone has nearly as many people as the entire state of West Virginia.
 While the acquisition will increase City Holding Company's assets by about 40 percent, the company is well poised to absorb Lincoln Savings Bank into its system. City Holding Company is experienced in running separate community bank subsidiaries, and has successfully integrated four acquisitions in the last two years. The company also already has infrastructure in the Pittsburgh area in the form of a recently opened mortgage company.
 City Holding Company sees significant opportunities for further growth in Pittsburgh as consolidation has left a competitive void in the marketplace. There are no mid-sized banks serving the city's middle market, as there is a large gap between Pittsburgh's three large banks and its numerous community banks and thrifts. The two counties in which Lincoln Savings Bank operates have about twice the number of potential acquisition targets as City Holding Company's West Virginia markets combined.
 City intends on operating Lincoln with its current name and without change in management or staff, as it has typically done in its previous acquisitions. Also, four members of Lincoln's board of directors will become directors of City and City will add two members to Lincoln's board of directors.
 Financial Performance
 Lincoln Savings Bank is one of the top performing thrifts in the Mid- Atlantic region, with strong capital, solid asset quality and high profitability. The $247 million thrift has an equity-to-assets ratio of 12.13 percent. Regulatory capital is even stronger, with a Tier 1 risk-based capital ratio of 28.02 percent and a total risk-based capital ratio of 30.28 percent.
 Lincoln Savings Bank's loan portfolio shows similar strength, with nonperforming assets amounting to only .28 percent of total assets, and reserves for loan losses amounting to 345 percent of nonperforming assets. The portfolio is also well diversified, with approximately 62 percent in residential mortgages, 34 percent in commercial loans and mortgages and 4 percent in consumer loans at Sept. 30, 1993. The remainder of Lincoln Savings Bank's assets are made up primarily of treasuries, federal agency securities, mortgage-backed securities and municipals.
 Lincoln Savings Bank has maintained high margins and low exposure to interest rates. Lincoln Savings Bank's latest quarter net interest margin of 3.86 percent is well ahead of peers while the company's cumulative one-year asset/liability gap is slightly positive. Combined with low operating expenses, this makes Lincoln highly profitable. The company exhibited a return on assets before any extraordinary items or gains from securities or real estate of 1.38 percent for the latest 12-month period.
 Financial Impact
 Balance Sheet Effect
 The addition of Lincoln Savings Bank to City Holding Company improves nearly every aspect of City Holding Company's balance sheet. Levels of equity, regulatory capital and reserves increase, while the level of problem assets declines. Furthermore, the transaction is over 3 percent accretive to tangible book value.
 (Dollars in millions)
 9/30/93 9/30/93
 City Holding(A) Lincoln
 (unaudited) (unaudited) Combined
 Total assets $628.3 $246.6 $874.9
 Total loans 353.6 111.3 464.9
 Total deposits 554.3 175.8 730.1
 Tangible equity 41.3 29.9 71.2
 Net income(B) 5.4 3.2 8.6
 Tangible book value $13.73 $33.24 $14.15
 Tang. Equity/Assets (pct.) 6.57 12.13 8.14
 Total Capital Ratio 13.34 30.28 17.34
 NPAs/Assets 0.52 0.28 0.45
 Reserves/NPAs 162.74 345.00 195.15
 Return on assets(B) 1.02 1.38 1.13
 Return on equity(B) 12.14 11.33 11.83
 (A) Pro forma for the acquisition of the deposits of Shenandoah Federal.
 (B) Latest 12 months net income excluding extraordinary items and securities gains.
 Income Statement Effect
 Given Lincoln Savings Bank's strong profitability, the acquisition is immediately accretive to City Holding Company's earnings per share, even with minimal expense savings.
 The following reflects the estimated impact to City Holding Company's earnings per share for 1994 and 1995:
 1994 1995
 Change in earnings per share $0.03 $0.10
 City Holding Company said it believes that the Lincoln Savings Bank transaction enhances City Holding Company's shareholder value. The market in which Lincoln operates is large, diverse and economically healthy. Lincoln itself is a top-performing company which City Holding Company feels will fit well with City Holding Company and enhance its results. City Holding Company encourages individuals to contact any one of the following people at City Holding Company if they should have any questions:
 Steven J. Day, president and chief executive officer, 304-926-3330; or Robert A. Henson, treasurer, 304-926-3332.
 -0- 1/6/94
 /CONTACT: Steven J. Day, president and chief executive officer of City Holding, 304-926-3330, or David B. Hartman, chairman of the board and chief executive officer of Lincoln Savings, 412-276-4860/

CO: City Holding Company; Lincoln Savings Bank ST: West Virginia, Pennsylvania IN: FIN SU: TNM

CD-DM -- PG020 -- 9883 01/06/94 16:11 EST
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Date:Jan 6, 1994

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