City Bank Announces Cash Dividend

On December 10, 2008, the Board of Directors of City Bank (NASDAQ:CTBK) declared a $.06 per share cash dividend, payable to shareholders of record as of January 2, 2009, and payable on January 16, 2009. This cash dividend is the 99^th paid, including regular and special dividends, in the Bank’s 34-year history and the Bank’s 81^st consecutive quarterly dividend.

The decision to reduce the quarterly cash dividend was made after careful and extensive consideration at our Board of Directors meeting. The Board recognizes the significant impact this will have on our shareholders. Unfortunately, the economic cycle we are experiencing creates tremendous challenges for all financial institutions, including City Bank, as evidenced by the significant increase in the nonperforming assets as reported for the third quarter ended September 30, 2008. Therefore, the Board believes this is prudent and ultimately in the best long-term interest of shareholders to preserve the Bank’s strong level of capital.

Risk-based capital ratios are calculated to provide a measure of capital that reflects the degree of risk associated with a financial institution's assets and off-balance-sheet items. City Bank’s total risk-based capital ratio was 17.55% at September 30, 2008, significantly greater than the 10% level required to be classified as "well-capitalized," the highest rating possible under FDIC and Federal Reserve Board Guidelines. The Board recognizes that these are not ordinary times, and took that into consideration in setting the lower dividend payment.

The Board of Directors also announced, while applauding the U.S. Government's systemic and creative approach to alleviating the current National financial crisis, that it would not be in the best interests of the Bank or its shareholders to apply for aid from the U.S. Treasury under the Treasury's new capital assistance program. This conclusion was reached based on the costs of the program versus the relative benefits given the bank’s capital position.

City Bank is a state-chartered commercial bank founded in 1974 and headquartered in Lynnwood, Washington. Eight banking offices and three mortgage loan production offices serve Snohomish, North King, Pierce and Clark counties. City Bank provides a wide range of banking services for business and individuals, including loans for residential construction, land development, mortgage, commercial, Small Business Administration, consumer, and all types of deposits as well as other general banking services. City Bank has been consistently recognized as one of the top performing banks in Washington State as well as nationally.