UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
For Annual and Transition Reports Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 1999.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period __________ to __________.
Commission File Number 0-11733
CITY HOLDING COMPANY
(Exact name of registrant as specified in its charter)
West Virginia 55-0619957
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
25 Gatewater Road
Charleston, West Virginia 25313
(Address of principal offices)
Registrant's telephone number,
including area code: (304) 769-1100
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered:
Common Stock, $2.50 par value The Nasdaq Stock Market
- - - - - - - - ------------------------------------------ ---------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days. [x] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant based on the closing price as of March 27, 2000 (Registrant has
assumed that all of its executive officers and directors are affiliates. Such
assumption shall not be deemed to be conclusive for any other purpose.):
Aggregate Market Value -- $186,725,208
- - - - - - - - -----------------------------------------
The number of shares outstanding of the issuer's common stock as of March 27,
2000:
Common Stock, $2.50 Par Value 16,874,836 shares
- - - - - - - - -------------------------------------------------
1
DOCUMENTS INCORPORATED BY REFERENCE
Documents Part of Form 10-K
- - - - - - - - --------- into which Document
is incorporated
-------------------
Portions of the Annual Part I, Item 1; Part
Report to Shareholders II, Items 5, 6, 7,
of City Holding Company and 8; Part III, Item
for the year ended 13; Part IV, Item 14.
December 31, 1999.
_______________
Portions of City Holding Part III, Items 10,
Company's Proxy statement 11, 12 and 13.
for the 2000 Annual
Meeting of Shareholders. ______________
2
FORM 10-K INDEX
---------------
PART I Page
-----
Item 1. Business 4
Item 2. Properties 11
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of 12
Security Holders
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 13
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of 13
Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk 13
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes In and Disagreements with Accountants 13
on Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of Registrant 13
Item 11. Executive Compensation 14
Item 12. Security Ownership of Certain Beneficial 14
Owners and Management
Item 13. Certain Relationships and Related Transactions 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and 15-16
Reports on Form 8-K
Signatures 17-18
Exhibit Index
3
PART I
Item 1 Business
- - - - - - - - --------------------
City Holding Company (the Company), a West Virginia corporation headquartered
in Charleston, West Virginia, is a multi-bank holding company that provides
diversified financial products and services to consumers and local businesses.
Through its network of 62 banking offices in West Virginia (56 offices), Ohio (2
offices) and California (4 offices), the Company provides credit, deposit,
investment advisory, insurance, and technology products and services to its
customers. In addition to its branch network, the Company's delivery channels
include ATMs, check cards, telemarketing, direct mail solicitation, interactive
voice response systems, and internet technology.
Community banking is the core business segment of the Company. Since 1983, the
Company has provided traditional banking products and services through its lead
bank, City National Bank of West Virginia (City National), and through the
various financial institutions the Company has acquired over the years. In
conjunction with the evolution of the financial services industry, the Company,
in recent years, has diversified its business to offer additional products and
services to existing and new customers. Mortgage banking, including the
origination, acquisition, servicing and sale of mortgage loans has developed
into a significant product line for the Company, but the Company has agreed to
sell its specialty finance servicing and origination operations. The Company
also provides additional financial services, including investment advisory,
insurance, and internet technology products.
Community-Banking
Included within the community banking segment are the operating results
generated from providing traditional banking products and services, including
credit, deposit, trust and other similar services. No portion of the Company's
deposits are derived from a single person or persons, the loss of which could
have a material adverse effect on liquidity, capital, or other elements of
financial performance. City National does, however, maintain 71% of its
borrowings with the Federal Home Loan Bank (FHLB). City National has
historically utilized borrowing capacity with the FHLB to fund loan growth and,
recently, as a short-term replacement for declines in deposit balances. Although
no portion of the Company's loan portfolio is concentrated within a single
industry or group of related industries, the Company historically has held
residential mortgage loans as a significant portion of its loan portfolio. At
December 31, 1999, 50.36% of the Company's loan portfolio was categorized as
residential mortgage loans. However, due to the fractionated nature of
residential mortgage lending, there is no concentration of credits that would be
considered detrimental to the Company's financial position or operating results.
On July 1, 1999, the Company acquired Frontier Bancorp and its wholly-owned
subsidiary, Frontier State Bank (collectively, "Frontier"). Frontier,
headquartered in Redondo Beach, California, reported total assets and total
deposits of approximately $88 million and $71 million, respectively, at June 30,
1999. Pursuant to the merger agreement, the Company paid approximately $15.13
million cash for 100% of the outstanding common stock of Frontier Bancorp. This
transaction was accounted for under the purchase method of accounting.
Accordingly, the results of operations have been included in the consolidated
totals from the date of acquisition.
Mortgage Banking
The mortgage banking segment generally includes the Company's operations that
are devoted to the origination, acquisition, servicing, and sale of mortgage
loan products. In recent years, the Company increased its mortgage banking
operations to include the retail origination and wholesale
4
acquisition of junior lien mortgage and similar loan products. This program was
initiated by the Company, in part, to continue the growth of the Company's loan
servicing division. Additionally, in December 1997, the Company initiated a loan
securitization program which included the securitization of junior lien mortgage
loans. Including one securitization completed in May 1999, the Company has
completed six such loan securitizations. Subsequent to the May 1999 transaction,
the Company effectively terminated its loan securitization program.
On March 3, 2000, the Company announced that City National had signed a
binding term sheet to sell its specialty finance servicing and origination
operations. If completed, the sale of those divisions would significantly reduce
the size of the Company's mortgage banking operations and, similarly, reduce the
impact of the mortgage banking segment on the Company's consolidated financial
statements. The sale of these divisions is scheduled to be completed during the
second quarter of 2000 pending regulatory approval.
Other Financial Services
The other financial services business segment includes the operations of the
Company's securities brokerage subsidiary and City National's insurance,
internet, and printing divisions. This segment is not considered significant to
the Company's consolidated financial statements.
In addition to the Company's community banking, mortgage banking, and other
financial services business segments, the Company's general corporate business
segment, which primarily includes the parent company and other administrative
areas, provides general corporate support. Each of these business segments are
primarily identified by the products and services offered and the delivery
channels through which the product or service is offered. The following tables
summarize selected segment information for each of the last three years:
Other
(in thousands) Community Mortgage Financial General
Banking Banking Services Corporate Eliminations Consolidated
-----------------------------------------------------------------------------
1999
- - - - - - - - ----
Net interest income (expense) $ 105,381 $ (5,273) $ (171) $ (1,517) $ - $ 98,420
Provision for loan losses 19,286 -- -- -- - 19,286
-----------------------------------------------------------------------------
Net interest income (expense) after provision
for loan losses 86,095 (5,273) (171) (1,517) - 79,134
Other income 29,850 22,523 12,495 64 (5,397) 59,535
Other expenses 80,387 33,528 14,792 7,304 (5,397) 130,614
-----------------------------------------------------------------------------
Income before income taxes 35,558 (16,278) (2,468) (8,757) - 8,055
Income tax expense (benefit) 12,920 (5,995) (808) (4,275) - 1,842
-----------------------------------------------------------------------------
Net Income $ 22,638 $(10,283) $(1,660) $ (4,482) $ - $ 6,213
=============================================================================
Average assets $2,572,162 $306,819 $13,381 $ 12,697 $(186,327) $2,718,732
=============================================================================
1998
- - - - - - - - ----
Net interest income (expense) $ 96,085 $ 8,906 $ 64 $ (1,712) - $ 103,343
Provision for loan losses 8,481 - - - - 8,481
-----------------------------------------------------------------------------
Net interest income (expense) after provision
for loan losses 87,604 8,906 64 (1,712) - 94,862
Other income 19,355 47,414 11,133 216 $ (5,695) 72,423
Other expenses 82,100 50,752 11,502 16,899 (5,695) 155,558
-----------------------------------------------------------------------------
Income before income taxes 24,859 5,568 (305) (18,395) - 11,727
Income tax expense (benefit) 9,816 1,798 (8) (5,113) - 6,493
-----------------------------------------------------------------------------
Net Income $ 15,043 $ 3,770 $ (297) $(13,282) $ - $ 5,234
=============================================================================
Average assets $2,202,104 $336,367 $14,660 $ 12,968 $ - $2,566,099
=============================================================================
5
Other
(in thousands) Community Mortgage Financial General
Banking Banking Services Corporate Eliminations Consolidated
-----------------------------------------------------------------------------
1997
- - - - - - - - ----
Net interest income (expense) $ 90,769 $ 8,456 $ 3 $ (2,074) - $ 97,154
Provision for loan losses 4,064 4,064
-----------------------------------------------------------------------------
Net interest income (expense) after provision
for loan losses 86,705 8,456 3 (2,074) - 93,090
Other income 13,858 17,636 446 673 - 32,613
Other expenses 61,165 14,702 366 8,666 84,899
-----------------------------------------------------------------------------
Income before income taxes 39,399 11,389 83 (10,067) - 40,804
Income tax expense (benefit) 12,604 4,284 36 (2,411) - 14,513
-----------------------------------------------------------------------------
Net Income $ 26,795 $ 7,105 $ 47 $ (7,656) - $ 26,291
=============================================================================
Average assets $2,041,150 $133,792 $ 627 $ 4,891 - $2,180,460
=============================================================================
Internal warehouse funding between the community banking segment and the
mortgage banking and other financial services segments is eliminated in the
Consolidated Balance Sheets. Services provided to the banking segments by the
direct mail, insurance, and internet service provider divisions are eliminated
in the Consolidated Statements of Income.
The Company's business is not seasonal and has no foreign sources or
applications of funds. There are no anticipated material capital expenditures,
or any expected material effects on earnings or the Company's competitive
position as a result of compliance with federal, state and local provisions
enacted or adopted relating to environmental protection.
Regulation and Supervision
The Company, as a registered bank holding company, and its banking
subsidiaries, as insured depository institutions, operate in a highly regulated
environment and are regularly examined by federal and state regulators. The
following description briefly discusses certain provisions of federal and state
laws and certain regulations and the potential impact of such provisions to
which the Company and its subsidiaries are subject. These federal and state
laws and regulations have been enacted for the protection of depositors in
national and state banks and not for the protection of shareholders of bank
holding companies.
As a bank holding company registered under the Bank Holding Company Act of
1956, as amended (the "BHCA"), the Company is subject to regulation by the
Federal Reserve Board. The Federal Reserve Board has jurisdiction under the
BHCA to approve any bank or nonbank acquisition, merger or consolidation
proposed by a bank holding company. The BHCA generally limits the activities of
a bank holding company and its subsidiaries to that of banking, managing or
controlling banks, or any other activity which is so closely related to banking
or to managing or controlling banks as to be a proper incident thereto.
There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by federal law and
regulatory policy that are designed to reduce potential loss exposure to the
depositors of such depository institutions and to the FDIC insurance fund in the
event the depository institution becomes in danger of default or in default.
For example, under a policy of the Federal Reserve Board with respect to bank
holding company operations, a bank holding company is required to serve as a
source of financial strength to its subsidiary depository institutions and to
commit resources to support such institutions in circumstances where it might
not do so otherwise. In addition, the "cross-guarantee" provisions of federal
law require insured depository institutions under common control to reimburse
the FDIC for any loss suffered or reasonably anticipated by the Bank Insurance
Fund (BIF) as a result of the default of a commonly
6
controlled insured depository institution or for any assistance provided by the
FDIC to a commonly controlled insured depository institution in danger of
default. The FDIC may decline to enforce the cross-guarantee provisions if it
determines that a waiver is in the best interest of the BIF. The FDIC's claim
for reimbursement is superior to claims of shareholders of the insured
depository institution or its holding company but is subordinate to claims of
depositors, secured creditors and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution.
The Federal Deposit Insurance Act (FDIA) also provides that amounts received
from the liquidation or other resolution of any insured depository institution
by any receiver must be distributed (after payment of secured claims) to pay the
deposit liabilities of the institution prior to payment of any other general or
unsecured senior liability, subordinated liability, general creditor or
shareholder. This provision would give depositors a preference over general and
subordinated creditors and shareholders in the event a receiver is appointed to
distribute the assets of any of the banking divisions.
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.
The banking subsidiaries are subject to supervision and regulation by the
Office of the Comptroller of the Currency ("OCC"), the Office of Thrift
Supervision, the Federal Reserve Board and the FDIC. 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.
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. Among other things,
FDICIA requires federal bank regulatory authorities to take "prompt corrective
action" with respect to depository institutions that do not meet minimum capital
requirements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Company and its banking subsidiaries must meet
specific capital guidelines that involve quantitative measures of assets,
liabilities and certain off-balance sheet items, calculated under regulatory
accounting practices. The Company's and its banking subsidiaries' capital
amounts and classifications are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors. 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 I risk-adjusted capital
ratio and the leverage ratio. Under the regulations, a bank is considered (i)
7
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 I 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, 1999, City National had
capital levels that qualify it 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. 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.
Capital Requirements
Under the risk-based capital requirements of these federal bank regulatory
agencies, the Company and its banking subsidiaries are required to maintain a
minimum ratio of total capital to risk-weighted assets of at least 10% in order
to remain categorized as "well capitalized". At least half of the total capital
is required to be "Tier 1 capital", which consists principally of common and
certain qualifying preferred shareholders' equity, less certain intangibles and
other adjustments. The remainder, "Tier 2 capital," consists of a limited amount
of subordinated and other qualifying debt (including certain hybrid capital
instruments) and a limited amount of the general loan loss allowance.
In addition, each of the federal regulatory agencies has established a minimum
leverage capital ratio (Tier 1 capital to average tangible assets). These
guidelines provide for a minimum ratio of 4% for banks and bank holding
companies that meet certain specified criteria, including that they have the
highest regulatory examination rating and are not contemplating significant
growth or expansion. All
8
other institutions are expected to maintain a leverage ratio of at least 100 to
200 basis points above the minimum. 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 Company maintains two separate special-purpose statutory trust
subsidiaries, which sold trust preferred securities in 1998 generating gross
proceeds of $87.50 million. Pursuant to rulings released in 1996 by the Federal
Reserve Board, the Company has included the trust preferred securities in its
regulatory capital ratio computations. At December 31, 1999, $72.96 million of
trust preferred securities are included in the Company's Tier I capital, with
the remaining $14.54 million added to the Company's total regulatory capital.
The Tier 1 capital, total capital and leverage ratios of the Company as of
December 31, 1999 were 9.28%, 10.97%, and 8.84%, respectively, meeting the
minimums required to be considered well capitalized. As of December 31, 1999,
the most recent notifications from banking regulatory agencies categorized the
Company and its banking subsidiaries as "well capitalized" under the regulatory
framework for prompt corrective action. There are no conditions or events since
notifications that management believes have changed the institution's
classifications.
Limits on Dividends and Other Payments
The Company is a legal entity separate and distinct from its subsidiaries.
Most of the Company's revenues result from dividends paid to the Company by
those subsidiaries. The right of the Company, and shareholders of the Company,
to participate in any distribution of the assets or earnings of any subsidiary
through the payment of such dividends or otherwise is necessarily subject to the
prior claims of creditors of such subsidiary, except to the extent that claims
of the Company in its capacity as a creditor may be recognized. Moreover, there
are various legal limitations applicable to the payment of dividends to the
Company as well as the payment of dividends by the Company to its shareholders.
Under federal law, the Company's banking subsidiaries may not, subject to
certain limited expectations, make loans or extensions of credit to, or
investment in the securities of, or take securities of the Company as collateral
for loans to any borrower. The Company's subsidiaries are also subject to
collateral security requirements for any loans or extensions of credit permitted
by such exceptions.
The Company's banking subsidiaries are subject to various statutory
restrictions on their ability to pay dividends to the Company. Under applicable
regulations, during 2000, the banking subsidiaries can declare dividends to the
Company of $1.69 million plus retained net profits for the interim period
through the date of declaration without obtaining prior approval of the Office
of the Comptroller of the Currency (the OCC). The payment of dividends by the
Company and the banking subsidiaries may also be limited by other factors, such
as requirements to maintain adequate capital above regulatory guidelines. The
OCC has the authority to prohibit any bank under its jurisdiction from engaging
in an unsafe and unsound practice in conducting its business. Depending upon the
financial condition of the subsidiary in question, the payment of dividends
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
9
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. In addition, City National may not declare a
dividend in any calendar year that will exceed its net income of that year to
date plus the retained net income of the preceding two years, unless it obtains
the advance approval of the OCC.
The ability of the Company's subsidiaries to pay dividends in the future is,
and is expected to continue to be, influenced by regulatory policies and by
capital guidelines. The OCC has 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.
Governmental Policies
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.
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. The
Company cannot determine the ultimate effect that such potential legislation, if
enacted, would have upon its financial condition or operations.
Other Safety and Soundness Regulations
The federal banking agencies have broad powers to take prompt corrective
action to resolve problems of insured depository institutions. The extent of
these powers depends upon whether the institutions in question are "well
capitalized", "adequately capitalized", "undercapitalized", "significantly
undercapitalized" or "critically undercapitalized", as such terms are defined
under uniform regulations defining such capital levels issued by each of the
federal banking agencies.
(d) Employees
---------
As of December 31, 1999, City Holding Company employed 1,560 associates.
Employee relations within the Company are considered to be satisfactory.
(e) Statistical Information
-----------------------
The information noted below is provided pursuant to Guide 3 -- Statistical
Disclosure by Bank Holding Companies. Page references are to the Annual Report
to Shareholders for the year ended December 31, 1999 and such pages are
incorporated herein by reference.
Page
Description of Information Reference
- - - - - - - - -------------------------- ---------
1. Distribution of Assets, Liabilities and Stockholders'
Equity; Interest Rates and Interest Differential
10
a. Average Balance Sheets 6
b. Analysis of Net Interest Earnings 6-7
c. Rate Volume Analysis of Changes in 7
Interest Income and Expense
2. Investment Portfolio
a. Book Value of Investments 12
b. Maturity Schedule of Investments 12
c. Securities of Issuers Exceeding 10% of 12
Stockholders' Equity
3. Loan Portfolio
a. Types of Loans 13
b. Maturities and Sensitivity to Changes in Interest Rates 13
c. Risk Elements 15
d. Other Interest Bearing Assets N/A
4. Summary of Loan Loss Experience 15
5. Deposits
a. Breakdown of Deposits by Categories, Average Balance 6
and Average Rate Paid
b. Maturity Schedule of Time Certificates of Deposit 18
and Other Time Deposits of $100,000 or More
$100,000 or More
6. Return on Equity and Assets 4
Item 2 Properties
- - - - - - - - ----------------------
At December 31, 1999, the Company and its subsidiaries owned the majority
of their principal business locations, including the Company's corporate
headquarters. The corporate headquarters also house City National's primary data
processing center, the main office of the loan servicing division, and the
operations of City National's internet service division. City National also
maintains 56 banking offices and one loan production office in West Virginia,
two banking locations in Ohio, and two loan production offices near Costa Mesa,
California. In addition to the office located
11
in West Virginia, the loan servicing division maintains an office near Dallas,
Texas and another office in Costa Mesa, California. Del Amo Savings Bank and
Frontier Bancorp, wholly owned subsidiaries of the Company, each maintain two
offices in Southern California. All of the properties are suitable and adequate
for their current operations and are generally being fully utilized.
Item 3 Legal Proceedings
- - - - - - - - -----------------------------
There are various legal proceedings pending to which City Holding Company
and/or its subsidiaries are parties. These proceedings are incidental to the
business of City Holding Company and its subsidiaries and, after reviewing the
matters and consulting with counsel, management is of the opinion that the
ultimate resolution of such matters will not materially affect the Company's
consolidated financial statements.
Item 4 Submission of Matters to a Vote of Security Holders
- - - - - - - - ------------------------------------------------------------
None.
12
PART II
Item 5 Market for Registrant's Common Stock and Related Stockholder Matters
- - - - - - - - ------------------------------------------------------------------------------
Pages 2 and 36 of the Annual Report to Shareholders of City Holding
Company for the year ended December 31, 1999, included in this report as Exhibit
13, are incorporated herein by reference.
On July 22, 1999, the Company issued 26,764 shares of its common stock to
three individuals pursuant to a Supplemental Purchase Agreement entered into on
April 15, 1998 between City National Bank of West Virginia, a subsidiary of the
Company, and the previous owners of MarCom, Inc. The Company's common stock
issued in this transaction was not registered under the Securities Act of 1933,
in reliance on Section 4(2) of such Act, as a transaction not involving any
public offering.
Item 6 Selected Financial Data
- - - - - - - - ---------------------------------
Selected Financial Data on page 1 of the Annual Report to Shareholders
of City Holding Company for the year ended December 31, 1999, included in this
report as Exhibit 13, is incorporated herein by reference.
Item 7 Management's Discussion and Analysis of Financial Condition and
- - - - - - - - -------------------------------------------------------------------------
Results of Operations
- - - - - - - - ---------------------
Management's Discussion and Analysis of Financial Condition and Results
of Operations on pages 2 through 19 of the Annual Report to Shareholders of
City Holding Company for the year ended December 31, 1999, included in this
report as Exhibit 13, is incorporated herein by reference.
Item 7A Quantitative and Qualitative Disclosures About Market Risk
- - - - - - - - --------------------------------------------------------------------
Information appearing under the caption "Market Risk Management"
appearing on pages 9 through 11 of the Annual Report to Shareholders of City
Holding Company for the year ended December 31, 1999, included in this report as
Exhibit 13, is incorporated herein by reference.
Item 8 Financial Statements and Supplementary Data
- - - - - - - - -----------------------------------------------------
The report of independent auditors and consolidated financial statements,
included on pages 20 through 39 of the Annual Report to Shareholders of City
Holding Company for the year ended December 31, 1999, included in this report as
Exhibit 13, are incorporated herein by reference.
Item 9 Changes In and Disagreements with Accountants on Accounting and
- - - - - - - - -------------------------------------------------------------------------
Financial Disclosure
- - - - - - - - --------------------
None
PART III
Item 10 Directors and Executive Officers of Registrant
- - - - - - - - --------------------------------------------------------
The information required by Item 10 of FORM 10-K appears in the Company's
2000 Proxy Statement to be filed within 120 days of fiscal year end under the
captions "ELECTION OF DIRECTORS" and "EXECUTIVE OFFICERS".
13
Item 11 Executive Compensation
- - - - - - - - --------------------------------
The information required by Item 11 of FORM 10-K appears in the Company's
2000 Proxy Statement under the caption "EXECUTIVE COMPENSATION".
Item 12 Security Ownership of Certain Beneficial Owners and Management
- - - - - - - - ------------------------------------------------------------------------
The information required by Item 12 of FORM 10-K appears in the Company's
2000 Proxy Statement under the caption "OWNERSHIP OF EQUITY SECURITIES".
Item 13 Certain Relationships and Related Transactions
- - - - - - - - --------------------------------------------------------
The information required by Item 13 of FORM 10-K appears in the Company's
2000 Proxy Statement under the caption "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS" and in NOTE SIX of Notes to Consolidated Financial Statements
appearing on page 29 of the Company's Annual Report to Shareholders for
the year ended December 31, 1999, included in this report as Exhibit 13, and
incorporated herein by reference.
14
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
- - - - - - - - -------------------------------------------------------------------------
(a) Financial Statements Filed; Financial Statement Schedules
-------------------------- -----------------------------
The following consolidated financial statements of City Holding Company
and subsidiaries, included in the Company's Annual Report to Shareholders for
the year ended December 31, 1999, are incorporated by reference in Item 8:
Page Number
-----------
Report of Independent Auditors 20
Consolidated Balance Sheets - December 31, 1999 and 1998 21
Consolidated Statements of Income - Years Ended
December 31, 1999, 1998, and 1997 22
Consolidated Statements of Changes in Stockholders' Equity -
Years Ended December 31,1999, 1998 and 1997 23
Consolidated Statements of Cash Flows -
Years Ended December 31, 1999, 1998 and 1997 24
Notes to Consolidated Financial Statements -
December 31, 1999 25-39
15
Financial Schedules I and II under Article 9 of Regulation S-X are not
applicable
(b) Reports on Form 8-K:
- - - - - - - - --- --------------------
On January 12, 1999, the Company filed a Current Report on Form 8-K to
announce the completion of its acquisition of Horizon Bancorp, Inc.
On September 14, 1999, the Company filed a Current Report on Form 8-K,
attaching a report to shareholders of City Holding Company for the quarter
ended June 30, 1999, together with a letter from the Company's President
and Chief Executive Officer, Steven J. Day.
On December 16, 1999, the Company filed a Current Report on Form 8-K,
attaching a report to shareholders of City Holding Company for the quarter
ended September 30, 1999, together with a letter from the Company's
President and Chief Executive Officer, Steven J. Day.
(c) Exhibits
--------
The exhibits listed in the Exhibit Index included herein are filed herewith
or incorporated by reference from previous filings.
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
City Holding Company
-------------------------------
(Registrant)
/s/ Steven J. Day
-------------------------------
Steven J. Day,
President/Director
(Principal Executive Officer)
/s/ Robert A. Henson
-------------------------------
Robert A. Henson,
Chief Financial Officer
(Principal Financial Officer)
/s/ Michael D. Dean
-------------------------------
Michael D. Dean
Senior Vice President - Finance
(Principal Accounting Officer)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report on Form 10-K has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on April 14, 2000. Each of the
directors and/or officers of City Holding Company whose signature appears below
hereby appoints Steven J. Day and Robert A. Henson and each of them severally,
as his attorney-in-fact to sign in his name and behalf, in any and all
capacities stated below and to file with the Commission, any and all amendments
to this report on Form 10-K, making such changes in this report on Form 10-K as
appropriate, and generally to do all such things in their behalf in their
capacities as officers and directors to enable City Holding Company to comply
with the provisions of the Securities Exchange Act of 1934, and all requirements
of the Securities and Exchange Commission.
/s/ Samuel M. Bowling /s/ D. K. Cales
- - - - - - - - ----------------------------- ---------------------------
Samuel M. Bowling Dr. D. K. Cales
Director Director
/s/ Hugh R. Clonch /s/ Robert D. Fisher
- - - - - - - - ----------------------------- ---------------------------
Hugh R. Clonch Robert D. Fisher
Director Director
17
/s/ E. M. Payne III /s/ Jay C. Goldman
- - - - - - - - ----------------------------- ---------------------------
E. M. Payne III Jay C. Goldman
Director Director
/s/ David E. Haden
- - - - - - - - ----------------------------- ---------------------------
David E. Haden Carlin K. Harmon
Director Director
/s/ C. Dallas Kayser /s/ Leon K. Oxley
- - - - - - - - ----------------------------- ---------------------------
C. Dallas Kayser Leon K. Oxley
Director Director
/s/ Mark H. Schaul /s/ Steven J. Day
- - - - - - - - ----------------------------- ---------------------------
Mark H. Schaul Steven J. Day
Director Director/President
/s/ Philip L. McLaughlin
- - - - - - - - ----------------------------- ---------------------------
James E. Songer, Sr. Philip L. McLaughlin
Director Director
/s/ Bernard C. McGinnis III /s/Tracy W. Hylton II
- - - - - - - - ----------------------------- ---------------------------
B. C. McGinnis III Tracy W. Hylton II
Director Director
/s/ Albert M. Tieche, Jr.
- - - - - - - - ----------------------------- ---------------------------
Albert M. Tieche, Jr. Phillip W. Cain
Director Director
/s/ William C. Dolin /s/ David W. Hambrick
- - - - - - - - ----------------------------- ---------------------------
William C. Dolin David W. Hambrick
Director Director
/s/ Thomas L. McGinnis
- - - - - - - - ----------------------------- ---------------------------
Frank S. Harkins, Jr. Thomas L. McGinnis
Director Director
/s/ R. T. Rogers
- - - - - - - - -----------------------------
R. T. Rogers
Director
18
EXHIBIT INDEX
The following exhibits are filed herewith or are incorporated herein
by reference.
Prior Filing
Exhibit Reference
Number Description (if applicable)
- - - - - - - - ------- ----------- --------------
3(a) Articles of Incorporation of I
City Holding Company
3(b) Articles of Amendment to the II
Articles of Incorporation of
City Holding Company, dated
March 6, 1984
3(c) Articles of Amendment to the III
Articles of Incorporation of
City Holding Company, dated
March 4, 1986
3(d) Articles of Amendment to the IV
Articles of Incorporation of
City Holding Company, dated
September 29, 1987
3(e) Articles of Amendment to the V
Articles of Incorporation of
City Holding Company, dated
May 6, 1991
3(f) Articles of Amendment to the V
Articles of Incorporation of
City Holding Company, dated
May 7, 1991
3(g) Articles of Amendment to the VIII
Articles of Incorporation of
City Holding Company, dated
August 1, 1994
3(h) Articles of Amendment to the XIV
Articles of Incorporation of
City Holding Company, dated
December 9, 1998
3(i) Amended and Restated By laws XIV
of City Holding Company
4(a) Amendment and Restated Rights VII
Agreement, dated as of May 7, 1991,
between the Company and Sovran Bank,
N.A. (predecessor to Nations Bank,
N.A.), as Rights Agent
19
4(b) Supplement, dated as of June 1, 1998, XIII
between City Holding Company and SunTrust
Bank, Atlanta, as Rights Agent, to Amended
and Restated Rights Agreement dated
May 7, 1991
10(a) Agreement dated June 5, 1986, by III
and between Steven J. Day and
City Holding Company
10(b) Form of Employment Agreement, IX
dated as of December 31, 1998,
by and between City Holding Company
and Steven J. Day
10(c) Form of Employment Agreement, IX
dated as of December 31, 1998,
by and between City Holding Company
and Robert A. Henson
10(d) Form of Employment Agreement, IX
dated as of December 31, 1998,
by and between City Holding Company
and Matthew B. Call
10(e) Form of Employment Agreement, IX
dated as of December 31, 1998,
by and between City Holding Company
and Philip L. McLaughlin
10(f) Form of Employment Agreement, IX
dated as of December 31, 1998,
by and between City Holding Company
and Bernard C. McGinnis, III
10(g) Form of Employment and Consulting IX
Agreement, dated as of December 31, 1998
by and between City Holding Company
and Frank S. Harkins, Jr.
10(h) Junior Subordinated Indenture, X
dated as of March 31, 1998,
between City Holding Company
and The Chase Manhatten Bank,
as Trustee
10(i) Form of City Holding Company's X
9.15% Debenture due April 1, 2028
10(j) Form of City Holding Company's XI
9.125% Debenture due October 31, 2028
10(k) City Holding Company's 1993 XII
Stock Incentive Plan
11 Statement Re: Computation of Per
Share Earnings
20
13 City Holding Company Annual Report
to Shareholders for Year Ended
December 31, 1999
21 Subsidiaries of City Holding Company
23 Consent of Ernst & Young LLP
24 Power of Attorney (included on the signature page
hereof)
27 Financial Data Schedule for the year
ending December 31, 1999
____
I Attached to, and incorporated by reference from Amendment No. 1 to City
Holding Company's statement on Form S-4, Registration No. 2-86250, filed
November 4, 1983, with the Securities and Exchange Commission.
II Attached to, and incorporated by reference from City Holding Company's
Form 8-K Report dated March 7, 1984, and filed with the Securities and
Exchange Commission on March 22, 1984.
III Attached to, and incorporated by reference from City Holding Company's
Form 10-K Annual Report dated December 31, 1986, and filed March 31, 1987,
with the Securities and Exchange Commission.
IV Attached to and incorporated by reference from City Holding Company's
Registration Statement on Form S-4, Registration No. 33-23295, filed with
the Securities and Exchange Commission on August 3, 1988. Attached to, and
incorporated by reference from City Holding Company's Form 10-K Annual
Report dated December 31, 1991, and filed March 17, 1992, with the
Securities and Exchange Commission.
V Attached to, and incorporated by reference from City Holding Company's
Form 10-K Annual Report dated December 31, 1991, and filed March 17, 1992,
with the Securities and Exchange Commission.
VI Attached to, and incorporated by reference from City Holding Company's
Form 10-K Annual Report dated December 31, 1988, and filed March 30, 1989,
with the Securities and Exchange Commission.
VII Attached to, and incorporated by reference from City Holding Company's
Form 8-K Current Report dated May 7, 1991, and filed May 14, 1991, with the
Securities and Exchange Commission.
VIII Attached to, and incorporated by reference from City Holding Company's
Form 10-Q Quarterly Report dated September 30, 1994 and filed November 14,
1994, with the Securities and Exchange Commission.
IX Attached to, and incorporated by reference from, City Holding
Company's Registration Statement on Form S-4, Registration No. 333-64205,
filed with the Securities and Exchange Commission on September 24, 1998.
X Attached to, and incorporated by reference from, City Holding
Company's Registration Statement on Form S-4, Registration No. 333-62419,
filed with the Securities and Exchange Commission on August 28, 1998.
21
XI Attached to, and incorporated by reference from, the Pre-Effective
Amendment No. 1 to City Holding Company's Registration Statement on Form S-
3, Registration No. 333-64809, filed with the Securities and Exchange
Commission on October 21, 1998.
XII Attached to, and incorporated by reference from, City Holding
Company's Registration Statement on Form S-8, Registration No. 033-62738,
filed with the Securities and Exchange Commission on May 14, 1993.
XIII Attached to, and incorporated by reference from, City Holding
Company's Form 10-Q Quarterly Report dated June 30, 1998 and filed August
14, 1998, with the Securities and Exchange Commission.
XIV Attached to, and incorporated by reference from, City Holding Company's
Form 10-K Annual Report dated December 31, 1998, and filed March 31, 1999,
with the Securities and Exchange Commission.
22