UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 27, 2001
CITY HOLDING COMPANY
(Exact name of registrant as specified in its charter)
West Virginia 0-17733 55-0619957
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(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification Number)
incorporation or
organization)
25 Gatewater Road
Charleston, West Virginia, 25313
(Address of principal executive officers)
(304) 769-1100
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since
last report)
Item 5. Other Events
On February 27, 2001, City Holding Company ("the Company") issued a news
release announcing the appointment of Gerald R. Francis as President and Chief
Executive Officer of City Holding Company and its lead bank, City National Bank
of West Virginia, upon receipt of a notice of non-objection from the Office of
the Comptroller of the Currency. The news release was accompanied by a
memorandum from Mr. Francis to City Holding Company shareholders in which Mr.
Francis outlined a number of issues that the Company will address to implement a
strategic plan to restore the financial strength of the Company. Specifically,
Mr. Francis noted that the Company must assess "loan loss reserve adequacy
through completion of a loan portfolio review" and assess "the fair value of
retained interest in securitized loan pools in light of accounting principle
changes."
Although the Company believes that its allowance for loan losses as of
December 31, 2000 is adequate to provide for losses inherent in the loan
portfolio, recent news of the increased potential for economic downturns in both
the national and local economies has heightened focus on credit quality issues.
Although the Company's recent trends of credit losses have been fully considered
in assessing the adequacy of the allowance for loan losses as of December 31,
2000, the additional concerns imposed by a softening economic outlook may result
in the need for additional loan loss reserves in 2001.
New accounting guidance was issued in 2000 by the Emerging Issues Task
Force ("the EITF") that provided specific accounting guidance regarding the
recognition of interest income and impairment of retained interests. Since the
initial issuance of EITF Issue 99-20, which addresses this topic, the EITF has
subsequently clarified the intent of the new guidance and revised certain
terminology. Such clarification and revised terms have a direct impact on the
implementation of the new guidance and the resulting accounting treatment for
retained interests. Most recently, in January 2001, the EITF met to discuss
additional implementation issues and further clarified the substance of Issue
99-20. Although early application of the provisions of Issue 99-20 are
permitted, the new guidance becomes effective for all fiscal quarters beginning
after March 15, 2001. Upon implementation of Issue 99-20, the recorded balance
of the Company's retained interests will be adjusted to estimated fair value,
with the amount of any negative adjustment recorded through the Company's income
statement. The amount of the adjustment to be recorded upon implementation will
be determined by comparing the estimated fair value of the retained interest at
the date of implementation to the original carrying amount of the retained
interests, plus any interest subsequently accrued. Under current accounting
guidance and using its current modeling assumptions, as of December 31, 2000 the
Company has a negative fair value adjustment of $9.81 million, pre-tax, recorded
as an adjustment through Stockholders' Equity. The Company has not yet
determined the financial statement impact of adopting Issue 99-20.
Additionally, each quarter the Company re-evaluates the reasonableness of
its modeling assumptions. Although not known at this time, the Company may
determine that certain modeling assumptions should be revised in 2001 to
address, for example, the potential economic slowdown discussed previously or
the recent sale of the right to service the underlying collateral loan pools to
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an independent third party. If determined necessary, such changes in modeling
assumptions could have an adverse affect on the fair value of the retained
interests and result in a negative impact to the Company's operating results.
The Company also announced its intention to sell its internet service
provider (Citynet) and direct mail (Jarrett/Aim Communications) divisions as
part of the Company's continued effort to refocus its resources on its core West
Virginia community banking franchise. Although the financial impact of these
events has not yet been determined, there may be certain non-recurring and other
restructuring charges that could negatively impact the Company's earnings over
the next several months associated with the sale of these entities.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements None
(b) Pro Forma Financial Information None
(c) Exhibits
99 News Release issued on
February 27, 2001
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CITY HOLDING COMPANY
Date: March 14, 2001
By:
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Michael D. Dean
Senior Vice President - Finance,
Chief Accounting Officer and
Duly Authorized Officer
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