SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
ANNUAL REPORT
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Pursuant to Section 15(d) of the
Securities Act of 1934
For the year ended December 31, 1997
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City Holding Company
Employee Stock Ownership Plan
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City Holding Company
25 Gatewater Road
Cross Lanes, West Virginia 25313
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FORM 11-K
CITY HOLDING COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
December 31, 1997
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<S> <C>
The following financial statements and schedules of the Plan are included
herein:
Report of Independent Auditors 1
Statements of Net Assets Available for Plan Benefits as of December 31,
1997 and 1996 2
Statements of Changes in Net Assets Available for Plan Benefits for the
years ended December 31, 1997 and 1996 3
Notes to Financial Statements 4-6
Item 27(a) - Supplemental Schedule of Assets Held for Investment Purposes 7
Item 27(d) - Supplemental Schedule of Reportable Transactions 8
Schedules I, II, and III have been omitted because the required
information is shown in the financial statements or in the notes thereto.
Item 9(b) - Exhibits:
Exhibit 24(c) - Consent of Independent Auditors
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City Holding Company
Employee Stock Ownership Plan
Audited Financial Statements and Supplemental Schedules
December 31, 1997
Contents
Report of Independent Auditors..............................................1
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits........................2
Statements of Changes in Net Assets Available for Plan Benefits.............3
Notes to Financial Statements...............................................4
Supplemental Schedules
Item 27(a) - Schedule of Assets Held for Investment Purposes................7
Item 27(d) - Schedule of Reportable Transactions............................8
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Report of Independent Auditors
Board of Directors
City Holding Company
We have audited the accompanying statements of net assets available for plan
benefits of the City Holding Company Employee Stock Ownership Plan as of
December 31, 1997 and 1996, and the related statements of changes in net assets
available for plan benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1997 and 1996, and the changes in its net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1997, and reportable
transactions for the year then ended are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974 and are not
a required part of the basic financial statements. The supplemental schedules
have been subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Ernst & Young LLP
Charleston, West Virginia
June 26, 1998
1
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City Holding Company
Employee Stock Ownership Plan
Statements of Net Assets Available for Plan Benefits
December 31, 1997
<CAPTION>
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December 31
1997 1996
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Assets
Common stock of City Holding Company at fair value $3,607,232 $1,000,455
Employer contribution receivable 2,194,844 1,566,731
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Net assets available for plan benefits $5,802,076 $2,567,186
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See accompanying notes to financial statements.
2
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City Holding Company
Employee Stock Ownership Plan
Statements of Changes in Net Assets Available for Plan Benefits
December 31, 1997
<CAPTION>
December 31
1997 1996
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Contributions and income:
Contributions from employer $2,194,844 $1,566,731
Interest and dividends 66,963 25,689
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Total contributions and income 2,261,807 1,592,420
Deductions:
Benefit payments 77,030 38,996
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Total deductions 77,030 38,996
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2,184,777 1,553,424
Net realized and unrealized gains 1,050,113 118,816
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Net additions 3,234,890 1,672,240
Net assets available for plan benefits at beginning of the year 2,567,186 894,946
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Net assets available for plan benefits at end of the year $5,802,076 $2,567,186
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See accompanying notes to financial statements.
3
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City Holding Company
Employee Stock Ownership Plan
Notes to Financial Statements
December 31, 1997
1. Significant Accounting Policies
Plan Amendment
City Holding Company, the Plan Sponsor, amended its Money Purchase Plan by
converting it to an Employee Stock Ownership Plan (the Plan) as of January 1,
1996. The Plan is comprised of a Stock Bonus Plan and a Money Purchase Pension
Plan.
Basis of Accounting
The accounting records of the Plan are maintained on the accrual basis of
accounting. The Plan's financial statements presented herein are in conformity
with generally accepted accounting principles and require management of the Plan
to make estimates and develop assumptions that affect the amounts reported in
the financial statements and related footnotes. Actual results may differ from
management's estimates.
2. Description of Plan
The following description of the Plan provides general information. Participants
should refer to the Plan document for a complete description of the Plan's
provisions. The Plan, which was adopted in December 1995, and became effective
January 1, 1996, is a defined contribution employee stock ownership plan
covering all employees of City Holding Company and its subsidiaries (the
Company) who have completed one year of service and have attained the age of 21.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA).
Employer contributions to the Stock Bonus portion of the Plan will be
discretionary as determined annually by the Board of Directors of the Plan
Sponsor. Employer contributions to the Money Purchase portion of the Plan will
approximate 9% of the eligible participant's annual compensation. The
contributions are allocated to eligible participants who are actively employed
on the last day of the Plan year. On March 2, 1998, the Company contributed
approximately $2,916,000 to the Plan.
The fair value of the Plan's investment in City Holding Company is estimated
based on the stock's quoted trade value as of the last business day of the year.
4
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City Holding Company
Employee Stock Ownership Plan
Notes to Financial Statements (continued)
Vesting
A participant becomes vested in the Company's contributions as follows:
Vested Percentage of
Years of Service Employer Contributions
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Less than 3 0%
3 20
4 40
5 60
6 80
7 or more 100
Forfeitures of terminated participants' nonvested account balances shall be used
to reduce the Company's contribution.
Allocations
Participants are required to complete one year of service in order to share in
any employer contributions or forfeitures. Any participant who terminates
employment during the plan year for reasons other than death, total or permanent
disability, or retirement does not share in the allocation of contributions and
forfeitures. Allocations of earnings with respect to amounts contributed to the
Plan after the previous valuation date are determined by using a weighted
average.
3. Federal Income Taxes
The Internal Revenue Service (IRS) has accepted the form of the plan document
under Sections 401(a), 403(a), and 501(a) of the Internal Revenue Code (the
Code) for use by employers for the benefit of their employees. In March 1998,
the IRS ruled that the Plan qualifies under Section 401(a) of the Code and is,
therefore, not subject to tax under present income tax law. Once qualified, the
Plan is required to operate in conformity with the Code to maintain its
qualification. The plan administrator and other representatives of the Plan are
not aware of any course of action or series of events that have occurred that
might adversely affect the Plan's qualified status.
5
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City Holding Company
Employee Stock Ownership Plan
Notes to Financial Statements (continued)
4. Related Party Transactions
Investments are made in City Holding Company stock which is listed and its price
quoted in the National Association of Securities Dealers Automated Quotations
System (NASDAQ). The investments are subject to market risk to the extent of the
amount in the statement of net assets available for plan benefits.
Included in interest and dividends for the year ended December 31, 1997, are
dividends received from City Holding Company common stock investments
approximating $56,300.
The Company provides certain accounting and administrative services to the Plan
without charge. The Company also pays certain administrative costs on behalf of
the Plan, including legal and accounting fees.
6
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City Holding Company
Employee Stock Ownership Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1997
<CAPTION>
Current
Shares/Units Description Cost Value
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Common stock:
85,879 City Holding Company $2,519,636 $3,606,918
7
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City Holding Company
Employee Stock Ownership Plan
Item 27(d) - Schedule of Reportable Transactions
Year Ended December 31, 1997
<CAPTION>
Number Total Number Total Total Gain
of Cost of Cost Proceeds (Loss)
Units of Units of from on
Purchased Purchase Sold Sales Sales Sales
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Category (i) - Individual Transactions in Excess of 5% of Plan Assets
Common stock 5,771 $ 194,775 - $ - $ - $ -
Common stock 7,320 244,305 - - - -
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets
Common stock 48,750 1,633,871 - - - -
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There were no category (ii) or (iv) reportable transactions during 1997.
8
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Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 File No. 33-62738) pertaining to the City Holding Company Employee Stock
Ownership Plan of our report dated June 26, 1998, with respect to the financial
statements and supplemental schedules of the City Holding Company Employee Stock
Ownership Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 1997.
/s/ Ernst & Young LLP
Charleston, West Virginia
June 29, 1998
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Pursuant to the requirements of the Securities and Exchange Act of 1934, City
Holding Company has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
City Holding Company Employee
Stock Ownership Plan
/s/ Robert A. Henson
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Mr. Robert A. Henson
Plan Administrator
June 29, 1998
