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): December 16, 1999
CITY HOLDING COMPANY
(Exact name of registrant as specified in its charter)
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<CAPTION>
<S> <C>
West Virginia 0-17733 55-0619957
(State or other jurisdiction of (Commission File No.) (IRS Employer Identification
incorporation or organization) Number)
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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)
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ITEM 5. OTHER EVENTS
Attached hereto as Exhibit 99 is a report to the shareholders of City
Holding Company (the "Company") for the quarter ended September 30, 1999,
together with a letter from the Company's President and Chief Executive Officer,
Steven J. Day. This letter contains, among other things, certain forward-looking
statements, including statements made about the plan adopted by the Board of
Directors to improve the Company's earnings and the resulting impact to the
market value of the Company's common stock, expected expense reductions, more
predictable earnings streams from mortgage banking operations, a return to
higher levels of loan quality, and a return to higher growth levels for the
bank. Such forward-looking statements involve certain risks and uncertainties,
including a variety of factors that may cause the Company's actual results to
differ materially from the anticipated results or other expectations expressed
in such forward-looking statements. Factors that might cause such a difference
include, but are not limited to: (1) the expense reductions anticipated as a
result of implementing the plan adopted by the Board of Directors may not be
fully realized; (2) staffing reductions and compensation adjustments may not be
completed with the anticipated result; (3) overall loan quality may not improve
as expected, (4) competitive pressures among depository and other financial
institutions may increase significantly; (5) changes in the interest rate
environment may reduce margins; (6) general economic or business conditions,
either nationally or in the states or regions in which the Company does
business, may be less favorable than expected, resulting in, among other things,
a deterioration in credit quality or a reduced demand for credit; (7)
legislative or regulatory changes may adversely affect the businesses in which
the Company is engaged; and (8) changes may occur in the securities markets.
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: December 16, 1999
By: /s/ Michael D. Dean
----------------------------------
Michael D. Dean
Senior Vice President - Finance,
Chief Accounting Officer and
Duly Authorized Officer
EXHIBIT 99
LETTER TO SHAREHOLDERS:
The Company's net income for the third quarter of 1999 was $2.32
million or $0.14 per share compared to $6.58 million or $0.39 per share for the
three months ended September 30, 1998. For the nine months ended September 30,
1999, the Company reported earnings of $14.56 million or $0.86 per share
compared to $20.31 million or $1.20 per share for the nine months ended
September 30, 1998.
The return on average assets and return on average equity for the third
quarter of 1999 was 0.34% and 4.27%, respectively, compared to 1.00% and 10.95%,
respectively, for the third quarter of 1998. For the nine months ended September
30, 1999, the return on average assets and return on average equity was 0.71%
and 8.81%, respectively, compared to 1.08% and 11.51%, respectively, for the
nine months ended September 30, 1998.
Based on the last several months of operations, trends are improving
and earnings are headed upwards. Also, the Board of Directors has adopted a plan
to resolve the short-term earnings downturn and more importantly, approved a
plan to return the Company to its former level of earnings and the corresponding
stock performance. The plan involves the previously mentioned bank consolidation
initiative, certain balance sheet restructuring and actions to bring other
business lines into profitability.
The expected results are dramatic expense reductions, more predictable
earnings streams from the mortgage banking operations located on the West Coast,
a return to higher levels of overall loan quality and a return to higher growth
levels for the bank.
Specifically, the bank consolidation and expense reduction program will
provide the right sizing and centralization of operations and support needed for
improved performance at the bank. Although additional short-term expenses have
impacted current earnings, the long-term value of this exercise is expected to
provide a recurring return to shareholders. The Company has undertaken the task
of rewriting the staffing model for the bank. This action is resulting in the
elimination of positions formerly maintained at each of the 16 banks and also
adjusts compensation levels to the level of responsibility of the various
positions within the bank. To reach the Company's goal of being a high
performing bank these actions are difficult but necessary. Management and the
Board of Directors believe they have put the proper mechanisms in place to
accomplish this goal.
Finally, the return of the bank to its former growth and profitability
levels will provide opportunities and fuel future improvements in the financial
performance of the Company. Although these mentioned actions are not all
inclusive of the Board's and Management's plan, they impact the Company's
operations most significantly.
The Company is trending in a positive manner and taking actions to
improve the overall financial performance of City Holding Company. City has been
a leader in growth and earnings over the decade and the stock has
correspondingly performed in the same manner. City is a very strong company with
a history of repeated years of record performance. A strong commitment from
management, the Board of Directors and the employees to return the Company to
those higher levels is continuing. Your continued support is appreciated and we
look forward to a good year in 2000 and beyond.
Yours truly,
/s/ Steven J. Day
Steven J. Day
President & CEO
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CONSOLIDATED BALANCE SHEETS
CITY HOLDING COMPANY AND SUBSIDIARIES
(IN THOUSANDS)
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SEPTEMBER 30 December 31 September 30
1999 1998 1998
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(UNAUDITED) (UNAUDITED)
ASSETS
Cash and due from banks $ 100,105 $ 87,866 $ 62,529
Federal funds sold 1,617 31,911 30,254
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CASH AND CASH EQUIVALENTS 101,722 119,777 92,783
Securities available for sale, at fair value 389,700 356,659 335,525
Securities held-to-maturity (approximate fair value
at December 31, 1998 and September 30, 1998 - - 39,063 40,415
$40,539 and $42,771)
Loans:
Gross loans 1,821,401 1,715,929 1,709,320
Allowance for loan losses (20,652) (17,610) (18,542)
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NET LOANS 1,800,749 1,698,319 1,690,778
Loans held for sale 113,442 246,287 267,543
Premises and equipment 69,497 71,094 68,853
Accrued interest receivable 24,438 21,660 22,176
Other assets 224,939 153,145 133,385
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TOTAL ASSETS $2,724,487 $2,706,004 $2,651,458
================================================================
LIABILITIES
Deposits:
Noninterest-bearing $ 253,439 $ 303,421 $ 273,058
Interest-bearing 1,719,155 1,760,994 1,763,416
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TOTAL DEPOSITS 1,972,594 2,064,415 2,036,474
Short-term borrowings 288,763 183,418 192,066
Long-term debt 106,634 102,719 107,334
Corporation-obligated mandatorily redeemable capital
securities of subsidiary trusts holding solely
subordinated debentures of City Holding Company 87,500 87,500 30,000
Other liabilities 53,141 47,893 44,080
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TOTAL LIABILITIES 2,508,632 2,485,945 2,409,954
STOCKHOLDERS' EQUITY
Preferred stock, par value $25 per share: authorized
- 500,000 shares: none issued
Common stock, par value $2.50 per share: 50,000,000
shares authorized; issued and outstanding
16,879,815, 16,820,276, and 17,096,390 shares as
of September 30, 1999, December 31, 1998, and
September 30, 1998, respectively, including 42,199 42,051 42,740
15,867, 10,000, and 266,037 shares, respectively,
in treasury
Capital surplus 59,291 58,365 66,910
Retained earnings 124,668 120,209 138,466
Cost of common stock in treasury (491) (274) (8,758)
Accumulated other comprehensive (loss) income (9,812) (292) 2,146
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TOTAL STOCKHOLDERS' EQUITY 215,855 220,059 241,504
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,724,487 $ 2,706,004 $ 2,651,458
================================================================
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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
CITY HOLDING COMPANY AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
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Nine Months Ended September 30
1999 1998
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INTEREST INCOME
Interest and fees on loans $126,121 $126,401
Interest on investment securities:
Taxable 12,835 13,018
Tax-exempt 3,785 3,638
Other interest income 3,795 2,367
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TOTAL INTEREST INCOME 146,536 145,424
INTEREST EXPENSE
Interest on deposits 54,142 55,198
Interest on short-term borrowings 7,278 7,252
Interest on long-term debt 4,470 3,680
Interest on trust preferred securities 6,010 1,383
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TOTAL INTEREST EXPENSE 71,900 67,513
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NET INTEREST INCOME 74,636 77,911
Provision for loan losses 7,327 4,416
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 67,309 73,495
OTHER INCOME
Investment securities gains 52 5
Service charges 7,301 7,082
Mortgage loan servicing fees 17,013 12,255
Net origination fees on junior-lien mortgages 4,493 11,486
Gain on sale of loans 5,805 12,811
Other income 20,934 11,265
---------------------------------------
TOTAL OTHER INCOME 55,598 54,904
OTHER EXPENSES
Salaries and employee benefits 42,793 39,358
Occupancy, excluding depreciation 8,428 6,338
Depreciation 8,578 7,301
Advertising 10,939 16,353
Other expenses 29,150 28,424
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TOTAL OTHER EXPENSES 99,888 97,774
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INCOME BEFORE INCOME TAXES 23,019 30,625
INCOME TAXES 8,462 10,314
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NET INCOME $ 14,557 $ 20,311
=======================================
Basic earnings per common share $ 0.86 $ 1.21
=======================================
Diluted earnings per common share $ 0.86 $ 1.20
=======================================
Average common shares outstanding:
Basic 16,833 16,791
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Diluted 16,833 16,912
=======================================
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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
CITY HOLDING COMPANY AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
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<CAPTION>
Three Months Ended September 30
1999 1998
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INTEREST INCOME
Interest and fees on loans $41,317 $43,483
Interest on investment securities:
Taxable 4,305 4,081
Tax-exempt 1,234 1,229
Other interest income 1,012 877
---------------------------------------
TOTAL INTEREST INCOME 47,868 49,670
INTEREST EXPENSE
Interest on deposits 17,772 18,939
Interest on short-term borrowings 2,729 2,691
Interest on long-term debt 1,471 965
Interest on trust preferred securities 2,014 689
---------------------------------------
TOTAL INTEREST EXPENSE 23,986 23,284
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NET INTEREST INCOME 23,882 26,386
Provision for loan losses 2,684 1,949
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 21,198 24,437
OTHER INCOME
Investment securities gains (losses) 4 11
Service charges 2,794 2,541
Mortgage loan servicing fees 5,711 4,246
Net origination fees on junior-lien mortgages 462 5,269
Gain on sale of loans 216 5,478
Other income 4,281 3,635
---------------------------------------
TOTAL OTHER INCOME 13,468 21,180
OTHER EXPENSES
Salaries and employee benefits 13,802 13,486
Occupancy, excluding depreciation 1,777 2,401
Depreciation 2,959 2,716
Advertising 1,586 7,072
Other expenses 11,010 10,543
---------------------------------------
TOTAL OTHER EXPENSES 31,134 36,218
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INCOME BEFORE INCOME TAXES 3,532 9,399
INCOME TAXES 1,214 2,824
---------------------------------------
NET INCOME $ 2,318 $ 6,575
=======================================
Basic earnings per common share $ 0.14 $ 0.39
=======================================
Diluted earnings per common share $ 0.14 $ 0.39
=======================================
Average common shares outstanding:
Basic 16,857 16,850
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Diluted 16,857 16,995
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SELECTED FINANCIAL SUMMARY
CITY HOLDING COMPANY AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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<CAPTION>
SEPTEMBER 30,
1999 1998
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FOR THE NINE MONTHS ENDED:
PER SHARE DATA:
Basic earnings per common share $ 0.86 $ 1.21
Diluted earnings per common share 0.86 1.20
SELECTED RATIOS:
Return on Average Assets 0.71% 1.08%
Return on Average Equity 8.81 11.51
Average Equity to Average Assets 8.10 9.41
FOR THE THREE MONTHS ENDED:
PER SHARE DATA:
Basic earnings per common share $ 0.14 $ 0.39
Diluted earnings per common share 0.14 0.39
SELECTED RATIOS:
Return on Average Assets 0.34% 1.00%
Return on Average Equity 4.27 10.95
Average Equity to Average Assets 7.90 9.13
AT PERIOD END:
Net Loans $ 1,800,749 $ 1,690,778
Securities 389,700 375,940
Deposits 1,972,594 2,036,474
Stockholders' Equity 215,855 241,504
Total Assets 2,724,487 2,651,458
Book value per common share 12.80 14.36
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TWO YEAR SUMMARY OF COMMON STOCK PRICES AND DIVIDENDS
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MARKET VALUE
CASH DIVIDENDS PER SHARE LOW HIGH
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1999
THIRD QUARTER $0.200 $18.125 $30.875
Second Quarter 0.200 25.750 32.250
First Quarter 0.200 24.813 31.250
1998
Fourth Quarter 0.200 30.000 37.125
Third Quarter 0.190 34.250 44.875
Second Quarter 0.190 41.000 48.000
First Quarter 0.190 41.500 51.000
1997
Fourth Quarter 0.190 39.875 42.375
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CITY HOLDING COMPANY'S COMMON STOCK TRADES ON THE NASDAQ STOCK
MARKET UNDER THE SYMBOL CHCO. THE TABLE ABOVE SETS FORTH THE
CASH DIVIDENDS PAID PER SHARE AND INFORMATION REGARDING THE
MARKET PRICES PER SHARE OF THE COMPANY'S COMMON STOCK FOR THE
PERIODS INDICATED. THE PRICE RANGES ARE BASED ON TRANSACTIONS
AS REPORTED ON THE NASDAQ STOCK MARKET.
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CITY HOLDING COMPANY SUBSIDIARIES AND DIVISIONS
WWW.CITYHOLDING.COM
CITY NATIONAL BANK OF WEST VIRGINIA
Community banking subsidiary of City Holding Company
Main Office: 3601 MacCorkle Avenue, S.E.
Charleston, West Virginia
www.citynational-bank.com
DEL AMO SAVINGS BANK, FSB
Community banking subsidiary of City Holding Company
Main Office: 3422 Carson Street
Torrance, California
FRONTIER STATE BANK
Community banking subsidiary of City Holding Company
Main Office: 2233 Artesia Boulevard
Redondo Beach, California
CITY FINANCIAL CORPORATION
Investment brokerage subsidiary of City Holding Company
Main Office: 3601 MacCorkle Avenue, S.E.
Charleston, West Virginia
www.cityfinancialcorp.com
CITY MORTGAGE SERVICES
Loan origination and servicing division of City National Bank
Main Office: 25 Gatewater Road
Cross Lanes, West Virginia
www.citymortgageservices.com
CITYNET
Internet service and web site development division of City National Bank
Main Office: 25 Gatewater Road
Cross Lanes, West Virginia
www.citynet.net
JARRETT/AIM COMMUNICATIONS
Printing and direct mail division of City National Bank
Main Office: 900 Christopher Street
Charleston, West Virginia
www.jarrett-aim.com
RMI, LTD.
Insurance brokerage division of City National Bank
Main Office: 1 Wall Street
Winfield, West Virginia
www.rmiltd.com
CITY HOLDING 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 65 BANKING OFFICES IN WEST
VIRGINIA, OHIO, AND CALIFORNIA, THE COMPANY PROVIDES CREDIT, DEPOSIT,
INVESTMENT ADVISORY, INSURANCE AND TECHNOLOGY PRODUCTS AND SERVICES TO
ITS CUSTOMERS.
<PAGE>
CITY HOLDING COMPANY
BOARD OF DIRECTORS
SAMUEL M. BOWLING C. DALLAS KAYSER
President, Dougherty Co., Inc. Attorney
Vice Chairman of the Board,
City Holding Company BERNARD C. MCGINNIS, III
Vice Chairman of the Board,
PHILLIP W. CAIN City Holding Company
Executive Vice President,
City National Bank THOMAS L. MCGINNIS
Executive Vice President,
DR. D. K. CALES City National Bank
Dentist
PHILIP L. MCLAUGHLIN
HUGH R. CLONCH Chairman of the Board,
President, City Holding Company
Clonch Industries, Inc.
LEON K. OXLEY
STEVEN J. DAY Partner,
President & Chief Executive Officer, Frazier & Oxley, LC
City Holding Company
E. M. PAYNE, III
WILLIAM C. DOLIN Partner,
Retired, File, Payne, Scherer & File
Dolin Supply Co.
R. T. ROGERS
ROBERT D. FISHER President & Chief Executive
Partner, Officer,
Adams, Fisher & Evans R. T. Rogers Oil Co.
MARK H. SCHAUL
JAY C. GOLDMAN President,
President, Charmar Realty Company
Goldman & Associates
JAMES E. SONGER, SR.
DAVID E. HADEN Retired,
President, Songer Insurance, Inc.
RMI, Ltd.
ALBERT M. TIECHE, JR.
DAVID W. HAMBRICK President,
Vice President, BHI, Inc.
City Holding Company
DIRECTORS EMERITUS
FRANK S. HARKINS, JR. George F. Davis
Retired, William M. Frazier
Bank of Raleigh Jack E. Fruth
Vitus Hartley, Jr.
CARLIN K. HARMON Dale Nibert
Retired,
First State Bank & Trust
TRACY W. HYLTON, II
President,
Eller, Inc.
<PAGE>
CITY NATIONAL BANK
BOARD OF DIRECTORS
JACK ALLEN CLARENCE MARTIN
JACK BAZEMORE CURTIS MCCALL
SAMUEL M. BOWLING HAROLD PAYNE
OSHEL CRAIGO PAT REED
STEVEN J. DAY JAMES ROSSI
WILLIAM FILE SHARON ROWE
SCOTT GIBSON MICHAEL SELLARDS
ROBERT GRIST CHARLES SMITH
CAROL KABLE PAUL TURMAN, II
BARRY KEMERER CECIL WILLIAMS
JACK KLIM MARY HOOTEN WILLIAMS
TOM LILLY LEE WILSON
TIMOTHY J. MANCHIN
FORWARD-LOOKING STATEMENTS
THE LETTER TO SHAREHOLDERS INCLUDED HEREIN MAY INCLUDE FORWARD-LOOKING
FINANCIAL INFORMATION WITHIN THE MEANING OF SECTION 27(A) OF THE
SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934. SUCH FORWARD-LOOKING INFORMATION IS IDENTIFIED BY PHRASES SUCH
AS "THE COMPANY EXPECTS" OR "ANTICIPATES" AND WORDS OF SIMILAR EFFECT.
THE COMPANY'S ACTUAL RESULTS ACHIEVED MAY DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING INFORMATION. THE FORWARD-LOOKING
FINANCIAL INFORMATION IS PROVIDED TO ASSIST INVESTORS AND COMPANY
STOCKHOLDERS IN UNDERSTANDING ANTICIPATED FUTURE FINANCIAL OPERATIONS
OF THE COMPANY AND ARE INCLUDED PURSUANT TO THE SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FURTHER, THE
COMPANY DISCLAIMS ANY INTENT OR OBLIGATION TO UPDATE THIS
FORWARD-LOOKING FINANCIAL INFORMATION.
