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, 1998
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City Holding Company
Profit Sharing and 401(k) Plan
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City Holding Company
25 Gatewater Road
Charleston, West Virginia 25313
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<PAGE>
FORM 11-K
CITY HOLDING COMPANY
PROFIT SHARING AND 401(K) PLAN
December 31, 1998
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The following financial statements and schedules of the Plan are included
herein:
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors 1
Statements of Net Assets Available for Benefits as of December 31, 1998 and
1997 2
Statements of Changes in Net Assets Available for Benefits for the years
ended December 31, 1998 and 1997 3
Notes to Financial Statements 4-7
Item 27(a) - Supplemental Schedule of Assets Held for Investment Purposes 8
Item 27(d) - Supplemental Schedule of Reportable Transactions 9
Item 9(b) - Exhibits:
Exhibit 24(c) - Consent of Independent Auditors
</TABLE>
<PAGE>
City Holding Company
Profit Sharing and 401(k) Plan
Audited Financial Statements and Supplemental Schedules
December 31, 1998
CONTENTS
Report of Independent Auditors..............................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits.............................2
Statements of Changes in Net Assets Available for Benefits..................3
Notes to Financial Statements...............................................4
Supplemental Schedules
Item 27(a) - Schedule of Assets Held for Investment Purposes................8
Item 27(d) - Schedule of Reportable Transactions............................9
<PAGE>
Report of Independent Auditors
Board of Directors
City Holding Company
We have audited the accompanying statements of net assets available for benefits
of City Holding Company Profit Sharing and 401(k) Plan as of December 31, 1998
and 1997, and the related statements of changes in net assets available for
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, 1998 and 1997, 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 made 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, 1998, and reportable
transactions for the year then ended are presented for the purpose of additional
analysis and are not part of the basic financial statements but are
supplementary information required by the Department of Labor Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The Fund information in the statement of net assets available
for benefits and the statement of changes in net assets available for benefits
is presented for purposes of additional analysis rather than to present the net
assets available for benefits and the changes in net assets available for
benefits of each fund. The supplemental schedules and Fund information have been
subjected to auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
June 25, 1999
1
<PAGE>
City Holding Company
Profit Sharing and 401(k) Plan
Statements of Net Assets Available for Benefits, with Fund Information
<TABLE>
<CAPTION>
FIDELITY CITY FIDELITY FIDELITY FIDELITY
ADVISOR HOLDING ADVISOR ADVISOR ADVISOR GROUP
PARTICIPANT OVERSEAS COMPANY SHORT FIXED GROWTH OPPT. BALANCED ANNUITY
LOANS FUND STOCK FUND INCOME FUND FUND FUND CASH CONTRACT TOTAL
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1998
ASSETS
Cash and cash equivalents $ 29,295 $ 2,326 $ 3,443 $ 4,573 $ 12,516 $ 15,066 $ - $ - $ 67,219
Investments, at fair value:
Mutual and commingled
funds - 363,952 - 522,634 2,787,705 1,298,649 - 1,027,883 6,000,823
Common stock of City
Holding Company - - 6,728,015 - - - - - 6,728,015
Participant loans 286,388 - - - - - - - 286,388
Receivables:
Employer contributions - - - - - - - - -
Employee contributions - - - - - - - - -
Transfer adjustment
accrual (29,295) 445 (862) 4,259 30,800 (3,072) - (2,275) -
----------------------------------------------------------------------------------------------------------
Net assets available for
benefits $ 286,388 $366,723 $6,730,596 $531,466 $2,831,021 $1,310,643 $ - $1,025,608 $13,082,445
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
FIDELITY CITY FIDELITY FIDELITY FIDELITY
ADVISOR HOLDING ADVISOR ADVISOR ADVISOR GROUP
PARTICIPANT OVERSEAS COMPANY SHORT FIXED GROWTH OPPT. INCOME AND ANNUITY
LOANS FUND STOCK FUND INCOME FUND FUND GROWTH FUND CASH CONTRACT TOTAL
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1997
ASSETS
Cash and cash equivalents $ 17,823 $ - $ 67,464 $ - $ - $ - $439 $ - $ 85,726
Investments, at fair value:
Mutual and commingled
funds - 154,059 - 426,052 1,770,853 903,578 - 916,350 4,170,892
Common stock of City
Holding Company - - 7,935,809 - - - - - 7,935,809
Participant loans 169,986 - - - - - - - 169,986
Receivables:
Employer contributions (17,823) 13,114 (21,563) 350 21,805 13,833 - 6,144 15,860
Employee contributions - - - - - - - - -
--------------------------------------------------------------------------------------------------------
Net assets available for
benefits $169,986 $167,173 $7,981,710 $426,402 $1,792,658 $ 917,411 $439 $ 922,494 $12,378,273
========================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
City Holding Company
Profit Sharing and 401(k) Plan
Statements of Changes in Net Assets Available for Benefits, with
Fund Information
<PAGE>
<TABLE>
<CAPTION>
FIDELITY CITY FIDELITY FIDELITY FIDELITY
ADVISOR HOLDING ADVISOR ADVISOR ADVISOR
PARTICIPANT OVERSEAS COMPANY SHORT FIXED GROWTH OPPT. BALANCED
LOANS FUND STOCK FUND INCOME FUND FUND FUND
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
Contributions and income:
Contributions from employer $ - $ - $ 428,085 $ - $ - $ -
Contributions from employee 5,246 183,105 628,004 178,274 740,401 329,733
Interest and dividends 19,260 3,787 150,807 32,468 116,841 127,522
-------------------------------------------------------------------------
Total contributions and income 24,506 186,892 1,206,896 210,742 857,242 457,255
Transfers to/from investment options,
including participant loan
transactions 106,626 (3,019) 113,175 (30,153) (69,574) (12,226)
Deductions:
Benefit payments 14,730 10,771 599,210 72,597 115,639 84,186
Administrative expenses - - - - - -
---------------------------------------------------------------------------
Total deductions 14,730 10,771 599,210 72,597 115,639 84,186
---------------------------------------------------------------------------
Net additions 116,402 173,102 720,861 107,992 672,029 360,843
Net realized and unrealized
appreciation (depreciation) in fair
value of investments - 26,448 (1,971,975) (2,928) 366,334 32,389
Net assets available for benefits at
beginning of year 169,986 167,173 7,981,710 426,402 1,792,658 917,411
---------------------------------------------------------------------------
Net assets available for benefits
at end of year $286,388 $366,723 $6,730,596 $531,466 $2,831,021 $1,310,643
===========================================================================
</TABLE>
GROUP
ANNUITY
CASH CONTRACT TOTAL
----------------------------
YEAR ENDED DECEMBER 31, 1998
Contributions and income:
Contributions from employer $ - $ - $ 428,085
Contributions from employee - 282,759 2,347,522
Interest and dividends - 51,441 502,126
----------------------------
Total contributions and income - 334,200 3,277,733
Transfers to/from investment options,
including participant loan
transactions (439) (104,390) -
Deductions:
Benefit payments - 126,446 1,023,579
Administrative expenses - 250 250
----------------------------
Total deductions - 126,696 1,023,829
----------------------------
Net additions (439) 103,114 2,253,904
Net realized and unrealized
appreciation (depreciation) in fair
value of investments - - (1,549,732)
Net assets available for benefits at
beginning of year 439 922,494 12,378,273
----------------------------
Net assets available for benefits
at end of year $ - $1,025,608 $13,082,445
============================
<TABLE>
<CAPTION>
FIDELITY CITY FIDELITY FIDELITY
ADVISOR HOLDING ADVISOR ADVISOR
PARTICIPANT OVERSEAS COMPANY SHORT FIXED GROWTH OPPT.
LOANS FUND STOCK FUND INCOME FUND FUND
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Contributions and income:
Contributions from employer $ - $ - $ 278,616 $ - $ -
Contributions from employee - 34,377 290,795 53,372 211,023
Interest and dividends 16,303 9,945 133,343 24,454 110,196
-----------------------------------------------------------------------
Total contributions and income 16,303 44,322 702,754 77,826 321,219
Transfers to/from investment options, including
participant loan transactions (26,931) 87,899 (3,721) (19,198) (28,185)
Deductions:
Benefit payments 15,297 1,151 194,873 14,933 66,597
Administrative expenses - - - - -
-----------------------------------------------------------------------
Total deductions 15,297 1,151 194,873 14,933 66,597
-----------------------------------------------------------------------
Net additions (25,925) 131,070 504,160 43,695 226,437
Net realized and unrealized appreciation
(depreciation) in fair value of investments - (671) 2,988,242 (1,945) 267,409
Net assets available for benefits at beginning
of year 195,911 36,774 4,489,308 384,652 1,298,812
-----------------------------------------------------------------------
Net assets available for benefits at end of year $ 169,986 $ 167,173 $ 7,981,710 $ 426,402 $1,792,658
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
ADVISOR GROUP
INCOME AND ANNUITY
GROWTH FUND CASH CONTRACT TOTAL
------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Contributions and income:
Contributions from employer $ - $ - $ - $ 278,616
Contributions from employee 94,808 - 75,797 760,172
Interest and dividends 81,270 106 55,933 431,550
-------------------------------------------------------
Total contributions and income 176,078 106 131,730 1,470,338
Transfers to/from investment options, including
participant loan transactions 32,725 (22,313) (20,276) -
Deductions:
Benefit payments 38,301 - 61,298 392,450
Administrative expenses - - 250 250
--------------------------------------------------------
Total deductions 38,301 - 61,548 392,700
-------------------------------------------------------
Net additions 170,502 (22,207) 49,906 1,077,638
Net realized and unrealized appreciation
(depreciation) in fair value of investments 73,263 - - 3,326,298
Net assets available for benefits at beginning
of year 673,646 22,646 872,588 7,974,337
-------------------------------------------------------
Net assets available for benefits at end of year $ 917,411 $ 439 $ 922,494 $ 12,378,273
=======================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
City Holding Company
Profit Sharing and 401(k) Plan
Notes to Financial Statements
December 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accounting records of the City Holding Company Profit Sharing and 401(k)
Plan (the Plan) are maintained on the accrual basis of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from these estimates.
INVESTMENTS
The Plan estimates the fair value of its investment in City Holding Company
common stock based on the stock's quoted trade price. Investments in mutual and
commingled funds are valued at the Plan's proportionate share of the quoted fair
value of net assets in each fund as of December 31, 1998 and 1997. At December
31, 1998, mutual and commingled funds consisted of the following investment
alternatives:
FIDELITY ADVISOR SHORT FIXED-INCOME FUND: The primary objective of the
Fund is to obtain a high level of current income, consistent with the
preservation of capital, by investing primarily in a broad range of
investment-grade fixed income securities. The Fund consists primarily of
fixed-income securities of all types which may include convertible and
zero-coupon securities. The Fund may also invest a portion of its assets
in securities issued by foreign companies and foreign governments.
FIDELITY ADVISOR GROWTH OPPORTUNITY FUND: The primary objective of the
Fund is to provide capital growth by investing primarily in common stocks
and securities convertible into common stocks. The Fund may also invest in
other securities, such as preferred stock and bonds that may produce
capital growth.
FIDELITY ADVISOR BALANCED FUND (FORMERLY CALLED INCOME AND GROWTH FUND):
The primary objective of the Fund is to invest in equity securities,
convertible securities, common and preferred stocks, and fixed-income
securities that provide income or opportunities for capital growth.
FIDELITY ADVISOR OVERSEAS FUND: The primary objective of the Fund is to
seek growth of capital through investments in foreign securities. The Fund
invests in securities of companies located in the Americas (other than
U.S.), Far East, the Pacific Basin, and Western Europe. The Fund also
invests in debt securities for long-term growth purposes.
4
<PAGE>
GROUP ANNUITY CONTRACT: The group annuity contract represents an
investment in a Deposit Administration Fund maintained by an insurance
company. Interest is credited to the Fund, compounded annually, and is
determined by annual interest rates which will not be less than the
following (as specified in the contract):
INTEREST RATE CONTRACT YEAR
--------------------------------------------------------------------------
5.50% 1998
5.00% 1999
At least 30 days prior to the expiration of the interest guarantees, the
Hartford Life Insurance Company shall advise the Plan of new interest guarantees
that apply to the contract. In addition to the interest guarantees above, a
long-term guaranteed interest rate of 3% applies to all contributions and
earnings received and applies for the life of the contract. The group annuity
contract is valued at cost plus reinvested income, which approximates fair
value. Participant directed transfers may be made under the contract. Such
transfers will not be subject to withdrawal charges, market value adjustments,
or penalties provided that the amount of the withdrawal, when added to the sum
of all withdrawals during the preceding twelve months, does not exceed 12% of
the balance of the fund twelve months earlier. Such withdrawals are subject to
the consent of the insurance company.
Each participant may designate the percentage of his or her contributions to be
invested into any of the aforementioned alternatives.
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 and became effective January 1, 1991, is
a defined contribution savings and profit sharing 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).
The Company's contribution consists of a 50% match of the first 6% of each
eligible participant's contribution. Matching contributions are made with common
stock of the Plan sponsor, City Holding Company.
Participants may elect to contribute, on a salary-deferral basis, up to 15% of
annual compensation, subject to federal income tax limits. Included in
participant contributions are approximately $522,000 and $173,000 in 1998 and
1997, respectively, of participant account balances rolled-over from previous
5
<PAGE>
employer plans and approximately $923,000 and $0 in 1998 and 1997, respectively,
transferred in as a result of three plan mergers during the year due to Company
acquisitions.
VESTING
Participants are immediately fully vested in their voluntary contributions and
employer matching contributions, plus actual earnings thereon. A participant
becomes vested in discretionary profit sharing contributions as follows:
VESTED PERCENTAGE OF
YEAR OF SERVICE EMPLOYER CONTRIBUTIONS
- --------------------------------------------------------------------------------
Less than 2 0%
3 20
4 40
5 60
6 80
7 or more 100
There were no discretionary profit sharing contributions during 1998 or 1997.
Forfeitures of terminated participants' nonvested account balances are allocated
to eligible participants who are employed on December 31 of each year based on
their annual compensation.
BENEFITS
Benefits, representing each participant's share in the Plan, are generally
payable upon the participating employee's death, retirement, disability, or
separation from the Company. Benefits are payable in the form of cash, stock, or
a combination thereof.
3. FEDERAL INCOME TAXES
The Plan has received a determination letter from the Internal Revenue Service
dated August 27, 1992, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the Code) and, therefore, is exempt from taxation.
Once qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The Plan was amended subsequent to the IRS
determination letter. Therefore, the amendments are not covered by the
determination letter. The Plan Administrator believes the Plan is being operated
in compliance with the applicable requirements of the Code and, therefore,
believes that the Plan is qualified and is tax exempt.
4. RELATED PARTY TRANSACTIONS
Contributions made to the Plan as part of the Company's matching provisions
consist of common stock of City Holding Company. Such contributions are
6
<PAGE>
nonparticipant directed investments included in plan assets. For the years ended
December 31, 1998 and 1997, matching contributions approximated $428,000 and
$279,000, respectively.
Included in interest and dividends for the years ended December 31, 1998 and
1997, are dividends from City Holding Company common stock approximating
$151,000 and $133,000, respectively.
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.
5. YEAR 2000 (UNAUDITED)
Plan management established formal communication with its third-party service
providers to determine that they have developed plans to address their own year
2000 problems as they relate to the Plan's operations. All third-party service
providers have indicated that they will be year 2000 compliant by early 1999. If
modification of data processing systems of either the Plan, the Plan Sponsor, or
its service providers are not completed timely, the year 2000 problem could have
a material impact on the operations of the Plan. Plan management has not
developed a contingency plan because they are confident that all systems will be
year 2000 ready.
6. SUBSEQUENT EVENT
On December 31, 1998, the Plan Sponsor merged with Horizon Bancorp, Inc. On June
14, 1999, the Board of Directors of City Holding Company voted to allow the
former Horizon employees to participate in the Plan effective April 1, 1999.
<PAGE>
Supplemental Schedules
<PAGE>
City Holding Company
Profit Sharing and 401(k) Plan
EIN 55-0619957, Plan 002
Item 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
CURRENT
SHARES/UNITS DESCRIPTION COST VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common stock:
207,016 City Holding Company Common Stock* $ 5,176,835 $ 6,728,015
Investments in mutual or commingled funds:
55,521 Fidelity Advisor Growth Opportunity 2,026,296 2,787,705
69,484 Fidelity Advisor Balanced 1,167,730 1,298,649
20,679 Fidelity Advisor Overseas 338,297 363,952
Fidelity Advisor Short Fixed Income Fund:
3,573 Fidelity Advisor Balanced 63,466 66,776
48,807 Fidelity Advisor Short Fixed Income 449,598 455,858
1,027,883 Group Annuity Contract 1,027,883 1,027,883
---------------------------------------
5,073,270 6,000,823
Loans to participants (6.00% to 10.21%) - 286,388
Cash and cash equivalents 67,219 67,219
---------------------------------------
$10,317,324 $13,082,445
=======================================
</TABLE>
* Party-in-interest
8
<PAGE>
City Holding Company
Profit Sharing and 401(k) Plan
EIN 55-0619957, Plan 002
Item 27(d) - Schedule of Reportable Transactions
Year Ended December 31, 1998
<TABLE>
<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
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CATEGORY (III)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
Fidelity Advisor Growth
Opportunity Fund 19,806 $ 815,272 - $ - $ - $ -
City Holding Company
Common Stock 37,677 1,549,038 19,339 337,192 788,375 451,183
</TABLE>
There were no category (i), (ii) or (iv) reportable transactions during 1998.
9
<PAGE>
SIGNATURE
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
Profit Sharing and 401(k) Plan
/s/ Robert A. Henson
----------------------------
Mr. Robert A. Henson
Plan Administrator
June 29, 1999
Exhibit 23
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 Profit Sharing and
401(k) Plan of our report dated June 25, 1999, with respect to the financial
statements and schedules of the City Holding Company Profit Sharing and 401(k)
Plan included in this Annual Report (Form 11-K) for the year ended December 31,
1998.
/s/ Ernst & Young LLP
Charleston, West Virginia
June 29, 1999
