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): September 14, 1999
CITY HOLDING COMPANY
(Exact name of registrant as specified in its charter)
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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 June 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 integration of Horizon Bancorp,
Inc. ("Horizon") and a possible joint venture with another loan service
corporation. 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) expected cost
savings from the integration of Horizon may not be fully realized within the
expected time frame; (2) the Company may not complete its proposed joint venture
with another loan service corporation, or the results of the joint venture may
not be as favorable as currently anticipated; (3) competitive pressures among
depository and other financial institutions may increase significantly; (4)
costs or difficulties related to the integration of Horizon may be greater than
expected; (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: September 14, 1999
By: /s/ Michael D. Dean
----------------------------------
Michael D. Dean
Senior Vice President - Finance,
Principal Accounting Officer and
Duly Authorized Officer
EXHIBIT 99
LETTER TO SHAREHOLDERS:
The financial performance for the second quarter of 1999 was slightly
down from the same period of 1998. Reported earnings for the quarter were $6.99
million or 42 cents per share compared to $7 million or 41 cents per share for
three months ended June 30, 1998. City Holding Company reported earnings of
$12.24 million or 73 cents per share for the six months ended June 30, 1999
compared to $13.74 million or 81 cents per share for the six months ended June
30, 1998.
The return on average assets for the second quarter of 1999 was 1.03%
compared to 1.13% for the second quarter of 1998. The return on average
shareholder's equity for the second quarter of 1999 was 12.68% compared to
11.85% for the second quarter of 1998. For the first six months of 1999 return
on average assets was .91% compared to 1.13% for the six months ended June 30,
1998. Return on average equity was 11.08% and 11.95% for the six months ended
June 30, 1999 and 1998, respectively.
During the second quarter of 1999, City Holding Company completed the
sale of six branch locations as part of the Company's continuing reorganization
following its merger of Horizon Bancorp. As a result of the divestitures, other
income included a tax effected $5.18 million that was associated with the gain
of the sale of those branch offices.
Conversely, the integration of the former Horizon banks has not
occurred as smoothly or as quickly as originally anticipated due to problems
with operational restructuring. The problems have been identified and are being
corrected in the normal course of business and are temporary by nature. However,
until the corrections are completed it is creating significant expenses due to
extra personnel and overtime, temporary employment services and outside
professional services. Also, it has impeded management's ability to realize the
cost savings associated with the merger of Horizon, which occurred on December
31, 1998. Management anticipates having the non-recurring expenses eliminated by
early in the fourth quarter of 1999 and to begin to experience cost savings of
the full consolidation of its operations thereafter.
City Mortgage Services, which services almost $2 billion in loans, is
also working towards a joint venture with another loan servicing operation.
Those companies have signed a non-binding letter of intent to spin-off their
separate operations into a new company. Management views this as extremely
valuable to City Holding Company.
Finally, the work of positioning City Holding Company for the future
has required a great deal of effort from the many people in the organization.
Their teamwork continues to provide the foundation for building shareholder
value. As we diligently work to improve our financial results and complete this
combination of our operations, we appreciate the support and continued goodwill
of our shareholders.
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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JUNE 30 December 31 June 30
1999 1998 1998
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(UNAUDITED) (UNAUDITED)
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ASSETS
Cash and due from banks $ 101,765 $ 87,866 $ 87,832
Federal funds sold 439 31,911 12,835
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CASH AND CASH EQUIVALENTS 102,204 119,777 100,667
Securities available for sale, at fair value 380,650 356,659 335,587
Securities held-to-maturity (approximate fair value
at December 31, 1998 and June 30, 1998 - $40,539 - 39,063 40,430
and $41,572)
Loans:
Gross loans 1,734,396 1,715,929 1,689,188
Allowance for loan losses (18,795) (17,610) (18,464)
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NET LOANS 1,715,601 1,698,319 1,670,724
Loans held for sale 105,918 246,287 194,959
Premises and equipment 68,132 71,094 67,103
Accrued interest receivable 22,975 21,660 19,597
Other assets 209,328 153,145 112,940
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TOTAL ASSETS $2,604,808 $2,706,004 $2,542,007
================================================================
LIABILITIES
Deposits:
Noninterest-bearing $ 248,027 $ 303,421 $ 295,008
Interest-bearing 1,681,669 1,760,994 1,698,207
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TOTAL DEPOSITS 1,929,696 2,064,415 1,993,215
Short-term borrowings 216,357 183,418 155,678
Long-term debt 100,472 102,719 87,267
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 54,411 47,893 33,827
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TOTAL LIABILITIES 2,388,436 2,485,945 2,299,987
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
16,853,051, 16,820,276, and 17,095,417 shares
as of June 30, 1999, December 31, 1998, and June 30,
1998, respectively, including 17,199, 10,000, and 42,133 42,051 42,740
213,702 shares, respectively, in treasury
Capital surplus 58,685 58,365 66,994
Retained earnings 125,723 120,209 134,896
Cost of common stock in treasury (535) (274) (5,643)
Accumulated other comprehensive (loss) income (9,634) (292) 3,033
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TOTAL STOCKHOLDERS' EQUITY 216,372 220,059 242,020
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,604,808 $2,706,004 $2,542,007
================================================================
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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>
Six Months Ended June 30
1999 1998
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INTEREST INCOME
Interest and fees on loans $84,804 $82,918
Interest on investment securities:
Taxable 8,530 8,937
Tax-exempt 2,551 2,409
Other interest income 2,783 1,490
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TOTAL INTEREST INCOME 98,668 95,754
INTEREST EXPENSE
Interest on deposits 36,370 36,259
Interest on short-term borrowings 4,549 4,561
Interest on long-term debt 2,999 2,715
Interest on trust preferred securities 3,996 694
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TOTAL INTEREST EXPENSE 47,914 44,229
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NET INTEREST INCOME 50,754 51,525
Provision for loan losses 4,643 2,467
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 46,111 49,058
OTHER INCOME
Investment securities gains (losses) 48 (6)
Service charges 4,507 4,541
Mortgage loan servicing fees 11,302 8,009
Net origination fees on junior-lien mortgages 4,031 6,217
Gain on sale of loans 5,208 7,333
Other income 17,034 7,630
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TOTAL OTHER INCOME 42,130 33,724
OTHER EXPENSES
Salaries and employee benefits 28,991 25,872
Occupancy, excluding depreciation 6,651 3,937
Depreciation 5,619 4,585
Advertising 9,353 9,281
Other expenses 18,140 17,881
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TOTAL OTHER EXPENSES 68,754 61,556
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INCOME BEFORE INCOME TAXES 19,487 21,226
INCOME TAXES 7,248 7,490
---------------------------------------
NET INCOME $12,239 $13,736
=======================================
Basic earnings per common share $0.73 $0.82
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Diluted earnings per common share $0.73 $0.81
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Average common shares outstanding:
Basic 16,820 16,760
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Diluted 16,820 16,866
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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 June 30
1999 1998
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INTEREST INCOME
Interest and fees on loans $41,096 $43,198
Interest on investment securities:
Taxable 4,256 4,349
Tax-exempt 1,263 1,206
Other interest income 1,458 948
---------------------------------------
TOTAL INTEREST INCOME 48,073 49,701
INTEREST EXPENSE
Interest on deposits 17,773 19,152
Interest on short-term borrowings 2,591 1,940
Interest on long-term debt 1,356 1,248
Interest on trust preferred securities 1,998 686
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TOTAL INTEREST EXPENSE 23,718 23,026
---------------------------------------
NET INTEREST INCOME 24,355 26,675
Provision for loan losses 2,229 1,238
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 22,126 25,437
OTHER INCOME
Investment securities gains (losses) 6 9
Service charges 2,322 2,404
Mortgage loan servicing fees 5,617 4,126
Net origination fees on junior-lien mortgages 3,838 4,071
Gain on sale of loans 4,483 4,775
Other income 11,445 4,166
---------------------------------------
TOTAL OTHER INCOME 27,711 19,551
OTHER EXPENSES
Salaries and employee benefits 13,779 13,621
Occupancy, excluding depreciation 3,307 2,175
Depreciation 2,991 2,429
Advertising 8,233 6,104
Other expenses 9,825 9,855
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TOTAL OTHER EXPENSES 38,135 34,184
---------------------------------------
INCOME BEFORE INCOME TAXES 11,702 10,804
INCOME TAXES 4,708 3,805
---------------------------------------
NET INCOME $6,994 $6,999
=======================================
Basic earnings per common share $0.42 $0.41
=======================================
Diluted earnings per common share $0.42 $0.41
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Average common shares outstanding:
Basic 16,820 16,879
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Diluted 16,820 17,042
=======================================
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SELECTED FINANCIAL SUMMARY
CITY HOLDING COMPANY AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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JUNE 30,
1999 1998
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FOR THE SIX MONTHS ENDED:
PER SHARE DATA:
Basic earnings per common share $ 0.73 $ 0.82
Diluted earnings per common share 0.73 0.81
SELECTED RATIOS:
Return on Average Assets 0.91% 1.13%
Return on Average Equity 11.08 11.95
Average Equity to Average Assets 8.20 9.52
FOR THE THREE MONTHS ENDED:
PER SHARE DATA:
Basic earnings per common share $ 0.42 $ 0.41
Diluted earnings per common share 0.42 0.41
SELECTED RATIOS:
Return on Average Assets 1.03% 1.13%
Return on Average Equity 12.68 11.85
Average Equity to Average Assets 8.14 9.56
AT PERIOD END:
Net Loans $ 1,715,601 $ 1,670,724
Securities 380,650 376,017
Deposits 1,929,696 1,993,215
Stockholders' Equity 216,372 242,020
Total Assets 2,604,808 2,542,007
Book value per common share 12.85 14.34
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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
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
Third Quarter 0.180 32.250 43.250
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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
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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 Officer,
Partner, R. T. Rogers Oil Co.
Adams, Fisher & Evans
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
Former President & CEO,
First State Bank & Trust
TRACY W. HYLTON, II
President,
Eller, Inc.
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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
