UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
10-K
[X]
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the
fiscal year ended December 31, 2007
or
[ ]
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the
transition period from __________ to __________.
Commission
File Number 0-11733
CITY
HOLDING COMPANY
(Exact
Name of Registrant as Specified in its Charter)
|
West
Virginia
|
55-0169957
|
|
(State
or Other Jurisdiction of
|
(I.R.S.
Employer
|
|
Incorporation
or Organization)
|
Identification
No.)
|
25
Gatewater Road, Cross Lanes, WV 25313
(Address
of Principal Executive Offices, Including Zip Code)
304-769-1100
(Registrant’s
Telephone Number, Including Area Code)
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of Each Class
|
Name
of Each Exchange on Which Registered:
|
|
|
None
|
None
|
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, $2.50 par value
(Title of
class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. [ ] Yes [X]
No
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. [ ] Yes [X]
No
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [X] Yes [ ] No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act. (Check one):
|
Large
accelerated filer [ ]
|
Accelerated
filer [X]
|
|
|
Non-accelerated
filer [ ]
|
Smaller
reporting company
[ ]
|
-1-
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
[ ]
Yes [X] No
As of
June 30, 2007, the last business day of the registrant’s most recently completed
second quarter, the aggregate market value of the shares of common stock held by
non-affiliates, based upon the closing price per share of the registrant’s
common stock as reported on the Nasdaq National Market System, was approximately
$626.9 million. (Registrant has assumed that all of its executive
officers and directors are affiliates. Such assumption shall not be
deemed to be conclusive for any other purpose.)
As of
February 27, 2008, there were 16,181,275 shares of the Company’s common stock
outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the annual report to security holders for the fiscal year ended December 31,
2007 are incorporated by reference into Part I, Item 1 and Part II, Items 6, 7,
7A, and 8. Portions of the Proxy Statement for the 2008 annual shareholders’
meeting to be held on April 30, 2008 are incorporated by reference into Part
III, Items 10, 11, 12, 13, and 14.
-2-
|
Pages
|
||
|
4-9
|
||
|
10-14
|
||
|
14
|
||
|
14-15
|
||
|
15
|
||
|
15
|
||
|
16-18
|
||
|
18
|
||
|
18
|
||
|
18
|
||
|
18
|
||
|
19
|
||
|
19
|
||
|
19
|
||
|
19
|
||
|
19
|
||
|
20
|
||
|
20
|
||
|
20
|
||
|
21
|
||
|
22-23
|
||
|
24-26
|
||
|
Business
|
City
Holding Company (the “Company”) is a bank holding company headquartered in
Charleston, West Virginia. The Company conducts its principal activities through
its wholly-owned subsidiary, City National Bank of West Virginia (“City
National”). Through its network of 69 banking offices in West Virginia (58
offices), Kentucky (9 offices), and Ohio (2 offices), City National provides
credit, deposit, trust and investment management, and insurance products and
services to its customers. In addition to its branch network, City National’s
delivery channels include ATMs, check cards, interactive voice response systems,
and internet technology. City National has approximately 7% of the deposit
market share in West Virginia and the Company is the third largest bank holding
company headquartered in West Virginia based on deposit share. The Company’s
business activities are currently limited to one reportable business segment,
which is community banking.
No
portion of City National’s deposits are derived from a single person or persons,
the loss of which could have a material adverse effect on liquidity, capital, or
other elements of financial performance. Although no portion of City National’s
loan portfolio is concentrated within a single industry or group of related
industries, it historically has held residential mortgage loans as a significant
portion of its loan portfolio. At December 31, 2007, 53% of the Company’s loan
portfolio was categorized as residential mortgage and home equity loans.
However, due to the fractionated nature of residential mortgage lending, there
is no concentration of credits that would be considered materially detrimental
to the Company’s financial position or operating results.
The
Company’s business is not seasonal and has no foreign sources or applications of
funds. There are no anticipated material capital expenditures, or any
expected material effects on earnings or the Company’s competitive position as a
result of compliance with federal, state and local provisions enacted or adopted
relating to environmental protection.
Competition
As noted
previously, the Company’s principal markets are located in West Virginia. The
majority of the Company’s banking offices are located in the areas of
Charleston, Huntington, Beckley and Martinsburg where there is a significant
presence of other financial service providers. In its markets, the Company
competes with national, regional, and local community banks for deposit, credit,
trust and investment management, and insurance customers. In addition to
traditional banking organizations, the Company competes with credit unions,
finance companies, insurance companies and other financial service providers who
are able to provide specialty financial services to targeted customer groups. As
further discussed below, changes in laws and regulations enacted in recent years
have increased the competitive environment the Company faces to retain and
attract customers.
Regulation
and Supervision
Overview: The Company, as a
registered bank holding company, and City National, as an insured depository
institution, operate in a highly regulated environment and are regularly
examined by federal and state regulators. The following description briefly
discusses certain provisions of federal and state laws and regulations and the
potential impact of such provisions to which the Company and City National are
subject. These federal and state laws and regulations are designed to
reduce potential loss exposure to the depositors of such depository institutions
and to the Federal Deposit Insurance Corporation’s insurance fund and are not
intended to protect the Company’s security holders. Proposals to change the laws
and regulations governing the banking industry are frequently raised in
Congress, in state legislatures, and before the various bank regulatory
agencies. The likelihood and timing of any changes and the impact
such changes might have on the Company are impossible to determine with any
certainty. A change in applicable laws or regulations, or a change in
the way such laws or regulations are interpreted by regulatory agencies or
courts, may have a material impact on the business, operations and earnings of
the Company. To the extent that the following information describes
statutory or regulatory provisions, it is qualified entirely by reference to the
particular statutory or regulatory provision.
As a bank
holding company registered under the Bank Holding Company Act of 1956, as
amended (the “BHCA”), the Company is subject to regulation by the Federal
Reserve Board. Federal banking laws require a bank holding company to serve as a
source of financial strength to its subsidiary depository institutions and to
commit resources to support such institutions in circumstances where it might
not do so otherwise. Additionally, the Federal Reserve Board has jurisdiction
under the BHCA to approve any bank or nonbank acquisition, merger or
consolidation proposed by a bank holding company. The BHCA generally limits the
activities of a bank holding company and its subsidiaries to that of banking,
managing or controlling banks, or any other activity that is so closely related
to banking or to managing or controlling banks as to be a proper incident
thereto. The BHCA also prohibits a bank holding company, with certain
exceptions, from acquiring more than 5% of the voting shares of any company and
from engaging in any business other than banking or managing or controlling
banks. The Federal Reserve Board has by regulation determined that certain
activities are closely related to banking within the meaning of the BHCA. These
activities include: operating a mortgage company, finance company, credit card
company or factoring company; performing certain data processing operations;
providing investment and financial advice; and acting as an insurance agent for
certain types of credit-related insurance.
The
Gramm-Leach-Bliley Act (“Gramm-Leach”) became law in November 1999. Gramm-Leach
established a comprehensive framework to permit affiliations among commercial
banks, investment banks, insurance companies, securities firms, and other
financial service providers. Gramm-Leach permits qualifying bank holding
companies to register with the Federal Reserve Board as “financial holding
companies” and allows such companies to engage in a significantly broader range
of financial activities than were historically permissible for bank holding
companies. Although the Federal Reserve Board provides the principal regulatory
supervision of financial services permitted under Gramm-Leach, the Securities
and Exchange Commission and state regulators also provide substantial
supervisory oversight. In addition to broadening the range of financial services
a bank holding company may provide, Gramm-Leach also addressed customer privacy
and information sharing issues and set forth certain customer disclosure
requirements. The Company has no current plans to petition the Federal Reserve
Board for consideration as a financial holding company.
The
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(“Riegle-Neal”) permits bank holding companies to acquire banks located in any
state. Riegle-Neal also allows national banks and state banks with different
home states to merge across state lines and allows branch banking across state
lines, unless specifically prohibited by state laws.
The
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (USA “Patriot Act”) was adopted in response to the September 11, 2001
terrorist attacks. The Patriot Act provides law enforcement with
greater powers to investigate terrorism and prevent future terrorist
acts. Among the broad-reaching provisions contained in the Patriot
Act are several designed to deter terrorists’ ability to launder money in the
United States and provide law enforcement with additional powers to investigate
how terrorists and terrorist organizations are financed. The Patriot
Act creates additional requirements for banks, which were already subject to
similar regulations. The Patriot Act authorizes the Secretary of
Treasury to require financial institutions to take certain “special measures”
when the Secretary suspects that certain transactions or accounts are related to
money laundering. These special measures may be ordered when the
Secretary suspects that a jurisdiction outside of the United States, a financial
institution operating outside of the United States, a class of transactions
involving a jurisdiction outside of the United States or certain types of
accounts are of “primary money laundering concern.” The special
measures include the following: (a) require financial institutions to
keep records and report on transactions or accounts at issue; (b) require
financial institutions to obtain and retain information related to the
beneficial ownership of any account opened or maintained by foreign persons; (c)
require financial institutions to identify each customer who is permitted to use
a payable-through or correspondent account and obtain certain information from
each customer permitted to use the account; and (d) prohibit or impose
conditions on the opening or maintaining of correspondent or payable-through
accounts. Failure of a financial institution to maintain and
implement adequate programs to combat money laundering and terrorist financing,
or to comply with all of the relevant laws or regulations, could have serious
legal and reputational consequences for the institution.
Capital Adequacy: Federal
banking regulations set forth capital adequacy guidelines, which are used by
regulatory authorities to assess the adequacy of capital in examining and
supervising a bank holding company and its insured depository institutions. The
capital adequacy guidelines generally require bank holding companies to maintain
total capital equal to at least 8% of total risk-adjusted assets, with at least
one-half of total capital consisting of core capital (i.e., Tier I capital) and
the remaining amount consisting of “other” capital-eligible items (i.e., Tier II
capital), such as perpetual preferred stock, certain subordinated debt, and,
subject to limitations, the allowance for loan losses. Tier I capital generally
includes common stockholders’ equity plus, within certain limitations, perpetual
preferred stock and trust preferred securities. For purposes of computing
risk-based capital ratios, bank holding companies must meet specific capital
guidelines that involve quantitative measures of assets, liabilities and certain
off-balance sheet items, calculated under regulatory accounting practices. The
Company’s and City National’s capital amounts and classifications are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
In
addition to total and Tier I capital requirements, regulatory authorities also
require bank holding companies and insured depository institutions to maintain a
minimum leverage capital ratio of 3%. The leverage ratio is determined as the
ratio of Tier I capital to total average assets, where average assets exclude
goodwill, other intangibles, and other specifically excluded assets. Regulatory
authorities have stated that minimum capital ratios are adequate for those
institutions that are operationally and financially sound, experiencing solid
earnings, have high levels of asset quality, and are not experiencing
significant growth. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to maintain
strong capital positions substantially above the minimum supervisory levels. In
those instances where these criteria are not evident, regulatory authorities
expect, and may require, bank holding companies and insured depository
institutions to maintain higher than minimum capital levels.
Additionally,
federal banking laws require regulatory authorities to take “prompt corrective
action” with respect to depository institutions that do not satisfy minimum
capital requirements. The extent of these powers depends upon whether the
institutions in question are “well capitalized”, “adequately capitalized”,
“undercapitalized”, “significantly undercapitalized” or “critically
undercapitalized”, as such terms are defined under uniform regulations defining
such capital levels issued by each of the federal banking agencies. As an
example, a depository institution that is not well capitalized is generally
prohibited from accepting brokered deposits and offering interest rates on
deposits higher than the prevailing rate in its market. Additionally, a
depository institution is generally prohibited from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company, may be subject to asset growth limitations and may be
required to submit capital restoration plans if the depository institution is
considered undercapitalized. The Company’s and City National’s regulatory
capital ratios are presented in the following table:
|
December
31,
|
||||||||
|
2007
|
2006
|
|||||||
|
City
Holding:
|
||||||||
|
Tier
I Risk-based
|
14.12 | % | 15.30 | % | ||||
|
Total
|
15.11 | 16.19 | ||||||
|
Tier
I Leverage
|
10.31 | 10.79 | ||||||
|
City
National:
|
||||||||
|
Tier
I Risk-based
|
12.51 | % | 12.53 | % | ||||
|
Total
|
13.51 | 13.42 | ||||||
|
Tier
I Leverage
|
9.08 | 8.81 | ||||||
Dividends and Other Payments:
The Company is a legal entity separate and distinct from City National.
Dividends from City National are essentially the sole source of cash for the
Company. The right of the Company, and shareholders of the Company, to
participate in any distribution of the assets or earnings of City National
through the payment of such dividends or otherwise is necessarily subject to the
prior claims of creditors of City National, except to the extent that claims of
the Company in its capacity as a creditor may be
recognized. Moreover, there are various legal limitations applicable
to the payment of dividends to the Company as well as the payment of dividends
by the Company to its shareholders. Under federal law, City National
may not, subject to certain limited expectations, make loans or extensions of
credit to, or invest in the securities of, or take securities of the Company as
collateral for loans to any borrower. City National is also subject to
collateral security requirements for any loans or extensions of credit permitted
by such exceptions.
City
National is subject to various statutory restrictions on its ability to pay
dividends to the Company. Specifically, the approval of the Office of
the Comptroller of the Currency (“OCC”) is required prior to the payment of
dividends by City National in excess of its earnings retained in the current
year plus retained net profits for the preceding two years. The
payment of dividends by the Company and City National may also be limited by
other factors, such as requirements to maintain adequate capital above
regulatory guidelines. The OCC has the authority to prohibit any bank
under its jurisdiction from engaging in an unsafe and unsound practice in
conducting its business. Depending upon the financial condition of City
National, the payment of dividends could be deemed to constitute such an unsafe
or unsound practice. The Federal Reserve Board and the OCC have
indicated their view that it generally would be an unsafe and unsound practice
to pay dividends except out of current operating earnings. The
Federal Reserve Board has stated that, as a matter of prudent banking, a bank or
bank holding company should not maintain its existing rate of cash dividends on
common stock unless (1) the organization’s net income available to common
shareholders over the past year has been sufficient to fund fully the dividends
and (2) the prospective rate of earnings retention appears consistent with the
organization’s capital needs, asset quality, and overall financial condition.
Moreover, the Federal Reserve Board has indicated that bank holding companies
should serve as a source of managerial and financial strength to their
subsidiary banks. Accordingly, the Federal Reserve Board has stated that a bank
holding company should not maintain a level of cash dividends to its
shareholders that places undue pressure on the capital of bank subsidiaries, or
that can be funded only through additional borrowings or other arrangements that
may undermine the bank holding company’s ability to serve as a source of
strength.
During
2006 and 2007 combined, City National received regulatory approval to pay $146.4
million of cash dividends to the Parent Company, while generating net profits of
$104.4 million. Therefore, City National will be required to obtain
regulatory approval prior to declaring any cash dividends to the Parent Company
during 2007. Although regulatory authorities have approved prior cash
dividends, there can be no assurance that future dividend requests will be
approved.
During
2007, the Company used cash obtained from these dividends primarily to: (1) pay
common dividends to shareholders, (2) remit interest payments on the Company’s
junior subordinated debentures, and (3) fund repurchases of the Company’s common
shares. Management believes that the Company’s available cash balance, together
with cash dividends from City National, is adequate to satisfy its funding and
cash needs in 2008.
Governmental
Policies
The
Federal Reserve Board regulates money and credit and interest rates in order to
influence general economic conditions. These policies have a significant
influence on overall growth and distribution of bank loans, investments and
deposits and affect interest rates charged on loans or paid for time and savings
deposits. Federal Reserve monetary policies have had a significant effect on the
operating results of commercial banks in the past and are expected to continue
to do so in the future.
Various
other legislative and regulatory initiatives, including proposals to overhaul
the banking regulatory system and to limit the investments that a depository
institution may make with insured funds, are from time to time introduced in
Congress and state legislatures, as well as regulatory agencies. The
Company cannot determine the ultimate effect that such potential legislation, if
enacted, would have upon its financial condition or operations.
Executive
Officers of the Registrant
At
December 31, 2007, the executive officers of the Company were as
follows:
|
Name
|
Age
|
Business
Experience
|
|
Charles
R. Hageboeck
|
45
|
President
and Chief Executive Officer, City Holding Company and City National Bank,
Charleston, WV since February 1, 2005. Executive Vice President
and Chief Financial Officer, City Holding Company and City National Bank,
Charleston, WV from June 2001 – January 31, 2005.
|
|
Craig
G. Stilwell
|
52
|
Executive
Vice President of Retail Banking, City Holding Company and City National
Bank, Charleston, WV since February 2005. Executive Vice
President of Marketing & Human Resources, City Holding Company and
City National Bank, Charleston, WV from May 2001 – February
2005.
|
|
John
A. DeRito
|
58
|
Executive
Vice President of Commercial Banking, City Holding Company and City
National Bank, Charleston, WV since June 25, 2004. Regional Credit Officer
for the West Virginia Central Region of BB&T, Charleston, WV from
November 2000 – June 2004. Senior Vice President and Credit
Officer, One Valley Bank, Charleston, WV from November 1983 – November
2000.
|
|
John
W. Alderman, III
|
43
|
Senior
Vice President and Chief Legal Counsel, City Holding Company and City
National Bank since April 1997.
|
|
David
L. Bumgarner
|
42
|
Senior
Vice President and Chief Financial Officer, City Holding Company and City
National Bank since February 2005. Audit Senior Manager, Arnett
& Foster, PLLC from August 2000 – January
2005.
|
Employees
The
Company had 811 full-time equivalent employees at December 31,
2007.
Available
Information
The
Company’s Internet website address is www.cityholding.com. The
Company makes available free of charge through its website its annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably
practicable after such documents are electronically filed with, or furnished to,
the Securities and Exchange Commission. The information on the Company’s website
is not, and shall not be deemed to be, a part of this report or incorporated
into any other filing with the Securities and Exchange Commission. Copies of the
Company’s annual report will be made available, free of charge, upon written
request.
Statistical
Information
The
information noted below is provided pursuant to Guide 3 -- Statistical
Disclosure by Bank Holding Companies. Page references are to the Annual Report
to Shareholders for the year ended December 31, 2007 and such pages have been
filed as an exhibit to this Form 10-K and are incorporated herein by
reference.
|
Description of
Information
|
Page
Reference
|
|||
|
1.
|
Distribution
of Assets, Liabilities and Stockholders'
|
|||
|
Equity;
Interest Rates and Interest Differential
|
||||
|
a.
|
Average
Balance Sheets
|
5
|
||
|
b.
|
Analysis
of Net Interest Earnings
|
6-7
|
||
|
c.
|
Rate
Volume Analysis of Changes in
Interest
Income and Expense
|
8
|
||
|
2.
|
Investment
Portfolio
|
|||
|
a.
|
Book
Value of Investments
|
13
|
||
|
b.
|
Maturity
Schedule of Investments
|
13
|
||
|
c.
|
Securities
of Issuers Exceeding 10% of
Stockholders’
Equity
|
13
|
||
|
3.
|
Loan
Portfolio
|
|||
|
a.
|
Types
of Loans
|
14
|
||
|
b.
|
Maturities
and Sensitivity to Changes in Interest Rates
|
14
|
||
|
c.
|
Risk
Elements
|
17
|
||
|
d.
|
Other
Interest Bearing Assets
|
N/A
|
||
|
4.
|
Summary
of Loan Loss Experience
|
16
|
||
|
5.
|
Deposits
|
|||
|
a.
|
Breakdown
of Deposits by Categories, Average Balance
And
Average Rate Paid
|
5
|
||
|
b.
|
Maturity
Schedule of Time Certificates of Deposit
and
Other Time Deposits of $100,000 or More
|
19
|
||
|
6.
|
Return
on Equity and Assets
|
3
|
||
|
7.
|
Short-term
Borrowings
|
19
|
||
|
Risk
Factors
|
An
investment in the Company’s common stock is subject to risks inherent to the
Company’s business. The material risks and uncertainties that management
believes affect the Company are described below. The risks and uncertainties
described below are not the only ones facing the Company. Additional risks and
uncertainties that management is not aware of or focused on or that management
currently deems immaterial may also impair the Company’s business
operations. You should carefully consider the risks described below,
as well as the other information included or incorporated by reference in this
Annual Report on Form 10-K, before making an investment in the Company’s common
stock. If any of the following risks occur, the Company’s financial
condition and results of operations could be materially and adversely affected,
and you could lose all or part of your investment.
The
Value of the Company’s Common Stock May Fluctuate
The
market for the Company’s common stock may experience significant price and
volume fluctuations in response to a number of factors including actual or
anticipated quarterly variations in operating results, changes in expectations
of future financial performance, changes in estimates by securities analysts,
governmental regulatory action, banking industry reform measures, customer
relationship developments and other factors, many of which will be beyond the
Company’s control.
Furthermore,
the stock market in general, and the market for financial institutions in
particular, have experienced extreme volatility that often has been unrelated to
the operating performance of particular companies. These broad market and
industry fluctuations may adversely affect the trading price of the Company’s
common stock, regardless of actual operating performance.
The
Trading Volume In The Company’s Common Stock Is Less Than That Of Other Larger
Financial Services Companies
Although
the Company’s common stock is listed for trading on the Nasdaq Stock Market,
Inc. (NASDAQ), the trading volume in its common stock is less than that of other
larger financial services companies. A public trading market having the desired
characteristics of depth, liquidity and orderliness depends on the presence in
the marketplace of willing buyers and sellers of the Company’s common stock at
any given time. This presence depends on the individual decisions of investors
and general economic and market conditions over which the Company has no
control. Given the lower trading volume of the Company’s common stock,
significant sales of the Company’s common stock, or the expectation of these
sales, could cause the Company’s stock price to fall.
Future
Sales of Shares of the Company’s Common Stock Could Negatively Affect its Market
Price
Future
sales of substantial amounts of the Company’s common stock, or the perception
that such sales could occur, could adversely affect the market price of the
Company’s common stock in the open market. We make no prediction as to the
effect, if any, that future sales of shares, or the availability of shares for
future sale, will have on the market price of the Company’s common
stock.
Shares
of the Company’s Common Stock Are Not FDIC Insured
Neither
the Federal Deposit Insurance Corporation nor any other governmental agency
insures the shares of the Company’s common stock. Therefore, the value of your
shares in the Company will be based on their market value and may
decline.
Anti-takeover
Defenses May Delay or Prevent Future Mergers
The
Company has entered into a Rights Agreement with SunTrust, as its rights agent,
designed to discourage the accumulation of shares in excess of 15% of the
Company’s outstanding shares. This agreement could limit the price that some
investors might be willing to pay in the future for shares of the Company’s
common stock and may have the effect of delaying or preventing a change in
control.
The
Company’s Ability To Pay Dividends Is Limited
Holders
of shares of the Company’s common stock are entitled to dividends if, and when,
they are declared by the Company’s Board of Directors out of funds legally
available for that purpose. Although the Board of Directors has declared cash
dividends in the past, the current ability to pay dividends is largely dependent
upon the receipt of dividends from the City National. Federal and state laws
impose restrictions on the ability of the City National to pay dividends.
Additional restrictions are placed upon the Company by the policies of federal
regulators, including the Federal Reserve Board’s November 14, 1985 policy
statement, which provides that bank holding companies should pay dividends only
out of the past year’s net income, and then only if their prospective rate of
earnings retention appears consistent with their capital needs, asset quality,
and overall financial condition. In general, future dividend policy is subject
to the discretion of the Board of Directors and will depend upon a number of
factors, including the Company’s and City National’s future earnings, capital
requirements, regulatory constraints and financial condition.
An
Economic Slowdown in West Virginia, Kentucky, and Ohio Could Hurt Our
Business
Because
the Company focuses its business in West Virginia, Kentucky, and Ohio, an
economic slowdown in these states could hurt our business. An economic slowdown
could have the following consequences:
|
·
|
Loan
delinquencies may increase;
|
|
·
|
Problem
assets and foreclosures may
increase;
|
|
·
|
Demand
for the products and services of City National may decline;
and
|
|
·
|
Collateral
(including real estate) for loans made by City National may decline in
value, in turn reducing customers’ borrowing power, and making existing
loans less secure.
|
The
Company and City National are Extensively Regulated
The
operations of the Company and City National are subject to extensive regulation
by federal, state and local governmental authorities and are subject to various
laws and judicial and administrative decisions imposing requirements and
restrictions on them. Policies adopted or required by these governmental
authorities can affect the Company’s business operations and the availability,
growth and distribution of the Company’s investments, borrowings and deposits.
In addition, the Office of the Comptroller of the Currency periodically conducts
examinations of the Company and City National and may impose various
requirements or sanctions.
Proposals
to change the laws governing financial institutions are frequently raised in
Congress and before bank regulatory authorities. Changes in applicable laws or
policies could materially affect the Company’s business, and the likelihood of
any major changes in the future and their effects are impossible to determine.
Moreover, it is impossible to predict the ultimate form any proposed legislation
might take or how it might affect the Company.
The
Company is Subject to Interest Rate Risk
The
Company’s earnings and cash flows are largely dependent upon its net interest
income. Net interest income is the difference between interest income earned on
interest-earning assets such as loans and securities and interest expense paid
on interest-bearing liabilities such as deposits and borrowed funds. Interest
rates are highly sensitive to many factors that are beyond the Company’s
control, including general economic conditions and policies of various
governmental and regulatory agencies and, in particular, the Board of Governors
of the Federal Reserve System. Changes in monetary policy, including changes in
interest rates, could influence not only the interest the Company receives on
loans and securities and the amount of interest it pays on deposits and
borrowings, but such changes could also affect (i) the Company’s ability to
originate loans and obtain deposits, (ii) the fair value of the Company’s
financial assets and liabilities, and (iii) the average duration of the
Company’s mortgage-backed securities portfolio. If the interest rates paid on
deposits and other borrowings increase at a faster rate than the interest rates
received on loans and other investments, the Company’s net interest income, and
therefore earnings, could be adversely affected. Earnings could also be
adversely affected if the interest rates received on loans and other investments
fall more quickly than the interest rates paid on deposits and other
borrowings.
Although
management believes it has implemented effective asset and liability management
strategies, including the use of derivatives as hedging instruments, to reduce
the potential effects of changes in interest rates on the Company’s results of
operations, any substantial, unexpected, prolonged change in market interest
rates could have a material adverse effect on the Company’s financial condition
and results of operations. See the section captioned “Risk Management” in
Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations located elsewhere in this report for further discussion
related to the Company’s management of interest rate risk.
The
Company’s Allowance for Loan Losses May Not Be Sufficient
The
Company maintains an allowance for loan losses, which is a reserve established
through a provision for loan losses charged to expense that represents
management’s best estimate of probable losses in the existing portfolio of
loans. The allowance, in the judgment of management, is necessary to provide for
estimated loan losses and risks inherent in the loan portfolio. The level of the
allowance reflects management’s continuing evaluation of industry
concentrations; specific credit risks; loan loss experience; current loan
portfolio quality; present economic, political and regulatory conditions and
unidentified losses inherent in the current loan portfolio. The determination of
the appropriate level of the allowance for loan losses inherently involves a
high degree of subjectivity and requires the Company to make significant
estimates of current credit risks and future trends, all of which may undergo
material changes. Changes in economic conditions affecting borrowers, new
information regarding existing loans, identification of additional problem loans
and other factors, both within and outside of the Company’s control, may require
an increase in the allowance for loan losses. In addition, bank regulatory
agencies periodically review the Company’s allowance for loan losses and may
require an increase in the provision for loan losses or the recognition of
further loan charge-offs, based on judgments different than those of management.
In addition, if charge-offs in future periods exceed the allowance for loan
losses, the Company will need additional provisions to increase the allowance
for loan losses. Any increases in the allowance for loan losses will result in a
decrease in net income and, possibly, capital, and may have a material adverse
effect on the Company’s financial condition and results of
operations.
Management
evaluates the adequacy of the allowance for loan losses at least quarterly,
which includes testing certain individual loans as well as collective pools of
loans for impairment. This evaluation includes an assessment of actual loss
experience within each category of the portfolio, individual commercial and
commercial real estate loans that exhibit credit weakness; current economic
events, including employment statistics, trends in bankruptcy filings, and other
pertinent factors; industry or geographic concentrations, and regulatory
guidance. See the section captioned “Allowance and Provision for Loan
Losses” in Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations located elsewhere in this report for further
discussion related to the Company’s process for determining the appropriate
level of the allowance for loan losses.
Customers
May Default On the Repayment Of Loans
City
National’s customers may default on the repayment of loans, which may negatively
impact the Company’s earnings due to loss of principal and interest income.
Increased operating expenses may result from the allocation of management time
and resources to the collection and work-out of the loan. Collection efforts may
or may not be successful causing the Company to write off the loan or repossess
the collateral securing the loan, which may or may not exceed the balance of the
loan.
Previously
Securitized Loans May Become Impaired
City
National’s previously securitized loans may become impaired, requiring an
impairment charge to be recognized through the Company’s provision for loan
losses. The Company accounts for the previously securitized loans by
accreting into income the discount on these loans based on their estimated
collectibility. This requires the Company to make estimates for
prepayments and defaults on previously securitized loans. Should any
of the actual prepayments or defaults adversely impact collectibility of these
loans, the Company would be required to take an impairment charge on the
previously securitized loans. See the section captioned “Previously
Securitized Loans” in Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations located elsewhere in this report
for further discussion related to the Company’s process for determining the
appropriate valuation of the Company’s previously securitized
loans.
Due
To Increased Competition, the Company May Not Be Able To Attract and Retain
Banking Customers At Current Levels
The
Company faces competition from the following:
|
·
|
local,
regional and national banks;
|
|
·
|
savings
and loans;
|
|
·
|
internet
banks;
|
|
·
|
credit
unions;
|
|
·
|
finance
companies; and
|
|
·
|
brokerage
firms serving the Company’s market
areas.
|
In
particular, City National’s competitors include several major national financial
and banking companies whose greater resources may afford them a marketplace
advantage by enabling them to maintain numerous banking locations and mount
extensive promotional and advertising campaigns. Additionally, banks and other
financial institutions may have products and services not offered by the
Company, which may cause current and potential customers to choose those
institutions. Areas of competition include interest rates for loans and
deposits, efforts to obtain deposits and range and quality of services provided.
If the Company is unable to attract new and retain current customers, loan and
deposit growth could decrease causing the Company’s results of operations and
financial condition to be negatively impacted.
The
Company May Be Required To Write Down Goodwill And Other Intangible Assets,
Causing Its Financial Condition And Results To Be Negatively
Affected
When the
Company acquires a business, a portion of the purchase price of the acquisition
is allocated to goodwill and other identifiable intangible assets. The excess of
the purchase price over the fair value of the net identifiable tangible and
intangible assets acquired determines the amount of the purchase price that is
allocated to goodwill acquired. At December 31, 2007, the Company’s goodwill and
other identifiable intangible assets were approximately $58.2 million. Under
current accounting standards, if the Company determines goodwill or intangible
assets are impaired, it would be required to write down the value of these
assets. The Company conducts an annual review to determine whether goodwill and
other identifiable intangible assets are impaired. The Company recently
completed such an impairment analysis and concluded that no impairment charge
was necessary for the year ended December 31, 2007. The Company cannot provide
assurance whether it will be required to take an impairment charge in the
future. Any impairment charge would have a negative effect on its shareholders’
equity and financial results and may cause a decline in our stock
price.
Acquisition
Opportunities May Present Challenges
The
Company continually evaluates opportunities to acquire other businesses.
However, the Company may not have the opportunity to make suitable acquisitions
on favorable terms in the future, which could negatively impact the growth of
its business. The Company expects that other banking and financial companies,
many of which have significantly greater resources, will compete with it to
acquire compatible businesses. This competition could increase prices for
acquisitions that the Company would likely pursue, and its competitors may have
greater resources than it does. Also, acquisitions of regulated businesses such
as banks are subject to various regulatory approvals. If the Company fails to
receive the appropriate regulatory approvals, it will not be able to consummate
an acquisition that it believes is in its best interests.
Any
future acquisitions may result in unforeseen difficulties, which could require
significant time and attention from our management that would otherwise be
directed at developing our existing business. In addition, we could discover
undisclosed liabilities resulting from any acquisitions for which we may become
responsible. Further, the benefits that we anticipate from these acquisitions
may not develop.
The
Company’s Controls and Procedures May Fail or Be Circumvented
Management
regularly reviews and updates the Company’s internal controls, disclosure
controls and procedures, and corporate governance policies and procedures. Any
system of controls, no matter how well designed and operated, is based in part
on certain assumptions and can provide only reasonable, not absolute, assurances
that the objectives of the system are met. Any failure or circumvention of the
Company’s controls and procedures or failure to comply with regulations related
to controls and procedures could have a material adverse effect on the Company’s
business, results of operations and financial condition.
Visa
Inc.’s Initial Public Offering Is Not Completed Successfully
Visa Inc.
(“Visa”) filed a registration statement with the Securities and Exchange
Commission in November 2007 to sell its common stock in an initial public
offering. If Visa’s offering is successfully completed, management anticipates
that the Company, as a selling stockholder, will receive proceeds from the
offering. However, there is no assurance that Visa will be able to complete an
initial public offering on the terms currently contemplated by its registration
statement or at all. If the number of shares or the price per share of Visa’s
offering is less than Visa currently anticipates selling or if the Visa offering
is not completed, the Company may not realize proceeds sufficient to cover the
indemnity liabilities accrued in 2007 in respect of Visa litigation
matters.
The
Company May Not Be Able To Attract and Retain Skilled People
The
Company’s success depends, in large part, on its ability to attract and retain
key people. Competition for the best people in most activities engaged in by the
Company can be intense and the Company may not be able to hire people or to
retain them. The unexpected loss of services of one or more of the Company’s key
personnel could have a material adverse impact on the Company’s business because
of their skills, knowledge of the Company’s market, years of industry experience
and the difficulty of promptly finding qualified replacement
personnel.
|
Unresolved Staff
Comments
|
None
|
Properties
|
City
National owns the Company’s executive offices, located at 25 Gatewater Road,
Charleston, West Virginia. City National operates 69 branch offices, with 58
offices in West Virginia, nine in Kentucky, and two offices in Ohio. The West
Virginia locations are primarily centered in the Charleston, Huntington,
Beckley, and Martinsburg markets. City National owns 50 locations and leases 19
locations, pursuant to operating leases. All of the properties are
suitable and adequate for their current operations and are generally being fully
utilized.
City
National also owns a thirty thousand square foot office building in an
unincorporated area approximately fifteen miles west of Charleston, West
Virginia. This facility formerly housed loan operations personnel, but has since
been vacated by the Company. The building is currently being leased to a third
party.
|
Legal
Proceedings
|
The
Company is engaged in various legal actions that it deems to be in the ordinary
course of business. As these legal actions are resolved, the Company could
realize positive and/or negative impact to its financial performance in the
period in which these legal actions are ultimately decided. There can be no
assurance that current actions will have immaterial results, either positive or
negative, or that no material actions may be presented in the
future.
|
Submission of Matters
to a Vote of Security
Holders
|
None
|
Market for
Registrant's Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity
Securities
|
Common
Stock Market and Dividends
The
Company’s common stock trades on the NASDAQ stock market under the symbol CHCO.
This table 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. At December 31, 2007, there were 3,148 shareholders of
record.
|
Cash
|
||||||||||||
|
Dividends
|
Market
Value
|
|||||||||||
|
Per
Share
|
Low
|
High
|
||||||||||
|
2007
|
||||||||||||
|
Fourth
Quarter
|
$ | 0.31 | $ | 33.41 | $ | 39.15 | ||||||
|
Third
Quarter
|
0.31 | 31.16 | 39.59 | |||||||||
|
Second
Quarter
|
0.31 | 37.67 | 40.93 | |||||||||
|
First
Quarter
|
0.31 | 38.04 | 41.54 | |||||||||
|
2006
|
||||||||||||
|
Fourth
Quarter
|
$ | 0.28 | $ | 37.49 | $ | 41.87 | ||||||
|
Third
Quarter
|
0.28 | 35.42 | 40.19 | |||||||||
|
Second
Quarter
|
0.28 | 34.53 | 37.31 | |||||||||
|
First
Quarter
|
0.28 | 35.26 | 37.64 | |||||||||
As noted
in the section captioned Dividends and Other Payments included in Item 1.
Business, the section captioned Liquidity included in Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations and in
Note Eighteen of Notes to Consolidated Financial Statements, the Company’s
ability to pay dividends to its shareholders is dependent upon the ability of
City National to pay dividends to City Holding (“Parent Company”).
Stock
Repurchase Plan
The
following table sets forth information regarding the Company's common stock
repurchases transacted during the quarter:
|
Period
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
per
Share
|
Total
Number
of
Shares
Purchased
as
Part of Publicly
Announced
Plans
or
Programs (a)
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|
||||||
|
October
1 – October 31, 2007
|
42,609
|
$
|
36.39
|
42,609
|
799,991
|
|||||
|
November
1 – November 30, 2007
|
164,200
|
$
|
35.30
|
164,200
|
635,791
|
|||||
|
December
1 - December 31, 2007
|
93,303
|
$
|
34.25
|
93,303
|
542,488
|
|||||
|
(a)
|
In December 2006, the Company
announced that the Board of Directors had authorized the Company to buy
back up to 1,000,000 shares of its common stock, in open market
transactions at prices that are accretive to continuing
shareholders. In August 2007, the Company announced that the Board of
Directors rescinded the share repurchase program approved in December 2006
and announced it had authorized the Company to buy back up to 1,000,000
shares of its common stock, in open market transactions at prices that are
accretive to continuing shareholders. No timetable was placed
on the duration of this share repurchase
program.
|
Stock-Based
Compensation Plan
Information regarding stock-based
compensation awards outstanding and available for future grants as of December
31, 2007, segregated between stock-based compensation plans approved by
shareholders and stock-based compensation plans not approved by shareholders, is
presented in the table below. Additional information regarding
stock-based compensation plans is presented in Note Fourteen Employee Benefit
Plans of Notes to Consolidated Financial Statements.
|
Plan
Category
|
Number
of Shares to be Issued Upon Exercise of Outstanding Awards
(a)
|
Weighted-average
exercise price of outstanding awards
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
|||||||||
|
Plans
approved by shareholders
|
305,909 | $ | 32.05 | 666,900 | ||||||||
|
Plans
not approved by shareholders
|
- | - | - | |||||||||
|
Total
|
305,909 | $ | 32.05 | 666,900 | ||||||||
Stock
Performance
The following graph sets forth the
cumulative total shareholder return (assuming reinvestment of dividends) to the
Company’s shareholders during the five-year period ended December 31, 2007,
as well as an overall stock market index (The Nasdaq Stock Market Index) and the
Company’s Peer Group. The Peer Group consists of certain publicly-traded banking
institutions over $1 billion but less than $8 billion in assets located in West
Virginia and adjoining states. The trading symbols for such financial
institutions include: FCBC, SASR, CTBI, NPBC, UBSH, WSBC, VFGI, HNBC, PRK,
RBCAA, PEBO, STBA, UBSI, FFBC, UVSP, FNB, NBTB, FCF, CBU, and
FPFC. The stock performance shown on the graph below is not
necessarily indicative of future price performance.
This
graph shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, unless the Company specifically incorporates this report by
reference. It will not be otherwise filed under such Acts.
|
Selected Financial
Data
|
Selected
Financial Data on page 1 of the Annual Report to Shareholders of City Holding
Company for the year ended December 31, 2007, included in this report as Exhibit
13, is incorporated herein by reference.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
Management's
Discussion and Analysis of Financial Condition and Results of Operations on
pages 2 through 21 of the Annual Report to Shareholders of City Holding Company
for the year ended December 31, 2007, included in this report as Exhibit 13, is
incorporated herein by reference.
|
Quantitative and
Qualitative Disclosures About Market
Risk
|
Information
appearing under the caption “Risk Management” appearing on pages 10-11 of the
Annual Report to Shareholders of City Holding Company for the year ended
December 31, 2007, included in this report as Exhibit 13, is incorporated herein
by reference.
|
Financial Statements
and Supplementary Data
|
The
consolidated financial statements, notes to consolidated financial statements,
reports of management and the independent registered public accounting firm
included on pages 22 through 51 of the Annual Report to Shareholders of City
Holding Company for the year ended December 31, 2007, included in this report as
Exhibit 13, are incorporated herein by reference.
|
Changes in and
Disagreements With Accountants on Accounting and Financial
Disclosure
|
None
|
Controls and
Procedures
|
Pursuant
to Rule 13a-15b under the Securities Exchange Act of 1934, the Company carried
out an evaluation, with the participation of the Company’s management, including
the Company’s Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the Company’s disclosure controls and procedures (as defined
under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)
as of the end of the period covered by this report. Based upon that evaluation,
the Company’s Chief Executive Officer and Chief Financial Officer concluded that
the Company’s disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required to be
included in the Company’s periodic Securities and Exchange Commission
filings.
|
(a)
|
Management’s
annual report on internal control over financial reporting appears on page
22 of the Annual Report to Shareholders of City Holding Company for the
year ended December 31, 2007, included in this report as Exhibit 13, is
incorporated herein by reference.
|
|
(b)
|
The
Company did not have any changes in internal control over financial
reporting during its fourth quarter for the year ending December 31, 2007,
that materially affected, or were reasonably likely to materially affect,
the Company’s internal control over financial reporting. In
February 2008, the Company converted from Jack Henry’s Banker II core
system to Jack Henry’s SliverLake core system. The core system
is used to process and accumulate data that is ultimately used for
financial reporting. The Company believes that this core system
conversion represents a material change to the Company’s internal control
over financial reporting. There were no other changes in the
Company’s internal control over financial reporting subsequent to December
31, 2007 that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
|
|
Other
Information
|
None
|
Directors, Executive
Officers and Corporate
Governance
|
Certain
information regarding executive officers is included under the section captioned
“Executive Officers of The Registrant” in Part I, Item 1, elsewhere in
this Annual Report on Form 10-K. Other information required by
this Item appears under the captions “ELECTION OF DIRECTORS”, “ADDITIONAL
INFORMATION CONCERNING THE BOARD OF DIRECTORS”, “REPORT OF THE AUDIT COMMITTEE”,
“SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE” in the Company's 2008
Proxy Statement that will be filed within 120 days of fiscal year end and is
hereby incorporated by reference.
The
Company has adopted a Code of Ethics that applies to the Company’s chief
executive officer, chief financial officer, chief accounting officer, and all
directors, officers and employees of the Company and has posted such Code of
Ethics on its website at www.cityholding.com under the “Corporate Governance”
link. A copy of the Company’s Code of Ethics covering all
employees will be mailed without charge upon request to Investor Relations, City
Holding Company, 25 Gatewater Road, P. O. Box 7520, Charleston,
WV 25356-0520. Any amendments to or waivers from any
provision of the Code of Ethics applicable to the Company’s chief executive
officer, chief financial officer, or chief accounting officer will be disclosed
by timely posting such information on the Company’s internet
website.
|
Executive
Compensation
|
The
information required by Item 11 of FORM 10-K appears under the captions
"COMPENSATION OF DIRECTORS", “COMPENSATION DISCUSSION AND ANALYSIS”, “ANNUAL
COMPENSATION”, “EQUITY HOLDINGS”, “POST-EMPLOYMENT PAYMENTS”, and “BOARD
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION” in the Company's 2008
Proxy Statement that will be filed within 120 days of fiscal year end and is
hereby incorporated by reference.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
The
information required by Item 12 of FORM 10-K appears under the caption "COMMON
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the Company's
2008 Proxy Statement that will be filed within 120 days of fiscal year end and
is hereby incorporated by reference.
|
Certain Relationships
and Related Transactions, Director
Independence
|
The
information required by Item 13 of FORM 10-K appears under the caption "CERTAIN
TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS" in the Company's 2008
Proxy Statement that will be filed within 120 days of fiscal year end and is
hereby incorporated by reference.
|
Principal Accounting
Fees and Services
|
The
information required by Item 14 of FORM 10-K appears under the caption
"PRINCIPAL ACCOUNTING FEES AND SERVICES" in the Company's 2008 Proxy Statement
that will be filed within 120 days of fiscal year end and is hereby incorporated
by reference.
|
Exhibits, Financial
Statement Schedules
|
|
(a)
|
(1)
|
Financial Statements. Reference
is made to Part II, Item 8, of this Annual Report on Form
10-K.
|
|
(2)
|
Financial Statement
Schedules. These schedules are omitted as the required
information is inapplicable or the information is presented in the
consolidated financial statements or related notes.
|
|
|
(3)
|
Exhibits. The exhibits listed in
the “Exhibit Index” on pages 24-26 of this Annual Report on Form 10-K
included herein are filed herewith or incorporated by reference from
previous filings.
|
|
|
(b)
|
See
(a) (3) above.
|
|
|
(c)
|
See
(a) (1) and (2) above.
|
|
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
City
Holding Company
|
|
|
(Registrant)
|
|
|
/s/
Charles R. Hageboeck
|
|
|
Charles
R. Hageboeck
|
|
|
President
and Chief Executive Officer
|
|
|
(Principal
Executive Officer)
|
|
|
/s/
David L. Bumgarner
|
|
|
David
L. Bumgarner
|
|
|
Senior
Vice President and Chief Financial Officer
|
|
|
(Principal
Financial Officer)
|
|
POWER
OF ATTORNEY
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated on February 27, 2008. Each of the directors and/or officers
of City Holding Company whose signature appears below hereby appoints Philip L.
McLaughlin, and/or Charles R. Hageboeck, as his attorney-in-fact to sign in his
name and behalf, in any and all capacities stated below and to file with the
Securities and Exchange Commission, any and all amendments to this report on
Form 10-K, making such changes in this report on Form 10-K as appropriate, and
generally to do all such things in their behalf in their capacities as officers
and directors to enable City Holding Company to comply with the provisions of
the Securities Exchange Act of 1934, and all requirements of the Securities and
Exchange Commission.
|
/s/
Philip L. McLaughlin
|
/s/
David W. Hambrick
|
|
|
Philip
L. McLaughlin
|
David
W. Hambrick
|
|
|
Chairman
|
Director
|
|
|
/s/
Charles R. Hageboeck
|
||
|
Samuel
M. Bowling
|
Charles
R. Hageboeck
|
|
|
Director
|
Director,
President, and Chief Executive Officer
|
|
|
/s/
Hugh R. Clonch
|
/s/
Tracy W. Hylton, II
|
|
|
Hugh
R. Clonch
|
Tracy
W. Hylton, II
|
|
|
Director
|
Director
|
|
|
/s/
Oshel B. Craigo
|
/s/
C. Dallas Kayser
|
|
|
Oshel
B. Craigo
|
C.
Dallas Kayser
|
|
|
Director
|
Director
|
|
|
/s/
John R Elliot
|
/s/
James L. Rossi
|
|
|
John
R Elliot
|
James
L. Rossi
|
|
|
Director
|
Director
|
|
|
/s/
William H. File, III
|
/s/
Sharon H. Rowe
|
|
|
William
H. File, III
|
Sharon
H. Rowe
|
|
|
Director
|
Director
|
|
|
/s/
James E. Songer, II
|
||
|
Robert
D. Fisher
|
James
E. Songer, II
|
|
|
Director
|
Director
|
|
|
/s/
Jay C. Goldman
|
/s/
Mary H. Williams
|
|
|
Jay
C. Goldman
|
Mary
H. Williams
|
|
|
Director
|
Director
|
|
EXHIBIT INDEX
The
following exhibits are filed herewith or are incorporated herein by
reference.
Exhibit Description
|
3(a)
|
Articles of Incorporation of
City Holding Company (attached to, and incorporated by reference
from, Amendment No. 1 to City Holding Company’s Registration Statement on
Form S-4, Registration No. 2-86250, filed November 4, 1983 with the
Securities and Exchange
Commission).
|
|
3(b)
|
Articles of Amendment to the
Articles of Incorporation of City Holding Company, dated March 6,
1984 (attached to, and incorporated by reference from, City Holding
Company's Form 8-K Report dated March 7, 1984, and filed with the
Securities and Exchange Commission on March 22,
1984).
|
|
3(c)
|
Articles of Amendment to the
Articles of Incorporation of City Holding Company, dated March 4,
1986 (attached to, and incorporated by reference from, City Holding
Company's Form 10-K Annual Report for the year ended December 31, 1986,
filed March 31, 1987 with the Securities and Exchange
Commission).
|
|
3(d)
|
Articles of Amendment to the
Articles of Incorporation of City Holding Company, dated September
29, 1987 (attached to and incorporated by reference from, City Holding
Company's Registration Statement on Form S-4, Registration No. 33-23295,
filed with the Securities and Exchange Commission on August 3,
1988).
|
|
3(e)
|
Articles of Amendment to the
Articles of Incorporation of City Holding Company, dated May 6,
1991 (attached to, and incorporated by reference from, City Holding
Company's Form 10-K Annual Report for the year ended December 31, 1991,
filed March 17, 1992 with the Securities and Exchange
Commission).
|
|
3(f)
|
Articles of Amendment to the
Articles of Incorporation of City Holding Company, dated May 7,
1991 (attached to, and incorporated by reference from, City Holding
Company's Form 10-K Annual Report for the year ended December 31, 1991,
filed March 17, 1992 with the Securities and Exchange
Commission).
|
|
3(g)
|
Articles of Amendment to the
Articles of Incorporation of City Holding Company, dated August 1,
1994 (attached to, and incorporated by reference from, City Holding
Company's Form 10-Q Quarterly Report for the quarter ended September 30,
1994, filed November 14, 1994 with the Securities and Exchange
Commission).
|
|
3(h)
|
Articles of Amendment to the
Articles of Incorporation of City Holding Company, dated December
9, 1998 (attached to, and incorporated by reference from, City Holding
Company’s Form 10-K Annual Report for the year ended December 31, 1998,
filed March 31, 1999 with the Securities and Exchange
Commission).
|
|
3(i)
|
Articles of Amendment to the
Articles of Incorporation of City Holding Company, dated June 13,
2001 (attached to, and incorporated by reference from, City Holding
Company’s Registration Statement on Form 8-A, filed June 22, 2001 with the
Securities and Exchange
Commission).
|
|
3(j)
|
Articles of Amendment to the
Articles of Incorporation of City Holding Company, dated May 10,
2006 (attached to, and incorporated by reference from, City Holding
Company’s Form 10-Q, Quarterly Report for the quarter ended June 30, 2006,
filed August 9, 2006 with the Securities and Exchange
Commission).
|
|
3(k)
|
Amended and Restated Bylaws of
City Holding Company, revised February 28, 2007 (attached to, and
incorporated by reference from, City Holding Company’s Current Report on
Form 8-K filed March 1, 2007 with the Securities and Exchange
Commission).
|
|
4(a)
|
Rights Agreement, dated
as of June 13, 2001 (the “Rights Agreement”), between City Holding Company
and SunTrust Bank, as Rights Agent (attached to, and incorporated by
reference from, City Holding Company’s Registration Statement on Form 8-A,
filed June 22, 2001 with the Securities and Exchange
Commission).
|
|
4(b)
|
Amendment No. 1 to the Rights
Agreement dated as of November 30, 2005 (attached to, and
incorporated by reference from City Holding Company’s Amendment No. 1 on
Form 8-A, filed December 21, 2005, with the Securities and Exchange
Commission).
|
|
|
10(a)
|
Directors’ Deferred
Compensation Plan for the Directors of the Bank of Raleigh, dated
January 1987 (attached to and incorporated by reference from, City Holding
Company’s Form 10-K Annual Report for the year ended December 31, 2004,
filed March 2, 2005 with the Securities and Exchange
Commission).
|
|
10(b)
|
Form of Deferred Compensation
Agreement for the Directors of the National Bank of Summers, dated
January 15, 1987 (attached to and incorporated by reference
from, City Holding Company’s Form 10-K Annual Report for the year ended
December 31, 2004, filed March 2, 2005 with the Securities and Exchange
Commission).
|
|
10(c)
|
Junior Subordinated
Indenture, dated as of March 31, 1998, between City Holding Company
and The Chase Manhattan Bank, as Trustee (attached to, and incorporated by
reference from, City Holding Company’s Registration Statement on Form S-4,
Registration No. 333-62419, filed with the Securities and Exchange
Commission on August 28, 1998).
|
|
10(d)
|
Form of City Holding Company’s
9.15% Debenture due April 1, 2028 (attached to, and incorporated by
reference from, City Holding Company’s Registration Statement on Form S-4,
Registration No. 333-62419, filed with the Securities and Exchange
Commission on August 28, 1998).
|
|
10(e)
|
City Holding Company’s 1993
Stock Incentive Plan (attached to, and incorporated by reference
from, Exhibit 4.1 to City Holding Company’s Registration Statement on Form
S-8, Registration No. 333-87667, filed with the Securities and Exchange
Commission on September 23, 1999).
|
|
10(f)
|
Amendment No. 1 to City Holding
Company’s 1993 Stock Incentive Plan (attached to, and incorporated
by reference from, Exhibit 4.2 to City Holding Company’s Registration
Statement on Form S-8, Registration No. 333-87667, filed with the
Securities and Exchange Commission on September 23,
1999).
|
|
10(g)
|
Amendment No. 2 to City Holding
Company’s 1993 Stock Incentive Plan (attached to, and incorporated
by reference from, City Holding Company’s Form 10-Q Quarterly Report for
the quarter ended June 30, 2002, filed August 14, 2002 with the Securities
and Exchange Commission).
|
|
10(h)
|
City Holding Company’s 2003
Incentive Plan (attached to, and incorporated by reference from,
City Holding Company’s Definitive Proxy Statement, filed March 21, 2003
with the Securities and Exchange
Commission).
|
|
10(i)
|
Form of Amended and Restated
Employment Agreement, dated as of November 18, 2003, by and between
City Holding Company and Gerald R. Francis (attached to and incorporated
by reference from, City Holding Company’s Form 10-K Annual Report for the
year ended December 31, 2003, filed March 11, 2004 with the Securities and
Exchange Commission).
|
|
10(j)
|
Form of Employment
Agreement, dated as of July 25, 2007, by and between City Holding
Company and Charles R. Hageboeck (attached to, and incorporated by
reference from, City Holding Company’s Current Report on Form 8-K, filed
July 31, 2007 with the Securities and Exchange
Commission).
|
|
10(k)
|
Form of Employment
Agreement, dated as of July 25, 2007, by and between City Holding
Company and Craig G. Stilwell (attached to, and incorporated by reference
from, City Holding Company’s Current Report on Form 8-K, filed July 31,
2007 with the Securities and Exchange
Commission).
|
|
10(l)
|
Form of Employment
Agreement, dated July 25, 2007, by and between City Holding Company
and John W. Alderman, III (attached to, and incorporated by reference
from, City Holding Company’s Current Report on Form 8-K, filed August 1,
2007 with the Securities and Exchange
Commission).
|
|
10(m)
|
Form of Change of Control
Agreement, dated February 1, 2005, by and between City Holding
Company and David L. Bumgarner (attached to and incorporated by reference
from, City Holding Company’s Form 10-K Annual Report for the year ended
December 31, 2004, filed March 2, 2005 with the Securities and Exchange
Commission).
|
|
10(n)
|
Form of Change in Control and
Termination Agreement, dated June 28, 2004, by and between City
Holding Company and John A. DeRito (attached to, and incorporated by
reference from, City Holding Company’s Form 10-K Annual Report for the
year ended December 31, 2005, filed March 7, 2006 with the Securities and
Exchange Commission).
|
|
Portions
of City Holding Company Annual Report to Shareholders for Year Ended
December 31, 2007.
|
|
Subsidiaries
of City Holding Company
|
|
Consent
of Ernst & Young LLP, Independent Registered Public Accounting
Firm
|
24 Power
of Attorney (included on the signature page hereof)
|
Certification
pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by
Charles R. Hageboeck
|
|
Certification
pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by David
L. Bumgarner
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 by Charles R.
Hageboeck
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 by David L.
Bumgarner
|
-26-