SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of
the Securities Act of 1934
For the year ended December 31, 2003
City Holding Company
401(k) Plan and Trust
City Holding Company
25 Gatewater Road
Cross Lanes, West Virginia 25313
401(k) Plan and Trust
Form 11-K
Year ended December 31, 2003
Required Information
The City Holding Company 401(k) Plan and Trust (the Plan) is subject to the Employee Retirement Income Security Act of 1974 (ERISA), as amended. Accordingly, in lieu of the requirements of Items 1-3 of this section, the Plan is filing financial statements and supplemental schedules prepared in accordance with the financial reporting requirements of ERISA. The following financial statements and supplemental schedules, attached hereto, are filed as part of the Annual Report:
| 1 | ||
| 2 | ||
| 3 | ||
| 4-7 | ||
| Schedule H, Line 4i - Schedule of Assets (Held at End of Year) |
8 | |
| Item 9(b) - Exhibits: |
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| Exhibit 23 - Consent of Independent Registered Public Accounting Firm |
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Report of Independent Registered Public Accounting Firm
Board of Directors
City Holding Company
We have audited the accompanying statements of net assets available for benefits of the City Holding Company 401(k) Plan and Trust (the Plan) as of December 31, 2003 and 2002, and the related statement of changes in net assets available for benefits for the year ended December 31, 2003. 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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2003 and 2002, and the changes in its net assets available for benefits for the year ended December 31, 2003, in conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental Schedule of Assets (Held at End of Year) at of December 31, 2003, is presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor’s 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 supplemental schedules have been subjected to the 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
May 24, 2004
1
401(k) Plan and Trust
Statements of Net Assets Available for Benefits
| December 31 | ||||||
| 2003 |
2002 | |||||
| Assets | ||||||
| Cash and cash equivalents |
$ | 33,736 | $ | 68,041 | ||
| Investments at fair value: |
||||||
| Mutual and commingled funds |
9,104,104 | 6,604,949 | ||||
| Common stock of City Holding Company |
18,741,078 | 17,813,013 | ||||
| Participant loans |
842,426 | 483,970 | ||||
| Total assets |
28,721,344 | 24,969,973 | ||||
| Accrued expenses |
5,550 | 4,350 | ||||
| Payable to participants |
4,523 | — | ||||
| Net assets available for benefits |
$ | 28,711,271 | $ | 24,965,623 | ||
See accompanying notes.
2
401(k) Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2003
| Additions | |||
| Investment income: |
|||
| Net appreciation in fair value of investments |
$ | 4,822,295 | |
| Interest and dividends |
520,048 | ||
| 5,342,343 | |||
| Contributions: |
|||
| Contributions from employer |
476,591 | ||
| Contributions from employees |
1,242,665 | ||
| 1,719,256 | |||
| Total additions |
7,061,599 | ||
| Deductions | |||
| Withdrawals and benefit paid directly to participants |
3,296,301 | ||
| Administrative expenses |
19,650 | ||
| Total payments and expenses |
3,315,951 | ||
| Net increase |
3,745,648 | ||
| Net assets available for benefits: |
|||
| Beginning of year |
24,965,623 | ||
| End of year |
$ | 28,711,271 | |
See accompanying notes.
3
401(k) Plan and Trust
Notes to Financial Statements
Year ended December 31, 2003
1. Significant Accounting Policies
Basis of Accounting
The accounting records of the City Holding Company 401(k) Plan and Trust (the Plan) are maintained on the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with U.S. 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.
Cash and Cash Equivalents
Cash equivalents are short-term, highly liquid investments. The market value of cash equivalents approximates cost.
Investments
The Plan determines 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, 2003 and 2002. The participant loans are valued at their outstanding balances, which approximate fair value.
Each participant may designate the percentage of his or her contributions to be invested into any of the investment options, offered by the Plan.
4
City Holding Company
401(k) Plan and Trust
Notes to Financial Statements (continued)
2. Description of Plan
The following description of the Plan provides general only information. Participants should refer to the Summary Plan Description for a complete description of the Plan’s provisions.
General
The Plan is a defined contribution savings plan covering all employees of City Holding Company and its subsidiaries (the Company) who are eligible for participation in the plan the first day of the month subsequent to date of hire or attaining the age of 21. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions
The Company’s contribution consists of a 50% match of the first 6% of each eligible participant’s contribution as directed by the participant’s investment elections. If a participant does not elect investment options, all contributions are invested in the default fund as noted by the Plan.
Participant Accounts
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 $67,000 and $11,000 in 2003 and 2002, respectively, of participant account balances rolled-over from previous employer plans.
Vesting
Participants are immediately vested in all contributions, the employer match, and earnings thereon when they are made to the Plan.
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of equal to the lesser of $50,000 or 50% of their account balance. Loan terms range from 1-5 years or for a reasonable time period if for the purchase of a primary residence. The loans are secured
5
City Holding Company
401(k) Plan and Trust
Notes to Financial Statements (continued)
2. Description of Plan (continued)
by the balance in the participant’s account and bear interest at a reasonable rate. Participant assets are utilized to pay administrative fees associated with processing participant loans. Principal and interest is paid ratably through semi-monthly payroll deductions.
Payment of 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.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the plan subject to the provisions of ERISA.
3. Federal Income Taxes
The Plan has received a determination letter from the Internal Revenue Service dated December 23, 2002, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax-exempt.
4. Related Party Transactions
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.
Effective January 1, 2002, City National Bank of West Virginia, a subsidiary of the Company, became the trustee of the Plan’s assets, whereas the trustee prior to this date was an independent third party.
6
City Holding Company
401(k) Plan and Trust
Notes to Financial Statements (continued)
5. Investments
During 2003, the Plan’s investments (including investments purchased and sold as well as those held during the year) appreciated in fair value as determined by quoted market prices as follows:
| Net Realized and Unrealized Appreciation in Fair Value of Investments | |||
| Common stock |
$ | 3,860,188 | |
| Mutual and commingled funds |
962,107 | ||
| Total |
$ | 4,822,295 | |
The fair values of individual investments that represent 5% or more of the Plan’s net assets are as follows:
| December 31 | ||||||
| 2003 |
2002 | |||||
| * City Holding Company common stock |
$ | 18,741,078 | $ | 17,813,013 | ||
| Federated Capital Preservation Fund |
2,934,247 | 2,279,914 | ||||
| Federated Stock and Bond Fund, Inc. |
1,852,786 | 1,728,041 | ||||
| Federated Capital Appreciation Fund |
1,500,178 | 1,109,454 | ||||
| * | Party-in-interest |
7
401(k) Plan and Trust
Plan: 002 EIN: 550619957
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2003
| Identity of Issue, Borrower, Lessor, or Similar Party |
Description of Investment |
Current Value | |||
| Common stock: |
|||||
| *City Holding Company common stock |
534,543 Shares | $ | 18,741,078 | ||
| Investments in mutual or commingled funds: |
|||||
| Federated Capital Appreciation Fund |
62,848 Units | 1,500,178 | |||
| Federated Capital Preservation Fund |
293,425 Units | 2,934,247 | |||
| Federated Kaufmann Fund |
113,232 Units | 561,631 | |||
| Federated Limited Duration Fund |
71,806 Units | 674,972 | |||
| Federated Max-Cap Index Fund |
14,106 Units | 316,963 | |||
| Federated Stock and Bond Fund, Inc. |
102,647 Units | 1,852,786 | |||
| Federated Stock Trust |
8,517 Units | 291,879 | |||
| Federated Total Return Bond Fund |
20,304 Units | 220,091 | |||
| Alger Growth Fund |
14,332 Units | 161,377 | |||
| Baron Small Cap Fund |
16,980 Units | 315,147 | |||
| Janus Advisor International Growth Fund |
11,324 Units | 274,833 | |||
| 9,104,104 | |||||
| Cash and cash equivalents: |
|||||
| Cash |
12,135 | ||||
| Federated Government Obligation Money Market Fund |
21,601 Units | 21,601 | |||
| 33,736 | |||||
| Participant loans (annual interest rates ranging from 5% to 10% and maturities ranging from January 2004 to December 2008) |
842,426 | ||||
| Total |
$ | 28,721,344 | |||
| * | Party-in-interest |
8
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 |
| 401(k) Plan and Trust |
| /s/ Craig G. Stilwell |
| Craig G. Stilwell |
| Plan Administrator |
June 28, 2004