City Holding Company · NASDAQ:CHCO
City — RBC Capital Markets presentation, May 2010
41 slides from City's conference presentation, May 6, 2010
Slide 1: RBC Capital Markets May 2010
RBC Capital Markets May 2010
Slide 2: Forward-looking statements
This news release contains certain forward-looking statements that are included pursuantto the saje harbor provisions of the Private Securities Litigation Reform Act of 1995. Such information involves risks and uncertainties that could result in the Company's actual results differing from those proj
Slide 3: City Holding at a glance
n n n n n n Total Assets $2.6 bil Branches 67 FTE 815 Market Cap $560 mil Institutional Ownership 62% Average Daily Volume $2.7 mil Date: April 20, 2010
Slide 4: City Holding Company key strengths
n Operates an extremely strong retail/commercial franchise in stable markets with disciplined competition n Strong compared to peers and City’s management has recognized and dealt with issues n Has Consistently outperformed peers with respect to earnings, capital, and liquidity n Growing and succeed
Slide 5: Key Markets
Key Markets 1 st Branch Share & 9% Deposit Share in Huntington WV/Ashland KY MSA $3.8 Billion 1 st Branch Share & 10% Deposit Share in WV’s largest market; $5.3B 1 st & 27% Deposit Share $2.0 Billion 2 nd Branch Share & 8% Deposit Share in Morgan, Berkeley & Jefferson Co. WV $1.9 Billion
Slide 6: Asset Quality: a function of culture and market
• City’s Loans are 60% Retail/40% Commercial • City’s market area tends to be more stable • Real Estate prices in City’s market area have been relatively stable • City’s Past-due loan trends are stable • City’s non-performing asset levels are stronger than peers • City has been aggressive about char
Slide 7: Loan to Deposits vs. peers
Loan to Deposits 82.8% Loan to Deposits 86.5% Sample of 296 publicly traded banks and thrifts with assets between $1-$10 billion as of December 31, 2009 As of December 31, 2009
Slide 8: Retail Loan Facts
• Residential RE are 1,3,5 and 10 Yr ARMs • No Sub-prime, Interest-only, Option Adjustable • Home Equity loans include LOCs, fixed amortizing loans, non-purchase adjustable loans • 65% of Home Equity Loans are 1 st Lien Position • 66% of Home Equity Loans have a LTV < 80%. • Ave Loan Balance for Res
Slide 9: Stable Past-Due Loans (30+ days)
Stable Past-Due Loans (30+ days)
Slide 10: Past-due loans trend chart
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Slide 11: Non-performing Assets
Non-performing Assets: 1.39% of Total Loans (March 31, 2010) All Other Greenbrier Spec Houses Eastern Panhandle 20%
Slide 12: Commercial net charge-offs 2009
Commercial $3.026 MM $1.367MM Net Charge-offs 2009: Net C/O $10.6 MM Provision $ 7.1 MM Net C/O 0.59% of Average Loans
Slide 13: Greenbrier Resort Speculative Properties
Original Loan Balances $ 18.2 MM Current Loan Book Balance net of reserves $ 3.8 MM OREO after Charge-off’s $ 7.8 MM On-Balance Sheet: $ 12.6 MM (64% of orig loan) Greenbrier Resort Speculative Properties - 3/31/10
Slide 14: Investment Portfolio at 12/31/09
Original Cost Other than Temporary Credit Impairment Charges (Cumm) Unrealized Gains/ (Losses) Carrying Value Municipals $ 54.5 $0 $0.7 $55.2 MBS $280.8 $0 $8.9 $289.7 Pool Bank Trust Pfd $ 29.6 ($18.2) ($4.6) $6.8 Single Issue Bank Trust Pfd; Bank Holding Company Pfd; Sub-debt of FI’s $107.0 ($1.6)
Slide 15: Performance: consistently among the strongest
2005 2006 2007 2008 2009 2009 Peers** Median Reported ROA 2.09% 2.11% 2.03% 1.12% 1.63% 0.46% - 95 th %ile ROTE 22.3% 22.4% 21.0% 11.4% 18.0% 6.62% - 95 th %ile Tangible Common Equity/TA 9.5% 10.1% 9.7% 8.83% 9.78% 7.4% - 95 th %ile NIM 4.49% 4.56% 4.34% 4.64% 4.18% 3.76%- 90 th %ile Efficiency Rati
Slide 16: Reported vs. core EPS
Source: SNL (Core Earnings exclude Invest Security Gains/Losses and Non-recurring Income Yet, strong bottom line results continue net of security gains& losses: Reported EPS Core EPS
Slide 17: Normalization of provision and loss of PSL revenues
CHCO faced “normalization” of provision and loss of PSL revenues from 2003-2009:
Slide 18: Previously Securitized Loans
2004 2005 2006 2007 2008 2009 2010 proj Average Balances $83.5 MM $42.9 MM $22.3 MM $10.5 MM $5.2 MM $3.9 MM $1.3 MM Rate 17.4% 26.6% 42.2% 69.1% 108% 128% 219% Gross Interest Revenue $14.5 MM $11.4 MM $9.4 MM $7.3 MM $5.6 MM $3.9 MM $2.9 MM Previously Securitized Loans: Core growth in revenues in 2
Slide 19: Liabilities: low cost and stable deposits
Data: December 31, 2009 Liabilities: Low Cost and stable deposits drives profitability
Slide 20: Cost of Funds Advantage
CHCO Peers Ave Advantage CD’s 3.16% 2.75% (41 Bps) Interest Bearing Deposits 1.95% 1.90% (5 Bps) Total Deposits 1.65% 1.69% 4 Bps Interest Bearing Liabilities 1.87% 2.18% 31 Bps Data: 2009. Peers reflect publicly traded $1 to $10 billion banks reporting these rates CHCO’s Cost of Funds Advantage:
Slide 21: Strong Deposit Franchise drives top decile non-interest revenue
24% 76% 63% * As of December 31, 2009. Non- interest income excludes other than temporary impairment losses and VISA IPO gain Sample of 295 reporting publicly traded banks and thrifts with assets between $1 and $10 billion as of December 31, 2009, excluding investment gains/losses 94th percentile St
Slide 22: Strong Net Interest Margin
Net Interest Margin Strong NIM driven by solid core deposit franchise & strong NIM management
Slide 23: Prime-based Floors
Notional Prime Rate Term Date $100MM 8% June 2011 $100MM 7.75% May 2011 $100MM 6% June 2010 - Purchased $600 million during 2005-2006 - Sold late 2008 - Positions CHCO for rising rates Prime-based Floors:
Slide 24: Quarterly Prime Floor Income
Quarterly Prime Floor Income (After-tax) Gain from sale recognized over remaining lives of hedged LOANS $800, 000 $600,000 $400,000 oo Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11
Slide 25: Interest Rate Risk to Net Interest Margin
CHCO is well positioned with respect to interest rate risk: Immediate Basis Point Change in Interest Rates Estimated Increase or Decrease in Net Income between 1-12 months +300 Bp +12.7% +200 Bp 7.7% +100 Bp 2.1% Data: March 31, 2010 Interest Rate Risk to Net Interest Margin:
Slide 26: Interest Rate Risk Summary
CHCO is less dependent upon NII than its peers t Fee income in top 10% of peer group CHCO’s NIM is strong relative to peers based upon strong core deposit franchise Due to Prime-based floors, CHCO’s NIM is in the top decile within its peer group: t In 1 st Q of 2010, Prime-based floors were worth 26
Slide 27: Growth: positioned for reasonable growth
n Commercial n Retail n Insurance n Trust & Investment Management GROWTH: CHCO is positioned to achieve “reasonable growth”
Slide 28: Major Competitors
Branches Deposits CHCO 67 $ 2.2 B BBT 36 $ 3.3 B JPM 20 $ 1.2 B UBSI 20 $ 1.2 B HBAN 14 $ 0.9 B FITB 10 $ 0.4 B Includes branches within 5 miles of City Branch Source: SNL Major Competitors:
Slide 29: Growth opportunities
n n n . Opportunity: City’s mix is 40% Commercial/60% Retail reflecting City’s historic retail focus. Opportunity: Some competitors have stopped lending. Opportunity: City has launched a successful new cash management initiative to address depository needs of larger business customers
Slide 30: Growth: Expanding Retail Distribution
Growth: Expanding Retail Distribution
Slide 31: Wal-Mart branch openings
City Opened 4 Wal-Marts in key markets where it had significant share:
Slide 32: Branch Renovations/Expansions
Branch Renovations/Expansions to meet customer demand:
Slide 33: Focus: Eastern Panhandle Expansion
A Focus: Eastern Panhandle Expansion
Slide 34: Expansion into Bluefield WV-VA
Expansion into Bluefield WV-VA: Bluefield WV-VA: County Deposits:$1.7 billion Branches: Largest Competitors: BB&T (27%), FCBC (26%)
Slide 35: Newest Location: Hurricane WV
City’s Newest Location: Hurricane WV Putnam Co. WV: County Deposits:$761 MM Branches: Largest Competitors: Putnam Co. Bank (50%) BB&T (10%)
Slide 36: CityInsurance
CityInsurance n 2006 Revenues $2.3 million n 2007 $4.1 million n 2008 $4.2 million n 2009 $5.6 million Strategies: Added Workers Compensation Dept in 2006/7 Added Personal Lines Department in 2006/7 Opened Beckley WV Office in 2006/7 Opened Martinsburg Office in 4 th Q 2008 Opened Ashland Office in
Slide 37: Recent Insurance Acquisitions
Recent Insurance Acquisitions Patton Insurance Dickens & Clark
Slide 38: Trust AUM
Trust AUM: CAGR (04-09) 9.1% Grew AUM in 2008/9 despite market by taking share
Slide 39: Capital Flexibility
- Increased 10% in April 2004 to $0.88 - Increased 14% in April 2005 to $1.00 - Increased 12% in April 2006 to $1.12 - Increased 11% in April 2007 to $1.24 - Increased 10% in April 2008 to $1.36 - - - Purchased 1,784,458 shares in 2007, 2008 and 2009 (10.2% of outstanding shares at 12/31/06); - Driv
Slide 40: Acquisitions
Acquisitions: $100MM to $500MM in assets WV, SE Ohio, Eastern KY, I81 Corridor from VA thru MD, SW Pennsylvania, North Carolina
Slide 41: CHCO represents good value and stability
Pricing Metrics *: n Price to Book: 179% n Price to Tangible Book: 219% n Price to 2010 Projected Earnings** 13.4x n Dividend Yield 3.9% n Div Payout Ratio (First Call)** 51% n Tangible Capital/Tangible Assets 9.81% n Institutional Ownership 62% * Based on Price of $35.39 (4/20/10) ** Based on analy
City Holding — RBC Capital Markets presentation, May 2010 on 6ix