City Holding Company · NASDAQ:CHCO
City — KBW Conference (March 2009)
34 slides from City's conference presentation, Mar 4, 2009
Slide 1: Investor Presentation March 2009
Investor Presentation March 2009
Slide 2: Forward-looking statements
This news release contains certain forward-looking statements that are included pursuant to the safe 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 pro
Slide 3: Company key facts
n n n n n n n Total Assets at Dec 31, 2008 $2.6 bil Net Income in 2008 $28.1 mil Branches 69 FTE 827 Market Cap $432 mil Institutional Ownership 57% Avg Daily Volume $3.1 mil
Slide 4: Key Markets
Key Markets 2 nd & 9% Market Share in Huntington WV/Ashland KY MSA $3.9 Billion 8% Market Share in Morgan, Berkeley & Jefferson Co. WV $1.9 Billion 1 st & 28% Market Share $2.0 Billion 2 nd & 10% Market Share in WV’s largest market; $5.3B
Slide 5: CHCO is consistently among the most profitable
2004 2005 2006 2007 2008 2008 Peers Median Reported ROA 2.10% 2.09% 2.11% 2.03% 1.12% 0.58% - - ROTE 23.2% 22.3% 22.4% 21.0% 11.4% 8.5% - - Tangible Common Equity/TA 9.7% 9.5% 10.1% 9.7% 8.83% 6.4% - - NIM 4.29% 4.49% 4.56% 4.34% 4.64% 3.67%- Efficiency Ratio 48.7% 46.7% 44.5% 45.9% 46.3% 63.1% - -
Slide 6: Normalization of provision and loss of PSL revenues 2003-2008
CHCO faced “normalization” of provision and loss of PSL revenues from 2003-2008:
Slide 7: Strong bottom line results continue net of security gains and losses
Core ROA and Core EPS as reported by SNL Financial Yet, strong bottom line results continue net of security gains & losses: Core ROA Core EPS
Slide 8: Challenges to CHCO's earnings in 2008
After-tax Impact to NI Loss on Preferred Stock of FNMA/FHLMC $12.7 MM Impairment on Pooled Trust Preferred Securities $10.3 MM Increase in Provision Expense in 08 vs. 07 $ 3.0 MM Challenges to CHCO’s earnings in 2008:
Slide 9: Previously Securitized Loans
2004 2005 2006 2007 2008 2009 Projected Average Balances $83.5 MM $42.9 MM $22.3 MM $10.5 MM $5.2 MM $4.0 MM Rate 17.4% 26.6% 42.2% 69.1% 108% 108% Previously Securitized Loans: Core growth in revenues in 2003-2008 offset lower earnings from PSL balances Gross Interest Revenue $14.5 MM $11.4 MM $9.4
Slide 10: 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 of Decrease in between 1-12 months +300 Bp +9.2% +200 Bp 6.3% +100 Bp 3.2% Data: December 31. 2008 Net Income Interest Rate Risk to Net Interest Margin:
Slide 11: Prime-based Floors
$100MM 8% June 2011 $100MM 7.75% May 2011 $50MM 6.75% Nov 2009 $50MM 6.75% Nov 2008 $100MM 6% June 2010 $100MM 6% June 2009 - Purchased 2005-2006 - Sold late 2008 - Positions CHCO for rising rates Notional Prime Rate Term Date Prime-based Floors:
Slide 12: Prime Floor Income (After-tax)
Prime Floor Income (After-tax) $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 S- Mar-09 May-09 | Jul-09 Jan-10 Jul-10 Sep-10 Noy-10 Jan-11 Mar-11 May-11
Slide 13: Interest Rate Risk Summary
CHCO is less dependent upon NII than its peers t Fee income in top 10% of peer group Due to Prime-based floors, CHCO’s NIM is among the best in the industry at these very low interest rates CHCO’s balance sheet is traditionally asset-sensitive due to strong prime- based portfolio supported by core d
Slide 14: Conservative Loan Portfolio Mix
Loan to Deposits 88.8% Loan to Deposits 98.8% Sample of 266 publicly traded banks and thrifts with assets between $1-$10 billion as of December 31, 2007 As of December 31, 2008 Conservative Loan Portfolio Mix
Slide 15: Commercial lending opportunity
. n Opportunity: City’s mix is 40% Commercial/60% Retail reflecting City’s historic retail focus. n Opportunity: Some competitors have stopped lending. n Opportunity: City has launched a successful new cash management initiative to address depository needs of larger business customers
Slide 16: Liabilities: Low Cost and Stable Deposits
Data: December 31, 2008 Liabilities: Low Cost and Stable Deposits
Slide 17: CHCO's Cost of Funds Advantage
CHCO Peers CD’s 3.87% 3.81% Interest Bearing Deposits 2.48% 2.74% Total Deposits 2.08% 2.33% Interest Bearing Liabilities 2.48% 2.90% Top quartile CHCO’s Cost of Funds Advantage: Advantage -6 Bps Bps Bps Bps
Slide 18: Favorable Revenue Profile for the current yield curve environment
Favorable Revenue Profile for the current yield curve environment: 24% 76% 64% * As of December 31, 2008. Non- interest income excludes other than temporary impairment losses and VISA IPO gain Sample of 249 reporting publicly traded banks and thrifts with assets between $1 and $10 billion as of Dece
Slide 19: Retail banking growth in service charges
Success in our Retail Banking unit has led to strong growth in retail branch service charges: 14.8% CAGR 2001 to 2008
Slide 20: $450 $400 $350 $300 $250 $200 $150 2004 2005 2006 2007 2008
$450 $400 $350 $300 $250 $200 $150 2004 2005 2006 2007 2008
Slide 21: City's Insurance Division Strategies
n 2006 Revenues $2.3 million n 2007 $4.1 million n 2008 $4.2 million Added Workers Compensation Dept in 2007 Added Personal Lines Department - goal of $3 million in revenue Opened Beckley WV Office in 2007 Opened Martinsburg Office in 4 th Q 2008 Opened Ashland Office in 4 th Q 2008 Acquired Charles
Slide 22: WV Economy: Relatively Stable Compared to U.S.
. n January 2009 Unemployment Rate West Virginia 6.2% U.S. 7.6% n Housing Price Appreciation - last 12 months from OHFEO West Virginia -.9% (7 th best in U.S) n Foreclosure Rates (June 08) West Virginia 1 of 10,450 U.S. 1 of 501 WV Economy: Relatively Stable Compared to U.S u u u u u
Slide 23: Source: Charleston Gazette & MBA rd Q 2008
Source: Charleston Gazette & MBA 3 rd Q 2008
Slide 24: Net Charge-offs 2008
Net Charge-offs 2008: 85.750 Million 0.33% of Average Loans vs. 0.46% for 20 Regional Peers Overdraft DDA $1.410 MM
Slide 25: 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% —— Pf a v6 a6
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Slide 26: Non-performing Loans
Non-performing Loans: 1.64% of Total Loans vs. 1.62% for 20 Regional Peers 27% 48%
Slide 27: Greenbrier Resort speculative properties
Current Book Balance @ 12/31/08 $17MM Non-Performing @12/31/08 $12MM Provision @ 12/31/08 $3.6MM Greenbrier Resort Speculative Properties - Two Now in OREO
Slide 28: Past-Due Loans (30+ days)
12/31/05 12/31/06 12/31/07 12/31/08 Residential 1.14% 0.76% 0.91% 1.01% Home Equity 0.37% 0.34% 0.63% 0.32% Consumer 2.32% 0.99% 0.86% 0.58% CMRE 0.11% 0.03% 0.26% 0.22% C&I 0.12% 1.47% 0.02% 0.23% Past-due loans trends are stable and reflect better economics in City’s core markets Past-Due Loans (3
Slide 29: Asset Quality Summary
Charge-offs include overdrawn depository accounts CHCO operates in markets where the economy is “stable” ; Real estate prices in CHCO markets have been stable Non-performing Loans comparable to peers Non-Performing Loans are concentrated in two areas: Greenbrier Resort homes and the Eastern Panhandl
Slide 30: Investment Portfolio
Orig. Cost Other than Temporary Impairment Charges (Cumm) Unrealized Gains/ (Losses) Carrying Value % of Original Cost Still Carried Investment Portfolio Treasury $0 Agency Debt $0 Municipals $ 44.8 $0 ($0.5) $44.3 99% MBS $284.6 $0 $3.7 $288.3 101% Pool Bank Trust Pfd $ 29.7 ($16.2) ($10.1) $3.4 11
Slide 31: City is Highly Efficient
City is Highly Efficient 2004 Efficiency Ratio adjusted to eliminate $5.5 million in revenue from Legal Settlement and associated legal expenses of $500M; Peers: Sample of 225 reporting publicly traded banks and thrifts with assets between $1 to $10 Billion as of December 31, 2007 94th percentile
Slide 32: CHCO: Value in the Banking Sector
CHCO 12/31/08 Peer Mean 12/31/08 Equity/Assets 10.9% 8.8% Tang Equity/Tang Assets 8.8% 7.3% Leverage Ratio 9.5% 8.8% Tier I Capital Ratio 12.3% 11.2% Total Risk-based Capital Ratio 13.4% 12.9% Source: SNL for 253 publicly traded banks with total assets from $1 to $10 billion reporting to date - tang
Slide 33: CHCO: 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 1,651,172 shares in 2007 and 2008 (9.4% of outstanding shares at 12/31/06) - Driven by CHCO
Slide 34: Pricing Metrics
Pricing Metrics *: n Price to Book: 153% n Price to Tangible Book: 193% n Price to 2009 Projected Earnings** 9.5x n Dividend Yield 5.0% n Div Payout Ratio (First Call)** 48% n Tangible Capital/Tangible Assets 8.83% n Institutional Ownership 57% * Based on Price of $27.00 (intra-day trade on 2/27/09)