City Holding Company · NASDAQ:CHCO
City — Keefe, Bruyette & Woods Community Bank Investor Conference July 2009
42 slides from City's conference presentation, Jul 28, 2009
Slide 1: Keefe, Bruyette & Woods Community Bank Investor Conference July 2009
Keefe, Bruyette & Woods Community Bank Investor Conference July 2009
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 69 FTE 830 Market Cap $480 mil Institutional Ownership 56% Avg Daily Volume $2.5 mil Date: June 30, 2009
Slide 4: Value in the Banking Sector? Checklist for success
n Strongly capitalized n Solid Distribution Network n Stable Geographic Markets n Disciplined Competition n Strong Net Interest Margin n Strong NIM Management n Strong Fee income n Ability to control expenses n Liquidity to grow n Ability to grow share in market n Opportunity to grow into new market
Slide 5: City Holding Company: markets, performance, asset quality, growth
n Operates an extremely strong retail/commercial franchise in stable markets with disciplined competition n Has Consistently outperformed peers with respect to earnings, capital, and liquidity n strong compared to peers and City’s management has recognized and dealt with issues n Growing and succeed
Slide 6: 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 Key Markets
Slide 7: CHCO is consistently among the most profitable
2005 2006 2007 2008 2008 Peers Median 2009 1 st Half Reported ROA 2.09% 2.11% 2.03% 1.12% 0.58% - - 1.63% ROTE 22.3% 22.4% 21.0% 11.4% 8.5% - - 18.4% Tangible Common Equity/TA 9.5% 10.1% 9.7% 8.83% 6.4% - - 9.11% NIM 4.49% 4.56% 4.34% 4.64% 3.67%- 4.29% Efficiency Ratio 46.7% 44.5% 45.9% 46.3% 63.1%
Slide 8: Low Cost and Stable Deposits
Data: December 31, 2008 Liabilities: Low Cost and Stable Deposits
Slide 9: 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 10: Favorable Revenue Profile for the current yield curve
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 11: Retail banking service charges growth
Success in our Retail Banking unit has led to strong growth in retail branch service charges: 14.8% CAGR 2001 to 2008
Slide 12: Asset Quality
• City’s Loans are 60% Retail/40% Comm’l • 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 charging
Slide 13: 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 14: Past-Due Loans (30+ days)
Past-due loans trends are stable and reflect better economics in City’s core markets 12/05 12/06 12/07 12/08 6/30/09 Residential 1.14% 0.76% 0.91% o.63% 0.84% Home Equity 0.37% 0.34% 0.63% 0.39% 0.51% Consumer 2.32% 0.99% 0.86% 0.84% 0.28% CMRE 0.11% 0.03% 0.26% 0.19% 0.15% C&I 0.12% 1.47% 0.02% 0.2
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Slide 16: Non-performing Loans
Non-performing Loans: 1.76% of Total Loans (June 30, 2009) Greenbrier Spec Houses Eastern Panhandle 24%
Slide 17: Net Charge-offs
Commercial $3.026 MM Net Charge-offs 2009:1 Half $5.1 MM 0.28% of Average Loans
Slide 18: Greenbrier Resort Speculative Properties
Original Loan Balances $ 18.6 MM Current Loan Book Balance $ 7.6 MM OREO $ 6.7 MM Specific Reserve in ALLL ( $ 2.2 MM) On-Balance Sheet: $ 12.1 MM (65% of orig loan) Greenbrier Resort Speculative Properties - 6/30/09
Slide 19: Investment Portfolio
Orig. Cost Other than Temporary Impairment Charges (Cumm) Unrealized Gains/ (Losses) Carrying Value Investment Portfolio at 3/31/09 FNMA & FHLMC Pfd $22.7 ($21.1) ($1.0) $0.6 Municipals $ 49.3 $0 ($0.4) $48.8 MBS $292.8 $0 $6.2 $299.0 Pool Bank Trust Pfd $ 27.1 ($18.3) ($5.4) $3.4 Single Issue Bank
Slide 20: Net Interest Margin
Net Interest Margin Strong NIM driven by solid core deposit franchise & strong NIM management
Slide 21: 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 +11.9% +200 Bp 7.4% +100 Bp 3.0% Data: March 31. 2009 Net Income Interest Rate Risk to Net Interest Margin:
Slide 22: 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 23: Prime Floor Income (After-tax)
Prime Floor Income (A fter-tax) Gain from sale recognized over remaining lives of hedged LOANS $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 Jan-10 Jul-10 Sep-10 Noy-10 Jan-11 Mar-11 May-11
Slide 24: 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 among the best in the industry t In 2 nd Q of 2009, Prime-based floors were worth 47 bp of NIM
Slide 25: 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 $3.6MM Rate 17.4% 26.6% 42.2% 69.1% 108% 120% 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 26: Opportunities
. 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 27: City's Retail Distribution Network
City’s Retail Distribution Network: Expanding to meet our customer’s needs
Slide 28: Wal-Mart branches in key markets
City Opened 4 Wal-Marts in key markets where it had significant share:
Slide 29: Branch Renovations/Expansions
Branch Renovations/Expansions to meet customer demand:
Slide 30: Focus: Eastern Panhandle Expansion
A Focus: Eastern Panhandle Expansion
Slide 31: 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 32: City's 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 33: City's Next Location: South Charleston
City’s Next Location: South Charleston
Slide 34: CityInsurance
CityInsurance n 2006 Revenues $2.3 million n 2007 $4.1 million n 2008 $4.2 million n 2009 YTD $3.3 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
Slide 35: Insurance Acquisition: Patton Insurance
Insurance Acquisition Nitro-based Patton Insurance
Slide 36: Insurance Acquisition: Dickens & Clark
Insurance Acquisition Teays Valley based Dickens & Clark
Slide 37: Trust
Trust AUM: CAGR (04-08) 8% Grew AUM in 2008 despite market by taking share
Slide 38: 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 39: Acquisitions
Acquisitions: $100MM to $500MM in assets WV, SE Ohio, Eastern KY, I81 Corridor from VA thru MD, SW Pennsylvania
Slide 40: Deep, Diverse, and Young Management Team
n CEO PPLS; CHCO CFO,PHD 46 2001 n EVP-Retail PPLS 53 2001 n CFO Public Accounting,CPA 43 2005 n CAO/CIO City National Bank 45 1989 n CCO United Bankshares,CPA 35 1998 n SVP-Branches BB&T 41 2001 n CRO BB&T 52 2001 n SVP Consumer Bank One 42 2001 n SVP Mortgage United Bankshares 57 2004 n SVP Trust
Slide 41: Value in the Banking Sector? Checklist for success
Value in the Banking Sector? Checklist for success in current environment: Capital n Strongly capitalized - Top 10% Markets n Solid Distribution Network - Excellent n Stable Geographic Markets - Yes - - WV & E Kentucky n Disciplined Competition - Yes - see NIM Performance n Strong Net Interest Margi
Slide 42: Pricing Metrics
Pricing Metrics *: n Price to Book: 158% n Price to Tangible Book: 197% n Price to 2009 Projected Earnings** 11.0x n Dividend Yield 4.7% n Div Payout Ratio (First Call)** 52% n Tangible Capital/Tangible Assets 9.11% n Institutional Ownership 56% * Based on Price of $28.83 (7/22/09) ** Based on analy
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