City Holding Company · NASDAQ:CHCO
City — RBC Conference – Martha's Vineyard September 2004
36 slides from City's conference presentation, Sep 28, 2004
Slide 1: RBC Conference – Martha's Vineyard September 2004
RBC Conference – Martha’s Vineyard September 2004
Slide 2: Forward Looking Statements
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 resul
Slide 3: $2.2 Billion Commercial Bank
$2.2 Billion Commercial Bank headquartered in Charleston, WV 56 Banking Offices 150,000 households $535 million market capitalization* *As of 9/21/04
Slide 4: Key Markets
Key Markets 8% Market Share in DC suburbs WV’s fastest growing market 12% Market Share in WV’s 2nd largest market 11% Market Share in WV’s largest market 30% Market Share Ohio West Virginia 25 Gatewater Road Charleston, West Virginia 25313 (304) 769-1106 www.cityholding.com
Slide 5: Why Own This Stock?
Why Own This Stock? 1. CHCO is highly profitable
Slide 6: 2003 Results
2003 Results 24% stock appreciation in 2003 Key performance ratios: ROE (SNL database) 24.5% 21st Best* ROA (SNL database) 2.18% 17th Best* Net Income $43.7 Million EPDS $2.58 *Among publicly-traded US banks
Slide 7: 2004 Results – 1st half
2004 Results – 1st half Key performance ratios: ROE (SNL Database) 24.0% 20th Best ROA (SNL Database) 2.19% 10th Best Net Income $24.3 Million EPDS $1.43 *Among publicly-traded US banks
Slide 8: Sustained High Performance
Sustained High Performance EPS (diluted) ROA ROE $2.58 $1.90 $1.43 2.18% 2.19% 1.59% 24.5% 24.0% 20.5% $-1.54 -1.07% -16.8% 2001 2002 2003 2004 - 1st half 2001 2002 2003 2004 - 1st half 2001 2002 2003 2004 - 1st half
Slide 9: Normalized Profitability
Normalized Profitability 2004 1st half ROA ROE 94th percentile on adjusted basis 1.10% 1.79% 2.19% Peers Adjusted Reported 93rd percentile on adjusted basis 12.84% 19.70% 24.00% Peers Adjusted Reported Adjusted 2004 earnings to reflect 25 basis points of Provision Expense and eliminate $2.8 million
Slide 10: Why Own This Stock?
Why Own This Stock? 1. CHCO is highly profitable 2. CHCO is growing share
Slide 11: Growth in Targeted Lines of Business - Loans
Growth in Targeted Lines of Business - Loans Real Estate Secured Loans up 12.8% between 6/30/03 and 6/30/04 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Commercial Real Est
Slide 12: Growth in Deposits: Totally Free Checking Accounts
Growth in Deposits: Totally Free Checking Accounts 9% CAGR 120000 115000 110000 105000 100000 95000 90000 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04
Slide 13: In addition to dramatic growth in Fees
In addition to dramatic growth in Fees: 29% CAGR 9,000 8,000 7,000 $ (000s) 6,000 5,000 4,000 3,000 2,000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004
Slide 14: Why Own This Stock?
Why Own This Stock? 1. CHCO is highly profitable 2. CHCO is growing share 3. CHCO is well-positioned for the future
Slide 15: Customer Profile: Retail Focused
Customer Profile: Retail Focused $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 $1,397,610 $467,256 $903,198 $447,431 $ Deposits $ Loans Retail Commercial Source: Internal data as of June 30, 2004
Slide 16: Deposits: Low Cost and Stable
Deposits: Low Cost and Stable 3% 1% 9% 14% 19% 10% 2% 25% 6% 3% 8% Equity Non Interest DDA Interest DDA Savings MMS CDs Jumbos Customer Repos FHLB Other Borrowing Trust Preferred
Slide 17: Conservative Loan Portfolio Mix
Conservative Loan Portfolio Mix City Holding Company 28% 5% 34% 4% 28% Residential Real Estate Home Equity Consumer/Other Commercial Real Estate C&I Loan to Deposits 81.5% As of June 30, 2004 Peer Group 14% 26% 45% 5% 10% Residential Real Estate Home Equity Consumer/Other Commercial Real Estate C&I
Slide 18: Real Estate Based Lending Focus
Real Estate Based Lending Focus 90.0% 10.0% Real Estate Secured Loans Other Loans As of June 30, 2004
Slide 19: Favorable Revenue Profile
Favorable Revenue Profile City Holding Company* 32.5% 67.5% Non Interest Income Net Interest Income *As of June 30, 2004. Non-interest income excludes security gains and revenues from legal settlements Peer Group 23.6% 76.4% Non Interest Income Net Interest Income Sample of 185 publicly traded banks
Slide 20: Strong Loan Quality
Strong Loan Quality 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 0.19% 0.46% 0.30% 0.59% Non Performing Assets/Assets Non Performing Loans/Loans CHCO* Peer *As of June 30, 2004 Sample of 185 publicly traded banks and thrifts with assets between $1 and $5 billion
Slide 21: Strong Loan Loss Reserve
Strong Loan Loss Reserve Loan Loss Reserve/Total Loans 1.48% 1.46% 1.44% 1.42% 1.40% 1.38% 1.36% 1.34% 1.32% 1.30% 1.47% 1.36% CHCO Peer *As of June 30, 2004 Loan Loss Reserve/Non Performing Loans 500% 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% 493% 265% CHCO Peer Sample of 185 publicly traded b
Slide 22: City is Highly Efficient
City is Highly Efficient Efficiency Ratio 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 86.9% 62.8% 58.7% 60.7% 52.1% 62.2% 50.4% 59.0% 84th percentile 12/31/01 12/31/02 12/31/03 6/30/04 CHCO Peer 2004 Efficiency Ratio adjusted to eliminate $5.5 million in revenue from Legal Settlement and associated expenses
Slide 23: CHCO is positioned to benefit from rising rates
CHCO is positioned to benefit from rising rates Immediate Basis Point Change in Interest Rates +300 Bp +100 Bp - 50 Bp Estimated Increase or Decrease in Net Income between 1-12 months +11% + 5% - 3% Estimated Increase or Decrease in Net Income between 13-24 months +19% + 8% - 5% As of 6/30/04. Refle
Slide 24: Interest Rate Risk Dynamics
Interest Rate Risk Dynamics $8,000 $7,500 (Monthly) $7,000 $6,500 NII $6,000 $5,500 $5,000 1. Holding interest rates flat with the existing balance sheet (except for previously securitized loans, indirect auto and unsecured consumer loans, net interest income would be flat over two years Jul-04 Oct-
Slide 25: Interest Rate Risk Dynamics
Interest Rate Risk Dynamics $8,000 $7,500 (Monthly) $7,000 $6,500 NII $6,000 $5,500 $5,000 2. But, Reported NII will fall because of declining balances of previously securitized loans carried at high rates of interest 1. Holding interest rates flat with the existing balance sheet (except for previou
Slide 26: Interest Rate Risk Dynamics
Interest Rate Risk Dynamics $8,000 $7,500 (Monthly) $7,000 $6,500 NII $6,000 $5,500 $5,000 3. Unless Either rates rise 200 Bp (as shown here), or balances grow 10% annually 2. But, high reported NII will fall due to these loans if rates remain unchanged and the balance sheet doesn’t grow 1. Holding
Slide 27: Why Own This Stock?
Why Own This Stock? 1. CHCO is highly profitable 2. CHCO is growing share 3. CHCO is well positioned for the future Retail focus Strong core deposit base Strong non-interest income Conservative loan portfolio Loans predominately real estate secured Loan quality is extremely strong Well reserved for
Slide 28: Performance Objectives
Performance Objectives Measure Goals 2003 Results 2004 1st Half Results Earnings Per Share Growth 10% + 35.8% 12.6% ROE 20% 24.5% 24.0% ROA 1.50% 2.18% 2.19% Capital Maintain well-capitalized status Total Risk-based capital of 13.2% Total Risk-based capital of 15.7%
Slide 29: Strategic Opportunities
Strategic Opportunities Results of Retail Delivery System Study: City’s distribution is sub-optimal In WV’s 10 densest markets, City has no presence in 50% In WV’s 60 densest markets, City is in only 33% 5 year Plan to improve distribution Consolidate 10% of distribution network Build 3-5 branches A
Slide 30: Strategic Opportunities
Strategic Opportunities Moving out to restructure the retail network: 2 new Wal-Mart Branches opened Sept 2004 High-density retail areas in Charleston & Huntington Over 40% of the way to profitability after opening 750 new accounts
Slide 31: Strategic Opportunities
Strategic Opportunities Capital Flexibility – Tier II Capital @ 15.7% Dividends – Increased 10% in April 2004 Share Repurchases – have repurchased over 1% of outstanding shares since the 2nd Q Acquisitions are possible
Slide 32: Acquisition Parameters
Acquisition Parameters $100MM to $500MM in assets Markets in or adjacent to CHCO footprint Retail Deposit Franchise Accretive to EPS in first full year
Slide 33: eds) Talon Territory
eds) Talon Territory nso Penervana | “p tisburgh ..
Slide 34: Why Own This Stock
Why Own This Stock Highly Profitable Franchise Strong fee-income Strong asset quality Liquid Core-funded Loans are real-estate and retail Strongly capitalized Moving ahead to re-position the retail franchise And yet, priced lower than peers
Slide 35: CHCO Stock Performance
CHCO Stock Performance CHCO Stock Performance Relative Stock Price Performance Versus Major Indices December 2000—September 2004 650.00 600.00 550.00 500.00 450.00 400.00 350.00 300.00 250.00 200.00 150.00 100.00 50.00 12/31/2000 2/28/2001 4/30/2001 6/30/2001 8/31/2001 10/31/2001 12/31/2001 2/28/200
Slide 36: Questions?
Cityzxzs, Questions?
City Holding — RBC Conference – Martha's Vineyard September 2004 on 6ix