City Holding Company · NASDAQ:CHCO
City — Hovde Group Financial Services Conference 2024
37 slides from City's conference presentation, November 2024
Slide 1: Hovde Group Financial Services Conference
Hovde Group Financial Services Conference November 7th–8th, 2024 www.bankatcity.com
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. Forward looking statements express only management’s beliefs regarding future results or events and are subject to inherent
Slide 3: City Holding Snapshot
CITY HOLDING MARKETS Stable, slow growing, & less competitive CUSTOMERS SNAPSHOT Robust retail customer base ASSET QUALITY Demonstrated strong track record $6.4 BILLION 940 PERFORMANCE Total Assets FTE Long record as a high performer GROWTH Succeeding in slow-growth markets & expanding into new mark
Slide 4: CHCO ROA: A Perennial High-Performing Bank
CHCO A PERENNIAL HIGH-PERFORMING BANK 2.40% 2.20% 2.00% 1.80% ROA 1.60% 1.40% 1.20% 1.00% Source - S&P Global MI. Peer data as of June 30, 0.80% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD 2024. CHCO (adjusted for M&A exp & VISA gain) $1B - $10B
Slide 5: Financial Performance: Best in Class
FINANCIAL PERFORMANCE: BEST IN CLASS
Slide 6: Forbes America's Best Banks 2024
FINANCIAL PERFORMANCE: BEST |N CLASS Forbes America’s Best Banks 2024
Slide 7: Financial Performance: Best in Class (S&P Global)
FINANCIAL PERFORMANCE: BEST IN CLASS S&P Global Source - S&P Global MI.
Slide 8: CHCO Performance Metrics
2024 YTD 2023 EPS $5.96 $7.61 ROA 1.88% 1.87% ROACTE 21.9% 23.8% CHCO NIM 3.90% 4.01% PERFORMANCE EFFICIENCY 48.9% 46.0% TANG. BOOK VALUE $39.49 $34.69 METRICS SHARE PRICE @EOP $117.39 $110.26 NPA’s/LOANS & OREO 0.39% 0.21% PAST DUE LOANS 0.27% 0.27% NCO/LOANS 0.08% 0.01%
Slide 9: Investment Thesis
INVESTMENT THESIS CHCO’s FRANCHISE IS EXCEPTIONAL DUE TO: • Strong NIM driven by extraordinary Deposit Franchise • Proven culture of conservative lending • Shareholder focused capital management • Acquisition philosophy focused on earnings and not asset size • Community banking philosophy focused on
Slide 10: Deposit Costs
CHCO benefits from many small deposit accounts that aren’t rate sensitive Interest Bearing Deposits Fed Funds 6.00% DEPOSIT 5.00% COSTS 4.00% 3.00% 2.00% 1.00% 0.00% 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 3/31/2024 6/30/2024 9/30/2024 Qtr Qtr Qtr QTR Qtr Qtr Qt
Slide 11: Banks with the Least Rate Sensitive Deposit Base
Q4’23 Change Q4’23-Q4’21 Change in Noninterest noninterest – Total Loan-to- Bearing Cumulative Deposit Bearing Deposit Assets Deposit Deposits/ Deposit Growth Concentration Company Name Ticker City, State ($B) Ratio (%) Deposits (%) Beta (%) (%) BANKS WITH THE (pps) Westamerica Bancorp WABC San Rafa
Slide 12: City's NIM
Historically, outperforms in high interest rate environments 4.00% 3.75% CITY’S 3.50% 3.25% NIM 3.00% 2.75% 2.50% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD CHCO excluding PSLs, PPP Fees, & Accretion $1B to $10B Peer
Slide 13: Deposit Franchise
97 BRANCHES Among Top 100 Banks $53MM* DEPOSIT Average Deposits per Branch 2,100 FRANCHISE Average Households per Branch ONE KEY TO CITY’S $9,000** ENVIABLE SUCCESSS Average DDA Balance $43,700 Average Business DDA * For CHCO’s self-defined peer group – average deposits per branch is $103 million. C
Slide 14: Strong Deposit Franchise
STRONG DEPOSIT FRANCHISE MANY SMALL ACCOUNTS Avg. Avg. # of Avg. $/ # of $ in Account Accounts/ Branch in Accounts Billions Size Branch Millions Checking 248,300 $2.7 $10,800 2,560 $27.6 Accounts Savings 67,000 $1.2 $18,200 700 $12.6 Accounts CDs 29,500 $1.2 $40,700 300 $12.4
Slide 15: 2023 Debit Card Revenues
2023 DEBIT CARD REVENUES Assets Debit Card Revenues Summit $4.6 Billion $7 Million City $6.2 Billion $28 Million Stockyard $8.1 Billion $19 Million Peoples $9.2 Billion $25 Million Wesbanco $17.7 Billion $19 Million The Data is clear: CHCO has a deeper customer base relative to its size.
Slide 16: City National Deposit Markets
3rd Branch Share Winchester VA & WV Panhandle $8.8 Billion Major Competitors: TFC, UBSI, WFC 1st Branch Share & 2nd Deposit Share (14%) In Charleston MSA/Huntington MSA; $14.8 Billion CITY NATIONAL Major Competitors: TFC, JPM, HBAN, UBSI 1st Branch Share & 4th Deposit Share (11%) DEPOSIT in Staunton
Slide 17: Deposit Franchise: Mostly in Slow-Growth WV and Eastern KY
MOSTLY IN SLOW-GROWTH WV AND EASTERN KY DEPOSIT Key Deposit Markets Deposits FRANCHISE West Virginia & Eastern Kentucky 72% - dating to 1870 New Markets 28%
Slide 18: Exceptional Retail Strength
Deposits Deposit Branch Household Market Branches ($MM) Share Share Share EXCEPTIONAL Charleston, WV $995 14.8% 13 29.5% 38.1% Huntington, WV $570 13.9% 10 18.5% 30.6% RETAIL Ashland, KY $538 21.2% 12 25.5% 42.1% STRENGTH Beckley, WV $555 21.9% 9 26.5% 36.6% BRANCH DISTRIBUTION Lewisburg, WV $351 35
Slide 19: Market Position: Newer Markets
MARKET POSITION: NEWER MARKETS HIGH POPULATION GROWTH & HIGHER INCOMES Population Median Projected Change Market Population Projected Change Household in HHLD Income 2020-2025 Income 2020-2025 Charleston/Huntington/ 611,000 (2.3)% $46,000 4.5% Ashland MSA Note: Orange highlight indicates Beckley/Lew
Slide 20: Internal DDA Growth
INTERNAL DDA GROWTH New DDA Net Growth in % Increase in Year Accounts DDA Accounts DDA Accounts 2020* 30,360 6,740 3.0% City Household 2021 32,800 8,860 3.8% Growth = 0.7% (2023) 2022 28,442 4,544 1.9% U.S. Population 2023** 31,745 4,768 1.9% Growth: 0.6% 2024 YTD 24,853 4,007 1.6% * Note: City’s lo
Slide 21: Age Distribution of Customer Base (2023)
AGE DISTRIBUTION OF Customer Base (2023) All City Customers New City Customers -2023 20.0% 30.0% 17.8% 18.0% 17.4% 25.0% 24.2% 16.0% 15.1% 14.5% 14.0% 12.5% 20.0% 11.8% 18.0% 12.0% 10.8% 15.6% 10.0% 15.0% 14.3% 14.2% 8.0% 10.0% 8.9% 6.0% 4.0% 4.9% 5.0% 2.0% 0.0% 0.0% <24 25-34 35-44 45-54 55-64 65-7
Slide 22: Customer Experience: Best in Class
CUSTOMER EXPERIENCE: BEST IN CLASS Voted Best in Customer Satisfaction for Consumer Banking in the North Central Region 2018 | 2019 | 2020 | 2022 | 2024
Slide 23: Market Disruptions
St. Albans, WV $120 5,500 $100 5,000 4,914 MARKET $80 4,795 4,821 4,500 $60 DISRUPTIONS Millions 4,262 $112 4,068 $102 $101 4,000 $40 $95 3,898 STRONG GROWTH $20 3,723 $78 3,500 OPPORTUNITIES $59 $70 $0 3,000 2017 2018 2019 2020 2021 2022 2023 City's Branch Deposit City HHLDs In 2017, there were 4 b
Slide 24: Loan Markets
LOAN MARKETS CHARLOTTE Size of bubbles are representative of City’s loan distribution
Slide 25: Diversified Commercial Loan Portfolio
DIVERSIFIED COMMERCIAL LOAN PORTFOLIO Percent of Key Loan Markets Commercial Portfolio West Virginia & Eastern Kentucky - dating to 1870 37% Virginia/Eastern Panhandle Markets - acquired 2012-2013 14% Lexington, KY - acquired 2015 27% Columbus, OH; Cincinnati, OH; & Pittsburgh, PA 22%
Slide 26: Asset Quality
NON-PERFORMING ASSETS - 39BP PAST DUE LOANS - 27BP ASSET Lowest in 20+ years QUALITY OREO - $0.7MM Lowest in 15+ years AT HISTORIC HIGHS NET CONSUMER LOAN CHARGE-OFFS Lowest in 15+ years AVERAGE PROVISION EXPENSE 2005-2023 21BP
Slide 27: Net Charge-Off Details
Average Net Charge-Offs/Year: Commercial $1.6M 42% Retail $1.4M 38% NSF $0.7M 20% Total $3.7 M $8,000 0.5% Average Net Losses/Avg Loans (2012-2023): 12 bps $7,000 NET 0.4% $6,000 0.3% CHARGE-OFF $5,000 $4,000 0.2% DETAILS $3,000 $2,000 0.1% 2012-2024 YTD $1,000 0.0% $0 2012 2013 2014 2015 2016 2017
Slide 28: Loan Growth
Loan Growth Loans Outstanding 4.500 4.250 LOANS 4.000 OUTSTANDING 3.750 Since March 2023 Acquisition 3.500 Loans
Slide 29: Cash Dividends/Share Declared & Dividend Payout Ratio
Cash Dividends/Share Declared & Dividend Payout Ratio $3.25 70% $3.00 60% CAPITAL $2.75 Cash Dividends/Share Declared $2.50 50% Dividend Payout Ratio MANAGEMENT $2.25 40% $2.00 30% $1.75 A LONG-TERM $1.50 20% CORE COMPETENCY $1.25 10% $1.00 $0.75 0% 2024 YTD 2015 2016 2017 2018 2019 2020 2021 2022 2
Slide 30: Share Activity
City’s strong capital and high profitability have allowed aggressive share repurchases 760,033 $70 800,000 666,575 $60 700,000 572,917 600,000 $50 SHARE 500,000 $40 Millions 324,513 400,000 $30 290,491 260,674 ACTIVITY 300,000 $20 178,529 200,000 $10 $90.21 $100.24 100,000 $63.68 $77.20 $81.50 $69.7
Slide 31: Repurchases More Than Offset Shares Issued for Acquisitions
REPURCHASES MORE THAN OFFSET SHARES ISSUED FOR ACQUISITIONS SHARE ACTIVITY (IN THOUSANDS OF SHARES) 20,000 19,000 Classic May ‘05 1,580,000 At Mkt Dec ‘16- 18,000 Feb ‘17 - 550,000 Community Jan ‘13 17,000 767,000 Poage Dec ‘18 1,142,000 CCVS Mar ‘23 16,000 VSB May ‘12 667,000 240,000 15,000 14,000
Slide 32: Loans, Deposits & Fee Income Per Share
$350 $4.50 $4.00 $300 LOANS, $250 $3.50 $3.00 DEPOSITS & $200 $2.50 FEE INCOME $2.00 $150 $1.50 ON A PER SHARE BASIS $100 $1.00 2018 2019 2020 2021 2022 2023 2024 YTD Loans (Avg Bal) Deposits (Avg Bal) Fee Income Note: 2024 YTD Fee income annualized
Slide 33: Acquisition Territory
ACQUISITION TERRITORY Small Community Banks will struggle with lower net interest income, asset quality challenges, lack of scale, and limited liquidity for their stock. Underperforming small banks may be interested in joining a stronger partner rather than to continue to perform poorly. City is wel
Slide 34: Acquisition History
2005: CLASSIC BANK, ASHLAND KY Approx. 25% Household Share, adjacent mkt 2012: VIRGINIA SAVINGS BANK, WINCHESTER VA 5 Branches in adjacent mkt; Strong Growth for City 2013: COMMUNITY BANK, STAUNTON VA Solid franchise in adjacent mkts; Was a “Problem Bank” and CHCO had significant financial gains fro
Slide 35: City: Still a Community Bank
CITY: Still a Community Bank and Engaged in our Communities
Slide 36: City's Employee Net Promoter Score: Best in Class
: CITY’S EMPLOYEE NET PROMOTER SCORE: Best In Class DISTRIBUTION OF RESPONSES 50.0% Promoters 45.2% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 14.6% 15.0% 12.6% Detractors 12.4% 10.0% 7.0% 5.0% 3.7% 0.5% 1.2% 2.0% 0.3% 0.3% 0.0% 0 1 2 3 4 5 6 7 8 9 10
Slide 37: CHCO Represents Value and Stability
2.67% CHCO Dividend Yield REPRESENTS VALUE AND 29% STABILITY Dividend Payout Ratio 9.26% Tangible Capital/Tangible Pricing Metrics* Assets*** • 234% Price to Book 72% • 299% Price to Tangible Book Institutional Ownership • 15.3X Price to Projected Earnings** $5.6 million Average Daily Volume * Based
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