City Holding Company · NASDAQ:CHCO
City — 25th Annual KBW Community Bank Investor Conference 2024
41 slides from City's conference presentation, Jul 30, 2024
Slide 1: 25th Annual KBW Community Bank Investor Conference
25th Annual KBW Community Bank Investor Conference July 30-31, 2024 www.bankatcity.com
Slide 2: Forward Looking Statements
This Annual Report on Form 10-K 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 subjec
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 $6.3 BILLION 948 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 March 0.80% 31, 2024. 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD CHCO (adjusted for M&A exp & VISA gain) $1B - $10B
Slide 5: Performance Metrics
2024 YTD 2023 EPS $3.94 $7.61 ROA 1.89% 1.87% ROACTE 22.4% 23.8% PERFORMANCE NIM 3.91% 4.01% METRICS EFFICIENCY 48.9% 46.0% TANG. BOOK VALUE $35.75 $34.69 SHARE PRICE @EOP $106.25 $110.26 NPA’s/LOANS & OREO 0.25% 0.21% PAST DUE LOANS 0.26% 0.27% NCO/LOANS 0.02% 0.01%
Slide 6: Analyst Expectations
2024 ANALYST 2025 ANALYST 2024 YTD ESTIMATES ESTIMATES NET INTEREST $109.1MM $218MM $217.9MM INCOME NIM 3.91% 3.90% 3.79% ANALYST PROVISION $0.3MM $3.5MM $7.0MM EXPECTATIONS NON-INT INCOME 36.9MM $73.3MM $74.2MM NON-INT EXPENSE $72.7MM $144.5MM $149.2MM NET INCOME $58.6MM $113.7MM $106.8MM DILUTED E
Slide 7: Challenges and Opportunities
INDUSTRY CHALLENGES • Deposit repricing and deposit run-off • Asset quality • Loan growth (function of Economy and Liquidity) CHALLENGES • Regulatory environment AND CHCO OPPORTUNITIES • City’s NIM tends to beat peers in high-rate OPPORTUNITIES environments due to deposit franchise • Reputation for
Slide 8: City National Deposit Markets
3rd Branch Share Winchester VA & WV Panhandle $8.7 Billion Major Competitors: TFC, UBSI, WFC 1st Branch Share & 2nd Deposit Share (14%) In Charleston MSA/Huntington MSA; $15.1 Billion CITY NATIONAL Major Competitors: TFC, JPM, HBAN, UBSI 1st Branch Share & 4th Deposit Share (11%) DEPOSIT in Staunton
Slide 9: Deposit Franchise
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 10: Deposit Franchise: Branches
97 BRANCHES Among Top 100 Banks $50MM* DEPOSIT Average Deposits per Branch 2,100 FRANCHISE Average Households per Branch ONE KEY TO CITY’S $9,275** ENVIABLE SUCCESSS Average DDA Balance $42,000 Average Business DDA * For CHCO’s self-defined peer group – average deposits per branch is $103 million. C
Slide 11: Exceptional Retail Strength
Deposits Deposit Branch Household Market Branches ($MM) Share Share Share EXCEPTIONAL Charleston, WV $942 13.2% 13 21.6% 41.6% Huntington, WV $582 13.8% 10 17.9% 30.3% RETAIL Ashland, KY $560 21.7% 12 25.5% 42.0% STRENGTH Beckley, WV $547 24.7% 9 21.3% 45.9% BRANCH DISTRIBUTION Lewisburg, WV $350 27
Slide 12: Market Position: Biggest Markets
MARKET POSITION: BIGGEST MARKETS STRONG DISTRIBUTION, LARGE SHARE, & HIGH PROFITABILITY Deposits Deposit Branch Branch Market Population Branches ($MM) Share Share Rank Charleston/Huntington/ 611,000 $2,155 14% 36 20% 1st Ashland MSA Beckley/Lewisburg WV 162,000 $893 27% 16 27% 1st Winchester/ Marti
Slide 13: 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 14: 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 15: Strong Deposit Franchise: Many Small Accounts
STRONG DEPOSIT FRANCHISE MANY SMALL ACCOUNTS Avg. Avg. # of Avg. $/ # of $ in Account Accounts/ Branch in Accounts Billions Size Branch Millions Checking 248,000 $2.6 $10,800 2,550 $27.3 Accounts Savings 67,300 $1.2 $18,500 700 $12.7 Accounts CDs 29,700 $1.1 $39,800 300 $11.7
Slide 16: 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 16,423 2,849 1.1% * Note: City’s lo
Slide 17: Market Disruptions
St. Albans, WV $120 5,500 $100 5,000 4,914 MARKET $80 4,795 4,821 4,500 DISRUPTIONS $60 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 18: 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 19: Few Uninsured Deposits
End of Period Uninsured By Deposit Type Balance % (in 000's) FEW Noninterest Bearing Demand Deposits $1,383,756 17% UNINSURED Interest Bearing Deposits DEPOSITS Demand Deposits $1,333,169 13% Savings Deposits $1,233,834 12% Time Deposits $1,145,617 16% Total Deposits $4,934,262 14% The percentages l
Slide 20: Customer Experience: Best in Class
CUSTOMER EXPERIENCE: BEST IN CLASS Voted Best in Customer Satisfaction for Consumer Banking in the North Central Region 2018 | 2019 | 2020 | 2022 | 2024
Slide 21: Deposit Costs
CHCO benefits from many small deposit accounts that aren’t rate sensitive 6.00% DEPOSIT 5.00% COSTS 4.00% Interest Bearing Deposits 3.00% Fed Funds 2.00% 1.00% 0.00% 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 3/31/2024 6/30/2024 Qtr Qtr Qtr QTR Qtr Qtr Qtr Qtr Qtr
Slide 22: Banks with the Least Rate Sensitive Deposit Base
Q4’23 Change Q4’23-Q4’21 Change in Noninterest noninterest – Total Loan-to- Bearing Cumulative Deposit Bearing Deposit Assets Deposit Deposits/ Deposit Growth Concentration Company Name Ticker City, State ($B) Ratio (%) Deposits (%) Beta (%) (%) BANKS WITH THE (pps) Westamerica Bancorp WABC San Rafa
Slide 23: 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 24: Significant Variable Priced Assets
$176M SIGNIFICANT VARIABLE Home Equity Loans tied to Prime PRICED ASSETS $1.1B Commercial Loans - Prime HAVE HELPED NIM OUTPERFORM $55M Variable Rate Investments $150M Roughly 25% of assets reprice with Off-Balance Sheet Hedge increases in Fed Funds or SOFR. $76M Cash held at Federal Reserve Commerc
Slide 25: Loan Markets
LOAN MARKETS CHARLOTTE Size of bubbles are representative of City’s loan distribution
Slide 26: Diversified Commercial Loan Portfolio
DIVERSIFIED COMMERCIAL LOAN PORTFOLIO Percent of Key Loan Markets Commercial Portfolio West Virginia & Eastern Kentucky - dating to 1870 41% Virginia/Eastern Panhandle Markets - acquired 2012-2013 14% Lexington, KY - acquired 2015 26% Columbus, OH; Cincinnati, OH; & Pittsburgh, PA 19%
Slide 27: Asset Quality at Historic Highs
NON-PERFORMING ASSETS - 25BP Lowest in 20+ years PAST DUE LOANS - 26BP ASSET Lowest in 20+ years QUALITY OREO - $0.6MM Lowest in 15+ years AT HISTORIC HIGHS NET CONSUMER LOAN CHARGE-OFFS Lowest in 15+ years AVERAGE PROVISION EXPENSE 2005-2023 21BP
Slide 28: 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 CHARGE-OFF $5,000 0.3% $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 29: Commercial Sectors Information
COMMERCIAL SECTORS INFORMATION As of June 30, 2024 Commercial Sector $ (in thousands) % of Commercial Loans Avg DSC Avg LTV Natural Gas Extraction $26,230 1.16% 3.71 N/A Natural Gas Distribution 12,800 0.57% 5.46 N/A Masonry Contractors 49,538 2.19% 1.04 84% Sheet Metal Work Manufacturing 31,444 1.3
Slide 30: Cash Dividends/Share Declared & Dividend Payout Ratio
Cash Dividends/Share Declared & Dividend Payout Ratio $3.00 70% $2.75 60% CAPITAL Cash Dividends/Share Declared $2.50 50% Dividend Payout Ratio $2.25 MANAGEMENT $2.00 40% $1.75 30% 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 2023 Di
Slide 31: 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 32: 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 33: Loans, Deposits & Fee Income Per Share
$350 $4.00 $3.50 LOANS, $300 $3.00 $250 DEPOSITS & $2.50 $200 $2.00 FEE INCOME $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
Slide 34: Financial Performance: Best in Class
FINANCIAL PERFORMANCE: BEST IN CLASS
Slide 35: Forbes America's Best Banks 2024
FINANCIAL PERFORMANCE: Forbes America’s Best Banks 2024
Slide 36: Financial Performance: Best in Class
FINANCIAL PERFORMANCE: BEST IN CLASS Source - S&P Global MI.
Slide 37: 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% 12.4% 12.6% Detractors 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 38: City: Still a Community Bank
CITY: Still a Community Bank and Engaged in our Communities
Slide 39: 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 40: 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 41: CHCO: Represents Value and Stability
2.81% CHCO Dividend Yield REPRESENTS VALUE AND 37% STABILITY Dividend Payout Ratio 8.50% Tangible Capital/Tangible Pricing Metrics* Assets*** • 261% Price to Book 73% • 341% Price to Tangible Book Institutional Ownership • 15.9X Price to Projected Earnings** $7.2 million Average Daily Volume * Based
City Holding Company — 25th Annual KBW Community Bank Investor Conference 2024 on 6ix