City Holding Company · NASDAQ:CHCO
City — Sandler O'Neill + Partners Cincinnati, Columbus, Cleveland March 20-21, 2013
40 slides from City's conference presentation, Mar 20, 2013
Slide 1: Sandler O'Neill + Partners Cincinnati, Columbus, Cleveland March 20-21, 2013
Sandler O’Neill + Partners Cincinnati, Columbus, Cleveland March 20-21, 2013
Slide 2: Forward looking statements
Forward looking statements This presentation 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: City Holding at a glance
Total Assets $3.4 bil Branches 83 FTE 959 Market Cap $568 mil Institutional Ownership 61% Average Daily Volume $1.6 mil Date: March 12, 2013
Slide 4: Legacy West Virginia markets
Legacy West Virginia markets 1st Branch Share & 8% Deposit Share in Huntington WV/Ashland KY MSA $4.4 Billion 1st Branch Share & 10% Deposit Share in WV’s largest market; $6.1 Billion 1st & 29% Deposit Share $2.0 Billion 3rdBranch Share & 9% Deposit Share in Morgan, Berkeley & Jefferson Co. WV $2.1B
Slide 5: Acquisitions in Growth Markets
Acquisitions in Growth Markets
Slide 6: Virginia Savings Bank
Virginia Savings Bank Closed May 31, 2012 5 branches in Virginia $73 million in loans $123 million in deposits 5,700 households Regional population of 185,000 Regional Households of 72,000 Projected Population growth of 5.0% over 5 yrs Our primary competitors in this market are BB&T, United Bank, Ba
Slide 7: Community Bank
Community Bank Closed January 10, 2013 10 branches in Virginia Eight Branches in Staunton, VA region Population of 205,000 Households of 79,000 Competitors: STEL, BBT, STI, BAC, UBSI Two Branches in Virginia Beach Region Population of 1.7 million Households of 625,000 $410 million in loans $380 mill
Slide 8: Market Position
Market Position Note: Grey highlight indicates original market, yellow highlight indicates market expansion as a result of the acquisition of Virginia Savings Bancorp, Inc., and green highlight indicates market expansion as a result of the acquisition of Community Financial Corporation *
Slide 9: Loan Composition and Loan/Deposit Ratio
Loan Composition and Loan/Deposit Ratio
Slide 10: Virginia Savings Bank progress resolving asset quality problems
Virginia Savings Bank Progress resolving asset quality problems Took a $10.05 million Mark-to-Market at acquisition Mark stood at $6.28 million at 2/28/13 Non-performing assets down 40% due to charge-off or workout OREO down 33% due to charge-off or workout Past-due loans down 76% At Feb 28, 2013 th
Slide 11: Challenges
Challenges: Economic Activity Margin Compression Loan Competition Regulatory Compliance Regulatory Agenda Integration & Culture
Slide 12: The key to City's success: an enviable deposit franchise
The key to City’s success: an enviable deposit franchise Branches 83 Average Deposits per Branch $34.2 MM Average Households per Branch 2,200 Average Deposit Share 12.2% Average Household Share* 24% * - Excludes Coastal Region
Slide 13: Low cost and stable funding
Low cost and stable funding: Data: December 31, 2012
Slide 14: Solid core deposits drive strong net interest margin
Solid core deposits drive strong net interest margin: Peer Data as of December 31, 2012 3.96% March 2008 thru June 2011: NIM supported by Interest Rate Floors
Slide 15: CHCO's sensitivity to interest rate risk
CHCO’s sensitivity to interest rate risk which assumes that deposit mix composition changes as rates rise: Immediate Basis Point Change in Interest Rates Estimated Increase or Decrease in Net Income between 1-12 months +400 Bp +4.2% +300 Bp +3.8% +200 Bp 2.5% +100 Bp -0.3% Data: December 31, 2012
Slide 16: Strong deposit franchise drives top decile non-interest revenue
Strong deposit franchise drives top decile non-interest revenue: *As of December 31, 2012. Non-interest income excludes investment gains/(losses) Sample of 279 reporting publicly traded banks and thrifts with assets between $1 and $10 billion as of December 31, 2012, excluding investment gains/(loss
Slide 17: Non-interest income is branch driven
Non-interest income is branch driven: 2007 2008 2009 2010 2011 2012 Electronic Fee Income $7.9 $8.6 $9.0 $9.9 $11.1 $12.4 All Other Service Fee Income $36.5 $37.4 $36.0 $30.1 $27.0 $26.3 Insurance 4.1 4.2 5.6 5.5 5.9 6.1 Investment Management 2.0 2.2 2.3 2.8 3.1 3.8 BOLI 2.5 2.9 3.3 3.4 3.2 3.0
Slide 18: Stable past-due loans (30+ days)
Stable past-due loans (30+ days) Past-due loans trends are stable and reflect better economics in City’s core markets
Slide 19: Charge-off trends
Charge-off trends: Source: FDIC, All Insured Depository Institutions Peer data as of September 30, 2012
Slide 20: Non-performing assets & OREO
Non-performing assets & OREO Source: FDIC, All Insured Depository Institutions Peer data as of September 30, 2012
Slide 21: A High Performing Bank
1. Bank Director ranked City #3 of largest 150 US banks in 2010 2. Bank Director ranked City #8 among US Banks with assets between $1B - $5B in 2011 3. Bank Director named City 10th on the “Nifty Fifty” for best use of capital A High Performing Bank
Slide 22: =~CHCO -= W/OMergerCosts -—S1B-$5B
008 2011 2012 =~CHCO -= W/OMergerCosts -—S1B-$5B Gity trolding Company
Slide 23: =*CHCO -=W/OMerger Costs =$1B-$5B
200: 2010 2011 2012 =*CHCO -=W/OMerger Costs =$1B-$5B Gity trolding Company
Slide 24: Efficiency Ratio
Efficiency Ratio Data as calculated using SNL Financial definition
Slide 25: Noninterest Income/Total Revenues
Noninterest Income/Total Revenues
Slide 26: Growth: positioned to achieve reasonable growth in core franchise
Growth: CHCO is positioned to achieve “reasonable growth” in its core franchise Commercial Retail Insurance Trust & Investment Management
Slide 27: Commercial loan growth
Commercial loan growth: Success achieved due to community bank orientation, strong team, strong underwriting, and strong local economies
Slide 28: North Carolina Loan Production Office
North Carolina Loan Production Office Markets: Charlotte, Winston-Salem, Raleigh, & Norfolk, VA Projects: Apartments 20%, High Tech Office Bldgs 25%, GSA 20%, Grocery and Other Retail Stores 30%; Medical Office Bldgs 5% Loans Outstanding: $87.1 million Debt Service Coverage * 1.65x Loan to Value* 62
Slide 29: Deposit growth opportunity
Deposit growth opportunity: CHCO has many small deposit relationships; peers tend to have larger commercial & public deposits Branches Deposits Deposits/Branch CHCO 83 $ 2.8 B $34 million BBT 80 $ 6.0 B $74 million UBSI 38 $ 1.9 B $51 million JPM 19 $ 1.2 B $66 million HBAN 17 $ 0.9 B $53 million In
Slide 30: Average Deposits and Average Consumer Loans
$18,000,000 @ Average Deposits $16,000,000 $14,000,000 = Average Consumer Loans $12,000,000 $10,000,000 $8,000,000 $6,000,000 j $4,000,000 = $2,000,000 $- Year 1 Year 2 Year 3 Year 4 Year 5 Gity Holding Company
Slide 31: CityInsurance: Growing Revenues
CityInsurance: Growing Revenues Lines of Business 2006 $2.3 million Personal Lines 2007 $4.1 million Workers Compensation 2008 $4.2 million Health/Benefits/Life Ins 2009 $5.6 million Property/Casualty 2010 $5.5 million 2011 $5.9 million 2012 $6.1 million Markets Acquisitions Charleston (3 locations)
Slide 32: Trust AUM: Strong growth
Trust AUM: Strong growth CAGR (Dec 31, 2004-December 31, 2012) over 11.2%
Slide 33: CHCO: Capital flexibility
CHCO: Capital flexibility Tangible common equity at 12/31/12: 9.40% Dividends 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 Increased 3% in January 2012 to $1.40
Slide 34: Tangible Common Equity
Tangible Common Equity: strong following 2 acquisitions in 2012/3
Slide 35: Average Shares Outstanding
Average Shares Outstanding 19,000,000 18,000,000 17,000,000 16,000,000 15,000,000 14,000,000 13,000,000 12,000,000 9 Ly $ S Se S s ss er Ff Ff s * Gity Holding Company
Slide 36: Shares outstanding and shorted at February 28, 2013
At February 28, 2013: 1,965,538 shares shorted 15,650,393 shares outstanding Gity Holding Company
Slide 37: Growth per share
Growth per share (12/31/04 – 12/31/12): Loans per share: 6.4% CAGR Deposits per share: 5.4% CAGR Non-interest inc per share: 2.7% CAGR Expenses per share*: 4.0% CAGR Implication: While CHCO operates in relatively low growth markets, high profitability allows share repurchases, which have driven core
Slide 38: Acquisition philosophy
Acquisition philosophy: Historically less acquisitive than peers Acquisitions must truly be strategic or meaningfully accretive Opportunities have increased Actively looking: In-market Adjacent market Growth markets Size: Generally $100MM to $1B
Slide 39: Acquisition territory
Acquisition territory:
Slide 40: CHCO represents good value and stability
CHCO represents good value and stability Pricing Metrics*: Price to Book: 171% Price to Tangible Book: 212% Price to 2013 Projected Earnings** 12.8x Dividend Yield 3.6% Div Payout Ratio (First Call)** 47% Tangible Capital/Tangible Assets*** 9.40% Institutional Ownership 61% * Based on Price of $38.1
City Holding — Sandler O'Neill + Partners Cincinnati, Columbus, Cleveland March 20-21, 2013 on 6ix