City Holding Company · NASDAQ:CHCO
City — Davidson 22nd Annual Financial Institutions Conference (May 2020)
39 slides from City's conference presentation, May 6, 2020
Slide 1: City Holding Company
City Holding Company Davidson 22nd Annual Financial Institutions Conference May 6, 2020
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 res
Slide 3: Highest customer satisfaction ranking by JD Power for 3rd consecutive year
City was very proud to recently announce that for the 3rd consecutive year, we were awarded the highest ranking in customer satisfaction in the North Central District by JD Power (IN, OH, KY, MI, WV). 2018 2019 2020
Slide 4: Overview
Overview Skip Hageboeck CEO & President David Bumgarner EVP & CFO
Slide 5: Snapshot
Snapshot • Total Assets $5.1 billion • Branches 95 • FTE 921 • Market Cap $1.0 billion • Markets: Stable, Slow growing, & less competitive • Business Lines: Retail, Commercial, Investment Management • Asset Quality: Demonstrated strong track record • Performance: Long record as a high performer • Gr
Slide 6: Snapshot: City National Markets
Snapshot: City National Markets 3rd Branch Share Winchester VA & WV Panhandle $6.2 Billion Major Competitors: BBT, UBSI, WFC 1st Branch Share & 3rd Deposit Share (14%) In Charleston MSA/Huntington MSA; $12.7 Billion Major Competitors: BBT, JPM, HBAN, UBSI T1st Branch Share & 4th Deposit Share (13%)
Slide 7: Market Position
Market Position City’s biggest markets have strong distribution, large share, and high profitability Deposits Deposit Branch Branch Market Population ($mm) Share Branches Share Rank Charleston/Huntington /Ashland MSA 611,000 $1,729 14% 36 20% 1 Beckley/Lewisburg WV 162,000 783 30% 16 25% 1 Wincheste
Slide 8: Market Demographics
Market Demographics Newer markets have high growth and higher incomes Projected Projected Population Median Change in Change 2020- Household HHLD Income Market Population 2025 Income 2020-2025 Charleston/Huntington/ Ashland MSA 611,000 (2.3%) $46,000 4.5% Beckley 162,000 (2.9%) $42,000 3.8% Winchest
Slide 9: Deposits mostly in WV and E. KY
Deposits mostly in WV and E. KY Key Deposit Markets Deposits West Virginia & E. Kentucky – dating to 1870 76% New Markets 24%
Slide 10: Diversified Commercial Loan Portfolio
Diversified Commercial Loan Portfolio Percent of Commercial Key Loan Markets Portfolio West Virginia & Eastern Kentucky – dating to 1870 46% Virginia/Eastern Panhandle Markets – acquired 15% 2012/13 Charlotte LPO – de novo 2006 10% Lexington, KY – acquired 2015 17% Columbus, OH & Pittsburgh PA 12%
Slide 11: EPS: CHCO: A perennial high-performing bank
CHCO: A perennial high-performing bank $6.00 EPS $5.50 $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 2015 2016 2017 2018 2019 CHCO CHCO excl M&A expenses
Slide 12: ROA: CHCO: A perennial high-performing bank
CHCO: A perennial high-performing bank 2.00% ROA 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 2015 2016 2017 2018 2019 CHCO CHCO excl M&A expenses $1B - $10B Source - S&P Global MI.
Slide 13: A long history of strong asset quality at CHCO
A long history of strong asset quality at CHCO 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 2016 2017 2018 2019 2020 Q1 CHCO NPA/Assets Industry Source: FDIC, All Insured Depository Institutions Peer data as of December 31, 2019
Slide 14: Efficiency Ratio
Efficiency Ratio low despite a large number of small branches 70.0% 65.0% 60.0% 55.0% 50.0% 45.0% 2016 2017 2018 2019 2020 Q1 CHCO $1B - $10B •Data as calculated using S&P Global MI definition.
Slide 15: Commercial loan growth
Commercial loan growth: Success achieved due to community bank orientation, strong team, strong underwriting, and exposure to new higher growth markets. $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 2015 2016 2017 2018 2019 CRE C&I
Slide 16: Retail loans
Retail loans Primarily residential related – demonstrates long-term steady and predictable growth; Recent challenges due to flat yield curve $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 2015 2016 2017 2018 2019 Residential Real Estate (1st DOT) Home Equity (2nd/Junior DOT) Consumer Installment
Slide 17: Capital Management: A Long-term Core Competency
Capital Management: A Long-term Core Competency • CHCO generates more capital than average • Allows CHCO to steadily increase TCE while balancing shareholder value: – History of increasing cash dividends – Active share repurchase program – Cash acquisition
Slide 18: Cash Dividends/Share Declared & Dividend Payout Ratio
Cash Dividends/Share Declared & Dividend Payout Ratio $2.30 70% 60% Cash Dividends/Share Declared $2.10 Dividend Payout Ratio 50% $1.90 40% $1.70 30% $1.50 20% $1.30 10% 5.0% 2.4% 7.0% 15.2% 7.5% $1.10 0% 2015 2016 2017 2018 2019 2020 Q1 Dividends/Share Dividend Payout Ratio 2020 projected dividend
Slide 19: Share Activity
Share Activity: City’s strong capital and high profitability have allowed aggressive share repurchases $30,000 $25,000 440,604 $20,000 $15,000 $20,271 260,674 $10,000 231,132 $5,000 181,899 $6,864 $0 2016 2017 2018 2019 2020 Q1 Repurchase $ Issuance $ Labels represent shares repurchased or issued.
Slide 20: Acquisition territory
Acquisition territory:
Slide 21: Acquisition philosophy
Acquisition philosophy: • Actively looking for strong franchises • Generally $100MM to $1B • Most likely in WV, VA, KY • Less acquisitive than peers because City: • Insists that combinations be accretive • Have compatible cultures • Have a strategic rationale
Slide 22: Bottom Line: CHCO is a Simple Model
Bottom Line: CHCO is a Simple Model Incredible Core Banking Franchise Well Managed (Expenses, Asset Quality, Etc.) Disciplined Growth Strategy focused on shareholders, and community service Highly Profitable Allows Strong Dividends & Accretive Share Repurchases
Slide 23: CHCO represents excellent value and stability
CHCO represents excellent value and stability • Pricing Metrics*: – Price to Book 152% – Price to Tangible Book 185% – Price to 2020 Projected Earnings** 14.4x • Dividend Yield 3.37% • Div Payout Ratio** 52% • Tangible Capital/Tangible Assets *** 11.4% • Institutional Ownership 67% • Average Daily V
Slide 24: Asset Quality - Tim Whittaker
Asset Quality Tim Whittaker Chief Credit Officer Senior Vice President
Slide 25: CECL: Allowance Allocation & Progression
CECL: Allowance Allocation & Progression CECL Charge- % of 12/31/19 Adj. Provision Offs Recoveries 3/31/20 Loans O/S Commercial & Industrial $2,059 $1,715 $2,149 $(77) $9 $5,855 1.90% Commercial Real Estate 2,606 3,254 3,709 (383) 203 9,389 0.64% Residential Real Estate 3,448 2,139 1,759 (483) 95 6,
Slide 26: Net Charge-off Details: 2012-2020 Q1
Net Charge-off Details: 2012-2020Q1 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 2012 2013 2014 2015 2016 2017 2018 2019 YTD ($1,000) 3/31/20 ($2,000) Commercial Retail NSF related
Slide 27: Charge-offs During Last Recession
Charge-offs During Last Recession (w/o DDA Charge-offs) 3.00% 2.75% 2.50% 2.25% 2.00% 1.75% 1.50% 1.25% 1.00% 0.75% 0.50% 0.25% 0.00% 2005 2006 2007 2008 2009 2010 2011 CHCO w/o NSF's Industry Source: FDIC, All Insured Depository Institutions
Slide 28: Exposure to Commercial Sectors Most Impacted by COVID-19
Exposure to Commercial Sectors Most Impacted by COVID-19 March 31, 2020 April 30, 2020 March 31, 2020 % of Total Average Average $ in millions Pass Criticized Total Loans Deferments DSC LTV Nonresidential Properties $428.1 $7.1 $434.2 12.0% $13.7 1.34x 66% Multi-Family Housing $325.6 $15.2 $340.8 9.
Slide 29: Hotel Exposure
Hotel Exposure 22.43% 23.4% 34.2% 37.72% 19.07% 23.2% 4.6% 14.6% 12.04% 8.74% WV KY OH VA Other Hilton Marriott InterContinental Choice Hotels Other • The average hotel loan balance is $5.1 million. • None of our hotel loans are “conference centers”. Data is as of March 31, 2020
Slide 30: Hotel Exposure Location Map
Hotel Exposure Location Map Chicago ger ville Cleveland a ie} New York Pittsburgh “ ie} Philadelphia °o f : Colurnsus Indianapolis Cit iti ; NN Washington ) Loursuille Evansville re tt Richmond Norfolke rginia Beach Nashville ° Knoxville ° oDurham Charlotte ° Huntsville
Slide 31: Multi-Family Housing Exposure
Multi-Family Housing Exposure Location map
Slide 32: Retail Franchise Strength - Tim Quinlan
Retail Franchise Strength Tim Quinlan Senior Vice President Branch Banking
Slide 33: COVID-19 Response
COVID-19 Response • Majority of in-person transactions being conducted at our drive- thrus, including opening new deposit accounts and loans • Increased reliance on electronic customer delivery channels: – Interactive-teller machines (ITMs) – Automated-teller machines (ATMs) – Mobile banking platfor
Slide 34: Retail Activity Remains Strong
Retail Activity Remains Strong • Retail mortgage volume was up over 7% YTD April 2020 compared to YTD April 2019 • Our 95 branches opened an average of 24 new DDA’s monthly in the first 4 months of 2020 • We have opened 240 more new Commercial DDA accounts through April 30, 2020 compared to the same
Slide 35: Deposit Franchise
DEPOSIT FRANCHISE One key to City’s enviable success • Branches 95 • Average Deposits per Branch $43 MM • Average Households per Branch 1,900 • Average Deposit Share 13.9% • Average Household Share* 27% • Average DDA Balance $7,100** • Average Business DDA $21,600 * - Excludes Lexington-Fayette KY R
Slide 36: Non-interest income is branch driven
Non-interest income is branch driven: $35,000 35.0% $30,000 30.0% $25,000 $20,000 25.0% $15,000 $10,000 20.0% $5,000 $0 15.0% 2016 2017 2018 2019 2020 YTD Bankcard Revenues Service Charges Investment Management CHCO - % of Operating Revenues Peer - % of Operating Revenues Source - S&P Global MI. Sam
Slide 37: Franchise Strength: Debit Cards
Franchise Strength: Debit Cards 2019 Bank Card & Credit Card Headquarter Average Interchange Card Revenue/ Parent Company Ticker State Assets Fees Avg. Deposits City Holding Company CHCO WV $4.9 B $19.3 M 0.48% First Community Bank FCBC VA $2.2 B $7.9 M 0.41% Peoples Bank PEBO OH $4.2 B $11.4 M 0.35
Slide 38: City's Exceptional Retail Strength Depends on Branch Distribution
City’s Exceptional Retail Strength Depends on Branch Distribution House- Deposits Deposit Branch Hold Market ($mm) Share Branches Share Share Charleston, WV $706 12.8% 13 27.7% 38.7% Huntington, WV 432 12.7% 10 15.9% 26.2% Ashland, KY 550 24.9% 12 22.2% 40.2% Beckley, WV 493 24.8% 9 27.3% 31.5% Lewi
Slide 39: Covid
Covid: Cases % of Population Deaths United States 1,200,000 0.36% 69,000 East Virginia 17,731 0.20% 616 Kentucky 4,879 0.11% 248 West Virginia 1,184 0.07% 50 May 4, 2020
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