City Holding Company · NASDAQ:CHCO
City — KBW Community Bank Investor Conference 2020
31 slides from City's conference presentation, Jul 28, 2020
Slide 1: City Holding Company – KBW Community Bank Investor Conference
City Holding Company KBW Community Bank Investor Conference July 28-July 30, 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 3
Slide 4: Presenters
Presenters: Skip Hageboeck CEO & President David Bumgarner EVP & CFO Tim Quinlan Retail Banking Executive 4
Slide 5: Snapshot
Snapshot • Total Assets $5.5 billion • Branches 94 • FTE 913 • 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: 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% 6
Slide 7: City National Deposit Markets
City National Deposit 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; $12.7 Billion Major Competitors: BBT, JPM, HBAN, UBSI T1st Branch Share & 4th Deposit Share (13%) in
Slide 8: Diversified Commercial Loan Portfolio
Diversified Commercial Loan Portfolio Percent of Commercial Key Loan Markets Portfolio West Virginia & Eastern Kentucky – dating to 1870 47% Virginia/Eastern Panhandle Markets – acquired 15% 2012/13 Charlotte LPO – de novo 2006 9% Lexington, KY – acquired 2015 17% Columbus, OH & Pittsburgh PA 12% 8
Slide 9: City National Loan Markets
City National Loan Markets CHARLOTTE 9 Size of Bubbles are representative of City’s loan distribution
Slide 10: Market Position
Market Position City’s biggest markets have strong distribution, large share, and high profitability Deposits Deposit Branch Branch Market Population ($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 11: 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 12: COVID-19: Retail Banking Impact
COVID-19: Retail Banking Impact • 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 b
Slide 13: Retail Activity Remains Strong
Retail Activity Remains Strong • Retail mortgage volume was up over 2% YTD June 2020 compared to YTD June 2019 • Our 94 branches opened an average of 25 new DDA’s monthly in the first 6 months of 2020 • We have opened 410 more new Commercial DDA accounts through June 30, 2020 compared to the same pe
Slide 14: COVID-19 Impact: Net Interest Income
COVID-19 Impact: Net Interest Income 2019 2020 Analyst 2020 YTD 2021 Analyst Expectations Expectations Net Interest $161.4 MM $157.3 MM $78.5 MM $153.2 MM Income Provision ($1.3 MM) $2.27 MM $9.2 MM $17.2 MM Non-Interest $68.5 MM $78.5 MM $48.0 MM $67.2 MM Income ($30.1 MM w/o Visa Sale) Non-Interes
Slide 15: COVID-19 Impact: Asset Quality
COVID-19 Impact: Asset Quality Provision Expense $30.0 Ave. Analyst 2020 Loan Provision Forecast $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 $5.0 Provision Expense 15
Slide 16: 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 16
Slide 17: Net Charge-off Details: 2012-2020 Q2
Net Charge-off Details: 2012-2020Q2 $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) 6/30/20 ($2,000) Commercial Retail NSF related 17
Slide 18: 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 $457.8 $7.1 $464.9 12.7% $48.4 1.34x 66% Multi-Family Housing $330.3 $15.3 $345.6 9.
Slide 19: Hotel Exposure
Hotel Exposure 23.4% Location Map 34.2% 23.2% WV KY 4.6% 14.6% OH VA Other 19
Slide 20: Multi-Family Housing Exposure
Multi-Family Housing Exposure Location map 20
Slide 21: ROA: 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. 21
Slide 22: Deposit Franchise
DEPOSIT FRANCHISE One key to City’s enviable success • Branches 94 • Average Deposits per Branch $47 MM • Average Households per Branch 2,000 • 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 23: Non-interest income is branch driven
Non-interest income is branch driven: $30,000 35.0% $25,000 30.0% $20,000 $15,000 25.0% $10,000 20.0% $5,000 $0 15.0% 2016 2017 2018 2019 2020 YTD Bankcard Revenues Service Charges Investment Management CHCO - % of Operating Revenues Peer - % of Operating Revenues Source - S&P Global MI. Peer data a
Slide 24: City's Exceptional Retail Strength Depends on Branch Distribution
City’s Exceptional Retail Strength Depends on Branch Distribution House- Deposits Deposit Branch Hold Market ($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 25: 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 Q2 CHCO $1B - $10B •Data as calculated using S&P Global MI definition. 25 •Peer data as of March 31, 2020.
Slide 26: 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 26
Slide 27: Cash Dividends/Share Declared & Dividend Payout Ratio
Cash Dividends/Share Declared & Dividend Payout Ratio $2.30 70% Cash Dividends/Share Declared $2.10 60% 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 28: Share Activity
Share Activity: City’s strong capital and high profitability have allowed aggressive share repurchases $30,000 $25,000 440,604 $20,000 $15,000 290,491 260,674 $10,000 261,134 231,132 $5,000 107,662 $0 2016 2017 2018 2019 2020 Q2 Repurchase $ Issuance $ Labels represent shares repurchased or issued.
Slide 29: 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. City is well positioned to acquire select franchises
Slide 30: 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 30
Slide 31: CHCO represents excellent value and stability
CHCO represents excellent value and stability • Pricing Metrics*: – Price to Book 148% – Price to Tangible Book 178% – Price to 2020 Projected Earnings** 15.5x • Dividend Yield 3.55% • Div Payout Ratio** 56% • Tangible Capital/Tangible Assets *** 10.6% • Institutional Ownership 68% • Average Daily V
City Holding Company — KBW Community Bank Investor Conference 2020 on 6ix