City Holding Company · NASDAQ:CHCO
City — KBW Community Bank Investor Conference 2023
33 slides from City's conference presentation, Aug 8, 2023
Slide 1: City Holding Company KBW Community Bank Investor Conference
City Holding Company KBW Community Bank Investor Conference August 8-9, 2023
Slide 2: Forward looking statements
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 a
Slide 3: Snapshot
Snapshot • Total Assets $6.1 billion • Branches 99 • FTE 963 • Market Cap $1.49 billion • Markets: Stable, Slow growing, & less competitive • Customers Robust retail customer base • Business Lines: Retail, Commercial, Investment Management • Asset Quality: Demonstrated strong track record • Performa
Slide 4: CHCO: A perennial high-performing bank
CHCO: A perennial high-performing bank ROA 2.40% 2.20% 2.00% 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 2015 2016 2017 2018 2019 2020 2021 2022 2023 CHCO (adjusted for M&A exp & VISA gain) $1B - $10B 4 Source - S&P Global MI. Peer data as of June 30, 2023.
Slide 5: 2023 Performance Metrics
2023 Performance Metrics 2023 YTD 2022 YTD EPS $3.80 $2.92 ROA 1.89% 1.47% ROACTE 23.7% 16.6% NIM 4.02% 2.93% Efficiency 49% 51.5% Tang. Book Value $31.50 $31.99 Share Price @ 6/30 $89.99 $79.88 Non-Perf Assets/Loans .17% .19% &OREO Past Due Loans .19% .17% NCO/Loans .02% .02% 5
Slide 6: Analyst Expectations
Analyst Expectations 2023 Analyst 2024 Analyst 2023 YTD Estimates Estimates For July-Dec Net Interest Income $109.0 MM $106.3 MM $209.2 MM NIM 4.02% 3.80% 3.74% Provision $3.3 MM* $2.8 MM $7.3 MM Non-Int Income $39.0 MM** $37.9 MM $74.4 MM Non-Int Expense $73.4 MM*** $69.5 MM $144.1 MM Net Income $5
Slide 7: Challenges and Opportunities
Challenges and Opportunities • Industry Challenges – Deposit Repricing & Deposit Run-off – Asset Quality – Loan Growth – Regulatory Environment • CHCO Opportunities – City’s NIM tends to beat peers in high rates – Reputation for conservative under righting – City’s profitability allows for strong sh
Slide 8: City National Deposit Markets
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 (15%) In Charleston MSA/Huntington MSA; $15.5 Billion Major Competitors: TFC, JPM, HBAN, UBSI 1st Branch Share & 4th Deposit Share (12%) in
Slide 9: Deposit Franchise mostly in slow-growth WV and eastern KY
Deposit Franchise mostly in slow-growth WV and eastern KY Key Deposit Markets Deposits West Virginia & E. Kentucky 76% – dating to 1870 New Markets 24% 9
Slide 10: Deposit Franchise: One key to City's enviable success
DEPOSIT FRANCHISE One key to City’s enviable success • 99 Branches among Top 100 Banks • Average Deposits per Branch $51 MM* • Average Households per Branch 2,100 • Average DDA Balance $11,200** • Average Business DDA $39,800 * For CHCO’s self-defined peer group – average deposits per branch is $103
Slide 11: City's Exceptional Retail Strength Depends on Branch Distribution
City’s Exceptional Retail Strength Depends on Branch Distribution House- Deposits Deposit Branch Hold Market ($mm) Share Branches Share Share Charleston, WV $1,092 16.5% 13 30.2% 40.6% Huntington, WV $587 13.7% 10 17.9% 28.3% Ashland, KY $590 21.4% 12 24.0% 41.0% Beckley, WV $583 22.5% 9 27.3% 31.8%
Slide 12: Market Position
Market Position City’s biggest markets have strong distribution, large share, and high profitability Deposits Deposit Branch Branch Market Population ($mm) Share Branches Share Rank Charleston/Huntington /Ashland MSA 611,000 $2,342 15% 36 20% 1st Beckley/Lewisburg WV 162,000 $945 29% 16 27% 1st Winc
Slide 13: Market Demographics
Market Demographics Newer markets have high population 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.
Slide 14: 2022 Debit Card Revenues
2022 Debit Card Revenues Debit Card Assets Revenues Summit $3.9 Billion $6.2 million City $6.0 Billion $27 million Stockyard $7.5 Billion $18 million Peoples $7.2 Billion $21 million Wesbanco $16.9 Billion $19 million The Data is clear: CHCO has a deeper 14 customer base relative to its size.
Slide 15: Checking Accounts
Checking Accounts # of Billions Ave Ave # of Ave $ per Accounts of $ Account accounts branch in Size per millions branch Checking 244,000 $2.7 $11,100 2,463 $27.4 Accounts Saving 68,000 $1.3 $19,900 682 $13.6 Accounts CDs 26,000 $1.0 $37,600 258 $9.7 15
Slide 16: Internal DDA Growth
Internal DDA Growth Net Growth % Increase New DDA Year in DDA in DDA Accounts Accounts Accounts 2018 30,400 4,310 2.2% 2020 *30,360 *6,740 3.0% 2021 32,800 8,860 3.8% 2022 28,442 4,544 1.9% 2023 YTD 16,226 2,989 2.4% Ann. Household Growth = 2.0% U.S. Population Growth: 0.6% *Note: City’s lobbies wer
Slide 17: Age Distribution of Customer Base
Age Distribution of Customer Base 2022 All City Customers New City Customers 20.0% 18.0% 2022 18.0% 17.4% 23.7% 25.0% 16.0% 15.1% 14.1% 14.0% 20.0% 12.4% 17.3% 12.0% 11.3%11.7% 16.0% 14.6%14.2% 15.0% 10.0% 8.0% 10.0% 8.6% 6.0% 5.7% 4.0% 5.0% 2.0% 0.0% 0.0% <24 25-34 35-44 45-54 <24 25-34 35-44 45-54
Slide 18: Uninsured Deposit Data
Uninsured Deposit Data (as of & for the quarter ended March 31, 2023) Average Balance By Deposit Type (in 000’s) Uninsured Percent Noninterest-Bearing Demand Deposits $1,420,676 19% Interest-Bearing Deposits Demand Deposits 1,234,981 8% Savings Deposits 1,376,317 11% Time Deposits 902,583 14% Total
Slide 19: JD Power: Highest Customer Satisfaction
JD Power: Highest Customer Satisfaction North Central Region, 2018, 2019, 2020 and 2022 19
Slide 20: Market Disruptions
Market Disruptions Provide Strong Growth Opportunities • Market: St. Albans WV $140 6,000 $120 5,000 • In 2017, there 4,436 4,926 were 4 banks $100 4,262 3,898 4,068 4,000 with branches in 3,723 $80 $120 this market 3,000 • In 2018 one Millions $60 $102 $102 2,000 closed $40 $84 • In 2020 another $7
Slide 21: Deposit Costs
Deposit Costs – Headed Up but CHCO benefits from it’s tremendous Deposit Franchise in higher rate environments 6.00% 5.00% 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 9/30/22 Qtr 12/31/22 3/31/2023 6/30/2023 Qtr Qtr Qtr Qtr Qtr Qtr Qtr 21
Slide 22: City's strong deposit franchise provides NIM strength in higher rate environments
City’s strong deposit franchise provides NIM strength in higher rate environments 4.00% 3.75% 3.50% 3.25% 3.00% 2.75% 2.50% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD CHCO excluding PSLs, PPP Fees, & Accretion $1B to $10B Peer Source - S&P Global MI. 2022 Peer Data as of March 3
Slide 23: CHCO: Variable Priced Assets
CHCO: Variable Priced Assets • Home Equity Loans tied to Prime $180 M • Commercial Loans - Prime/LIBOR $904 M • Variable Rate Investments $ 55 M • Off-Balance Sheet Hedge $150 M • Cash held at Federal Reserve @ 6/30/2023 $164 M • Total $1.4 B Roughly 25% of assets reprice with increases in Fed Funds
Slide 24: City National Loan Markets
City National Loan Markets CHARLOTTE 24 Size of Bubbles are representative of City’s loan distribution
Slide 25: Diversified Commercial Loan Portfolio
Diversified Commercial Loan Portfolio Percent of Commercial Key Loan Markets Portfolio West Virginia & Eastern Kentucky – dating to 1870 41% Virginia/Eastern Panhandle Markets – acquired 14% 2012/13 Lexington, KY – acquired 2015 27% Columbus, OH; Cincinnati, OH; & Pittsburgh PA 18% 25
Slide 26: Asset Quality: At Historic Highs
Asset Quality: At Historic Highs • Non-Performing Assets (17bp) – – Lowest in 20+ years • Past-Due Loans (19bp) – Lowest in 20+ years • OREO ($0.9 MM) – Lowest in 15+ years • Net Consumer Loan Charge-offs – Lowest in 15+ years Average Provision Expense 2005-2021 21bp 26
Slide 27: Net Charge-off Details: 2012-2023
Net Charge-off Details: 2012-2023 $8,000 Average Net Charge-Offs/Year: $7,000 Commercial $1.8 M 43% Retail $1.5 M 37% $6,000 NSF $0.8 M 20% Total $4.1 M $5,000 $4,000 $3,000 $2,000 $1,000 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ($1,000) YTD ($2,000) Commercial Retail NSF relat
Slide 28: Commercial Sectors Information
Commercial Sectors Information As of March 31, 2023 Commercial Sector $ (in thousands) % of Total Loans Avg DSC Avg LTV Natural Gas Extraction $25,179 0.65% 3.68 64% Natural Gas Distribution 23,711 0.61% 2.61 N/A Masonry Contractors 23,017 0.59% 1.13 84% Sheet Metal Work Manufacturing 23,491 0.60% 1
Slide 29: Cash Dividends/Share Declared
Capital Management: A Long-term Core Competency Cash Dividends/Share Declared & Dividend Payout Ratio $2.60 70% Cash Dividends/Share Declared $2.40 60% Dividend Payout Ratio $2.20 50% $2.00 40% $1.80 30% $1.60 20% $1.40 10% $1.20 0% 2015 2016 2017 2018 2019 2020 2021 2022 Dividends/Share Dividend Pa
Slide 30: Share Activity
Share Activity: City’s strong capital and high profitability have allowed aggressive share repurchases $70 760,033 800,000 $60 700,000 572,917 600,000 $50 487,587 500,000 $40 Millions 324,513 $90.35 400,000 $30 290,491 260,674 300,000 $20 $81.50 200,000 $10 $63.68 $77.20 100,000 $69.78 $74.54 $0 0 2
Slide 31: 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 we
Slide 32: Acquisition History
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
Slide 33: CHCO represents excellent value and stability
CHCO represents excellent value and stability • Pricing Metrics*: – Price to Book 234% – Price to Tangible Book 315% – Price to 2023 Projected Earnings** 13.5x • Dividend Yield 2.60% • Div Payout Ratio** 35% • Tangible Capital/Tangible Assets *** 7.9% • Institutional Ownership 70% • Average Daily Vo
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