City Holding Company · NASDAQ:CHCO
City — Investor Presentation (March 2004)
42 slides from City's investor presentation, Mar 3, 2004
Slide 1: Investor Presentation March 2004
March 2004 Investor Presentation
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. Such information involves risks and uncertainties that could result in the Company’s actual resul
Slide 3: WHO is CHCO?
WHO is CHCO ? Past: Turnaround Story Present: Low Risk/High Return Proposition Future: Remaining Opportunities!
Slide 4: Corporate Profile
Corporate Profile $ 2.2 Billion Commercial Bank headquartered in Charleston WV 54 Banking Offices 150,000 households; 275,000 accounts 16,644,000 common shares outstanding $ 571 million market capitalization* As of market close November 20, 2003
Slide 5: Key Markets
Key Markets 8% Market Share in DC suburbs WV’s fastest growing market 12% Market Share in WV’s 2nd largest market 11% Market Share in WV’s largest market 30% Market Share
Slide 6: The Past: A Turnaround Story
The Past: A Turnaround Story
Slide 7: Prior History
Prior History Net loss of $54.4 million or $3.81 per share for 2000 & 2001 Formal Agreements with OCC and Federal Reserve $ 130 million in “problem loans” Stock trading at $5.125 per share from a high of $45 per share Discontinued common share cash dividends and deferred trust preferred dividends
Slide 8: Managing the Turnaround
Managing the Turnaround Jerry Francis becomes CEO 1/31/01 31 years in banking First National Bank, Dayton National City Metropolitan Bank, Lima—President Bank One—Regional President Peoples Bank of Indianapolis—President
Slide 9: Assembling The Management Team
Assembling The Management Team Skip Hageboeck, PhD, CFO and CIO 14 years in banking Indiana National, NBD, Peoples Bank of Indianapolis John Loeber, Commercial Banking and Senior Credit Officer 36 years in banking Fleet Boston Financial, First American, Signet, Peoples Bank of Indianapolis Bill Butc
Slide 10: It's All About Management
It’s All About Management Peoples Bank Corporation of Indianapolis Earnings Per Share (Fully Diluted) $0.86 $1.22 $1.70 $1.99 $2.04 $2.92 CAGR 28% Stock Price $10.38 $12.13 $18.00 $36.00 $34.00 $73.00 CAGR 60% (34% w/o merger)
Slide 11: Writing It Down
Writing It Down By April 1, 2001: Exited the mortgage servicing business Wrote down $30 million in accordance with new accounting guidance related to retained interest in securitized loans Wrote off $7.9 million to reflect unrecognized losses Charged off $7.5 million in loans Took provision expense
Slide 12: Revenue Enhancement/Best Practices
Revenue Enhancement/Best Practices By June 30, 2001: Initiated revenue enhancement and “best practices” projects: Increased collection of service fees from < 50% to over 90% resulting in 60% increase in service charge revenue Reduced staff by 27% with annual savings of $7 million Implemented hundred
Slide 13: Focus On Credit
Focus On Credit By September 30, 2001: Reviewed 100% of commercial loans & assigned risk rating; scored all 66,000 Retail loans; adopted a formal and comprehensive loan policy Centralized loan underwriting and loan approval Hired experienced loan workout team of 7 persons Charged off $2.9 million in
Slide 14: Returning To Profitability
Returning To Profitability By December 31, 2001: Returned to profitability with operating ROA of 0.86% and ROE of 13.3% Initiated 4 month comprehensive credit training program for commercial lenders Complied fully with OCC and Fed agreements Sold $18 million of substandard loans Charged off $8.3 mil
Slide 15: Mission Accomplished
Mission Accomplished: Within first 18 months: Reported second quarter 2002 ROA of 1.48% and ROE of 19.7% Terminated Formal Agreements with OCC and Federal Reserve Announced resumption of common dividends and payment of Trust Preferred dividends Approved 1 million share common stock buy-back program
Slide 16: Accolades
Accolades: 1st of all USA banks and 4th best of all US publicly traded companies during 2001-2002 with appreciation of 391% In 2002, CEO accepts “Community Banker of the Year” award on behalf of Employees & Directors *The “Bloomberg 100” lists the top 100 companies by total return for the period of
Slide 17: Present
Present: Net Income $43.7 million or $2.58 per diluted share with ROA of 2.18% and ROE of 24.5% Non-Interest Income (excluding investment securities gains/losses) up 22% Efficiency Ratio 52.1% Non-performing Loans as a percent of loans 0.31% Allowance for Loan & Lease Losses to outstanding loans 1.6
Slide 18: Strong & Stable Net Interest Margin
Strong & Stable Net Interest Margin
Slide 19: Performance Measures
Performance Measures EPS (diluted) -$1.54 $1.90 2.58 ROA -1.07% 1.59% 2.18% ROE -16.8% 20.5% 24.5%
Slide 20: Strong Core Performance
Strong Core Performance Negative provision Expense in 2003 = $6.2 mm reflects strong credit culture reflects success at recovery of charged off loans Even with normalized provision expense, CHCO demonstrates exceptional performance: high and growing profitability strong and stable net interest margi
Slide 21: Normalized Profitability
Normalized Profitability ROA 1.20% 1.86% 2.18% ROE 13.70% 20.40% 24.50% *Adjusted 2003 earnings to reflect 25 basis points of Provision Expense
Slide 22: CHCO is a highly profitable franchise!
CHCO is a highly profitable franchise! CHCO is a low risk proposition: retail focus strong core deposit base strong non-interest income desirable in low rate environment conservative loan portfolio loans are predominately real estate secures loan quality is extremely strong well reserved for problem
Slide 23: City National Bank Customer Profile
City National Bank Customer Profile $1,411,963 $326,913 $844,342 $396,804 Source: Internal data as of October 31, 2003
Slide 24: Totally Free Checking Accounts
Totally Free Checking Accounts 15% Growth D13IN DDA TOTALLY FREE PERSONAL
Slide 25: Favorable Revenue Profile
Favorable Revenue Profile City Holding Company 68% 32% Net Interest Income Non Interest Income Peer Group 78% 22% As of December 31, 2003 *$ 1-3 billion peer group as compiled by the FFIEC in their Uniform Bank Performance Reports Net Interest Income Non Interest Income
Slide 26: Conservative Loan Portfolio Mix
Conservative Loan Portfolio Mix City Holding Company 35% 26% 6% 27% 6% Residential Real Estate Home Equity Consumer/Other Commercial Real Estate C&I Peer Group* 26% 4% 17% 36% 17% Residential Real Estate Home Equity Consumer/Other Commercial Real Estate C&I Loan to Core Deposits 78.9% Loan to Core D
Slide 27: Real Estate Based Lending Focus
Real Estate Based Lending Focus Real Estate Secured Loans 88.1% Other Loans 11.9% As of December 31, 2003
Slide 28: Strong Loan Quality
Strong Loan Quality 0.20% 0.52% 0.31% 0.80% Non Performing Assets/Assets Non Performing Loans/Loans *$ 1-3 billion peer group as compiled by the FFIEC in their Uniform Bank Performance Reports 3/31/03
Slide 29: Strong Loan Loss Reserve
Strong Loan Loss Reserve 1.66% 1.45% 529% 268% Loan Loss Reserve/Total Loans Loan Loss Reserve/Non Performing Loans *$ 1-3 billion peer group as compiled by the FFIEC in their Uniform Bank Performance Reports 3/31/03
Slide 30: Limited Interest Rate Risk
Limited Interest Rate Risk CHCO implements a leverage strategy in late 2003 while eliminating the company’s benefit from rising rates by using fixed rate funding with maturities ranging from 1 to 5 years Immediate Basis Estimated Increase or Point Change in Decrease in Net Interest Rates Income over
Slide 31: Future Opportunities
Future Opportunities: 1) Provision Expense 1) Potential for continued low negative provisions • Loan growth trends are strong • Strategic Opportunities 1) Growth 1) Capital 2) M&A 1) Legal Resolutions with 16—19 cents per share
Slide 32: Performance Objectives
Performance Objectives MEASURE GOALS 2003 RESULTS Earnings Per 10% + 35.79% Share Growth ROE 20% 24.5% ROA 1.50% 2.18% Capital Maintain well- Total Risk based capitalized status capitalized = 13.17%
Slide 33: Net Charge-Offs/Opportunity?
Net Charge-Offs/Opportunity? $22.1 $21.9 $0.9 Net Charge-Offs The Company recorded a negative provision of $6.2 million in 2003
Slide 34: Provision Expense
Provision Expense Provision Expense Net Charge Off
Slide 35: Growth in targeted lines of business
Growth in targeted lines of business Commercial Real Estate & Home Equity Indirect & Consumer
Slide 36: Strategic Opportunities
Strategic Opportunities Branch Optimization Project Close ? – over 20% of branches less than $10 million in deposits DeNovo ? – two potential large markets Reconfigure ? – need to reflect changing retail patterns Strong Capital Dividends ? Share Repurchase ? Acquisitions ?
Slide 37: Key Markets
Key Markets $2.2 Billion Market With higher incomes $1.1 Billion Market With strong growth $2.2 Billion Market Marietta Parkersburg Morgantown $1.4 Billion Market $3.7 Billion Market $1.0 Billion Market
Slide 38: Why Should You Own Our Stock?
Why Should You Own Our Stock? Proven management team focused on delivering shareholder value Performance-based incentive plans Value-vested stock options Improved City’s shareholder value by 488% since January 2001
Slide 39: Why Should You Own Our Stock?
Why Should You Own Our Stock? Low Risk/High Returns Fortress Balance Sheet Real Estate Secured Lending Strong retail core deposit franchise Pristine Loan Quality Allowance for loan loss is 529% of nonperforming Strongly Capitalized Tangible equity is 8.40% of total assets Total Risk based capital is
Slide 40: Why Should You Own Our Stock?
Why Should You Own Our Stock? Highly visible near-term opportunities Lower interest expense from called $57.5M Trust Preferred issue only partially reflected in 4th Quarter 2003 net interest income Potential low or negative loan loss provision in future periods Leverage strategy designed to maintain
Slide 41: CHCO Stock Performance
CHCO Stock Performance Relative Stock Price Performance Versus Major Indices: Since January 31, 2001 CHCO Stock Performance Relative Stock Price Performance Versus Major Indices December 2000—October 2003
Slide 42: Questions?
Citys, Questions?