City Holding Company · NASDAQ:CHCO
City — Stifel Nicolaus West Coast Conference September 2009
38 slides from City's conference presentation, Sep 15, 2009
Slide 1: Stifel Nicolaus West Coast - September 2009
Stifel Nicolaus West Coast - September 2009
Slide 2: Forward-looking statements
This news release contains certain forward-looking statements that are included pursuantto the saje 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 results differing from those proj
Slide 3: City Holding at a glance
n n n n n n Total Assets $2.6 bil Branches 69 FTE 830 Market Cap $480 mil Institutional Ownership 56% Avg Daily Volume $2.5 mil Date: June 30, 2009
Slide 4: Key Markets
1 st & 27% Deposit Shar e Key Markets 1 st Branch Share & 9% Deposit Share in Huntington WV/Ashland KY MSA $3.8 Billion 1 st Branch Share & 10% Deposit Share in WV’s largest market; $5.3B $2.0 Billion 2 nd Branch Share & 8% Deposit Share in Morgan, Berkeley & Jefferson Co. WV $1.9 Billion
Slide 5: Asset Quality: a function of culture and market
• City’s Loans are 60% Retail/40% Commercial • City’s market area tends to be more stable • Real Estate prices in City’s market area have been relatively stable • City’s Past-due loan trends are stable • City’s non-performing asset levels are stronger than peers • City has been aggressive about char
Slide 6: Conservative Loan Portfolio Mix
Loan to Deposits 88.8% Loan to Deposits 98.8% Sample of 266 publicly traded banks and thrifts with assets between $1-$10 billion as of December 31, 2007 As of December 31, 2008 Conservative Loan Portfolio Mix
Slide 7: Retail Loan Facts
• Residential RE are 1,3,5 and 10 Yr ARMs • No Sub-prime, Interest-only, Option Adjustable • Home Equity loans include LOCs, fixed amortizing loans, non-purchase adjustable loans • 65% of Home Equity Loans are 1 st Lien Position • 66% of Home Equity Loans have a LTV < 80%. • Ave Loan Balance for Res
Slide 8: Stable Past-Due Loans (30+ days)
Stable Past-Due Loans (30+ days)
Slide 9: Past-due loans chart
4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Le 1 —— No) a8 ss i) Ny S s PS s ® SP ee se Ss Ny ey 9% oe eh go go en ge go go coh ge prt po
Slide 10: Non-performing Loans
Non-performing Loans: 1.76% of Total Loans (June 30, 2009) Greenbrier Spec Houses Eastern Panhandle 24%
Slide 11: Commercial net charge-offs
Commercial $3.026 MM $1.367MM Net Charge-offs 2009:1 Half $5.1 MM 0.28% of Average Loans
Slide 12: Greenbrier Resort Speculative Properties
Original Loan Balances $ 18.6 MM Current Loan Book Balance net of reserves $ 5.4 MM OREO after Charge-off’s $ 6.7 MM On-Balance Sheet: $ 12.1 MM (65% of orig loan) Greenbrier Resort Speculative Properties - 6/30/09
Slide 13: Investment Portfolio at 6/30/09
Orig. Cost Other than Temporary Impairment Charges (Cumm) Unrealized Gains/ (Losses) Carrying Value FNMA & FHLMC Pfd $22.7 ($21.1) ($1.0) $0.6 Municipals $ 49.3 $0 ($0.4) $48.8 MBS $292.8 $0 $6.2 $299.0 Pool Bank Trust Pfd $ 27.1 ($18.3) ($5.4) $3.4 Single Issue Bank Trust Pfd; Bank Holding Company
Slide 14: Profitability: CHCO is consistently among the most profitable banks
2005 2006 2007 2008 2008 Peers Median 2009 1 st Half Reported ROA 2.09% 2.11% 2.03% 1.12% 0.58% - 87 th %ile 1.63% ROTE 22.3% 22.4% 21.0% 11.4% 8.5% - 69 st %ile 18.4% Tangible Common Equity/TA 9.5% 10.1% 9.7% 8.83% 6.4% - 90 th %ile 9.11% NIM 4.49% 4.56% 4.34% 4.64% 3.67%- 92 nd %ile 4.29% Efficien
Slide 15: Normalization of provision and loss of PSL revenues
CHCO faced “normalization” of provision and loss of PSL revenues from 2003-2008:
Slide 16: Previously Securitized Loans
2004 2005 2006 2007 2008 2009 Projected Average Balances $83.5 MM $42.9 MM $22.3 MM $10.5 MM $5.2 MM $3.6MM Rate 17.4% 26.6% 42.2% 69.1% 108% 120% Gross Interest Revenue $14.5 MM $11.4 MM $9.4 MM $7.3 MM $5.6MM $4.0MM Previously Securitized Loans: Core growth in revenues in 2003-2008 offset lower ea
Slide 17: Liabilities: Low cost and stable deposits
Data: December 31, 2008 Liabilities: Low Cost and stable deposits drives profitability
Slide 18: CHCO's Cost of Funds Advantage
CHCO Peers Advantage CD’s 3.87% 3.81% -6 Bps Interest Bearing Deposits 2.48% 2.74% 26 Bps Total Deposits 2.08% 2.33% 25 Bps Interest Bearing Liabilities 2.48% 2.90% 52 Bps Top quartile CHCO’s Cost of Funds Advantage:
Slide 19: Strong Deposit Franchise drives Non-Interest Revenue
24% 76% 64% * As of December 31, 2008. Non- interest income excludes other than temporary impairment losses and VISA IPO gain Sample of 249 reporting publicly traded banks and thrifts with assets between $1 and $10 billion as of December 31, 2008, excluding investment gains/losses 94th percentile St
Slide 20: Retail branch service charges growth
And, retail branch service charges have demonstrated strong GROWTH: 14.8% CAGR 2001 to 2008
Slide 21: Net Interest Margin
Net Interest Margin Strong NIM driven by solid core deposit franchise & strong NIM management
Slide 22: Prime-based Floors
Notional Prime Rate Term Date $100MM 8% June 2011 $100MM 7.75% May 2011 $50MM 6.75% Nov 2009 $100MM 6% June 2010 $100MM 6% June 2009 - Purchased $600 million during 2005-2006 - Sold late 2008 - Positions CHCO for rising rates Prime-based Floors:
Slide 23: Quarterly Prime Floor Income (After-tax)
Quarterly Prime Floor Income (After-tax) Gain from sale recognized over remaining lives $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 S- of hedged LOANS Mar-09 May-10 | Jul-10 Sep-10 Nov-10 Jan-11
Slide 24: Interest Rate Risk to Net Interest Margin
CHCO is well positioned with respect to interest rate risk: Immediate Basis Point Change in Interest Rates Estimated Increase of Decrease in Net Income between 1-12 months +300 Bp +9.7% +200 Bp 5.9% +100 Bp 2.2% Data: June 30. 2009 Interest Rate Risk to Net Interest Margin:
Slide 25: Interest Rate Risk Summary
CHCO is less dependent upon NII than its peers t Fee income in top 10% of peer group CHCO’s NIM is strong relative to peers based upon strong core deposit franchise Due to Prime-based floors, CHCO’s NIM is among the best in the industry t In 2 nd Q of 2009, Prime-based floors were worth 47 bp of NIM
Slide 26: Growth within its markets
n Commercial n Retail n Insurance n Trust & Investment Management CHCO positioned to focus on Growth within its markets :
Slide 27: Growth opportunities
n n n Opportunity: City’s mix is 40% Commercial/60% Retail reflecting City’s historic retail focus. Opportunity: Some competitors have stopped lending. Opportunity: City has launched a successful new cash management initiative to address depository needs of larger business customers.
Slide 28: City Opened Wal-Marts in key markets
City Opened 4 Wal-Marts in key markets where it had significant share:
Slide 29: Branch Renovations/Expansions
Branch Renovations/Expansions to meet customer demand:
Slide 30: A Focus: Eastern Panhandle Expansion
A Focus: Eastern Panhandle Expansion
Slide 31: Expansion into Bluefield WV-VA
Expansion into Bluefield WV-VA: Bluefield WV-VA: County Deposits:$1.7 billion Branches: 50 Largest Competitors: BB&T (27%), FCBC (26%)
Slide 32: City's Newest Location: Hurricane WV
City’s Newest Location: Hurricane WV Putnam Co. WV: County Deposits:$761 MM Branches: 18 Largest Competitors: Putnam Co. Bank (50%) BB&T (10%)
Slide 33: City's Next Location: South Charleston
City’s Next Location: South Charleston
Slide 34: City Insurance
CityInsurance n 2006 Revenues $2.3 million n 2007 $4.1 million n 2008 $4.2 million n 2009 YTD $3.3 million Strategies: Added Workers Compensation Dept in 2006/7 Added Personal Lines Department in 2006/7 Opened Beckley WV Office in 2006/7 Opened Martinsburg Office in 4 th Q 2008 Opened Ashland Office
Slide 35: Trust AUM
Trust AUM: CAGR (04-08) 8% Grew AUM in 2008 despite market by taking share
Slide 36: CHCO: Capital Flexibility
- 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 - - - Purchased 1,651,172 shares in 2007 and 2008 (9.4% of outstanding shares at 12/31/06) - Driven by CH
Slide 37: Acquisitions
Acquisitions: $100MM to $500MM in assets WV, SE Ohio, Eastern KY, I81 Corridor from VA thru MD, SW Pennsylvania, North Carolina
Slide 38: CHCO represents good value and stability
Pricing Metrics *: n Price to Book: 167% n Price to Tangible Book: 207% n Price to 2010 Projected Earnings** 10.9x n Dividend Yield 4.5% n Div Payout Ratio (First Call)** 49% n Tangible Capital/Tangible Assets 9.11% n Institutional Ownership 56% * Based on Price of $30.40 (9/9/09) ** Based on analys
City Holding — Stifel Nicolaus West Coast Conference September 2009 on 6ix