City Holding Company · NASDAQ:CHCO
City — Rodman & Renshaw Annual Global Investment Conference 2010
40 slides from City's conference presentation, Sep 14, 2010
Slide 1: Rodman & Renshaw Annual Global Investment Conference
Rodman & Renshaw Annual Global Investment Conference September 2010
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 key statistics
n n n n n n Total Assets $2.6 bil Branches 67 FTE 812 Market Cap $445 mil Institutional Ownership 62% Average Daily Volume $3.0 mil Date: August 30, 2010
Slide 4: Value in the Banking Sector? Checklist for success
n Strongly capitalized n Solid Distribution Network n Stable Geographic Markets n Disciplined Competition n Strong Net Interest Margin n Strong NIM Management n Strong Fee income n Ability to control expenses n Liquidity to grow n Ability to grow share in market n Opportunity to grow into new market
Slide 5: City Holding Company: markets, asset quality, performance, growth
n Operates an extremely strong retail/commercial franchise in stable markets with disciplined competition n Strong compared to peers and City’s management has recognized and dealt with issues n Has Consistently outperformed peers with respect to earnings, capital, and liquidity n Growing and succeed
Slide 6: Key Markets
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 1 st & 27% Deposit Share $2.0 Billion 2 nd Branch Share & 8% Deposit Share in Morgan, Berkeley & Jefferson Co. WV $1.9 Billion
Slide 7: Liabilities: low cost and stable deposits drive profitability
Data: December 31, 2009 Liabilities: Low Cost and stable deposits drives profitability
Slide 8: CHCO's Cost of Funds Advantage
CHCO Peers Ave Advantage CD’s 3.16% 2.75% (41 Bps) Interest Bearing Deposits 1.95% 1.90% (5 Bps) Total Deposits 1.65% 1.69% 4 Bps Interest Bearing Liabilities 1.87% 2.18% 31 Bps Data: 2009. Peers reflect publicly traded $1 to $10 billion banks reporting these rates CHCO’s Cost of Funds Advantage:
Slide 9: Net Interest Margin
Net Interest Margin Strong NIM driven by solid core deposit franchise & strong NIM management
Slide 10: Strong Deposit Franchise drives top decile non-interest revenue
24% 76% 63% * As of December 31, 2009. Non- interest income excludes other than temporary impairment losses and VISA IPO gain Sample of 295 reporting publicly traded banks and thrifts with assets between $1 and $10 billion as of December 31, 2009, excluding investment gains/losses Strong Deposit Fra
Slide 11: City's Deposit Franchise
n City’s Non-Interest Income represents 36% of total revenues n CHCO Ave Deposits/Branch $32 MM n Peer Ave Deposits/Branch $41 MM n Average Depository Hhlds/Branch 2,200 n Industry Ave. Hhlds per Branch* 1,220 As compared to other $2.6B banks, City has more branches and in each of these branches, mo
Slide 12: Regulation E Time-Line and Real-time Processing Implementation
n May 12, 2010: Implemented “Passport” software providing “real-time” posting of debits/credits intra-day n April 1, 2010: Began Communication Effort regarding Regulation E n 49% of customers made election prior to implementation n Implementation: August 14 th n Additional 4% of customers have made
Slide 13: Regulation E
n Customers who have NEVER overdrawn their account: Response Rate: 37% Opt-In / Opt-Out / Force-out: 26% / 11% /63% n Customers who HAVE overdrawn their account: Response Rate: 86% Opt-In/ Opt-Out / Force-out: 75% /11% /14% n Estimated impact to Total Service Charge Revenues from Reg E & “Passport”
Slide 14: 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 15: Conservative Loan Portfolio Mix
Loan to Deposits 82.8% Loan to Deposits 86.5% Sample of 296 publicly traded banks and thrifts with assets between $1-$10 billion as of December 31, 2009 As of December 31, 2009 Conservative Loan Portfolio Mix
Slide 16: 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 17: Stable Past-Due Loans (30+ days)
Past-due loans trends are stable and reflect better economics in City’s core markets Stable Past-Due Loans (30+ days)
Slide 18: 4.00% 3.50% 3.00% 2.50% 2.00% 1.50%
4.00% 3.50% 3.00% 2.50% 2.00% 1.50%
Slide 19: Non-performing Assets
Non-performing Assets: 1.28% of Total Loans (June 30, 2010) Greenbrier Spec Houses All Other > astern Panhandle 25%
Slide 20: Commercial Net Charge-offs 2010 YTD
Commercial $0.770MM Net Charge-offs: 2010 YTD
Slide 21: Greenbrier Resort Speculative Properties
Original Loan Balances $ 18.0 MM Current Loan Book Balance net of reserves $ 1.0 MM OREO after Charge-off’s $ 9.3 MM On-Balance Sheet: $ 10.3 MM (57% of orig loan) Greenbrier Resort Speculative Properties - 6/30/10 Sale of $1.7MM in 3 rd Quarter
Slide 22: CHCO's performance is exceptionally strong
2010 YTD Reported ROA 1.51% ROTE 15.6% Tangible Common Equity/TA 9.86% NIM 4.18% Efficiency Ratio 53.4% Non-Int Rev/Total Rev* 36.2% CHCO’s performance is exceptionally strong……..
Slide 23: CHCO consistently among the strongest
2005 2006 2007 2008 2009 2009 Peers** Median Reported ROA 2.09% 2.11% 2.03% 1.12% 1.63% 0.46% - 95 th %ile ROTE 22.3% 22.4% 21.0% 11.4% 18.0% 6.62% - 95 th %ile Tangible Common Equity/TA 9.5% 10.1% 9.7% 8.83% 9.78% 7.4% - 95 th %ile NIM 4.49% 4.56% 4.34% 4.64% 4.18% 3.76%- 90 th %ile Efficiency Rati
Slide 24: Growth: positioned to achieve reasonable growth in core franchise
n Commercial n Retail n Insurance n Trust & Investment Management GROWTH: CHCO is positioned to achieve “reasonable growth” in its core franchise:
Slide 25: Deposit Growth Opportunity
Branches Deposits Deposits/Branch CHCO 67 $ 2.2 B $33 million BBT 36 $ 3.3 B $92 million JPM 20 $ 1.2 B $60 million UBSI 20 $ 1.2 B $60 million HBAN 14 $ 0.9 B $64 million FITB 10 $ 0.4 B $40 million Includes branches within 5 miles of City Branch Source: SNL Deposit Growth Opportunity: CHCO has man
Slide 26: Commercial Loan Growth
Commercial Loan Growth: Success achieved due to community bank orientation, strong team, strong underwriting, and strong local economies 18.00% + 16.00% + Growth in 2005 14.00% + i 12.00% + 10.00% + 8.00% + 6.00% + 4.00% + 2.00% + 0.00% - 2003 2004 2005 2006 2007 2008 2009 2010 YTD
Slide 27: Growth: Expanding Retail Distribution
Growth: Expanding Retail Distribution to capture additional retail households
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: Eastern Panhandle Expansion exhibits strong demographics
Eastern Panhandle Expansion exhibits strong demographics
Slide 31: South Charleston WV expansion
Sept 2010: Expansion into South Charleston WV has encouraging early results
Slide 32: CityInsurance
CityInsurance n 2006 Revenues $2.3 million n 2007 $4.1 million n 2008 $4.2 million n 2009 $5.6 million Strategies: 2007: Added Workers Compensation Dept in 2007 Added Personal Lines Department in 2007 Opened Beckley WV Office in 2007 2008: Opened Martinsburg Office in 4 th Q 2008 Opened Ashland Offi
Slide 33: Trust AUM
Trust AUM: CAGR (04-10) of 8% Grew AUM in 2008/10 despite market by taking share
Slide 34: 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 1,784,458 shares in 2007, 2008 and 2009 (10.2% of outstanding shares at 12/31/06); - Purc
Slide 35: Growth Per Share (12/31/04 - 12/31/09)
n Loans Per Share: 8.7% CAGR n Deposits Per Share: 6.4% CAGR n Non-Interest Inc Per Share: 4.5% CAGR n Expenses Per Share: 4.4% CAGR Growth Per Share (12/31/04 - 12/31/09): Implication: While CHCO operates in relatively low growth markets, high profitability allows share repurchases, which have driv
Slide 36: Acquisition Philosophy
Acquisition Philosophy: • City has historically been less acquisition focused than peers - acquisitions must truly be strategic or meaningfully accretive • Going forward, City is likely to be more acquisitive than historically due to an increasing number of attractive opportunities • City will conti
Slide 37: Acquisition Philosophy
Acquisition Philosophy: • City will actively consider acquisition of banks in the $100 million to $1 billion range within its “acquisition footprint” • City will consider acquisition of certain under- performing banks larger than $1 billion in assets • Future acquisitions should: • Increase franchis
Slide 38: Acquisition Territory
Acquisition “Territory”:
Slide 39: Value in the Banking Sector? Checklist for success
n Strongly capitalized n Solid Distribution Network - n Stable Geographic Markets - n Disciplined Competition - n Strong Net Interest Margin - n Strong NIM Management - n Dependence on NII n Ability to control expenses - n Liquidity to grow - n Ability to grow share in market - n Opportunity to grow
Slide 40: CHCO represents good value and stability
Pricing Metrics *: n Price to Book: 142% n Price to Tangible Book: 174% n Price to 2010 Projected Earnings** 11.3x n Dividend Yield 4.8% n Div Payout Ratio (First Call)** 54% n Tangible Capital/Tangible Assets 9.86% n Institutional Ownership 62% * Based on Price of $28.35 (8/30/10) ** Based on analy
City Holding — Rodman & Renshaw Annual Global Investment Conference 2010 on 6ix