City Holding Company · NASDAQ:CHCO
City — Friedman Billings Ramsey Financial Institutions Conference December 2003
38 slides from City's conference presentation, Dec 3, 2003
Slide 1: Friedman Billings Ramsey Financial Institutions Conference December 2003
Freidman Billings Ramsey Financial Institutions Conference December 2003
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 2 Such information involves the default rates on its retained charges to earnings; (4) the Company Company could have adverse legal actions changes in the interest rate environment Forward-looking statements This news release contains certain forward-looking statements tha
Slide 3: Corporate Profile
• 3 • accounts * WV outstanding Bank 275,000 Charleston shares capitalization • 2003 • Profile Commercial in Offices households; common market 20, • million November • Billion Banking close $2.0 headquartered 55 150,000 16,636,000 $571 market • of • Corporate . . . . As
Slide 4: History of Problems and Agreements
• 4 • for of and high share Federal a per from dividends $3.81 and cash OCC loans” share or per share dividends million with “problem $5.125 $54.4 in at common preferred History of 2001 Agreements trading share trust loss & million per Discontinued Net 2000 Formal Reserve $130 Stock $45 deferred • P
Slide 5: Turnaround Timeline
• 5 • Jun-02 • Mar-02 • President Dec-01 1/31/01 President -Dayton—President Turnaround Sep-01 CEO Lima Indianapolis Bank, Bank, Regional of the Jun-01 becomes banking City—Bank in National One Mar-01 Francis years First National Metropolitan Bank Peoples • . . . . • Jerry . • Managing 1 0 Dec-00 .
Slide 6: Assembling The Management Team
Assembling The Management Team • PhD, NBD, Indianapolis banking of Hageboeck, CIO in National, Bank and years Peoples • Indiana • Skip CFO . . • . • Retail One, Indianapolis • Sr. Officer banking of • and in Bank Bank Butcher, years Norwest, Peoples 15 • Bill Banking Operations . . • . • and First I
Slide 7: It's All About Management
It’s All About Management Peoples Bank Corporation of Indianapolis $2.92 $2.04 1998 $1.99 28% $1.70 1996 (Fully Diluted) $1.22 CAGR Earnings Per Share $0.86 1994 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 7 $73.00 $34.00 1998 $36.00 $18.00 1996 60% Stock Price $12.13 CAGR (34% w/o merger) $10.38 1994
Slide 8: Writing Down Problem Assets
• Jun-02 • new in losses Mar-02 interest with Dec-01 business retained unrecognized million accordance to loans $5.7 Sep-01 in reflect in of servicing million related to million Down Jun-01 million expense mortgage $30 guidance loans $7.5 It 2001: $7.9 off Mar-01 1, the down off provision April Exit
Slide 9: Operational Enhancement and Best Practices
• 9 • Jun-02 over revenue million to expense $7 Mar-02 50% charge of • Practices < 1 • practices” from service savings changes to provision Dec-01 “best took fees in facilities and annual operational 4 loans; Sep-01 service increase with of from in of 60% 27% subsidiaries Jun-01 enhancement collecti
Slide 10: Credit Focus
• Jun-02 10 • risk formal expense a Mar-02 persons assigned approval 7 provision & adopted of Dec-01 loans loans; loan team took and loans; Sep-01 Retail policy workout in commercial 66,000 loan underwriting loan million • Jun-01 2001: of • Credit 30, 100% all loan $2.9 On scored off million Mar-01
Slide 11: Returning to Profitability
• Jun-02 0.86% program 11 of provision Mar-02 ROA training agreements Dec-01 credit loans reduced operating Fed loans; and • Sep-01 with in • Profitability comprehensive OCC substandard million 2001: lenders with of million • Jun-01 13.3% • To 31, profitability month fully $8.3 $1.8 to of million of
Slide 12: Mission Accomplished
• of 12 Jun-02 ROE Federal payment and and Mar-02 and buy-back to million 1.48% OCC • Dec-01 of dividends stock returned $1.8 ROA with common loans; of Sep-01 2002 common in expense of : quarter Agreements dividends share million Jun-01 months Formal resumption million $22.4 provision • Accomplished
Slide 13: Success Story
• 13 • with with 0.34% outstanding Story share share investment loans per per of to Success $1.9020.54% $1.9525.11% (excluding percent Losses orof orof 25% a up as Lease millionROE millionROE Income 48.05% Loans & $32.5and months) $33.0and Loan Performing 1.59% 2.21% gains/losses) Ratio for nine of
Slide 14: Awards and Stock Return Recognition
• 14 • 2002 publicly with were of Year” to • US 2001, million • stock years the 2, $100 all of • of Directors November below • index two & of • traded best period capitalization • prior Banker the • th for annual 4 the return market and • publicly and total $5 100 over Employees by under banks 391%
Slide 15: Charleston, West Virginia
Chaseston, West Virginia 25313 (G04) 769-1106 wontltgholding.com
Slide 16: Key Markets
16 8% Market Share in DC suburbs WV’s fastest growing market 30% Market Share 11% Market Sharein WV’s largest market largest market Key Markets 12% Market Sharend in WV’s 2
Slide 17: Value Proposition
Value Proposition Proven management team focused on delivering shareholder value Low risk/High returns Highly visible near-term opportunities CHCO’s 17
Slide 18: Business Model
18 gathering Business Model retail bank core deposit CHCO’s We are a We focus on
Slide 19: City National Bank Customer Profile
19 $396,804 $844,342 $ Loans Commercial $326,913 Retail $1,411,963 $ Deposits City National Bank Customer Profile $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Internal data as of June 30, 2003 Source:
Slide 20: Favorable Revenue Profile
Favorable Revenue Profile 68% City Holding Company Net Interest Income Non Interest Income 32% 78% Peer Group Net Interest Income Non Interest Income 22% 20 As of September 30, 2003*$1-3 billion peer group as compiled by the FFIEC in their Uniform Bank Performance Reports
Slide 21: Totally Free Checking Accounts Growth
21 Oct- 03 Sep- 03 15% Growth Aug- 03 Jul- 03 Jun- 03 May- 03 Apr- 03 Mar- 03 Feb- 03 Jan- 03 Dec- 02 Nov- 02 Oct- 02 Sep- 02 Aug- 02 Jul- 02 Jun- 02 May- 02 Apr- 02 Mar- 02 Feb- 02 Jan- 02 Totally Free Checking Accounts 110000 108000 106000 104000 102000 100000 98000 96000 94000 92000 90000
Slide 22: High Quality and Stable Funding Source
High Quality and Stable Funding Source 56% City Holding Company 13% 31% 51% Peer Group* 27% 22% Transaction & Savings Deposits Time <$100k Time>$100k; Repo & Other Borrowing Transaction & Savings Deposits Time <$100k Time>$100k; Repo & Other Borrowing 22 As of September 30, 2003*$1-3 billion peer gr
Slide 23: Conservative Loan Portfolio Mix
Conservative Loan Portfolio Mix 36% 25% 6% Commercial Real Estate Residential Real Estate Home Equity Consumer/Other C&I 7% City Holding Company 26% 4% 26% 17% Peer Group* Commercial Real Estate Residential Real Estate Home Equity Consumer/Other C&I 17% 36% 23 99.9% Loan to Core Deposits 80.4% Loan
Slide 24: Real Estate Based Lending Focus
Real Estate Based Lending Focus 24 Other Loans 13.4% Real Estate Secured Loans 86.6% As of September 30, 2003
Slide 25: Growth in Targeted Lines of Business
25 Sep-03 Jun-03 Mar-03 Indirect & Consumer Dec-02 Sep-02 Jun-02 Mar-02 Dec-01 Sep-01 Jun-01 Commercial Real Estate & Home Equity Growth in targeted lines of business Mar-01 $650,000 $550,000 $450,000 $350,000 $250,000 $150,000 $50,000
Slide 26: Performance Objectives
26 10% + 20% 1.50% Maintain well-capitalized status Performance Objectives Earnings Per Share Growth ROE ROA Capital
Slide 27: Performance Measures
27 25.1% 2003 ROE 20.5% 2002 -16.8% 2001 2.21% 2003 ROA 1.59% 2002 -1.07% 2001 $2.60 2003 $1.90 2002 EPS (diluted) -$1.54 Performance Measures 2001 2003 is 9/30/03 YTD annualized.
Slide 28: Strong & Stable Net Interest Margin
4.50% 28 Q3—03 4.72% 4.02% Q2—03 4.66% 4.08% Q1—03 Peers 4.68% 4.29% Q4—02 GAAP 4.83% 4.30% Q3—02 4.67% 4.28% Q2—02 4.52% 4.26% Q1—02 Strong & Stable Net Interest Margin 4.9% 4.7% 4.5% 4.3% 4.1% 3.9% 3.7% 3.5%
Slide 29: Strong Core Performance
29 Strong Core Performance While City Holding Company has benefited from low and negative provision expense and from a high accrual rate on its retained interests, in the absence of these factors CHCO would still demonstrate: high and growing profitability strong and stable net interest margins high
Slide 30: Strong Loan Quality
30 0.80% Peer 0.34% Non Performing Loans/Loans 0.52% Assets/Assets 0.24% Non Performing City Holding Company Strong Loan Quality 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% *$1-3 billion peer group as compiled by the FFIEC in their Uniform Bank Performance Reports 3/31/03
Slide 31: Strong Loan Loss Reserve
31 268% Peers 551% Loan Loss Reserve/Non Performing Loans 1.45% Strong Loan Loss Reserve 1.89% Loan Loss Reserve/Total Loans City Holding Company *$1-3 billion peer group as compiled by the FFIEC in their Uniform Bank Performance Reports 3/31/03
Slide 32: Net Charge-Offs
32 -$0.1 2003 $21.9 2002 Net Charge-Offs $22.1 2001 $30 $25 $20 $15 $10 $5 $0 -$5 -$10 The Company recorded a negative provision of $5.2 million in Q2 and Q3 2003 Net Charge-Offs/Opportunity? Millions In
Slide 33: Limited Interest Rate Risk
33 6% 1% Estimated Increase orDecrease in Net Income over 1 year +13%+- +300 Bp+100 Bp50 Bp Limited Interest Rate Risk Immediate BasisPoint Change inInterest Rates—As of 9/30/03
Slide 34: Why Own Our Stock?
• 34 • on 488% • Stock? by • Our focused plans value Own team value incentive options shareholder You stock 2001 • management shareholder City’s January • Should Performance-based • Value-vested Improved since • Proven delivering . . • Why .
Slide 35: Why Own Our Stock?
• 35 • Stock? Revenues Our Banking • Own • Returns Sheet Quality Mortgage You Funded Balance Loan Capitalized on Should Risk/High Liquidity Core reliant Fortress Pristine High Strongly Retail Not • Low . . . . . • Why .
Slide 36: Why Own Our Stock?
• 36 • in • Stock? $57.5M provision NII rates called loss enhance rising • Our opportunities to from • from loan • Own negative designed benefits near-term expense issue You or strategy Should visible interest Preferred low periods preserving Lower Trust Potential future Leverage while • Highly . .
Slide 37: 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 O c t-03 Sep-03 Aug-03 J ul-03 J un-03 M ay -03 Apr-03 M ar-03 F eb-03 J an-03 D ec -02 N ov -0
Slide 38: Questions?
Citys, Questions?
City Holding — Friedman Billings Ramsey Financial Institutions Conference December 2003 on 6ix