City Holding Company · NASDAQ:CHCO
City — Non-Deal Roadshow (August 2013)
50 slides from City's roadshow presentation, Aug 7, 2013
Slide 1: Boston Roadshow
Boston Roadshow Scott & Stringfellow August 7, 2013
Slide 2: Forward looking statements
Forward looking statements This presentation 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: Company key facts
Total Assets $3.4 bil Branches 83 FTE 931 Market Cap $698 mil Institutional Ownership 63% Average Daily Volume $1.6 mil Date: July 29, 2013
Slide 4: Value in the banking sector? Checklist for success
Value in the banking sector? Checklist for success in current environment: Capital Strongly capitalized Markets Solid distribution network Stable geographic markets Disciplined competition Performance Strong net interest margin Strong NIM management Strong fee income Ability to control expenses Grow
Slide 5: City Holding Company
City Holding Company Markets: Operates an extremely strong retail/commercial franchise in stable markets with disciplined competition Asset Quality: Strong compared to peers and City’s management has recognized and dealt with issues Performance: Has consistently outperformed peers with respect to ea
Slide 6: City National Markets
City National Markets 1st Branch Share & 8% Deposit Share in Huntington WV/Ashland KY MSA $4.4 Billion 1st Branch Share & 10% Deposit Share in WV’s largest market; $6.1 Billion 1st Branch Share & 29% Deposit Share $2.0 Billion 4th Branch & 9% Deposit Share $2.4 Billion 2nd Branch Share & 5% Deposit
Slide 7: Acquisitions in Growth Markets
Acquisitions in Growth Markets
Slide 8: Virginia Savings Bank
Virginia Savings Bank Closed May 31, 2012 5 branches in Virginia $73 million in loans $123 million in deposits 5,700 households Regional population of 185,000 Regional Households of 72,000 Projected Population growth of 5.0% over 5 yrs Our primary competitors in this market are BB&T, United Bank, Ba
Slide 9: Community Bank
Community Bank Closed January 10, 2013 10 branches in Virginia Eight Branches in Staunton, VA region Population of 205,000 Households of 79,000 Competitors: STEL, BBT, STI, BOA, UBSI Two Branches in Virginia Beach Region Population of 1.7 million Households of 625,000 $410 million in loans $380 mill
Slide 10: Market Position
Market Position Note: Green highlight indicates market expansion as a result of the acquisition. * Deposit Branch Deposits Share Share Branch Market Population ($mm) (%) Branches (%) Rank Winchester/Martinsburg 351,000 $206 5 % 9 9 % 2 Charleston MSA 305,000 575 10 17 17 1 Huntington/Ashland MSA 285
Slide 11: Loan Composition and Loan/Deposit Ratio
Loan Composition and Loan/Deposit Ratio
Slide 12: Virginia Savings Bank Progress resolving asset quality problems
Virginia Savings Bank Progress resolving asset quality problems Took a $10.1 million Mark-to-Market at acquisition Progress (1 year following acquisition): Non-performing assets down 50% due to charge-off or workout Classified loans down 15% OREO down 48% due to charge-off or workout Past-due loans
Slide 13: Community Bank Progress resolving Asset Quality Problems
Community Bank Progress resolving Asset Quality Problems Took a $37.1 million Mark-to-Market at acquisition Progress (5 months after acquisition): Classified Loans down 15% Non-performing loans down 13% OREO down 64% due to charge-off or workout Past-due loans down 65% Remaining Mark at June 30, 201
Slide 14: Retail Enhancements in Virginia
Retail Enhancements in Virginia 80% of Virginia Branches acquired are unprofitable due to absence of retail loans Solution: Originate Retail Loans Under CHCO, YTD Retail Loan Production: $21.6MM Annualizes to $37MM Goal of $50MM for 2014 Was not a focus for predecessors due to liquidity constraints
Slide 15: Retail Enhancements in Virginia
Retail Enhancements in Virginia Closed Harrisonburg Branch (Feb 2013) Had 288 households; Primarily Indirect Auto Focus Indirect Auto Loans down $6 MM (28%) since January 2013 Scale business Unacceptable long-term losses Relocated Winchester Branch (Aug 2013) Renovated Woodstock Branch (Aug 2013)
Slide 16: Facility Enhancements – Woodstock, Virginia
Facility Enhancements – Woodstock, Virginia BEFORE AFTER
Slide 17: Facility Enhancements Winchester, Virginia
Facility Enhancements Winchester, Virginia BEFORE AFTER
Slide 18: Financial Impact of Acquisitions
Financial Impact of Acquisitions: VSB - Before VSB – After Community – Before Community - After Branches 5 5 11 10 FTE 48 37 (-23%) 153 82 (-45%) Loans^ $73 MM (Mar 12 Call) $72 MM $371 MM $381 MM * Deposits $120 MM $120 MM $385 MM $356 MM ** Expenses $4.7MM (2011) $3.0MM (-36%) (YTD Ann) $14.7 MM (
Slide 19: Industry Challenges in 2013
Industry Challenges in 2013: Economic Activity & Loan Growth Margin Compression Loan Competition Regulatory Compliance Future Regulatory Agenda
Slide 20: The key to City's success: an enviable deposit franchise
The key to City’s success: an enviable deposit franchise Branches 83 Average Deposits per Branch $34.2 MM Average Households per Branch 2,200 Average Deposit Share 12.2% Average Household Share* 24% * - Excludes Coastal Region
Slide 21: Low cost and stable funding
Low cost and stable funding: Data: June 30, 2013
Slide 22: City's NIM has been very stable
Excluding Acquisition Accretion, Interest rate floors, and PSL’s – City’s NIM has been very stable: Peer Data as of March 31, 2013 4.18% March 2008 thru June 2011: NIM supported by Interest Rate Floors June 2013: NIM supported by Accretion from acquisitions
Slide 23: CHCO's sensitivity to interest rate risk
CHCO’s sensitivity to interest rate risk : Immediate Basis Point Change in Interest Rates Estimated Increase or Decrease in Net Income between 1-12 months +400 Bp +2.9% +300 Bp +3.8% +200 Bp +2.8% +100 Bp +0.2% Data: June 30, 2013 Assumes that deposit mix changes as rates rise
Slide 24: Strong deposit franchise drives top decile non-interest revenue
Strong deposit franchise drives top decile non-interest revenue: *As of June 30, 2013. Non-interest income excludes investment gains/(losses) Sample of 277 reporting publicly traded banks and thrifts with assets between $1 and $10 billion as of March 31, 2013, excluding investment gains/(losses)
Slide 25: Non-interest income is branch driven
Non-interest income is branch driven: 2008 2009 2010 2011 2012 YTD 2013 Bankcard Revenues $8.6 $9.0 $9.9 $11.1 $12.4 $6.6 Service Charges $37.4 $36.0 $30.1 $27.0 $26.3 $13.4 Insurance $4.2 $5.6 $5.5 $5.9 $6.1 $3.2 Investment Management $2.2 $2.3 $2.8 $3.1 $3.8 $2.0 BOLI $2.9 $3.3 $3.4 $3.2 $3.0 $1.6
Slide 26: Past-due loan Trends (30+ days)
Past-due loan Trends (30+ days)
Slide 27: Past Dues Originated & Acquired
Past Dues Originated & Acquired as of June 30, 2013 C&I CRE RRE HE Con Total Originated $0.2 $2.6 $6.5 $0.7 $0.4 $10.4 Acquired $3.7 $13.6 $2.0 - $0.7 $20.0 Total $3.9 $16.2 $8.5 $0.7 $1.1 $30.4 Past Dues: Increase in 2013 reflects Acquisition
Slide 28: Charge-off trends
Charge-off trends: Source: FDIC, All Insured Depository Institutions Peer data as of March 31, 2013
Slide 29: Non-performing assets & OREO
Non-performing assets & OREO Source: FDIC, All Insured Depository Institutions Peer data as of March 31, 2013
Slide 30: A High Performing Bank
1. Bank Director ranked City #3 of largest 150 US banks in 2010 2. Bank Director ranked City #8 among US Banks with assets between $1B - $5B in 2011 3. 2013: Bank Director named City 10th on the “Nifty Fifty” for best use of capital A High Performing Bank
Slide 31: ROA
ROA Peer Data as of March 31, 2013
Slide 32: ROTCE
ROTCE Peer Data as of March 31, 2013
Slide 33: Efficiency Ratio
Efficiency Ratio Data as calculated using SNL Financial definition. Peer data as of March 31, 2013.
Slide 34: Noninterest Income/Total Revenues
Noninterest Income/Total Revenues Peer Data as of March 31, 2013
Slide 35: Growth: positioned to achieve reasonable growth in core franchise
Growth: CHCO is positioned to achieve “reasonable growth” in its core franchise Commercial Retail Insurance Trust & Investment Management
Slide 36: Commercial loan growth
Commercial loan growth: Success achieved due to community bank orientation, strong team, strong underwriting, and strong local economies Growth percentages exclude acquisitions in 2005, 2012 & 2013
Slide 37: Retail loan growth
Retail loan growth: Adjustable Rate Mortgages, Home Equity Loans, Installment credit
Slide 38: Deposit growth opportunity
Deposit growth opportunity: CHCO has many small deposit relationships; peers tend to have larger commercial & public deposits Branches Deposits Deposits/Branch CHCO 83 $ 2.9 B $35 million BBT 80 $ 6.0 B $74 million UBSI 38 $ 1.9 B $51 million JPM 19 $ 1.2 B $66 million HBAN 17 $ 0.9 B $53 million In
Slide 39: CityInsurance: Growing Revenues
CityInsurance: Growing Revenues Lines of Business 2006 $2.3 million Personal Lines 2007 $4.1 million Workers Compensation 2008 $4.2 million Health/Benefits/Life Ins 2009 $5.6 million Property/Casualty 2010 $5.5 million Medical Malpractice 2011 $5.9 million 2012 $6.1 million 2013 $3.2 million YTD Mar
Slide 40: Trust AUM: Strong growth
Trust AUM: Strong growth CAGR (Dec 31, 2004-December 31, 2012) over 11.2%
Slide 41: CHCO: Capital flexibility
CHCO: Capital flexibility Tangible common equity at 6/30/13: 8.90% Dividends 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 Increased 3% in January 2012 to $1.40
Slide 42: Tangible Common Equity
Tangible Common Equity: strong following 2 acquisitions in 2012 & 2013
Slide 43: Average Shares Outstanding
19,000,000 18,000,000 17,000,000 16,000,000 15,000,000 14,000,000 13,000,000 12,000,000 Average Shares Outstanding iit 2005 2006 2007 2008 2009 2010 2011 2012 Jun-13 Gity Holding Company
Slide 44: Shares outstanding and shorted
At July 15, 2013: 1,712,480 shares shorted 15,683,885 shares outstanding Gity Holding Company
Slide 45: Growth per share
Growth per share (12/31/04 – 6/30/13): Loans per share: 7.6% CAGR Deposits per share: 6.6% CAGR Non-interest inc per share: 2.3% CAGR Expenses per share*: 4.5% CAGR Implication: While CHCO operates in relatively low growth markets, high profitability allows share repurchases, which have driven core
Slide 46: Acquisition philosophy
Acquisition philosophy: Historically less acquisitive than peers Acquisitions must truly be strategic or meaningfully accretive Opportunities have increased Actively looking: In-market Adjacent market Growth markets Size: Generally $100MM to $1B
Slide 47: Acquisition territory
Acquisition territory:
Slide 48: CHCO represents good value and stability
CHCO represents good value and stability Pricing Metrics*: Price to Book: 189% Price to Tangible Book: 237% Price to 2014 Projected Earnings** 14.2x Dividend Yield 3.3% Div Payout Ratio (First Call)** 47% Tangible Capital/Tangible Assets*** 8.90% Institutional Ownership 63% * Based on Price of $44.4
Slide 49: Value in the banking sector? Checklist for success
Value in the banking sector? Checklist for success in current environment: Capital Strongly capitalized – TCE approaching 9% Markets Solid distribution network - Excellent Stable geographic markets – Yes; WV, E Kentucky, and Western Va. Disciplined competition - Yes – few de novo’s Performance Stron
Slide 50: Gity trolding Company
Gity trolding Company