EX-99.1 3 ex99-1.htm SLIDE PRESENTATION, STIFEL NICOLAUS ex99-1.htm
 
   
Stifel Nicolaus
West Coast - September 2009
 
 
 
Forward Looking Statements
 
 
 
n Total Assets      $2.6 bil
n Branches      69
n FTE      830
n Market Cap     $480 mil 
n Institutional Ownership   56% 
n Avg Daily Volume    $2.5 mil
 Date: June 30, 2009
 
 
 
1st Branch Share & 9% Deposit Share
in Huntington WV/Ashland KY MSA
$3.8 Billion
1st Branch Share & 10% Deposit Share
in WV’s largest market; $5.3B
1st & 27% Deposit Share
$2.0 Billion
2nd Branch Share & 8% Deposit
Share in Morgan, Berkeley
& Jefferson Co. WV
$1.9 Billion
Key Markets
 
 
 
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 charging
 down non-performing loans
 
 
 
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
 
 
 
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 1st Lien Position
•66% of Home Equity Loans have a LTV < 80%.
•Ave Loan Balance for Residential RE is $78,000
•Ave Loan Balance for Home Equity loans is $35,000
 
 
 
Stable Past-Due Loans (30+ days)
 
 
 
NPA’s to Loans & OREO
 
 
 
31%
45%
 
 
 
Commercial
$3.026 MM
$1.367MM
Net Charge-offs
2009:1 Half $5.1 MM
0.28% of Average Loans
 
 
 
Greenbrier Resort Speculative
Properties - 6/30/09
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)  
 
 
 
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
Pfd;
Sub-debt of FI’s
$110.8
($1.0)
($14.0)
$95.8
Money Markets &
Mutual Funds
$64.8
$0
$0
$64.8
Fed & FHLB Stock
$ 13.0
$0
$0
$13.0
Bank Equities
$ 8.9
$0
($3.0)
$5.9
 
 
 
Profitability: CHCO is consistently
among the most profitable banks:
 
2005
2006
2007
2008
2008 Peers
Median
2009
1st Half
Reported ROA
2.09%
2.11%
2.03%
1.12%
0.58% - 87th
%ile
1.63%
ROTE
22.3%
22.4%
21.0%
11.4%
8.5% - 69st
%ile
18.4%
Tangible Common
Equity/TA
9.5%
10.1%
9.7%
8.83%
6.4% - 90th
%ile
9.11%
NIM
4.49%
4.56%
4.34%
4.64%
3.67%- 92nd
%ile
4.29%
Efficiency Ratio
46.7%
44.5%
45.9%
46.3%
63.1% - 92nd
%ile
50.4%
Non-Int
Rev/Total Rev
34%
34%
34%
36%
23% - 94th
%ile
37.7%
* Non-Int Reve excludes gain on Visa IPO; Securities Losses
 
 
 
CHCO faced “normalization” of provision
and loss of PSL revenues from 2003-2008:
 
 
 
Previously Securitized Loans:

Core growth in revenues in 2003-2008 offset
lower earnings from PSL balances
 
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
 
 
 
Liabilities: Low Cost and stable
deposits drives profitability
Data: December 31, 2008
 
 
 
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
 
 
 
Strong Deposit Franchise drives top
decile 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
 
 
 
And, retail branch service charges
have demonstrated strong GROWTH:
14.8% CAGR
2001 to 2008
 
 
 
Net Interest Margin
Strong NIM driven by solid core deposit
franchise & strong NIM management
 
 
 
- Purchased $600 million during 2005-2006
- Sold late 2008
- Positions CHCO for rising rates
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
Prime-based Floors:
 
 
 
 
 
 
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:
 
 
 
Interest Rate Risk Summary:
 u CHCO is less dependent upon NII than its
 peers
 t Fee income in top 10% of peer group
 u CHCO’s NIM is strong relative to peers based
 upon strong core deposit franchise
 u Due to Prime-based floors, CHCO’s NIM is
 among the best in the industry
 t In 2nd Q of 2009, Prime-based floors were
 worth 47 bp of NIM
 u CHCO is positioned to benefit from economic
 recovery
 t An increase of 300 Bp in rates would result
 in an increase of 41 bp of NIM
 
 
 
CHCO positioned to focus on
Growth within its markets:
n Commercial
n Retail
n Insurance
n Trust & Investment Management
 
 
 
n Opportunity:
 City’s mix is 40%
 Commercial/60%
 Retail reflecting
 City’s historic retail
 focus.
n Opportunity: Some
 competitors have
 stopped lending.
n Opportunity:
 City has launched a
 successful new cash
 management initiative
 to address depository
 needs of larger
 business customers.
 
 
 
City Opened 4 Wal-Marts in key markets
where it had significant share:
 
 
 
Branch Renovations/Expansions to
meet customer demand:
 
 
 
A Focus: Eastern Panhandle Expansion
 
 
 
Expansion into Bluefield WV-VA:
Bluefield WV-VA:
 County Deposits:$1.7 billion
 Branches: 50
 Largest Competitors: BB&T (27%), FCBC (26%)
 
 
 
City’s Newest Location: Hurricane WV
Putnam Co. WV:
County Deposits:$761 MM
Branches: 18
Largest Competitors:
Putnam Co. Bank (50%)
BB&T (10%)
 
 
 
City’s Next Location: South Charleston
 
 
 
CityInsurance
n 2006 Revenues   $2.3 million
n 2007     $4.1 million
n 2008    $4.2 million
n 2009 YTD    $3.3 million
Strategies:
 u Added Workers Compensation Dept in 2006/7
 u Added Personal Lines Department in 2006/7
 u Opened Beckley WV Office in 2006/7
 u Opened Martinsburg Office in 4th Q 2008
 u Opened Ashland Office in 4th Q 2008
 u Acquired Nitro-based Patton Ins. Agency in Dec 2008
 u Added Medicus Representation in late 2008
 u Acquired Teays Valley based Dickens & Clark in Apr 09
 
 
 
Trust AUM: CAGR (04-08) 8%
 Grew AUM in 2008 despite market by taking share
 
 
 
CHCO: Capital Flexibility
  Tangible Common Equity at 6/30/09: 9.11%
  No TARP!!!!
  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
 - Dividend Yield over 4%
 - Dividend Payout Ratio of < 50% (Analyst Est. EPS)
  Share Repurchases
 - Purchased 1,651,172 shares in 2007 and 2008 (9.4% of
 outstanding shares at 12/31/06)
 - Driven by CHCO’s strong profitability, coupled with
 CHCO’s dividend coverage ratio against first call
 estimates, CHOC can achieve greater long-term share
 repurchase activity than peers.
 
 
 
Acquisitions:
$100MM to $500MM in assets
WV, SE Ohio, Eastern KY, I81 Corridor from VA
thru MD, SW Pennsylvania, North Carolina
 
 
 
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 analyst estimate of $2.80 (average of 5)
CHCO represents good value and
stability