EX-99.1 3 exhibit99-1.htm EXHIBIT 99.1, SLIDE PRESENTATION FOR KBW CONFERENCE exhibit99-1.htm
   
Keefe, Bruyette & Woods
 February 2010
 
 
 
Forward Looking Statements
 
 
 
n Total Assets      $2.6 bil
n Branches      67
n FTE      809
n Market Cap     $488 mil 
n Institutional Ownership   63% 
n Avg Daily Volume    $4.5 mil
 Date: February 18, 2010
 
 
 
City Holding Company:
n Markets: Operates an extremely strong
 retail/commercial franchise in stable markets with
 disciplined competition
n Asset Quality: Strong compared to peers and City’s
 management has recognized and dealt with issues
n Performance: Has Consistently outperformed
 peers with respect to earnings, capital, and liquidity
n Growth: Growing and succeeding in slow-growth
 stable markets with targeted expansion into new
 markets
 
 
 
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
 
 
 
Loan to Deposits 82.8%
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, 2009
 
 
 
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
 
 
 
33%
45%
 
 
 
Commercial
$3.026 MM
$1.367MM
Net Charge-offs
2009: Net C/O $10.6 MM
 Provision $ 7.1 MM
Net C/O 0.59% of Average Loans
 
 
 
Greenbrier Resort Speculative
Properties - 12/31/09
Original Loan Balances    $ 18.2 MM
Current Loan Book Balance net of reserves $ 3.8 MM
OREO after Charge-off’s     $ 7.8 MM
On-Balance Sheet:      $ 12.6 MM
       (64% of orig loan)  
 
 
 
Investment Portfolio at 12/31/09
Orig.
Cost
Other than
Temporary
Impairment
Charges (Cumm)
Unrealized
Gains/
(Losses)
Carrying
Value
Municipals
$ 54.1
$0
$0.3
$54.4
MBS
$306.1
$0
$8.7
$314.8
Pool Bank Trust Pfd
$ 27.1
($20.0)
($0.0)
$7.1
Single Issue Bank
Trust Pfd; Bank
Holding Company
Pfd;
Sub-debt of FI’s
$109.6
($1.0)
($5.3)
$103.4
Money Markets &
Mutual Funds
$16.9
$0
$0
$16.9
Fed & FHLB Stock
$ 13.0
$0
$0
$13.0
Bank Equities
$ 10.1
($1.5)
($3.5)
$5.1
 
 
 
Performance: CHCO has been
consistently among the strongest:
2005
2006
2007
2008
2008
Peers**
Median
2009
Reported ROA
2.09%
2.11%
2.03%
1.12%
0.38% -
100th %ile
1.63%
ROTE
22.3%
22.4%
21.0%
11.4%
4.3% - 95th
%ile
18.0%
Tangible Common
Equity/TA
9.5%
10.1%
9.7%
8.83%
8.0% - 95th
%ile
9.78%
NIM
4.49%
4.56%
4.34%
4.64%
3.71%- 95th
%ile
4.18%
Efficiency Ratio
46.7%
44.5%
45.9%
46.3%
62.8% -
100th %ile
50.0%
Non-Int
Rev/Total Rev*
34%
34%
34%
36%
28.2% -
100th %ile
37.9%
* Non-Int Rev excludes gain on Visa IPO; Securities Losses
•** Peer Group of 20 Regional Banks of comparable size & geography
 
 
 
Yet, strong bottom line results continue
net of security gains& losses:
Reported EPS Core EPS
Source: SNL (Core Earnings exclude Invest Security
Gains/Losses and Non-recurring Income
 
 
 
CHCO faced “normalization” of provision
and loss of PSL revenues from 2003-2009:
 
 
 
Previously Securitized Loans:

Core growth in revenues in 2003-2009 offset
lower earnings from PSL balances
2004
2005
2006
2007
2008
2009
2010
proj
Average
Balances
$83.5
MM
$42.9
MM
$22.3
MM
$10.5
MM
$5.2
MM
$3.9
MM
$1.5
MM
Rate
17.4%
26.6%
42.2%
69.1%
108%
128%
159%
Gross
Interest
Revenue
$14.5
MM
$11.4
MM
$9.4
MM
$7.3
MM
$5.6
MM
$3.9
MM
$2.4
MM
 
 
 
Liabilities: Low Cost and stable
deposits drives profitability
Data: December 31, 2009
 
 
 
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
 
 
 
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 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
 
 
 
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
$100MM
6%
June 2010
Prime-based Floors:
 
 
 
 
 
 
CHCO is well positioned with respect to
interest rate risk:
Immediate Basis Point
Change in Interest
Rates
Estimated Increase or
Decrease in Net Income
between 1-12 months
+300 Bp
+10.0%
+200 Bp
6.2%
+100 Bp
2.2%
Data: September 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 in
 the top decile within its peer group:
 t In 4th Q of 2009, Prime-based floors were
 worth 32 bp of NIM
 u CHCO is positioned to benefit from economic
 recovery and higher interest rates:
 t An increase of 300 Bp in rates would result
 in an increase of 41 bp of NIM
 
 
 
GROWTH: CHCO is positioned
to achieve “reasonable growth”
n Commercial
n Retail
n Insurance
n Trust & Investment Management
 
 
 
Major Competitors:
Branches
Deposits
CHCO
66
$ 2.1 B
BBT
36
$ 3.3 B
JPM
20
$ 1.2 B
UBSI
20
$ 1.2 B
HBAN
14
$ 0.9 B
FITB
10
$ 0.4 B
Includes branches within 5 miles of City Branch
Source: SNL
 
 
 
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.
 
 
 
Growth: Expanding Retail Distribution
 
 
 
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%)
 
 
 
CityInsurance
n 2006 Revenues   $2.3 million
n 2007     $4.1 million
n 2008    $4.2 million
n 2009     $5.6 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
 u Added Martinsburg Office in 2009
 
 
 
Trust AUM: CAGR (04-09) 9.1%
Grew AUM in 2008/9 despite market by taking share
 
 
 
CHCO: Capital Flexibility
  Tangible Common Equity at 12/31/09: 9.78%
  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 52% (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, CHCO 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
 
 
 
A Strong Management Team
 TITLE  EXPERIENCE    AGE  JOINED
n CEO   PPLS; CHCO CFO,PHD 47  2001
n EVP-Retail  PPLS     54  2001
 n EVP-Comm                       One Valley; BB&T,CPA      60  2004
n CFO   Public Accounting,CPA  44  2005
n CAO/CIO  City National Bank  45  1989
n SVP-Branches BB&T    42  2001
n SVP- CCO  United Bankshares,CPA  36  1998
n SVP- CRO  BB&T    53  2001
n SVP Consumer Bank One   43  2001 
n SVP Mortgage United Bankshares  58  2004
n SVP Trust  City National Bank  55  1985
n SVP Insurance Rogers; Principal 40  2007 
n Treasurer  City National Bank  43  1990 
  
 
 
 
Pricing Metrics*:
n Price to Book:      158%
n Price to Tangible Book:     194%
n Price to 2010 Projected Earnings** 11.7x
n Dividend Yield     4.4%
n Div Payout Ratio (First Call)**   52%
n Tangible Capital/Tangible Assets  9.78%
n Institutional Ownership    63%
* Based on Price of $30.70 (2/19/10)
** Based on analyst estimate of $2.63 (average of 7)
CHCO represents good value and
stability