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
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
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
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
$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
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:
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:
and loss of PSL revenues from 2003-2008:
Previously Securitized Loans:
Core growth in revenues in 2003-2008 offset
lower earnings from PSL balances
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:
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
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
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:
have demonstrated strong GROWTH:
14.8% CAGR
2001 to 2008
Net Interest Margin
Strong NIM driven by solid core deposit
franchise & strong NIM management
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
- 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:
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 Margin:
Interest Rate Risk Summary:
u CHCO is less dependent upon NII than its
peers
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
upon strong core deposit franchise
u Due to Prime-based floors, CHCO’s NIM is
among the best in the industry
among the best in the industry
t In 2nd Q of 2009, Prime-based floors were
worth 47 bp of NIM
worth 47 bp of NIM
u CHCO is positioned to benefit from economic
recovery
recovery
t An increase of 300 Bp in rates would result
in an increase of 41 bp of NIM
in an increase of 41 bp of NIM
CHCO positioned to focus on
Growth within its markets:
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.
City’s mix is 40%
Commercial/60%
Retail reflecting
City’s historic retail
focus.
n Opportunity: Some
competitors have
stopped lending.
competitors have
stopped lending.
n Opportunity:
City has launched a
successful new cash
management initiative
to address depository
needs of larger
business customers.
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:
where it had significant share:
Branch Renovations/Expansions to
meet customer demand:
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
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)
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.
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
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
stability