Exhibit 99.1
June 21/22, 2005
Forward Looking Statements
This news release 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 results differing from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality, or conversely, the Company may incur less, or even negative, loan loss provision due to positive credit quality trends in the future; (2) the Company may not continue to experience significant recoveries of previously charged-off loans and the Company may incur increased charge-offs in the future; (3) the Company may experience increases in the default rates on its previously securitized loans causing the yields on these assets to decline; (4) the Company could have adverse legal actions of a material nature; (5) the Company may face competitive loss of customers; (6) the Company may be unable to manage its expense levels; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances. Forward-looking statements made herein reflect management’s expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made.
$2.5 Billion Commercial Bank headquartered in Charleston, WV
67 Banking Offices
165,000 households
$635 million market capitalization*
*As of 6/17/05
City Holding Company:
Headquartered In Charleston WV
Key Markets
1st & 10% Market Share in Huntington WV/Ashland KY MSA
2nd & 12% Market Share in WV’s largest market
1st & 30% Market Share
8% Market Share in Morgan, Berkeley & Jefferson Co. WV
Themes:
CHCO: Under Continuing Management CHCO: Consistently superior results CHCO: Growth in slow-growth markets
CHCO: Under Continuing Leadership
Former CEO Jerry Francis engineered the turn-around of the Company
CFO Skip Hageboeck assumed the role of CEO on February 1, 2005
City has assembled a team of top-notch talent over the last three years capable of continuing City’s strong performance
Engineering the Turn-around: Starting from Ground Zero
$38 million loss reported in 2000
Formal Agreements with OCC and Federal Reserve
$130 million in “problem loans”
Stock trading at $5.125 per share from a high (in 1998) of $45 per share; discontinued common share cash dividends; deferred trust preferred dividends
Ownership of non-core businesses which diluted focus and earnings
Company terminated its CEO in June 2000; Hired Turn-around expert Jerry Francis in January 2001
Mission Accomplished:
Turn-around Complete & Continuing
2004 1st Q 2005
ROA 2.10% 2.11% 1st Best
ROE 22.4% 20.9% 10th Best
NIM 4.29% 4.40%
Efficiency Ratio 48.5% 47.4%
Non-Int Rev/Total Rev 32% 34%
Non-performing Loans/Loans 0.29% .28%
ALLL/Non-perfoming Loans 487% 490%
* Rankings among 186 public banks $1-$5 Billion
A new Team focused on the future
CEO Skip Hageboeck
Ph.D. in Economics 42 years old Treasurer of $10B bank
CFO of $700MM community bank 1995-1999 CFO of City Holding Company 2001-2004
Why Own This Stock?
1. CHCO is highly profitable
Sustained High Performance
EPS (diluted) $-1.54 $1.90 $2.58 $2.75
2001 2002 2003 2004
ROA
-1.07%
1.59%
2.18%
2.10%
2001 2002 2003 2004
ROE
-16.8%
20.5%
24.5%
22.4%
2001 2002 2003 2004
Challenges for 2005
Provision Expense
At March 31, 2005, the ALLL was 1.22% of Loans No Provision expense has been recorded since the 2nd Quarter of 2002 when the ALLL was 2.31% of Loans 25 Bp of Provision expense would reduce earnings by about $2MM after-tax
Previously Securitized Loans & Retained Interests
2004 1 st Q 2005 2005 Projected
Ave Balances $83.5 MM $54.9 MM $48.2 MM
Rate 17.4% 22.4% 19-23%
Gross Interest Revenue $14.5 MM $ 3.082 $ 10.8 MM *
* Based on ave balances at 1st Q 2005 rate of 22.4%
Why Own This Stock?
1. CHCO is highly profitable
2. CHCO is well-positioned for the future
Conservative Loan Portfolios
Strong Asset Quality
Exceptional Core Deposit Base
Highly Liquid
Very Efficient
Strongly Capitalized
Positioned to benefit from rising rates
Conservative Loan Portfolio Mix
City Holding Company
28%
4%
28%
34%
5%
Residential Real Estate
Consumer/Other
C&I
Home Equity
Commercial Real Estate
Loan to Deposits 81.0%
As of December 31, 2004
Peer Group
14%
45%
10%
5%
26%
Residential Real Estate
Consumer/Other
C&I
Home Equity
Commercial Real Estate
Loan to Deposits 91.9%
Sample of 181 publicly traded banks and thrifts with assets between $1-$5 billion
Strong Loan Quality
.25%
.47%
493%
328%
Non Performing Loans/Loans
ALLL/Non-Perf Loans
CHCO*
Peer
*As of March 31, 2005
Sample of 186 publicly traded banks and thrifts with assets between $1 and $5 billion
Customer Profile: Retail Focused $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 $1,397,610 $467,256 $903,198 $447,431 $ Deposits $ Loans
Retail
Commercial
Source: Internal data as of June 30, 2004
Deposits: Low Cost and Stable
6%
25%
2%
10%
19%
14%
9%
1%
3%
8%
3%
Equity
MMS
FHLB
Non Interest DDA
CDs
Other Borrowing
Interest DDA
Jumbos
Trust Preferred
Savings
Customer Repos
Data: December 31, 2004
Favorable Revenue Profile
City Holding Company
34%
66%
Non Interest Income
Net Interest Income
*As of March 31, 2005. Non-interest income excludes security gains
Peer Group
21.1%
78.9%
Non Interest Income
Net Interest Income
Sample of 186 publicly traded banks and thrifts with assets between $1 and $5 billion
City is Highly Efficient
Efficiency Ratio
89(th)percentile
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
86.9%
62.8%
58.7%
60.7%
52.1%
62.2%
50.1%
60.4%
47.40%
59.30%
12/31/01 12/31/02 12/31/03 12/31/04 3/31/2005
CHCO
Peer
2004 Efficiency Ratio adjusted to eliminate $5.5 million in revenue from Legal Settlement and associated legal expenses of $500M
Peers: Sample of 186 publicly traded banks and thrifts with assets between $1to $5 Billion
CHCO is positioned to benefit from rising rates
Immediate Basis Point Change in Interest Rates Estimated Increase of Decrease in Net Income between 1-12 months Estimated Increase or Decrease in Net Income between 13- 24 months
+200 Bp +7% +9%
+100 Bp +3% +4%
-100 Bp -8% -11%
-175 Bp -18% -23%
Interest Rate Dynamics
12 months ago, Fed Funds was at 1% and CHCO was positioned to strongly benefit from rising rates
Over the last 12 months, the Prime rate and the Fed Funds rate have risen 200 Bps
As Prime has increased, rates on home equity loans, commercial loans, and some commercial real estate loans have adjusted upward.
However, deposit rates have increased only marginally.
Therefore, while CHCO remains positioned to benefit from rising rates, it’s earnings would be exposed to a decrease in market interest rates as variable rate asset yields decreased without corresponding decreases in deposit costs.
To mitigate that effect, CHCO has begun to purchase floors on the prime rate, which act as an insurance policy against potential decreases in interest rates on variable rate assets.
Interest Rate Dynamics
8,000 7,500 7,000 6,500 6,000 5,500
1. IF rates remain flat, and IF loans and deposits do not grow, reported NII will fall as the balances of Previously Securitized Loans decrease from $50.6MM at 3/31/05 to a projected balance of less than $25MM at 3/31/07. These loans carried a yield of 22.44% in the first quarter of 2005, representing 10% of total interest income.
Jun- 05
Jul- 05
Au g - 05
Sep - 05
Oc t - 05
Nov - 05
Dec - 05
Jan- 06
Feb - 06
Mar - 06
Apr- 06
May- 06
Ju n- 06
Jul- 06
Aug- 06
Sep- 06
Oc t - 06
Nov - 06
Dec- 06
Jan- 07
Fe b - 07
Ma r - 07
Ap r - 07
May- 07
Interest Rate Dynamics
8,000 7,500 7,000 6,500 6,000 5,500
2. But, the underlying dyamics of loans (excluding Previously Securitized Loans,
Indirect Auto Loans, and unsecured consumer loans) and deposits at current interest rates is positive over the next 24 months.
Jun - 05
Jul - 05
Aug - 05
Sep - 05
Oct- 05
Nov - - 05
Dec - 05
Jan - 06
Feb - 06
Mar - 06
Apr - 06
May - 06
Jun - - 06
Jul- 06
Aug - 06
Sep - 06
Oct - 06
Nov - 06
Dec - 06
Jan - - 07
Feb - 07
Mar - 07
Apr - 07
May - 07
Interest Rate Dynamics
8,500 8,000 7,500 7,000 6,500 6,000 5,500
3. CHCO can avoid deterioration in NII over 24 months IF rates rise 100 bp AND loan balances grow 4.5% per year (and assuming equity accumulation is utilized for share repurchases rather than funding asset growth).
Jun - 05
Jul - 05
Au g- 05
Sep - 05
Oct- 05
Nov - 05
Dec - 05
Jan - 06
Feb - 06
Mar- 06
Apr- 06
May- 06
Jun - 06
Jul - 06
Au g - 06
Sep - 06
Oct - 06
Nov - 06
Dec - 06
Jan - 07
Feb - 07
Mar- 07
Apr - 07
May - 07
Key Capital Ratios
12/31/04 5/30/05
Equity/Assets 9.8% 10.9%
Tang Equity/Tang Assets 9.5% 8.8%
Leverage Ratio 10.7% 11.2%
Tier I Capital Ratio 15.5% 13.8%
Total Risk-based Capital Ratio 16.6% 14.8%
Strategic Opportunities
Capital Flexibility
Dividends
Increased 10% in April 2004
Increased 13.6% in April 2005
Share Repurchases
Acquisitions
Why Own This Stock?
1. CHCO is highly profitable
2. CHCO is well-positioned for the future
2. CHCO is growing
Internal Loan Growth
Internal Deposit Growth
Improvements to Retail Distribution System
Acquisition
Growth in Targeted Lines of Business - Loans
Real Estate Secured Loans grew 9.1% in 2004 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0
Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar-
01 01 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05
Commercial Real Estate & Home Equity
Indirect & Consumer
Growth in Deposits:
Totally Free Checking Accounts
2002-2004
130,000 125,000 120,000 115,000 110,000 105,000 100,000 95,000 90,000
7.7% CAGR
Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04
In addition to dramatic growth in Fees:
31% CAGR 1st Q 2001 to 1st Q 2005
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005
Restructuring the Retail Delivery System
City’s Retail Distribution can be Improved (In WV’s 60 densest markets, City is in only 33%)
Wal-Mart Strategy
Consolidations
New Branches in growing areas of existing markets
DeNovo entry into contiguous markets
City’s Wal-Mart Strategy
Inexpensive distribution
High-traffic Wal-Marts
Supports existing retail distribution outlets in City’s major Markets
Openings
Charleston – Sept 2004
Huntington – Sept 2004
Beckley – May 2005
Ashland – August 2005
Ripley – 2006
Acquisition Parameters $100MM to $500MM in assets
Markets in or adjacent to CHCO footprint
Retail Deposit Franchise
Accretive to EPS in first full year
Acquisition Territory
Acquisition of Classic Bancshares
Classic Bancshares Acquisition:
Accretive to 3rd Q 2005 earnings
Opportunity to build retail share:
Share CHCO County
Boyd Co. KY 9% $75MM $833M
Lawrence Co. Ohio 12% $59MM $490M
Greenup Co. KY 6% $21MM $350M
Johnson Co. KY 31% $102MM $329M
Carter Co. KY 4% $11MM $275M
Combined Balance Sheet: Strong
CHCO CLAS Combined 5/30/05 CLAS Contribution
Assets $2,273 $310 $2,583 12%
Loans $1,353 $256 $1,609 16%
Deposits $1,682 $233 $1,915 12%
Why Own This Stock?
CHCO is highly profitable
CHCO earns high returns on a conservative platform
Retail bank with strong core deposits
Strong fee income
Conservative loan portfolio
Well capitalized
Liquid & positioned to benefit from rising rates
Extraordinary profitability
CHCO is growing in ordinary markets
Loans, Deposits, Improved Distribution, and Excess Capital Opportunities