Why City Holding Loves Its Retail Model

Skip Hageboeck, the West Virginia company's president and CEO, discusses how to make the model profitable and the benefits of having granular deposits and loans.

Good morning, Bank Slaters!

So we’re staring down the end of the third quarter. We really are on a fast track to ending 2024. How’s your planning for the new year?

We’re looking forward to the American Bankers Association’s Annual Convention in New York. Paul Davis will join a panel with representatives from ConnectOne Bank and Kilpatrick Townsend & Stockton to discuss next year’s M&A outlook. Given the recent wave of deals involving decent-sized sellers and coordinated capital raises by acquirers, it should be an interesting conversation.

The Forbes Finance Council published our observations about the habits of high-performing boards. Let us know if you need assistance reviewing board adherence to these principals — we can provide the educational resources to improve engagement and performance.

Let’s talk about City Holding in Charleston, W.Va.

At a time when many banks are positioning themselves as commercial lenders, the $6.3 billion-asset City still considers itself a retail-oriented bank. There are distinctive pros and cons to the model — though President and CEO Skip Hageboeck believes there is more upside for the bank staying true to itself.

Among the pros are a granular balance sheet — in terms of deposits and loans—helping City avoid concentration risk in terms of liquidity and credit quality. Still, it is challenging to make money from small-balance accounts, which means that the business model relies on fees. Service charges made up a tenth of City’s second-quarter revenue; that compares with 3.2% for banks with $5 billion to $10 billion of assets.

We spoke with Skip about the model and why he remains committed to the business strategy. Here is an edited transcript of the conversation.