Investor Presentation General Obligation State Road Bonds, Series 2018 A&B May 9, 2018
Disclaimer This investor presentation that you are about to view is provided as of May 9, 2018 for a proposed offering of the State of West Virginia, General Obligation State Road Bonds (the “ Bonds ”) . This presentation has been prepared for information purposes only and for your sole and exclusive use in connection with the proposed transaction. The information contained herein is subject to completion and amendment. Any offer or solicitation with respect to the Bonds will be made by means of a final official statement. If you are viewing this investor presentation after the date stated above, events may have occurred that have a material adverse effect on the financial information presented. This presentation does not constitute nor does it form part of an offer to sell or purchase, or the solicitation of an offer to sell or purchase, any securities or an offer or recommendation to enter into any transaction described herein nor does this presentation constitute an offer, commitment or obligation on the part of the issuer, underwriter or any of its affiliates to provide, issue, arrange or underwrite any financing or enter into any other transaction. You will be responsible for making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability of the proposed transaction and any other transactions contemplated by this presentation and neither the issuer nor the underwriter is making any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. Neither the issuer nor the underwriter makes a representation or warranty as to the (i) accuracy, adequacy or completeness of any information in this investor presentation or (ii) legal, tax or accounting treatment of any purchase of Bonds by you or any other effects such purchase may have on you and your affiliates. This investor presentation contains “forward - looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward-looking statements. Accordingly, we caution you not to place undue reliance on these statements. All statements other than the statements of historical fact could be deemed forward-looking. All opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to change without notice. THE PRINTING, DUPLICATING, DOWNLOADING, SCREEN CAPTURING, ELECTRONIC STORING, RECORDING, PUBLISHING OR DISTRIBUTING OF THIS INVESTOR PRESENTATION IN ANY MANNER IS STRICTLY PROHIBITED. By viewing this investor presentation you acknowledge that you understand and agree to the provisions of this page. Investor Presentation 2
Transaction Summary Negotiated Series 2018A Bonds to sell May 21 st , followed by Competitive Series 2018B Bonds May 23 rd General Obligation State Road Bonds, Series 2018 A General Obligation State Road Bonds, Series 2018 B Estimated Size* $311,795,000 $488,205,000 Method of Sale Negotiated Competitive Use of Proceeds Highway and bridge construction in the State Tax Status Federally Tax-Exempt, State of West Virginia Tax-Exempt Final Maturity June 1, 2043 Semi-annual principal payments Semi-annual principal payments Maturities* Serial Bonds: 12/1/18 – 6/1/30, 12/1/32 – 6/1/33, 12/1/37 – 6/1/38 Serial Bonds: 12/1/18 – 6/1/43 Term Bond: 12/1/42, 6/1/43 (See Notice of Sale) Denominations $1,000 $5,000 December 1 st and June 1 st , commencing December 1, 2018 Interest Payment Dates Security See “Security” slide herein Optional Redemption* TBD 6/1/2028@ Par Current Ratings (M/S/F) Aa2 / AA- / AA Sale Date May 21, 2018 May 23, 2018 Closing Date June 7, 2018 Financial Advisor Public Resources Advisory Group *Approximate, subject to change Investor Presentation 3
Overview of the State of West Virginia • The State of West Virginia, also known as the Mountain State, was created by Presidential proclamation effective on June 20, 1863 • Located in the South Atlantic region of the United States, West Virginia is bordered by the states of Maryland, Pennsylvania, Ohio, Kentucky and Virginia • Located within 500 miles of half of the United States population and a third of Canada's, West Virginia is well positioned as a desirable, affordable and easily accessible tourist destination • West Virginia has 24,077 square miles of land area, an average elevation of 1,500 feet and a population of approximately 1.82 million • The ancient geological events that created West Virginia's scenic mountains also endowed it with extensive deposits of high quality coal, natural gas, petroleum, limestone, salt and sand • West Virginia’s economy has a long tradition of mining and energy production, as well as related industries, such as chemicals, steel, cement and glass production Investor Presentation 4
State’s Economy is Rebounding Economic Highlights • West Virginia is in a state of transition with energy mix switching from coal to natural gas • Natural gas production up more than six fold since 2006 to nearly 1.4 trillion cubic feet • Growth in supply exceeds current pipeline infrastructure • Coal production down more than 40% since 2006: rebounded from 80 to 90 million tons in 2018 • Economic measurement: Real GDP 2017: WV 2.9% average in 2nd and 3rd Quarters • SA non-farm private sector payroll employment up 1.2% in March (6,900 jobs) • Construction up 11.2% (3,400); Mining and logging up 8.0% (1,700); Mfg. up 0.9% (400) • Private service producing sectors up 0.3% (1,400) • State performance compared to the rest of the nation (2017) • WV per capita income rose by 3.4% in 2017 versus U.S. increase of 2.4% • State’s unemployment rate of 5.4% in March 2018 versus 4.1% for the U.S. Investor Presentation 5
State Employment and Income Figures Continue to Improve Civilian Unemployment Rates – WV – U.S. Per Capita Income Ratio – 2010 - 2017 2000-2017 10.00% 84.0% 9.00% 82.0% 80.1% 80.0% 8.00% 78.0% 75.3% 7.00% 76.0% 74.0% 6.00% 74.5% 72.0% 72.8% 5.00% 70.0% 4.00% 2010 2011 2012 2013 2014 2015 2016 2017 WV-U.S. Ratio West Virginia United States Source: West Virginia Workforce; United States Department of Labor, Bureau of Labor Statistics. Source: United States Department of Commerce, Bureau of Economic Analysis and the Bureau of the Census. Investor Presentation 6
State Per Capita Growth Improving – Rate Exceeded US Rate in 2017 Per Capita Income Growth Rate Year Over Year – WV and US 7.0% 5.0% 3.0% 1.0% -1.0% -3.0% -5.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 West Virginia United States Source: United States Department of Commerce, Bureau of Economic Analysis and the Bureau of the Census. Investor Presentation 7
Personal Income and Consumers Sales Tax Growth Rate Gradually Improving Personal Income and Consumer Sales Tax Revenue Personal Income and Consumer Sales Tax Growth Rate $2,200 9.0% Millions 7.7% 2,004 $2,000 7.0% 1,860 1,840 1,814 1,803 $1,800 5.0% 4.5% 3.0% 2.5% $1,600 3.0% 0.6% $1,400 1.0% 0.3% 1,316 1,259 1,231 1,228 1,222 $1,200 -1.0% -0.7% -2.0% $1,000 -3.0% FY2015 FY2016 FY2017 FY2018 FY2019 FY2016 FY2017 FY2018 FY2019 * ACTUAL ACTUAL ACTUAL BUDGET BUDGET ACTUAL ACTUAL BUDGET BUDGET Personal Income Taxes Consumer Sales Taxes Personal Income Taxes Consumer Sales Taxes Source: State Budget Office - Reports and Charts. * The revenue growth targets necessary to match budgetary appropriations are 5.4% for the personal income tax component and 3.3% for the sales tax component Investor Presentation 8
Severance Taxes are Stabilizing Severance Tax Revenues $450 $414 Millions $400 $361 $362 $350 $321 $300 $276 $250 FY2015 FY2016 FY2017 FY2018 FY2019 ACTUAL ACTUAL ACTUAL BUDGET BUDGET Source: State Budget Office - Reports and Charts. Gains in Natural Gas are Offsetting Reduced Coal Production WV Natural Gas Production WV Coal Production Million Cubic Feet Total Tons Produced 1,375,108 1,500,000 157,778,087 160,000,000 134,661,745 1,000,000 79,757,315 394,125 110,000,000 500,000 244,880 0 60,000,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: United States Energy Information Administration, Natural Gas Wellhead Value and Marketed Production Report. Source: U. S. Energy Information Administration 2016 Coal Report (November 2017) and Coal Data Browser (Aggregate Coal Mine Production - Total 2016). Investor Presentation 9
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