City Holding trades at $127.35 per share and has stayed right on track with the overall market, gaining 7.2% over the last six months. At the same time, the S&P 500 has returned 4.8%.
Is now the time to buy CHCO? Find out in our full research report, it’s free.
Why Does CHCO Stock Spark Debate?
With roots dating back to 1957 and a strategic presence along the I-64 and I-81 corridors, City Holding (NASDAQGS:CHCO) operates as a financial holding company providing banking, trust, and investment services through its subsidiary City National Bank across West Virginia, Kentucky, Virginia, and Ohio.
Two Positive Attributes:
1. Net Interest Income Drives Additional Growth Opportunities
Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.
City Holding’s net interest income has grown at a 9.9% annualized rate over the last four years, a step above the broader bank industry. Its growth was driven by both an increase in its outstanding loans and net interest margin, which represents how much a bank earns in relation to its outstanding loan book.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
City Holding’s EPS grew at an astounding 10.3% compounded annual growth rate over the last five years, higher than its 3.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
One Reason to be Careful:
Long-Term Revenue Growth Disappoints
Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities.
Unfortunately, City Holding’s 3.6% annualized revenue growth over the last five years was mediocre. This wasn’t a great result compared to the rest of the bank sector, but there are still things to like about City Holding. 
Final Judgment
City Holding has huge potential even though it has some open questions, but at $127.35 per share (or 2.3× forward P/B), is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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