City Holding Company (NASDAQ: CHCO) just dropped its earnings report for Q1 2025, and there’s plenty to unpack. If you’re a shareholder (or just keeping tabs on the financial sector), here’s the lowdown in plain English.
A Solid Start to 2025
City posted a net income of $30.3 million, with earnings per share (EPS) hitting $2.06. That’s a strong performance for the Charleston-based $6.6 billion bank holding company.
They also clocked in an impressive return on assets (ROA) of 1.89% and a return on tangible equity (ROTE) of 20.7%, a clear signal that the bank continues to squeeze solid value from its operations.
City’s Margins are Moving Up
City’s net interest income rose slightly to $55.8 million, up from $55.6 million in Q4 2024. While that may seem like a modest jump, the net interest margin improved from 3.75% to 3.84%, which is a good sign for profitability.
This growth was mainly driven by lower costs on interest-bearing liabilities, a bump in average loan balances (+$ 76.8 million), and higher yields from investment securities.
Some headwinds included a small drop in loan yields and lower balances in deposits and investments, but overall, a net positive.
City’s Credit Remains Healthy
Nonperforming assets ticked up slightly to 0.38%, but past-due loans actually dropped from $8.8 million to $7.5 million. That’s a solid indicator that borrowers are keeping up with payments.
Also worth noting: no provision for credit losses was recorded this quarter. That’s a good sign, it means the bank isn’t seeing much reason to brace for bad loans.
City’s non-interest income hit $18.7 million, up from $17.9 million a year ago. Excluding some one-time investment gains in 2024, that’s a 3.5% year-over-year increase.
This is because wealth and investment management fees grew 10.6% and bank-owned life insurance (BOLI) income jumped 24.4%.
This kind of diversified income helps the bank weather interest rate swings better than peers who rely solely on lending.
There was a slight uptick in its non-interest expenses, nothing alarming.
Expenses rose $1.7 million year-over-year, mainly due to tech upgrades and increased
employee costs.
The big drivers?
A +$0.5M for software and equipment, coupled with +$0.5M in “other” expenses, and +$0.3M in salaries and benefits. All manageable stuff, and likely necessary to keep pace with customer expectations and operational efficiency.
Loans Nudged Up…
…by $11 million, now sitting at $4.29 billion.
City saw +$18.2M in residential real estate loans, +$4.1M in home equity loans, and +$3.4M in commercial & industrial loans
Deposits also saw healthy growth. There was +$114.3 million in period-end balances, with average deposit balances up 0.6% overall. Time deposits and savings were the stars here.
In Addition
City’s effective tax rate dipped to 17.8% from 19.5% a year ago, which is another contributor to net earnings.
And when it comes to capital strength, City is looking rock-solid.
There’s a tangible equity ratio up to 9.2%, CET1 and Tier 1 Capital ratios are both at 14.4%, and a total Risk-Based Capital ratio at 14.9%.
This means the bank is well capitalized, and regulators agree.
City declared a $0.79 per share dividend, which is payable April 30, 2025.
They also bought back 80,600 shares at an average price of $117.42. Still, over 740,000 shares remain under their current repurchase plan. This is great news if you’re into capital returns.
City National Bank, the Company’s subsidiary, continues to hold strong liquidity positions and operates 97 branches across WV, KY, VA, and OH.
They also have access to $1.6 billion in contingency funding, which means they’re well-prepared for any short-term liquidity crunch.
Finally
City Holding Company isn’t chasing headlines, but it’s quietly delivering reliable results quarter after quarter.
With strong credit quality, growing income, and conservative capital management, it’s the kind of stock long-term investors might want to keep on their radar.
