On July 23, 2024, City Holding Co (CHCO, Financial) released its 8-K filing announcing its financial results for the second quarter of 2024. City Holding Co is a financial holding company providing a range of banking, trust, and investment management services through its network of banking offices in West Virginia, Virginia, southeastern Ohio, and Kentucky.
Quarterly Earnings Overview
City Holding Co reported a net income of $29.1 million and diluted earnings per share (EPS) of $1.96 for the quarter ended June 30, 2024. This performance surpassed the analyst estimate of $1.91 per share. The company achieved a return on assets of 1.85% and a return on tangible equity of 22.2%.
Net Interest Income and Margin
The company's net interest income increased slightly by $0.2 million, or 0.4%, from $54.4 million in Q1 2024 to $54.6 million in Q2 2024. The net interest margin, however, decreased from 3.95% to 3.87% over the same period. This was influenced by an increase in the cost of interest-bearing liabilities and a higher average balance of interest-bearing liabilities.
Credit Quality
City Holding Co's ratio of nonperforming assets to total loans and other real estate owned improved from 0.28% at the end of Q1 2024 to 0.25% at the end of Q2 2024. However, total past due loans increased from $6.7 million to $10.9 million during the same period. The company recorded a provision for credit losses of $0.5 million in Q2 2024, primarily due to an increase in the loss rate for residential real estate loans.
Non-Interest Income and Expenses
Non-interest income for Q2 2024 was $18.9 million, down from $20.3 million in Q2 2023. This decrease was largely due to a $2.4 million reduction in bank-owned life insurance proceeds. Non-interest expenses increased by $2.0 million, or 5.8%, from $34.8 million in Q2 2023 to $36.8 million in Q2 2024, driven by higher other expenses and bankcard expenses.
Balance Sheet Trends
Loans increased by $21.1 million (0.5%) from March 31, 2024, to $4.11 billion at June 30, 2024. Residential real estate loans, home equity loans, and commercial real estate loans all saw increases. Period-end deposit balances also rose by $11.5 million during the same period.
Capitalization and Liquidity
City Holding Co remains strongly capitalized with tangible equity of $526 million as of June 30, 2024. The company's tangible equity ratio slightly decreased from 8.6% at the end of 2023 to 8.5% at the end of Q2 2024. Regulatory capital ratios, including a Common Equity Tier I ratio of 15.2% and a Total Risk-Based Capital ratio of 15.7%, remain well above the required levels to be considered "well capitalized."
Dividend and Share Repurchase
On May 29, 2024, the Board of Directors approved a quarterly cash dividend of $0.715 per share, payable on July 31, 2024. During Q2 2024, the company repurchased 142,000 common shares at an average price of $100.24 per share, leaving 821,000 shares available for repurchase under the current program.
Conclusion
City Holding Co's Q2 2024 performance demonstrates its resilience and ability to exceed earnings expectations despite challenges in non-interest income and increased expenses. The company's strong capitalization and liquidity position, along with strategic share repurchases and dividend payouts, underscore its commitment to delivering value to shareholders.
Explore the complete 8-K earnings release (here) from City Holding Co for further details.
