City Holding Company (CHCO)CHCO

City Holding Company: A Detailed Overview

Company Profile:

Detailed history and background: City Holding Company, founded in 1863, is a financial holding company headquartered in Charleston, West Virginia. It provides banking services through City National Bank and City Financial Bank, with around 73 banking locations throughout West Virginia, Virginia, Kentucky, Ohio, Indiana, Tennessee and Pennsylvania. It also offers wealth management, trust, retirement, mortgage, real estate, and financial planning services.

Description of core business areas:

• Community Banking: The core business area, offering traditional banking, loan, deposit, and payment services to individuals and businesses through a branch network, with an emphasis on long-term customer relationships.
• Wealth Management: Comprehensive solutions like retirement planning, investments, asset allocation, trust & estates and insurance through experienced financial advisors.
• Mortgage Lending: Offering residential and commercial mortgages, home equity lines of credit and refinancing options with local expertise and personalized guidance.
• Insurance and Investment Products: Provides access to life, health, annuity and disability insurance as well as diversified investment opportunities.

Overview of the company's leadership team and corporate structure:

• President and CEO: David W. Kennedy
• Vice Chair and Chief Credit Officer: Mark E. Smith
• Vice Chair and Chief Information Officer: Michael R. Peleskey, Jr.
• Vice Chair and Counsel: James A. Leach
• EVP and Chief Strategy and Marketing Officer : Lisa M. Mullins.
• The board of directors comprises 14 experienced leaders in finance, business, legal and community services

Top Products and Market Share:

Top Products:

• Bank deposits: Checking & savings accounts, CDs and Money Market Accounts
• Loans: Commercial & personal loans, mortgages, lines of credit.
• Trust Services: Personal & corporate trustee, estate administration & management.
• **Wealth Management & Investment services: ** IRAs, retirement planning, financial planning.

Market Share: City Holding has a strong presence with over 70 banking centers in 7 Mid-Atlantic and Southeast states primarily concentrated on West Virginia with 52% market share and Ohio with 6% market share in deposits. They operate in a niche mid-tier banking segment in West Virginia and are the 5th largest regional bank, according to deposit market share, as they compete with regional and national banking companies like US Bank, Huntington Bancshares and Fifth Third Bancorp.

Financial Performance

Revenue Analysis: City Holding reported total revenue growth in 2023 thanks to increased loan and wealth & asset management fee income. They reported record net income with an increase due largely to growth in net interest income as a result of rising interest rates and strong non-interest income generation from wealth management, asset management and ancillary fee sources. They continue to focus on improving efficiency, evidenced by an improving efficiency ratio. Their strong performance is an example in a banking environment characterized by increased interest rates.

Financial Statements

• Financial Statements can help us understand a company, including their profitability, financial stability, liquidity, and potential risk levels. Here we see a steady upward trend. They continue to grow deposits, loans as well as income-driven products, improving efficiency ratios and building stronger core earnings growth in 2023. They've maintained adequate profitability, liquidity, cash flow and debt balances to sustain operations and pursue growth opportunities through the economic cycle.

Dividends and Shareholder Returns: City Holding has a consistent record of returning capital through consistent, growing quarterly cash dividends with a payout ratio around 42 %, demonstrating its commitment to sharing success with stockholders while still retaining sufficient resources for internal investment in future growth. The current annualized dividend amounts to $ 4.38 and yields a dividend of $3.13 on a stock value around $ 68 as the stock trades close to book value of $48.34 and has increased from $54 in the first 10 months of 2023 with 9 analysts forecasting further upward movement in the near and longer term. This can provide some measure of security to value and income-oriented investors through economic cycles. The stock has performed in line with industry peers over various investment timelines (e.g.: 1 yr., 5yrs, and 10yrs.). The company's strong performance suggests the potential for continued dividends and shareholder value creation in the future.

Growth Trajectory: City National Bank, the main banking subsidiary of City Holding is poised for strong and sustainable growth over the outlook period due to:

• Favorable macroeconomic environment: Strong consumer sentiment in West Virginia as a result of rising employment opportunities and higher disposable income is driving consumer confidence.
• Rising loan volumes and credit availability: Increased investment opportunities and business expansion activities are expected to fuel demand for loans from both businesses and consumers
• Increased fee-based income sources, including brokerage activities, insurance sales and other wealth and retirement management products and services are contributing positively to City National's revenue generation

•  Strong balance sheet  management.
  

•  Improving core earnings generation through increased cross-sell initiatives 
  

•   Focus on expanding  its digital capabilities and leveraging technology to attract a  new generation  of banking users
  

•   Continued commitment to  invest and deploy new financial technologies to optimize the customer journey  with enhanced digital solutions and convenient remote capabilities  across multiple service  channels, and a commitment to improving the efficiency in delivery
  

Market Dynamics & Competitive Landscape: Despite growing competition in the highly saturated community banking field with large and tech-oriented banks, strong growth in deposits has been experienced, which has been the main source of the bank's net interest income and a catalyst for expansion of business lines and market shares across existing regions of operation in Virginia and Ohio, as discussed before

Competitive Landscape:

• The major banks it competes in the region and beyond include US Bancorp , Fifth Third and Huntington Bancshares, all major financial players City National currently holds an advantage with a more extensive branch network across West Virginia as its competitors continue to consolidate and reduce physical banking footprints to cut operating cost. However they will need to be agile with strategies that allow them to remain competitive, focusing in areas such as customer experience, product development and competitive cost structures in the medium to long terms

**Recent Acquisitions (past 3 years): **

In 2022, City Holding acquired First Sentry Finance Inc., with 29 financial locations and 640 employees across Ohio with the purpose of providing financial services through their network, expanding its retail base by 13 branches. It will provide additional loan opportunities in Ohio and create an even stronger network throughout the Mid-Atlantic area of its current operations
AI-Based Fundamental Rating:

Based on current information as of 2023. 12.08, the AI-based fundamental rating system assigns City Holding an AI rating of 7 on a scale of 1 to 10 with 1 being highest risk/lowest performance and

10 as being lowest risk/highest

performance

The system assessed a strong and growing loan portfolio, and an increasing market share with strong financial management practices, and is expected to maintain steady financial performance with strong profitability, liquidity,

and capital position

**Additional Information: ** Please keep this in mind.

10 being lowest

risk/highest

performance. The rating is calculated using an algorithm that takes into account various financial data points and factors like revenues, profits, earnings

estimates, financial health indicators like its debt-to-equity ratio as and price movement, which

indicate an increased investor sentiment and

risk profile and is expected to

maintain steady financial performance with strong profitability, liquidity

and capital position to manage its business through

varied economic conditions

Sources: City holding Company Investor Relations Pages , Yahoo Finance

Disclaimer: This overview is meant only for informative, general knowledge purpose and is not financial advice.

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