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CH

CITY HOLDING CO (CHCO)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter: Net income $33.4M and diluted EPS $2.29; ROA 2.03% and return on tangible equity 22.7% .
  • Strong beat vs Wall Street: EPS $2.29 vs $1.958 consensus; “Revenue” $80.16M vs $76.00M consensus; 5 EPS est., 4 revenue est.; target price consensus $129.5* (values from S&P Global).
  • NIM expansion to 3.95% (up 11 bps q/q) driven by 18 bps higher loan yields, lower cost of interest-bearing liabilities, and higher investment balances/yields .
  • Credit positive surprise: $2.0M recovery of credit losses tied to an upgraded specific credit and PCD payoffs; NPAs/loans+OREO down to 0.33% .
  • Capital actions continue: $0.79 dividend and 175K shares repurchased at $111.09, with 566K remaining under the plan; tangible equity ratio 9.4% .

What Went Well and What Went Wrong

What Went Well

  • Net interest income rose $3.1M q/q (5.6%), with tax-equivalent NII +$3.1M; NIM improved to 3.95% on higher loan yields (+18 bps), lower funding costs (-3 bps), and stronger investment contribution .
  • Asset quality improved: NPAs ratio fell to 0.33%; $2.0M ACL recovery primarily from an upgraded credit that had improved performance, plus PCD payoffs .
  • Non-interest income up y/y; underlying growth in service fees (+$0.3M), wealth/investment management (+$0.3M), and BOLI (+$0.2M) .

What Went Wrong

  • Non-interest expenses increased $2.2M y/y (+6.1%), largely from salaries/benefits (health insurance and salary adjustments), equipment/software, other tax matters, and repossessed asset losses .
  • Total past due loans ticked up modestly to $8.0M (0.18% of loans), though still low; commercial & consumer categories showed scattered past due movements .
  • Commercial & industrial balances declined $13.9M q/q, offsetting growth in residential real estate and commercial real estate loan categories .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Diluted EPS ($)$1.96 $2.02 $2.06 $2.29
Net Interest Income ($MM)$54.625 $55.605 $55.815 $58.924
Total Non-Interest Income ($MM)$18.911 $20.348 $18.737 $19.236
Net Interest Margin (%)3.87% 3.87% 3.84% 3.95%
ROA (%)1.85% 1.87% 1.89% 2.03%
Efficiency Ratio (%)49.3% 48.8% 49.6% 49.0%
Revenue (SPGI) ($MM)———80.160*

Note: Revenue (SPGI) values marked with * are “Wall Street consensus/actual” from S&P Global; Values retrieved from S&P Global.

Segment/Revenue Mix (Non-Interest Income)

Category ($MM)Q2 2024Q4 2024Q1 2025Q2 2025
Service charges$6.980 $7.531 $7.151 $7.264
Bankcard revenue$7.245 $7.346 $6.807 $7.233
Wealth & investment mgmt$2.762 $2.923 $2.902 $3.016
Bank-owned life insurance (BOLI)$0.775 $1.435 $1.153 $0.942
Other income$0.785 $0.772 $0.729 $0.894
Realized gains on securities— $(0.012) — $0.150
Unrealized gains/(losses) on equity securities$0.364 $(0.390) $(0.005) $(0.263)

Key KPIs and Asset Quality

KPIQ2 2024Q1 2025Q2 2025
Gross loans ($MM)$4,112.873 $4,285.824 $4,339.196
Total deposits ($MM)$5,067.280 $5,258.469 $5,248.820
Gross L/D ratio (%)—81.5% 82.7%
Allowance for credit losses ($MM)$22.688 $21.669 $19.724
(Recovery)/Provision ($MM)$0.500 $0.000 $(2.000)
NPAs ($MM)$10.209 $16.451 $14.248
NPAs / loans + OREO (%)0.25% 0.38% 0.33%
Past due loans ($MM)$10.886 $7.531 $7.986
Allowance % of loans0.55% 0.51% 0.45%

Capital & Shareholder Returns

MetricQ2 2024Q1 2025Q2 2025
Tangible equity ratio (%)8.50% 9.23% 9.40%
CET1 ratio (consolidated) (%)16.10% 16.84% 16.78%
Dividend per share ($)$0.72 $0.79 $0.79
Shares repurchased (000s)142 81 175
Avg repurchase price ($)$100.24 $117.42 $111.09
Remaining authorization (shares)—740,900 566,000

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly dividend ($/share)Q3 2025 (payable 7/31/25)$0.79 (declared for Q2 payable 4/30/25) $0.79 (declared 5/28/25) Maintained
Share repurchase program (remaining shares)As of period-end740,900 (3/31/25) 566,000 (6/30/25) Lower (due to repurchases)
Financial guidance (revenue/margins/OpEx)N/ANone providedNone providedN/A

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was available in our document set after search across earnings transcripts; assessment below references management’s press releases.

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Net interest margin driversQ1: NIM rose to 3.84% on lower funding costs and loan balance increase NIM up to 3.95% on higher loan yields (+18 bps), lower liability costs (-3 bps), higher investment balances/yields Improving
Credit quality/ACLQ1: No provision; NPAs at 0.38% $2.0M recovery; NPAs down to 0.33% on specific credit upgrade and PCD payoffs Improving
Deposit mix/costsQ1: Avg deposits +$29.2M; cost of interest-bearing liabilities 2.02% Avg deposits +$64.3M; cost down to 1.95% Slight improvement
Non-interest income compositionQ1: Stable fees; wealth & BOLI up y/y Fees, wealth, and BOLI growth y/y; realized gains offset equity fair value losses Stable to improving
Technology & software expensesQ1: Equipment/software +$0.5M y/y Equipment/software +$0.4M y/y Persisting cost pressure

Management Commentary

  • “City… announced record quarterly net income of $33.4 million and diluted earnings of $2.29 per share for the quarter ended June 30, 2025. In the second quarter of 2025, the Company achieved a return on assets of 2.03% and a return on tangible equity of 22.7%.”
  • “Net interest income increased… due to an increase in the yield on loans of 18 basis points… decrease of three basis points in the cost of interest bearing liabilities, and… increase in the yield… on investments.”
  • “The Company recorded a recovery of credit losses of $2.0 million… primarily due to an upgrade of a specific credit… and payoffs on purchase credit deteriorated loans.”
  • “The Company continues to be strongly capitalized… tangible equity ratio increased… City National’s regulatory capital ratios… significantly above levels required to be considered ‘well capitalized’.”

Q&A Highlights

  • No Q2 2025 earnings call transcript identified; therefore, no Q&A details available following a comprehensive search of the transcript catalog for CHCO in the Q2 window.

Estimates Context

MetricConsensusActualSurprise
Primary EPS$1.958*$2.29*+$0.33 (Beat)
Revenue$76.00M*$80.16M*+$4.16M (Beat)
# EPS Estimates5*——
# Revenue Estimates4*——
Target Price Consensus Mean$129.5*$129.5*—

Note: Values marked with * are retrieved from S&P Global.

Context and implications:

  • EPS beat driven by NIM expansion (loan yields +18 bps; lower funding costs), higher investment contribution, and the $2.0M ACL recovery lifting pre-tax income; non-interest income also improved y/y in core categories .
  • Revenue beat consistent with stronger net interest income trajectory and stable fee income; equity securities fair value losses modestly offset realized gains .

Key Takeaways for Investors

  • Earnings quality strong: core NII growth and NIM expansion underpin results; ACL recovery adds a transitory boost, but underlying loan yield trajectory and funding costs support momentum .
  • Credit trends favorable: NPAs ratio down, allowance coverage of NPLs improved to 140.3% as balances decline; underscores resilient portfolio credit metrics .
  • Operating leverage modest: efficiency ratio ~49% with elevated personnel/tech spending; watch health insurance and software expense trajectory for margin sensitivity .
  • Capital deployment continues: dividend maintained at $0.79 and share repurchases sustained, with ample liquidity/contingency funding capacity ($1.6B available lines) .
  • Deposit mix remains retail-heavy (checking/savings fund ~60% of assets), supporting lower funding costs and NIM durability in a stable-to-declining rate backdrop .
  • Near-term: Positive setup from EPS/NIM beat and credit recovery; medium-term thesis hinges on sustaining loan yield advantage and disciplined OpEx while maintaining low credit costs .
  • Estimate revisions likely upward for EPS and revenue given outsized beat; monitor non-interest expense normalization and any further ACL changes.