On Friday, Piper Sandler adjusted its price target on City Holding (NASDAQ:CHCO) shares, bringing it down to $125 from the previous $135 while maintaining a Neutral rating. The $1.75 billion regional bank, currently trading at a P/E ratio of 15.07, appears slightly undervalued according to InvestingPro analysis. The revision followed the company's fourth-quarter earnings report, which revealed that City Holding's core earnings per share (EPS) surpassed analyst expectations due to lower expenses and provisions for credit losses.
City Holding reported a fourth-quarter EPS of $1.94; however, after adjusting for securities losses, the core EPS was calculated at $2.11. This figure exceeded Piper Sandler's estimate by $0.15 and was $0.19 higher than the consensus among Wall Street analysts. The better-than-expected results were attributed to a smaller provision for credit losses, which was only $0.3 million compared to the $1.3 million anticipated by Piper Sandler. This positive outcome was further supported by strong credit metrics and reflects the company's solid financial health, with InvestingPro data showing a 17% return on equity over the last twelve months. The company has maintained its dividend payments for 24 consecutive years, currently offering a 2.66% yield.
The company's expenses also came in under what Piper Sandler had projected, contributing an additional $0.03 to the EPS. Nevertheless, net interest income (NII) fell slightly short of expectations by $0.01, as the net interest margin (NIM) decreased by 12 basis points to 3.75%, compared to Piper Sandler's forecast of 3.84%. Discover more insights about City Holding's performance metrics and 6 additional ProTips with an InvestingPro subscription.
The remaining difference in the EPS was due to a lower tax rate, which added $0.08 compared to what Piper Sandler had estimated. This benefit to the EPS was not considered a run-rate, implying it may not be a recurring boost in future reports. The adjustments to the EPS and the revised price target reflect Piper Sandler's analysis of City Holding's performance and market conditions.
In other recent news, City Holding Company experienced a significant loss with the passing of long-serving director Tracy W. Hylton II after battling a lengthy illness. Hylton, who had been with the company since 1993, played a crucial role during the 1998 merger of Horizon Bancorp (NASDAQ:HBNC) and City Holding Company. His leadership contributed to a notable turnaround in the company's fortunes, resulting in City Holding being named the top-performing bank in the US by Forbes in 2024.
In addition to this, the company has declared a dividend of $0.79 per common share, continuing its practice of rewarding shareholders. This dividend will be payable on January 31, 2025, to shareholders of record as of January 15, 2025. The declaration was made in a Form 8-K filing with the Securities and Exchange Commission, in line with the company's commitment to transparency.
In memory of Mr. Hylton, City Holding Company has donated $15,000 to a scholarship fund established by him and his wife. The fund, managed by the Beckley Area Foundation, assists students from coal-producing counties in southern West Virginia. These recent developments continue to shape the trajectory of City Holding Company.
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