CITY HOLDING COMPANY (CHCO): what the price requires

At today's price, CITY HOLDING COMPANY (CHCO) is priced for 14.7% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/CHCO

Headline

FieldValue
TickerCHCO
CompanyCITY HOLDING COMPANY
Current price$133.62/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed14.7%
Return on equity now16.1%
ROE gap-1.4pp
Price-to-book2.37x

Solve inputs: computed at a 8.5% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~2.4pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.74σ
cohort percentile (of 119 peers)92
sustained it ~10 years at this level61%
implied end-window share0%

Valuation X-Ray

The price is supported by earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.25x3expensive
Earnings0.93x2justifies
Relative1.08x3expensive
Growth1.19x2expensive

Families that justify the price: Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.

Per-Model Detail (n=10)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$151.920.88xyesTBVPS $55.65 × 2.73x (ROE (TTM) 16.6% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption))
Relative ValuationRelative$100.101.33xyesP/E 10x (static sector reference · 2026-04), scenarios: 8.4x / 10.0x / 11.6x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth$114.621.17xyesStage 1: 14% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$99.881.34xyesBV/sh $55.65, ROE (TTM) 16.6%, ke 9.3%
Two-Stage Excess ReturnAsset$132.081.01xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$110.551.21xyesRev $0.2B, growth 8% (input: historical growth; tapered), Terminal P/S: 6.6x / 7.9x / 9.2x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$124.251.08xyesEPS $9.07, growth 14% (input: historical EPS growth), PEG=1.06 (Fair)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$106.571.25xyes√(22.5 × EPS $9.07 × BVPS $55.65) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$272.880.49xyesEPS $9.07 × (8.5 + 2×13.7%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative$186.370.72xyesEPS $9.07 × (PEG 1.5 × growth 13.7% (input: historical EPS growth)) → PE 20.5x
Earnings YieldEarnings$98.051.36xyesEPS $9.07 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-1.2%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

City Holding is a mature bank, and mature is the right lens for reading every number it reports. It will not surprise anyone with a new growth engine. What it does instead is earn an unusually high return on the capital it already has, quarter after quarter, and return most of what it cannot reinvest. That makes the return on equity the whole story, and the return on equity is high. In the first quarter of 2026 the bank earned net income of $31.7 million and diluted EPS of $2.20, on a 1.92% return on assets and a 19.3% return on tangible common equity. Those are strong figures for a bank of any size, and the high return is the baseline rather than a spike: the bank has recently been earning around 16.1% return on equity.

The source of that return is a deposit base most banks would envy. City National Bank operates 96 offices concentrated in West Virginia, eastern Kentucky, Virginia, and a sliver of Ohio, and in its core counties it holds roughly "13% of the deposit market share in the counties of West Virginia where its bank branches are located" and "approximately 24%" in eastern Kentucky. A bank with that kind of local share funds itself cheaply and defends its margin: net interest margin improved to 3.97% in Q1 2026 from 3.94% the prior quarter. The 10-K describes the franchise plainly as a "retail and consumer-oriented community bank with 96 banking offices", and that consumer-deposit tilt is exactly what produces the low funding cost behind the margin.

The capital story closes the loop. A bank earning a high return it cannot fully reinvest at home returns the excess, and City Holding does both ends of that: it repurchased 262,017 shares in Q1 2026 and authorized buybacks of up to a million more shares, about 7% of the company, while paying a rising $0.87 quarterly dividend. Share count has been shrinking at roughly 1.2% a year. For a mature bank, that combination, a return well above its cost of equity and a disciplined return of the surplus, is the entire model working as designed.

Bear Case

The variable with the most leverage over City Holding is the one the price barely acknowledges: interest rates and the deposit costs they drive. A community bank earning a 3.97% net interest margin is, underneath the franchise language, a spread business, and that spread is sensitive to where short-term rates go and how hard depositors push for higher yields. Net interest income already slipped about 1.6% from the fourth quarter of 2025 to the first quarter of 2026, from $60.6 million to $59.6 million, even as the reported margin ticked up. At 2.3x book the price treats the high return as durable; it leaves little room for a stretch where funding costs rise faster than asset yields and the margin gives back its recent gains.

The growth question is the second pressure point, and for a maximally penetrated incumbent it is real. A bank that already holds 13% to 24% of deposits in its home counties does not have much organic runway, and those home markets, West Virginia and eastern Kentucky, are slow-growth, in places declining-population economies. The buybacks and the rising dividend are not only a sign of discipline; they are also the tell that the bank generates more capital than it can profitably redeploy at home. The 10-K notes a branch closure in Columbus, Ohio, during 2025, a reminder that the footprint is as likely to contract as to grow. Per-share growth here comes mostly from shrinking the share count, not from a bigger bank.

That puts the weight on the multiple. The price requires this bank to keep earning a return well above what most banks sustain, and to keep doing it for a long time. The price embeds a return near 14.3% against a long-run ceiling around 12.5%, which is to say it is paying for excess returns to persist well past the point most banks hold them. City Holding has earned that excess historically, so this is not a stretch in the way it would be for a lower-return bank at the same multiple. But it is still a bet that an above-average return does not fade, in a rate environment that can compress the margin and in home markets that are not growing. If the return on equity drifts back toward the sector, the price-to-book it supports compresses with it.

Valuation

A bank is worth the return it earns on its capital, so price-to-book is the frame, and at $127.10 (June 29, 2026) City Holding trades near 2.3x book. That multiple is doing one job: it prices a return on equity toward the top tier, discounted at a cost of equity around 8.6%. The unusual part is that the bank can plausibly back it. Most banks at 2.3x book would be pricing a return far above anything in their record; here the embedded return sits close to what City Holding actually earns. It has recently delivered about 16.1% return on equity and a 19.3% return on tangible common equity, so the premium reflects a demonstrated return rather than a hoped-for one.

Read across the families of method, the price lands in a coherent middle. The asset-value and growth lenses sit modestly below today's price, the earnings-power lens reads the price as somewhat full, and the peer-multiple lens lands almost exactly at it. No single family argues the stock is plainly cheap or plainly stretched; they cluster, which is what you expect when the multiple is paying for a return the bank genuinely earns rather than for a growth story it has to deliver. The bet the price makes is durability: the embedded return near 14.3% holding up against a long-run ceiling closer to 12.5%, so the price pays for above-average profitability to persist longer than the typical bank sustains it.

Solvency is not the question for a deposit-funded bank, and the standard corporate lenses, net debt, interest coverage, cash burn, do not apply: deposits are funding, not leverage. The relevant frame is capital return and the headroom behind it, and there the picture is clean, a return comfortably above the cost of equity, a share count shrinking about 1.2% a year, and a buyback authorization of roughly 7% of the company. The decisive variable is not the balance sheet; it is whether the high return on equity holds.

Catalysts

The most recent catalyst was the Q1 2026 print, and it confirmed the steady-quality profile rather than changing it. Net income of $31.7 million and diluted EPS of $2.20 beat the $2.15 consensus estimate, return on tangible common equity came in at 19.3%, and net interest margin improved to 3.97% from 3.94%. Reported revenue of about $79.25 million landed just under the roughly $79.34 million expected, so the beat was on profitability and efficiency rather than the top line. For a bank like this, that is the shape of the story: the quarterly question is whether the high return and the margin hold, not whether a new product lands.

The capital-return actions are the live catalysts to watch. On March 25, 2026, the board authorized a new buyback of up to 1,000,000 shares, roughly 7% of the company, with no expiration; the bank used part of it immediately, repurchasing 262,017 shares at an average price of $117.79 and leaving about 985,000 shares of authorization at quarter-end. The $0.87 quarterly dividend continues alongside it. With no transformative deal or product on the horizon, the pace of buybacks against the price paid, and any drift in funding costs that pressures the margin, are what will move the per-share numbers from here.

Peer Cohorts (Per Segment, With Filing Citations)

Community Banking (whole company) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

company 8-K, March 25, 2026

View the full interactive CHCO report on boothcheck