Shares of City Holding Co. CHCO touched a 52-week high of $49.65 during the last hours of the trading session on Jun 23. The stock closed at $49.49, reflecting a solid return of 10.2% over the past one year. The trading volume for the session was 0.3 million shares.
Despite the strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left, given the estimate revisions witnessed over the last 30 days.
Growth Drivers
An acquisition deal, likely to further strengthen City Holding’s revenues and market share, acted as the primary growth driver.
On Jun 1, City Holding signed a definitive agreement to acquire three branches from Financial Holdings, Inc. The branches, located in Lexington, KY, had deposits of $164.2 million as of May 15, 2015. The company will also be acquiring $125 million in performing loans.
Under the terms of the deal, City Holding will be paying a deposit premium of 5.5% on non-time deposits (excluding repurchase agreements). Further, the company will pay a 1.0% premium on loan balances acquired. Based on May-15 balances, the aggregate premium will likely be around $6.4 million.
The deal, expected to close in third-quarter 2015, will be immediately accretive to City Holding’s earnings per share. Further, addition of branches will aid the company’s top-line growth, going forward.
Estimate Revisions
Over the last 30 days, the Zacks Consensus Estimate for 2015 increased a penny to $3.15 per share. For 2016, the Zacks Consensus Estimate rose 1.5% to $3.29 per share over the same time frame.
Better-ranked finance stocks include F.N.B. Corporation FNB, First NBC Bank Holding Company FNBC and CommunityOne Bancorp COB. All these stocks hold a Zacks Rank #2 (Buy).
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