Community Heritage Financial, Inc. (the “Company” or “CHF”) (OTC PK: CMHF), the parent company of Middletown Valley Bank (“MVB” or the “Bank”), reported net income of $1.9 million, or $0.64 per diluted share, for the three months ended March 31, 2025, representing an increase of $477 thousand, or 33.9%, over net income of $1.4 million, or $0.48 per diluted share, reported for the same period in 2024. Compared to the fourth quarter 2024 results of $1.7 million, or $0.59 per diluted share, net income improved $149 thousand, or 8.6%.
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Balance Sheet
Assets totaled $1.06 billion as of March 31, 2025, representing an increase of $37.8 million since December 31, 2024, and a decrease of $6.4 million since March 31, 2024. During the period of mid-January 2024 through early November 2024, advances drawn under the Bank Term Funding Program (“BTFP”) available through the Federal Reserve Bank (“FRB”) totaling $50.0 million impacted asset balances. The advances offered the opportunity of a positive arbitrage between the weighted average advance rate and the earnings rate offered by the FRB. The Bank repaid the advances immediately prior to the November 2024 meeting of the FRB, at which the FRB reduced short-term interest rates eliminating the arbitrage opportunity.
The decline in total assets since March 31, 2024 of $6.4 million resulted from a reduction in total borrowings from the FRB and Federal Home Loan Bank of $40.0 million, offset by growth in interest-bearing deposits of $27.3 million. Interest-bearing deposit growth included growth in time deposit balances of $41.6 million, offset by a decline in interest-bearing demand deposits of $14.2 million. Migration to higher cost deposits during the twelve-month period reflected customers taking advantage of a higher interest rate environment with expectations of future rate cuts by the FRB.
Loan balances outstanding grew to $863.4 million as of March 31, 2025, representing an increase of $32.8 million, or 3.9% from March 31, 2024, and $15.8 million, or 7.5% annualized from December 31, 2024. Non-owner occupied commercial real estate loans, residential loans, including home equity loans, and owner occupied commercial real estate loans, grew $32.0 million, $13.9 million, and $5.8 million, respectively, since March 31, 2024. A decline in construction and land development loans of $23.4 million during the same period offset the growth in other loan portfolios. Since December 31, 2024, growth in owner occupied commercial real estate loans, construction and land development loans, and non-owner occupied commercial real estate loans of $7.3 million, $5.7 million and $3.9 million, respectively, contributed to total loan growth of $15.8 million.
Net Interest Income
Net interest income totaled $8.4 million during the three months ended March 31, 2025, compared to $7.2 million during the same period in 2024, and $8.1 million during the three months ended December 31, 2024. The net interest margin (“NIM”) increased from 2.80% for the first quarter 2024 to 3.13% for the fourth quarter 2024 and 3.36% for the first quarter 2025. The FRB's decision to increase short-term rates to combat inflation in March 2022 pressured the Company's NIM during 2022 and 2023 as deposit rates increased rapidly. The NIM reached a low point of 2.61% in the third quarter of 2023 and has since steadily improved, as interest rates on interest-bearing deposits stabilized and maturing loans continue to reprice at higher interest rates. Interest rate cuts initiated by the FRB beginning in September 2024 also contributed to the improvement in the NIM during the fourth quarter 2024 and the first quarter 2025.
Noninterest Income
First Quarter 2025 vs. First Quarter 2024 – Noninterest income decreased $105 thousand. Earnings on bank-owned life insurance decreased $188 thousand as the first quarter 2024 included receipt of insurance proceeds totaling $138 thousand. Other noninterest income increased $58 thousand and included broker fees received in the first quarter 2025 for referrals of Small Business Administration (“SBA”) qualified loans totaling $72 thousand.
Linked Quarter: First Quarter 2025 vs. Fourth Quarter 2024 – In December 2024, the Company repositioned a small percentage of its investment portfolio, selling $8.1 million of investments securities available-for-sale with a book yield of 1.67% at a pretax loss of $442 thousand. Proceeds were reinvested in investment securities with higher yields during December 2024 and January 2025. Exclusive of the loss on the sale of investment securities, noninterest income in the first quarter 2025 declined $295 thousand compared to the fourth quarter 2024. Mortgage banking revenue decreased $307 thousand with decreased mortgage origination and sale activity, reflecting a slower winter season, volatile interest rates and home buyer affordability concerns. Activity based card and merchant service fees and service charges on deposits declined $61 thousand. Other noninterest income increased $72 thousand, reflecting broker fees for SBA qualified loan referrals received in the first quarter 2025 totaling $72 thousand.
Noninterest Expense
First Quarter 2025 vs. First Quarter 2024 – Noninterest expense increased $471 thousand quarter over quarter. The net increase included an increase in salaries and employee benefits expense of $503 thousand and occupancy and equipment expense of $61 thousand, offset by a decrease in data and item processing of $126 thousand. The increase in salaries and employee benefits expense included an increase in benefits costs resulting from increased health claims of $143 thousand and increased incentive programs totaling $138 thousand. The increase in occupancy and equipment expense included an increase in snow removal expense of $50 thousand. The decrease in data and item processing expense resulted from a decline in deposit fraud losses of $136 thousand.
Linked Quarter: First Quarter 2025 vs. Fourth Quarter 2024 – Noninterest expense increased $190 thousand on a linked quarter basis. The increase included an increase in salaries and employee benefits expense of $282 thousand, offset by a decrease in FDIC insurance expense of $63 thousand. The increase in salaries and employee benefit expense included an increase in benefits costs resulting from increased health claims of $111 thousand and increased incentive programs totaling $122 thousand. FDIC insurance expense decreased with a lower asset base and a reduction in the premium rate.
Asset Quality
Asset quality remained strong with non-performing assets to total assets of 0.14% on March 31, 2025, compared to 0.15% on December 31, 2024 and 0.17% on March 31, 2024. The ratio of net charge-offs to average total loans was zero percent for the quarters ended March 31, 2025, December 31, 2024 and March 31, 2024. The allowance for credit losses as a percentage of total loans was 0.99% as of March 31, 2025, 0.98% as of December 31, 2024 and 0.97% as of March 31, 2024.
Dividend
The Board of Directors declared a dividend of $0.08 per common share on April 18, 2025, payable on May 9, 2025 to stockholders of record as of May 2, 2025.
Forward-Looking Statements
This press release may contain forward-looking statements with respect to the Company's financial condition, results of operations and business. Forward-looking statements can be identified by words such as “expects”, “anticipates”, “believes”, “estimates”, “projects”, “continue”, “plans”, “intends”, the negative of these words and other comparable terminology. Comments regarding future financial performance, expected levels of future revenue and expenses such as credit losses, growth strategies, new business initiatives and anticipated trends impacting performance may include these forward-looking statements. Forward-looking statements are not historical facts nor an assurance of future performance. While we believe the expectations of forward-looking statements to be reasonable, actual results may differ materially as forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and often outside of the control of the Company. Therefore, users should not rely on forward-looking statements.
Non-GAAP Financial Measures
The Company may include certain non-GAAP financial measures in this press release. The Company believes these financial measures provide information useful to investors in understanding the Company's performance and performance trends to facilitate comparisons with the performance of others in the industry. These non-GAAP financial measures should not be considered an alternative to GAAP and users should recognize the non-GAAP financial measures presented by the Company might not be comparable to measures of other companies with similar titles.
Reclassification
Reclassifications of certain previously reported amounts have been made to conform to current period reporting. No such reclassifications were significant.
Community Heritage Financial, Inc. Robert E. (BJ) Goetz, Jr. President & Chief Executive Officer 301-371-3055
Community Heritage Financial , Inc. and SubsidiariesBalance Sheets (unaudited) As of Period End 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024ASSETS Cash and due from banks $ 41,754,293 $ 16,510,418 $ 90,485,075 $ 91,988,101 $ 76,807,485 Securities available-for-sale, at fair value 42,514,398 40,481,911 43,803,206 39,518,549 40,267,761 Securities held-to-maturity 90,382,973 91,374,820 92,558,298 93,944,321 95,152,132 Less allowance for credit losses 93,416 102,896 110,386 118,787 126,943 Total securities held-to-maturity 90,289,557 91,271,924 92,447,912 93,825,534 95,025,189 Total securities 132,803,955 131,753,835 136,251,118 133,344,083 135,292,950 Equity securities, at cost 1,901,700 1,404,700 1,404,600 1,404,600 1,404,600 Loans 863,383,714 847,593,970 847,539,088 841,043,351 830,604,389 Less allowance for loan credit losses 8,525,628 8,279,404 8,167,602 8,186,862 8,032,597 Loans, net 854,858,086 839,314,566 839,371,486 832,856,489 822,571,792 Loans held for sale 564,685 5,106,956 4,591,950 4,739,191 1,443,270 Premises and equipment 5,628,103 5,688,187 5,805,983 6,010,649 6,164,114 Right of use asset 1,939,827 1,911,836 2,031,653 2,152,804 2,272,962 Accrued interest receivable 3,342,795 3,152,505 3,124,150 3,360,417 3,212,907 Deferred tax assets 4,431,764 4,558,255 4,568,943 4,870,431 4,879,208 Bank owned life insurance 7,443,531 7,411,319 7,379,630 7,159,381 7,122,335 Goodwill 1,656,507 1,656,507 1,656,507 1,656,507 1,656,507 Other assets 1,741,146 1,771,483 1,660,574 1,891,044 1,588,900 Total Assets $ 1,058,066,392 $ 1,020,240,567 $ 1,098,331,669 $ 1,091,433,697 $ 1,064,417,030LIABILITIES and SHAREHOLDERS' EQUITY Liabilities Deposits: Noninterest-bearing demand $ 247,511,094 $ 251,431,084 $ 246,907,558 $ 248,150,379 $ 247,549,872 Interest-bearing 685,201,331 656,575,635 685,892,223 682,397,667 657,884,381 Total deposits 932,712,425 908,006,719 932,799,781 930,548,046 905,434,253 FHLB advances and other borrowings 25,000,000 15,000,000 65,000,000 65,000,000 65,000,000 Subordinated debt, net 12,043,757 12,040,695 15,000,000 14,977,576 14,955,152 Lease liabilities 2,011,829 1,984,920 2,105,649 2,226,547 2,345,426 Accrued interest payable 730,113 485,160 2,468,369 1,633,334 1,212,747 Other liabilities 4,380,812 3,694,164 3,662,903 2,853,893 2,810,610 Total Liabilities 976,878,936 941,211,658 1,021,036,702 1,017,239,396 991,758,188 Shareholders' Equity Common stock 29,289 29,198 29,159 29,159 29,159 Additional paid-in-capital 41,351,223 41,331,966 41,284,421 41,204,072 41,123,723 Retained earnings 46,246,459 44,597,524 43,039,340 41,167,218 39,900,518 Accumulated other comprehensive loss (6,439,515) (6,929,779) (7,057,953) (8,206,148) (8,394,558) Total Shareholders' Equity 81,187,456 79,028,909 77,294,967 74,194,301 72,658,842 Total Liabilities and Shareholders' Equity $ 1,058,066,392 $ 1,020,240,567 $ 1,098,331,669 $ 1,091,433,697 $ 1,064,417,030
Community Heritage Financial , Inc. and SubsidiariesStatements of Income (unaudited) Three Months Ended 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024Interest Income Loans, including fees $ 12,228,538 $ 12,057,265 $ 12,066,857 $ 11,471,139 $ 11,181,544 Securities 858,632 809,512 773,571 773,717 772,603 Fed funds sold and other bank deposits 119,202 548,309 1,101,997 1,289,874 866,559 Total interest income 13,206,372 13,415,086 13,942,425 13,534,730 12,820,706Interest Expense Deposits 4,405,731 4,686,005 5,146,858 5,005,650 4,703,948 Borrowed funds 189,055 380,370 756,653 750,049 670,916 Subordinated debt 207,250 209,934 238,049 238,050 238,049 Total interest expense 4,802,036 5,276,309 6,141,560 5,993,749 5,612,913Net interest income 8,404,336 8,138,777 7,800,865 7,540,981 7,207,793Provision for credit losses 248,558 178,624 (7,396) 168,120 267,370Net interest income after provision for credit losses 8,155,778 7,960,153 7,808,261 7,372,861 6,940,423Noninterest income Card and merchant services 281,415 314,785 294,243 285,572 257,364 Service charges on deposits 235,097 262,583 252,406 237,357 237,020 Mortgage banking revenue 164,015 470,783 508,209 365,003 161,163 Earnings on bank-owned life insurance 23,920 23,398 86,958 28,755 211,641 Loss on sale of investment securities – (442,493) – – – Other 77,870 5,427 5,022 5,001 19,870 Total noninterest income 782,317 634,483 1,146,838 921,688 887,058Noninterest expense Salaries and employee benefits 3,847,202 3,565,344 3,696,105 3,588,465 3,344,188 Occupancy and equipment 925,091 906,738 901,283 869,510 864,008 Data and item processing 590,840 624,021 492,294 731,661 716,712 Legal and professional fees 277,977 291,944 242,411 354,244 288,193 FDIC insurance 142,866 206,376 210,789 205,143 185,134 Advertising 107,375 78,362 93,129 73,236 61,467 Other 587,891 616,615 553,021 536,341 548,714 Total noninterest expense 6,479,242 6,289,400 6,189,032 6,358,600 6,008,416Income before income taxes 2,458,853 2,305,236 2,766,067 1,935,949 1,819,065Income tax expense 576,217 571,853 718,989 494,293 413,370Net income $ 1,882,636 $ 1,733,383 $ 2,047,078 $ 1,441,656 $ 1,405,695Community Heritage Financial , Inc. and SubsidiariesPer Share Data (unaudited) Three Months Ended 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024Earnings per common share Basic $ 0.64 $ 0.59 $ 0.70 $ 0.49 $ 0.48 Diluted $ 0.64 $ 0.59 $ 0.70 $ 0.49 $ 0.48Common shares outstanding at period end 2,928,888 2,919,797 2,915,933 2,915,933 2,915,933Average common shares outstanding Basic 2,922,624 2,919,677 2,915,933 2,913,048 2,913,048 Diluted 2,937,508 2,934,754 2,927,377 2,916,951 2,913,048Cash dividends paid per common share $ 0.08 $ 0.06 $ 0.06 $ 0.06 $ 0.06
Community Heritage Financial , Inc. and SubsidiariesSelected Financial Data (unaudited) As of Period End 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024Per Share Data Common shares outstanding at period end 2,928,888 2,919,797 2,915,933 2,915,933 2,915,933 Book value per share $ 27.72 $ 27.07 $ 26.51 $ 25.44 $ 24.92 Tangible book value per share $ 27.15 $ 26.50 $ 25.94 $ 24.88 $ 24.35Capital (bank consolidated only unless noted otherwise) Common equity tier 1 (CET1) capital 12.11% 12.12% 12.27% 11.98% 11.99% Tier 1 capital 12.11% 12.12% 12.27% 11.98% 11.99% Total risk based capital 13.23% 13.24% 13.36% 13.07% 13.07% Tier 1 leverage ratio 9.47% 9.06% 8.90% 8.69% 8.84% Tangible common equity to tangible assets (CHF) 7.53% 7.60% 6.90% 6.66% 6.68%Asset Quality Data Non-accrual loans $ 1,488,718 $ 1,525,759 $ 1,566,138 $ 1,798,530 $ 1,847,747 Non-performing assets $ 1,488,718 $ 1,525,759 $ 1,566,138 $ 1,798,530 $ 1,847,747 Non-performing loans to loans 0.17% 0.18% 0.18% 0.21% 0.22% Non-performing assets to total assets 0.14% 0.15% 0.14% 0.16% 0.17% Net loan charge-offs to average loans 0.00% 0.00% 0.00% 0.00% 0.00% Allowance for loan credit losses to loans 0.99% 0.98% 0.96% 0.96% 0.97%Other Data Return on average assets 0.74% 0.65% 0.74% 0.53% 0.53% Return on average equity 9.47% 8.77% 10.66% 7.84% 7.81% Net interest margin 3.36% 3.13% 2.90% 2.83% 2.80% Yield on interest-earning assets 5.29% 5.16% 5.18% 5.09% 4.98% Cost of interest-bearing liabilities 2.78% 2.93% 3.19% 3.19% 3.07% Loans to deposits ratio 92.57% 93.35% 90.86% 90.67% 91.99%
Community Heritage Financial , Inc. and SubsidiariesCondensed Average Balance Sheet Analysis (unaudited) Three Months Ended March 31, 2025 December 31, 2024 March 31, 2024 Average Balance Interest Yield / Rate Average Balance Interest Yield / Rate Average Balance Interest Yield / RateASSETS Interest-earning assets: Loans, including LHFS $ 857,799,175 $12,228,538 5.76% $ 845,597,778 $12,057,265 5.67% $ 828,003,687 $11,181,544 5.43% Securities 135,129,415 858,632 2.54% 137,715,050 809,512 2.35% 137,640,451 772,603 2.25% Fed funds sold and other bank deposits 16,389,959 119,202 2.95% 50,564,598 548,309 4.30% 69,199,772 866,559 5.04% 1,009,318,549 13,206,372 5.29% 1,033,877,426 13,415,086 5.16% 1,034,843,910 12,820,706 4.98% Noninterest-earning assets 22,046,233 22,661,279 26,538,331 Total Assets $ 1,031,364,782 $ 1,056,538,705 $ 1,061,382,241LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Demand deposits $ 511,603,640 $ 2,964,668 2.35% $ 518,306,801 $ 3,253,566 2.50% $ 535,260,903 $ 3,636,945 2.73% Time deposits 156,928,392 1,441,063 3.72% 152,086,436 1,432,439 3.75% 125,635,771 1,067,003 3.42% Interest-bearing deposits 668,532,032 4,405,731 2.67% 670,393,237 4,686,005 2.78% 660,896,674 4,703,948 2.86% Borrowings 30,466,939 396,305 5.24% 46,286,930 590,304 5.08% 73,661,039 908,965 4.96% Interest-bearing liabilities 698,998,971 4,802,036 2.78% 716,680,167 5,276,309 2.93% 734,557,713 5,612,913 3.07% Noninterest-bearing liabilities: Demand deposits 244,507,561 253,879,418 248,367,752 Other 7,266,291 7,305,326 6,100,920 Total Liabilities 950,772,823 977,864,911 989,026,385 Cost of Total Deposits 1.96% 2.02% 2.08% Cost of Total Funds (interest- bearing liabilities plus non- interest-bearing deposits) 2.06% 2.16% 2.30% Shareholders' equity 80,591,959 78,673,794 72,355,856 Total Liabilities and Shareholders Equity $ 1,031,364,782 $ 1,056,538,705 $ 1,061,382,241 Net interest income / NIM $ 8,404,336 3.36% $ 8,138,777 3.13% $ 7,207,793 2.80%
Community Heritage Financial , Inc. and SubsidiariesLoan and Deposit Composition (unaudited) As of Period End 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024Loans:Commercial real estate: Construction and land development $ 65,421,754 $ 59,761,206 $ 64,686,070 $ 89,921,555 $ 88,793,186 Multifamily 24,142,268 25,185,498 23,437,101 21,281,351 21,682,394 Farmland 32,376,907 32,424,255 30,448,216 30,317,070 30,546,050 Other: Owner occupied 143,451,648 136,172,517 137,266,535 130,560,913 137,654,633 Non-owner occupied 163,089,171 159,150,227 154,090,059 143,246,131 131,114,323Residential, including home equity 298,829,304 296,196,340 297,472,722 290,587,107 284,962,472Commercial and industrial 131,591,369 134,164,953 135,355,039 130,148,584 130,972,545Consumer 915,551 1,036,859 1,296,915 1,392,904 1,369,535 Gross loans 859,817,972 844,091,855 844,052,657 837,455,615 827,095,138 Net deferred loan costs 3,565,742 3,502,115 3,486,431 3,587,736 3,509,251 Total Loans $863,383,714 $847,593,970 $847,539,088 $841,043,351 $830,604,389Deposits:Noninterest-bearing demand $247,511,094 $251,431,084 $246,907,558 $248,150,379 $247,549,872Interest-bearing: NOW 1 193,760,532 194,682,425 223,884,815 223,072,312 202,226,731 Savings 72,670,367 69,979,571 69,566,114 72,408,661 77,287,245 Money Market 251,803,391 240,320,055 239,982,813 237,799,850 252,954,674 Time 166,967,041 151,593,584 152,458,481 149,116,844 125,415,731 Total interest-bearing 685,201,331 656,575,635 685,892,223 682,397,667 657,884,381 Total Deposits $932,712,425 $908,006,719 $932,799,781 $930,548,046 $905,434,253 1. Includes demand transaction accounts enrolled in the Bank's reciprocal deposit program.
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