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Community Heritage Financial, Inc. Reports Record Earnings for the Third Quarter of 2019

MIDDLETOWN, Md., Oct. 18, 2019 /PRNewswire/ -- Community Heritage Financial, Inc. ("the Company") (CMHF), the parent company for Middletown Valley Bank ("MVB") and Millennium Financial Group, Inc. ("Mlend",) announced today that, for the quarter ended September 30,  2019, the Company earned net income of $1,000.4 thousand or $0.44 per share compared to net income of $474.2 thousand and earnings per share of $0.21 recorded for the third quarter of 2018. The net income for the quarter ended September 30, 2019 as compared to the year ago quarter ended September 30, 2018, was positively impacted by the performance of Mlend, significant increase in loan growth and a decline in provision for loan losses due to improvement in credit quality which more than offset the increase in non-interest expense and income taxes.

(PRNewsfoto/Community Heritage Financial)

Net income for the first nine months of 2019 was $2.06 million or $0.92 per share compared to $1.7 million or $0.75 per share in 2018. The increase in net income versus the first nine months of 2018 was primarily due to the addition of Mlend in February 2019, significant increase in net interest income, and growth in noninterest income which more than offset the increase in provision for loan loss, noninterest expense, merger and one-time expense and income taxes.    

3Q19 vs. 2Q19 Quarterly Highlights

  • Net book value per share increased by $0.46 per share or 2% to $21.38. Tangible book value per share increased by $0.47 or 2% to $20.65.
  • Net loans grew by $24.1 million or 6.3% which was primarily funded by a $4.9 million reduction in cash and $9.9 million increase in deposits and $8.7 million reduction in investment securities.
  • Deposits grew by $9.9 million or 2.3% while time deposits decreased by $10.7 million of which higher cost brokered deposits accounted for over 90% of the decline. Noninterest bearing deposits accounted for over half of the total deposit growth.
  • Net interest margin declined during the quarter to 3.74%, down from 3.82% in 2Q19 primarily due to above average loan fees in the 2nd quarter of 2019.
  • Provision expense was a decrease of $166.4 thousand driven by the Allowance for Loan Losses percentage declining by 1 bps during the quarter due to improvements in credit quality more than offsetting the impact from loan growth. Nonperforming Assets decreased by $174 thousand due to a reduction in nonaccrual loans.
  • Net interest income was essentially flat due to loan growth offsetting the slight reduction in net interest margin mentioned above.
  • Mlend contributed $215 thousand to the consolidated earnings of Community Heritage Financial, Inc. during the third quarter.

3Q19 vs. 3Q18 Year over Year Highlights

  • Net book value per share increased by $1.57 per share or 8% to $21.38. Tangible book value per share increased by $0.84 or 4% to $20.65.
  • Net loans grew by $66.0 million or 19.4% which was funded by strong growth in deposits of $57.7 million and $11 million decrease in investment securities and $5 million reduction of cash.
  • Deposits grew 15%, or $57.7 million while decreasing higher cost brokered deposits by $16.3 million and net interest margin grew by 19 basis points to 3.74%, up from 3.55% in third quarter of 2018.
  • Provision expense decreased by $190.0 thousand driven by a 1 basis point decrease in the Allowance for Loan Losses to 0.98% more than offsetting the loan growth over that period. Nonperforming assets decreased by $2.1 million compared to the third quarter 2018 primarily driven by $1.9 million in nonaccrual loan reductions and $167 thousand in foreclosed properties being sold.
  • Net interest income grew by $743 thousand in the nine months ended September 30, 2019 vs. 2018 due to robust loan growth and boost in net interest margin previously mentioned.

A dividend of $0.03 per share was declared by the Board of Directors on October 18, 2019 for stockholders of record as of November 1, 2019 and payable on November 8, 2019.

This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified by the use of forward- looking terminology such as "believes," "expects," "intends," "may," "will," "should," "anticipates" or similar terminology. Such statements, specifically regarding the Company's intentions regarding transparency, growth and market expansion, are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, changes in interest rates, stock market liquidity, deposit flows, loan demand and real estate values, as well as changes in economic, competitive, governmental, regulatory, technological and other factors which may affect the Company specifically, its existing and target market areas or the banking industry in general. The realization or occurrence of these risks or uncertainties could cause actual results to differ materially from those addressed in the forward-looking statements.

Community Heritage Financial, Inc.
Brian M. Ropp
Executive Vice President, Chief Financial Officer
(301) 371-3029

 

Community Heritage Financial, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands)



















Balance Sheet


September 30,


September 30,


June 30,


December 31,



2019


2018


2019


2018



(unaudited)


(unaudited)


(unaudited)


(audited)

Cash


$                19,725


$               24,907


$              24,578


$              18,546

FHLB Stock


392


538


392


325

Investments, at market value


37,128


48,255


45,809


47,967

Loans, net of Reserve


406,185


340,189


382,120


354,149

Loans Held for Sale


5,208


543


3,499


-

Fixed assets


10,088


5,920


10,244


6,286

Goodwill


1,654


-


1,659


-

Other assets


8,359


8,489


8,202


8,386

Total Assets


$              488,739


$             428,841


$            476,504


$            435,658










Deposits


$              433,081


$             375,411


$            423,188


$            388,544

Borrowings


-


5,000


-


-

Other liabilities


7,517


4,178


6,224


2,170

Total Liabilities


440,598


384,589


429,412


390,714

Equity


47,913


45,375


46,980


45,666

Unrealized gain(loss), net of tax


228


(1,123)


112


(722)

Total Equity


48,141


44,252


47,092


44,944

Total Liabilities & Equity


$              488,739


$             428,841


$            476,504


$            435,658




























Community Heritage Financial, Inc. and Subsidiaries

Consolidated Statements of Income





















For the Three Months Ended


For the Nine Months Ended

Income Statement


September 30,


September 30,


September 30,


September 30,



2019


2018


2019


2018



(unaudited)


(unaudited)


(unaudited)


(unaudited)

Total interest and fee income


$           5,332,701


$          4,290,135


$       15,593,503


$       11,656,495

Total interest expense


1,081,229


781,766


3,232,381


1,731,391

Net interest income 


4,251,472


3,508,369


12,361,122


9,925,104

Provision for loan losses


191,866


381,913


672,515


563,913

Net interest income after provision


4,059,606


3,126,456


11,688,607


9,361,191

Non-interest income


1,483,307


298,443


3,282,158


869,097

Non-interest expense


4,148,823


2,797,642


12,096,484


7,969,479

Merger expenses & one-time items


-


-


77,596


-

Pre-tax net income


1,394,090


627,257


2,796,685


2,260,809

Income taxes


393,690


153,056


731,997


583,749

Net income


$           1,000,400


$             474,201


$         2,064,688


$         1,677,060










Earnings per common share, basic 









  and diluted


$0.44


$0.21


$0.92


$0.75

 

 

Community Heritage Financial, Inc. and Subsidiaries










Selected Financial Data 


















September 30,


September 30,




December 31,



2019


2018




2018

(dollars in thousands)


(unaudited)


(unaudited)




(audited)

Total Assets 


$           488,739


$          428,841




$            435,574

Loans 


406,185


340,189




354,147

Goodwill


1,654


-




-

Deposits 


433,081


375,411




388,544

Shareholder's equity 


48,141


44,252




44,944










Nonperforming Assets:









Accruing troubled debt restructures


$                  708


$                 738




$                   731

Loans 90 past due and still accruing 


-


-




-

Nonaccrual loans 


1,206


3,098




2,453

Foreclosed properties 


-


167




-

Total nonperforming assets 


$               1,914


$              4,003




$                3,184





















For the Three Months Ended


For the Nine Months Ended



September 30,


September 30,


September 30,


September 30,

Summary of Operating Results 

2019


2018


2019


2018

(dollars in thousands)


(unaudited)


(unaudited)


(unaudited)


(unaudited)

Pre-allowance for loan loss provision, pre-tax net income

$        1,585,956


$       1,009,170


$      3,469,200


$         2,824,722

Allowance for loan loss provision, pre-tax


191,866


381,913


672,515


563,913

Tax expense


393,690


153,056


731,997


583,749

Net Income


$        1,000,400


$          474,201


$      2,064,688


$         1,677,060










Charge-Offs 


$                    21


$                   13


$                164


$                   122

(Recoveries)


(4)


(3)


(21)


(10)

Net charge-offs


$                    17


$                   10


$                143


$                   112










Per Common Share Data 


















Basic earnings per share


$0.44


$0.21


$0.92


$0.75

Common shares outstanding 


2,251,320


2,233,820


2,251,320


2,233,820

Weighted average shares outstanding


2,251,320


2,233,820


2,248,653


2,233,820

Dividends declared 


$0.03


$0.03


$0.09


$0.09

Book value per share


$21.38


$19.81


$21.38


$19.81

Tangible Book Value per Share


$20.65


$19.81


$20.65


$19.81










Selected Unaudited Financial Ratios

















Return on average assets


0.83%


0.43%


0.59%


0.58%

Return on average equity 


8.35%


3.99%


5.88%


5.09%

Allowance for loan losses to total loans


0.98%


0.99%


0.98%


0.99%

Nonperforming assets to total loans


0.46%


1.06%


0.46%


1.06%

Net charge-offs to average loans


0.00%


0.00%


0.04%


0.04%

Common equity tier 1 to risk-weighted assets 

12.25%


14.03%


12.25%


14.03%

Tier 1 capital to risk-weighted assets 


12.25%


14.03%


12.25%


14.03%

Total capital to risk-weighted assets 


13.50%


15.28%


13.50%


15.28%

Average equity to average assets 


9.99%


10.32%


9.97%


10.32%

Net interest margin 


3.74%


3.55%


3.73%


3.64%

Loan to deposit ratio


94.72%


91.50%


94.72%


91.50%










 

 

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