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Community Heritage Financial, Inc. Reports Fourth Quarter and Record Full Year 2019 Results - 2019 Net Income of $2.63 Million increased 34% over 2018

MIDDLETOWN, Md., Jan. 17, 2020 /PRNewswire/ -- Community Heritage Financial, Inc. (OTCPink: CMHF), the parent company for Middletown Valley Bank ("MVB"), reported quarterly net income of $566 thousand for the quarter ended December 31, 2019 ($0.25 basic common earnings per share), 95% higher than $291 thousand ($0.13 basic common earnings per share) in the year-earlier quarter. For the year ended December 31, 2019, net income was $2.63 million ($1.17 basic common earnings per share), a 34% increase compared to $1.97 million ($0.88 basic common earnings per share) for the year ended December 31, 2018.

(PRNewsfoto/Community Heritage Financial)

In the fourth quarter of 2018, the Company took an after-tax charge of $166 thousand or $0.07 per share, related to the cancellation of a ground lease agreement to build a new branch and instead pursued an existing bank branch site that had been vacated by another bank. The Company also incurred after-tax expenses of $80 thousand, $0.04 per share, in the fourth quarter 2018 related to one-time expenses for the conversion of the bank holding company and due diligence on the pending acquisition of Millennial Financial Group, Inc.

Highlights of the Company's performance and results for the year ended December 31, 2019 include:

  • Net book value per share increased by $1.48 per share or 7% to $21.60. Tangible book value per share increased by $0.74 or 4% to $20.86.
  • Net loans grew by $71.0 million or 20.0% which was primarily funded by a $58.2 million increase in deposits and $14.8 million in net borrowings ($15 million subordinated debt issued in October 2019).
  • Deposits grew by $58.2 million or 15% which was comprised of $19.2 million increase in noninterest bearing deposits, $36 million in savings and money market funds, and a $3 million increase in total time deposits while brokered deposits declined by $9.4 million. Noninterest bearing deposits accounted for 33% of the total deposit growth.
  • Net interest margin increased by 8 basis points during the year to 3.70%, up from 3.62% in 2018 due to loans fees offsetting the impact from the growth in interest costs in 2019.
  • Provision expense was an increase of $134.7 thousand driven by the impact of loan growth more than offsetting the decline in Allowance for Loan Losses percentage by 3 bps during the year to 0.99% due to credit quality improvement. Nonperforming Assets decreased by $1.3 million primarily due to a reduction in nonaccrual loans.
  • Net interest income grew by $509 thousand due to loan growth and an expansion in net interest margin during 2019 stated above.
  • Mlend contributed $350 thousand to the consolidated earnings of Community Heritage Financial, Inc. in 2019 since the acquisition closed on February 2, 2019.

Highlights of the Company's fourth quarter 2019 performance include:

  • Net book value per share increased by $0.22 per share or 1% to $21.60. Tangible book value per share increased by $0.21 or 1% to $20.86.
  • Net loans grew by $18.9 million or 4.7% which was funded by strong growth in deposits of $13.6 million and $14.8 million increase in net borrowings ($15 million subordinated debt issued in October 2019).
  • Deposits grew $13.6 million or 3.1% and net interest margin declined by 12 basis points to 3.62% as asset yields tied to variable rates were negatively impacted by the Federal Reserve cut in interest rates more than offsetting the reduction in deposit yields.
  • Provision expense increased by $69.7 thousand driven by a 1 basis point increase in the Allowance for Loan Losses to 0.99% coupled with strong loan growth mentioned above. Nonperforming assets decreased by $58 thousand during the quarter.
  • Net interest income declined by $21.5 thousand during the fourth quarter due to lower asset yields more than offsetting the growth in yielding assets during the quarter.
  • Mlend contributed $112.2 thousand to the consolidated earnings of Community Heritage Financial, Inc. during the quarter.

A dividend of $0.04 per share was declared by the Board of Directors on January 17, 2020 for stockholders of record as of January 31, 2020 and payable on February 7, 2020.

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


December 31,


September 30,




December 31,



2019


2019




2018



(unaudited)


(unaudited)




(audited)

Cash


$                25,116


$               19,725




$              18,546

FHLB Stock


392


392




325

Investments, at market value


42,641


37,128




47,967

Loans, net of Reserve


425,099


406,185




354,149

Loans Held for Sale


3,775


5,208




-

Fixed assets


9,925


10,088




6,286

Goodwill


1,674


1,654




-

Other assets


8,374


8,359




8,386

Total Assets


$              516,996


$             488,739




$            435,658










Deposits


$              446,707


$             433,081




$            388,544

Borrowings


14,863


-




-

Other liabilities


6,791


7,517




2,170

Total Liabilities


468,361


440,598




390,714

Equity


48,412


47,913




45,666

Unrealized gain(loss), net of tax


223


228




(722)

Total Equity


48,635


48,141




44,944

Total Liabilities & Equity


$              516,996


$             488,739




$            435,658




























Community Heritage Financial, Inc. and Subsidiaries

Consolidated Statements of Income





















For the Three Months Ended


For the Twelve Months Ended

Income Statement


December 31,


December 31,


December 31,


December 31,



2019


2018


2019


2018



(unaudited)


(unaudited)


(unaudited)


(unaudited)

Total interest and fee income


$           5,494,675


$          4,645,044


$       21,088,067


$       16,301,539

Total interest expense


1,264,711


924,125


4,496,981


2,655,516

Net interest income 


4,229,964


3,720,919


16,591,086


13,646,023

Provision for loan losses


261,563


235,425


934,078


799,338

Net interest income after provision


3,968,401


3,485,494


15,657,008


12,846,685

Non-interest income


1,368,643


305,154


4,650,801


1,174,251

Non-interest expense


4,574,838


3,382,070


16,671,322


11,351,551

Merger expenses & one-time items


-


-


77,596


-

Pre-tax net income


762,206


408,578


3,558,891


2,669,385

Income taxes


196,120


117,902


928,117


701,651

Net income


$              566,085


$             290,676


$         2,630,774


$         1,967,734










Earnings per common share, basic 









  and diluted


$0.25


$0.13


$1.17


$0.88

 

Community Heritage Financial, Inc. and Subsidiaries










Selected Financial Data 


















December 31,


September 30,




December 31,



2019


2019




2018

(dollars in thousands)


(unaudited)


(unaudited)




(audited)

Total Assets 


$           516,996


$          488,739




$            435,658

Loans 


425,099


406,185




354,149

Goodwill


1,674


-




-

Deposits 


446,707


433,081




388,544

Shareholder's equity 


48,635


48,141




44,944










Nonperforming Assets:









Accruing troubled debt restructures


$                  701


$                 708




$                   731

Loans 90 past due and still accruing 


-


-




-

Nonaccrual loans 


1,155


1,206




2,453

Foreclosed properties 


-


-




-

Total nonperforming assets 


$               1,856


$              1,914




$                3,184





















For the Three Months Ended


For the Twelve Months Ended



December 31,


December 31,


December 31,


December 31,

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

$        1,023,769


$           644,003


$      4,492,969


$         3,468,723

Allowance for loan loss provision, pre-tax

261,563


235,425


934,078


799,338

Tax expense


196,120


117,902


928,117


701,651

Net Income


$           566,086


$           290,676


$      2,630,774


$         1,967,734










Charge-Offs 


$                    13


$                    10


$                177


$                   132

(Recoveries)


(1)


(51)


(22)


(61)

Net charge-offs


$                    12


$                  (41)


$                155


$                     71










Per Common Share Data 


















Basic earnings per share


$0.25


$0.13


$1.17


$0.88

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


2,249,320


2,233,820

Dividends declared 


$0.03


$0.03


$0.12


$0.09

Book value per share


$21.60


$20.12


$21.60


$20.12

Tangible Book Value per Share


$20.86


$20.12


$20.86


$20.12










Selected Unaudited Financial Ratios
















Return on average assets


0.44%


0.27%


0.55%


0.50%

Return on average equity 


4.62%


2.59%


5.55%


4.45%

Allowance for loan losses to total loans

0.99%


0.99%


0.99%


1.02%

Nonperforming assets to total loans


0.43%


0.89%


0.43%


0.89%

Net charge-offs to average loans


0.00%


0.00%


0.04%


0.04%

Common equity tier 1 to risk-weighted assets 

14.34%


12.98%


14.34%


12.98%

Tier 1 capital to risk-weighted assets 


14.34%


12.98%


14.34%


12.98%

Total capital to risk-weighted assets 


15.54%


14.23%


15.54%


14.23%

Average equity to average assets 


9.61%


10.30%


9.88%


10.30%

Net interest margin 


3.62%


3.60%


3.70%


3.62%

Loan to deposit ratio


96.11%


90.44%


96.11%


91.03%










 

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SOURCE Community Heritage Financial, Inc.