MIDDLETOWN, Md., April 23, 2024 /PRNewswire/ -- 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 $1.4 million, or $0.48 per diluted share, for the three months ended March 31, 2024, representing an increase of $483 thousand or 52.3%, compared to net income of $923 thousand, or $0.32 per diluted share, for the three months ended December 31, 2023. Net income for the first quarter of 2024 was flat when compared to the $1.4 million, or $0.48 per diluted share, earned during the three months ended March 31, 2023.
(PRNewsfoto/Community Heritage Financial)
Balance Sheet and Asset Quality
Total assets were $1,064.4 million as of March 31, 2024, representing an increase of $75.8 million since December 31, 2023, and an increase of $127.8 million since March 31, 2023. Asset growth during both periods included advances under the Bank Term Funding Program ("BTFP") available through the Federal Reserve Bank ("FRB") totaling $50.0 million. The advances offer the opportunity of a positive arbitrage between the weighted average advance rate of 4.82% and the earnings rate offered by the FRB of 5.40%. The advances were drawn in mid-January 2024, mature in mid-January 2025 and can be repaid anytime without penalty. Asset growth was further fueled by growth in deposits of $26.2 million and $87.1 million since December 31, 2023 and March 31, 2023, respectively. Loans grew to $830.6 million as of March 31, 2024, an increase of $17.7 million, or 8.7% annualized, from December 31, 2023, and $73.0 million, or 9.6%, from March 31, 2023. Asset quality remained strong with non-performing assets to total assets of 0.17% on March 31, 2024, compared to 0.18% on December 31, 2023. The ratio of net charge-offs to average total loans was zero percent for the quarter ended March 31, 2024.
Quarterly Highlights – Q1 2024 vs. Q4 2023
Loans increased $17.7 million during the first quarter of 2024 to $830.6 million as of March 31, 2024. Net growth in non-owner occupied commercial real estate, residential real estate, and commercial and industrial loans totaled $11.1 million, $4.4 million and $2.0 million, respectively.
Deposits increased $26.2 million in the first quarter of 2024 to $902.9 million as of March 31, 2024. A decline of $12.7 million in non-interest-bearing transaction accounts and $1.7 million in time deposits was offset by increases of $37.7 million and $4.1 million in NOW and Money Market balances, respectively. Growth in NOW account balances included $40.7 million in balances sold in December, 2023 and reacquired in January, 2024.
The net interest margin ("NIM") increased from 2.71% during the fourth quarter of 2023 to 2.80% during the first quarter of 2024. The first quarter saw an improvement in the yield on interest-earning assets from 4.78% during the fourth quarter of 2023 to 4.97% during the first quarter of 2024 as new loan volume was originated with higher interest rates. While the cost of interest-bearing liabilities increased twelve basis points from quarter-to-quarter, the increase was driven by the cost of the $50.0 million in BTFP advances with a weighted average rate of 4.82%. The cost of total deposits, including non-interest-bearing deposits, increased two basis points, from 2.09% during the fourth quarter of 2023 to 2.11% during the first quarter of 2024. As a result of the improvement in the yield on interest-earning assets and continued stabilization of the cost of the Company's core funding source, total deposits, net interest income increased $452 thousand, or 6.7% during the first quarter compared to the fourth quarter.
Earnings on bank-owned life insurance increased from $96 thousand during the fourth quarter to $212 thousand during the first quarter with the receipt of insurance proceeds of $138 thousand.
Mortgage banking revenue declined $35 thousand, from $255 thousand in the fourth quarter to $220 thousand in the first quarter, as higher interest rates continued to depress mortgage origination volume.
The allowance for loan credit losses to loans ratio ("ACL") was 0.97% on March 31, 2024 compared to 0.95% on December 31, 2023. The provision for credit losses totaled $267 thousand in the first quarter compared to $275 thousand in the fourth quarter.
Quarterly Highlights – Q1 2024 vs. Q1 2023
Tangible book value per share increased $1.51 to $24.35 as of March 31, 2024, compared to $22.84 as of March 31, 2023. The increase on a year-over-year basis was due to earnings, net of dividends, and a decrease in the accumulated other comprehensive loss of $789 thousand.
Loans of $830.6 million as of March 31, 2024 grew $73.0 million or 9.6% compared to March 31, 2023. Residential real estate, construction and land development, commercial and industrial and farmland loans grew $44.1 million, $12.3 million, $12.1 million and $4.8 million, respectively.
Total deposits on March 31, 2024 were $902.9 million, an increase of $87.1 million or 10.7% compared to $815.8 million as of March 31, 2023. As of March 31, 2024, brokered deposits totaled $10.0 million. There were no brokered deposits on March 31, 2023.
The NIM for the first quarter of 2024 was 2.80%, compared to 3.08% for the first quarter of 2023. Beginning in the first quarter of 2022, the FRB began increasing short-term interest rates to combat inflation. These actions increased the Company's funding costs and pressured its net interest margin. The NIM reached a low point of 2.61% during the second quarter of 2023, with the last rate increase initiated by the FRB occurring in July, 2023, and has since recovered to 2.80%.
The ACL was .97% as of March 31, 2024 compared to 1.04% as of March 31, 2023. The provision for credit losses totaled $267 thousand in the first quarter of 2024 compared to a recovery of $440 thousand in the first quarter of 2023. The change in the ACL reflects improving GDP and unemployment forecasts included in the Company's allowance for credit loss model since adoption of the current expected credit loss methodology effective January 1, 2023.
Non-interest income totaled $974 thousand for the first quarter of 2024 compared to $713 thousand for the first quarter of 2023. The first quarter of 2024 included a one-time receipt of bank-owned life insurance proceeds of $138 thousand and an increase of $44 thousand related to commercial cash management services.
Non-interest expense decreased $156 thousand in the first quarter of 2024 compared to the same quarter in 2023, with a decrease in salaries and employee benefits accounting for $229 thousand of the total decrease. In addition, occupancy and equipment costs decreased $128 thousand. Legal and professional fees increased $103 thousand as the Company continued preparing for the requirements of FDICIA effective in 2025.
Dividend
A dividend of $0.06 per share was declared by the Board of Directors on April 19, 2024, for stockholders of record as of May 3, 2024, and payable on May 10, 2024.
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. These forward-looking statements may be included in 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. 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.
Community Heritage Financial, Inc. Robert E. (BJ) Goetz, Jr. President & Chief Executive Officer 301-371-3055
Community Heritage Financial , Inc. and Subsidiaries
Balance Sheets (unaudited)
As of Period End
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
ASSETS
Cash and due from banks
$ 76,807,485
$ 16,664,061
$ 36,448,539
$ 14,946,927
$ 12,820,683
Securities available for sale, at fair value
40,267,761
40,927,086
39,917,313
41,460,794
43,142,854
Securities held to maturity
95,152,132
96,111,626
97,217,237
98,496,558
99,914,183
Less allowance for credit losses
126,943
103,949
147,457
163,259
155,381
Total securities held to maturity
95,025,189
96,007,677
97,069,780
98,333,299
99,758,802
Total securities
135,292,950
136,934,763
136,987,093
139,794,093
142,901,656
Equity securities, at cost
1,404,600
1,363,600
1,363,600
1,527,600
1,740,100
Loans
830,604,389
812,932,872
798,035,073
796,931,525
757,611,496
Less allowance for loan credit losses
8,032,597
7,742,297
7,337,327
8,112,952
7,855,981
Loans, net
822,571,792
805,190,575
790,697,746
788,818,573
749,755,515
Loans held for sale
1,443,270
1,651,118
2,879,397
1,923,566
1,703,221
Premises and equipment
6,164,114
6,329,832
6,639,595
6,805,822
6,974,776
Right of use asset
2,272,962
2,380,555
2,498,508
2,615,519
2,731,604
Accrued interest receivable
3,212,907
2,972,952
2,733,565
2,512,795
2,405,851
Deferred tax assets
4,879,208
4,766,376
5,289,000
5,314,018
5,264,879
Bank owned life insurance
7,122,335
7,172,917
6,943,992
6,927,341
6,875,378
Goodwill
1,656,507
1,656,507
1,656,507
1,656,507
1,656,507
Other assets
1,588,900
1,544,870
1,556,491
1,502,676
1,789,682
Total Assets
$ 1,064,417,030
$ 988,628,126
$ 995,694,033
$ 974,345,437
$ 936,619,852
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing demand
$ 247,549,872
$ 260,204,859
$ 248,440,805
$ 244,342,167
$ 250,702,470
Interest-bearing
655,358,756
616,461,031
640,593,734
606,528,210
565,130,161
Total deposits
902,908,628
876,665,890
889,034,539
850,870,377
815,832,631
FHLB advances and other borrowings
65,000,000
18,000,000
15,000,000
32,000,000
30,000,000
Subordinated debt, net
14,955,152
14,932,727
14,910,303
14,887,879
14,865,455
Lease liabilities
2,345,426
2,450,133
2,565,151
2,678,348
2,789,614
Accrued interest payable
1,212,747
458,540
526,354
273,753
440,611
Other liabilities
5,336,235
4,889,735
4,644,608
5,540,871
4,661,833
Total Liabilities
991,758,188
917,397,025
926,680,955
906,251,228
868,590,144
Shareholders' Equity
Common stock
29,159
29,117
29,060
29,060
29,060
Additional paid in capital
41,123,723
41,096,972
41,035,733
40,949,900
40,895,863
Retained earnings
39,900,518
38,669,620
37,921,329
36,729,931
36,287,937
Accumulated other comprehensive income (loss)
(8,394,558)
(8,564,608)
(9,973,044)
(9,614,682)
(9,183,152)
Total Shareholders' Equity
72,658,842
71,231,101
69,013,078
68,094,209
68,029,708
Total Liabilities and Shareholders' Equity
$ 1,064,417,030
$ 988,628,126
$ 995,694,033
$ 974,345,437
$ 936,619,852
Community Heritage Financial , Inc. and Subsidiaries
Selected Financial Data (unaudited)
As of Period End
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Per Share Data
Common shares outstanding at period end
2,915,933
2,911,670
2,905,973
2,905,973
2,905,973
Book value per share
$ 24.92
$ 24.45
$ 23.75
$ 23.43
$ 23.41
Tangible book value per share
$ 24.35
$ 23.88
$ 23.18
$ 22.86
$ 22.84
Capital (bank consolidated only unless noted otherwise)
Common equity tier 1 (CET1) capital
11.98 %
12.02 %
12.15 %
11.95 %
12.30 %
Tier 1 capital
11.98 %
12.02 %
12.15 %
11.95 %
12.30 %
Total risk based capital
13.07 %
13.10 %
13.21 %
13.12 %
13.47 %
Tier 1 leverage ratio
8.84 %
9.10 %
9.34 %
9.52 %
9.57 %
Tangible common equity to tangible assets (CHF)
6.68 %
7.04 %
6.78 %
6.83 %
7.10 %
Asset Quality Data
Non-accrual loans
$ 1,847,747
$ 1,823,212
$ 1,882,614
$ 1,929,248
$ 2,082,556
Non-performing assets
$ 1,847,747
$ 1,823,212
$ 1,882,614
$ 1,929,248
$ 2,082,556
Non-performing loans to loans
0.22 %
0.22 %
0.24 %
0.24 %
0.27 %
Non-performing assets to total assets
0.17 %
0.18 %
0.19 %
0.20 %
0.22 %
Allowance for loan credit losses to loans
0.97 %
0.95 %
0.92 %
1.02 %
1.04 %
Other Data
Loans to deposits ratio
91.99 %
92.73 %
89.76 %
93.66 %
92.86 %
Community Heritage Financial , Inc. and Subsidiaries
Statements of Income - Five Quarters (unaudited)
Three Months Ended
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Interest Income
Loans, including fees
$ 11,181,544
$ 10,659,287
$ 10,139,353
$ 9,453,437
$ 9,344,705
Securities
772,603
754,731
763,606
767,524
734,583
Fed funds sold and other
866,559
496,210
203,553
81,306
109,705
Total interest income
12,820,706
11,910,228
11,106,512
10,302,267
10,188,993
Interest Expense
Deposits
4,703,948
4,755,804
4,369,856
3,459,747
2,925,333
Borrowed funds
670,916
160,901
201,754
482,469
80,458
Subordinated debt
238,049
238,049
238,050
238,049
238,049
Total interest expense
5,612,913
5,154,754
4,809,660
4,180,265
3,243,840
Net interest income
7,207,793
6,755,474
6,296,852
6,122,002
6,945,153
Provision for credit losses
267,370
275,339
(842,717)
260,439
(440,391)
Net interest income after provision for credit losses
6,940,423
6,480,135
7,139,569
5,861,563
7,385,544
Non-interest income
Service charges on deposits
237,020
209,331
202,779
187,426
187,402
Earnings on bank-owned life insurance
211,641
95,633
8,360
43,672
50,029
Gain on sale of fixed assets
-
-
19,907
-
-
Mortgage banking revenue
219,714
254,867
365,860
302,911
229,485
Other
305,496
349,211
244,074
269,503
245,605
Total non-interest income
973,871
909,042
840,980
803,512
712,521
Non-interest expense
Salaries and employee benefits
3,344,188
3,536,962
3,736,317
3,286,113
3,573,621
Occupancy and equipment
864,008
948,591
842,651
815,251
991,946
Legal and professional fees
288,193
206,178
242,671
294,626
185,509
Advertising
61,467
77,100
57,855
87,070
79,275
Data processing
793,519
752,980
618,593
688,229
800,986
FDIC insurance
185,134
190,695
163,731
130,622
154,032
Loss on sale of fixed assets
-
-
-
-
3,058
Other
558,720
471,476
485,493
566,953
462,317
Total non-interest expense
6,095,229
6,183,982
6,147,311
5,868,864
6,250,744
Income before income taxes
1,819,065
1,205,195
1,833,238
796,211
1,847,321
Income tax expense
413,370
282,204
467,482
179,858
457,259
Net income
$ 1,405,695
$ 922,991
$ 1,365,756
$ 616,353
$ 1,390,062
Community Heritage Financial , Inc. and Subsidiaries
Per Share Data (unaudited)
Three Months Ended
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Earnings per common share
Basic
$ 0.48
$ 0.32
$ 0.47
$ 0.21
$ 0.48
Diluted
$ 0.48
$ 0.32
$ 0.47
$ 0.21
$ 0.48
Common shares outstanding at period end
2,915,933
2,911,670
2,905,973
2,905,973
2,905,973
Average common shares outstanding
Basic
2,913,048
2,911,254
2,905,973
2,905,973
2,905,973
Diluted
2,913,048
2,911,254
2,905,973
2,905,973
2,905,973
Cash dividends paid per common share
$ 0.06
$ 0.06
$ 0.06
$ 0.06
$ 0.06
Community Heritage Financial , Inc. and Subsidiaries
Selected Financial Performance Ratios (unaudited)
Three Months Ended
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Return on average assets
0.53 %
0.36 %
0.55 %
0.26 %
0.60 %
Return on average equity
7.81 %
5.32 %
7.95 %
3.59 %
8.25 %
Net interest margin
2.80 %
2.71 %
2.62 %
2.61 %
3.08 %
Yield on interest-earning assets
4.97 %
4.78 %
4.57 %
4.43 %
4.52 %
Cost of interest-bearing liabilities
3.11 %
2.99 %
2.91 %
2.67 %
2.22 %
Net loan charge-offs to average loans
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
Community Heritage Financial , Inc. and Subsidiaries
