18.10.2021 18:31

Community Heritage Financial, Inc. Reports Record Earnings for the Third Quarter of 2021

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MIDDLETOWN, Md., Oct. 18, 2021 /PRNewswire/ -- Community Heritage Financial, Inc. ("the Company") (OTC Pink: CMHF), the parent company for Middletown Valley Bank ("MVB" or the "Bank") and Millennium Financial Group, Inc. ("Mlend"), announced today that for the period ending September 30, 2021 the Company earned year to date net income of $4.758 million or $2.11 per share, the highest for the time period in the history of the Company, with an increase of $2.2 million or 86% compared to September 30, 2020 at $2.560 million or $1.14 per share. Net income for the third quarter was $2.257 million or $1.00 per share, an increase of 153% or $1.4 million compared to second quarter net income of $892 thousand or $0.40 per share. Year over year third quarter net income increased $1.1 million or 88% compared to the third quarter of 2020. 

(PRNewsfoto/Community Heritage Financial)

Earnings continued to be bolstered by strong residential mortgage loan activity along with enhanced fee income from PPP loan forgiveness. Earnings were positively impacted during the third quarter by a loan charge-off recovery totaling $540 thousand related to the prior quarter isolated loan charge-off due to a COVID-19 business failure.  The Bank entered into a forbearance agreement with the principal of the aforementioned credit charge-off to receive monthly restitution towards the recovery of the charge-off.  The recovery also positively impacted the provision expense for the third quarter, resulting in a loan loss provision expense release of $246 thousand. As of September 30, 2021 the Company's credit quality continued to be strong with non-performing assets to total assets at 0.31%, a decrease of 5 basis points from the prior quarter.

The Company remains deeply committed to the communities we serve. We continue to expand our newly formed footprint in the Franklin County, PA market and continuing to grow in the Maryland market while providing our customers with "Absolutely Exceptional Experiences".

Quarterly Highlights – 3Q21 vs 2Q21

  • Net book value and tangible book value per share increased by $0.59 and $0.60, or 2.4% and 2.5%, respectively, per share to $24.82 and $24.09 per share, respectively, in the third quarter, from $24.23 and $23.49, respectively, in the second quarter.
  • Cash balances increased on a linked quarter basis by 10.3% or $5.7 million. Deposit growth in the third quarter totaled $47.6 million. The bank utilized the new deposit funds to purchase $47.2 million in security investments during the third quarter. The bank also continued to strengthen off-balance sheet contingency funding sources (FHLB and FRB discount window borrowing capacity), keeping the overall contingency funding position strong at approximately 58.2% of total funding at the bank level as of September 30, 2021.
  • Gross loans increased on a linked quarter basis by $850 thousand or 0.1% as of September 30, 2021. A net decrease in PPP loans of $13.8 million for the quarter was offset by core loan growth of $14.7 million, contributing to the overall quarterly loan growth when compared to June 30, 2021.
  • Overall deposits grew $47.6 million, or 6.8% in the third quarter of 2021 compared to the second quarter of 2021. Non-interest-bearing deposit grew $20.3 million and interest-bearing deposits grew $27.3 million. The interest-bearing deposits growth was mainly in low cost money market deposits totaling $14 million and interest-bearing transaction demand deposits totaling $13 million. The Bank's cost of interest-bearing deposits for the second quarter decreased 4 bps to 0.41%.
  • The Banks normalized margin (excludes impact of PPP loans and fees, FRB Cash and Brokered deposits) decreased 6 basis points to 3.40% in the third quarter of 2021 from 3.46% in the second quarter of 2021.
  • The loan loss reserve to total loans ratio (excluding PPP loans) increased to 1.10% at September 30, 2021, from 1.08% as of June 30, 2021. Most of the increase was related to core loan growth totaling $14 million, and the addition of a specific reserve for $47 thousand related to one loan relationship.

Quarterly Highlights – 3Q21 vs 3Q20

  • Net book value per share of $24.82 represents a $1.91, or 7.7% increase over September 30, 2020 book value of $22.91 per share. Tangible book value per share of $24.09 at September 30, 2021 increased by $1.92 or 8% from $22.17 at September 30, 2020.
  • Year-over-year net loan growth was $15.8 million or 2.9%, which includes a decrease of $46.2 million in PPP loans. Excluding the PPP loans, gross core loan growth was $60.3 million or 10.9% year-over-year.
  • Deposits grew $110.6 million or 18.8% on a year-over-year basis compared to September 30, 2020. Excluding brokered deposits of $20.2 million as of September 30, 2020, core deposits increased $130.6 million or 18.7% year-over-year. The majority of the core growth was in demand deposits $65.8 million and low interest cost money market $45.9 million and savings deposits $13.4 million. As of September 30, 2021 the Bank had decreased the higher cost brokered deposits balances to only $244 thousand.
  • As of September 30, 2021, the Bank had reduced overall cost of funds to 0.25%, down from 0.48% at September 30, 2020. This decreased results from the further rate reductions on numerous deposit account types due to historically low Fed rates.
  • Year-to-date loan loss provision expense through September 30, 2021 totaled $2.65 million (excludes $45 thousand for off-balance sheet and check card loss provision), an increase of $857 thousand compared to $1.80 million through September 30, 2020. Loan growth and the isolated charge-off combined with economic metrics due to the pandemic (unemployment, GDP and COVID factor) account for the increased provision expense. Loan recoveries through September 30, 2021 of $540 thousand positively impacted the loan loss provision expense.
  • Non-interest income year-to-date as of September 30, 2021 grew by $450 thousand or 8.9% compared to September 30, 2020. The mortgage activity and secondary sales income increase of $269 thousand along with the security sale gains increases of $196 thousand account for the majority of the increase year-over-year.
  • Non-interest expense as of September 30, 2021 increased by $648 thousand compared to September 30, 2020. The increase is directly related to the growth of the balance sheet (15.7% year-over-year) as staffing has increased to support the growth, and increased FDIC insurance premiums as deposits increased (18.8% year-over-year).

Dividend

A dividend of $0.04 per share was declared by the Board of Directors on October 18, 2021 for shareholders of record as of October 29, 2021 and payable on November 5, 2021.

Community Heritage Financial, Inc.
Robert E. (BJ) Goetz, Jr.
President & Chief Executive Officer
301-371-305

 

Community  Heritage Financial, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands)
















September 30,


June 30,


March 31,


December 31,


September 30,




2021


2021


2021


2020


2020




(Unaudited)


(Unaudited)


(Unaudited)


(Audited)


(Unaudited)













Assets











Cash and due from banks

$

55,559

$

49,830

$

43,425

$

28,785

$

15,044


Total cash and cash equivalents


55,559


49,830


43,425


28,785


15,044













Securities available-for-sale, at fair value


130,431


86,343


61,086


72,439


67,441

Equity securities, at cost


338


338


462


462


462













Loans


570,727


569,877


585,811


558,967


554,851

Less allowance for loan loss


6,071


5,812


8,948


7,480


6,024


Loans, net


564,655


564,065


576,864


551,486


548,828













Loans held for sale


7,963


8,008


10,717


12,626


21,670

Premises and equipment, net


6,858


7,025


6,529


6,400


6,459

Right-of-use assets


2,417


2,533


2,557


2,667


2,785

Accrued interest receivable


1,738


1,746


2,035


2,199


2,192

Deferred tax assets


2,007


1,873


3,025


2,081


1,796

Bank-owned life insurance


6,443


6,393


6,340


5,280


5,214

Goodwill


1,657


1,657


1,657


1,657


1,657

Intangible assets


3


5


7


9


11

Other Assets


1,715


1,590


1,750


2,090


1,960


Total Assets

$

781,783

$

731,404

$

716,452

$

688,181

$

675,519













Liabilities and Stockholders' Equity























Liabilties











Deposits:











Non-interest-bearing demand

$

254,058

$

233,757

$

228,946

$

197,297

$

187,972

Interest-bearing


444,488


417,157


405,499


402,262


399,955


Total Deposits


698,546


650,914


634,445


599,560


587,927













Subordinated debt, net


14,731


14,708


14,686


14,664


14,641

Other borrowings


2,629


4,015


3,719


8,558


10,577

Lease liabilities


2,480


2,591


2,610


2,715


2,823

Accrued interest payable


409


206


426


215


445

Other liabilities


7,099


4,416


7,349


9,509


7,532


Total Liabilities


725,895


676,850


663,236


635,221


623,946













Stockholders' Equity











Common stock


23


23


23


23


23

Surplus


28,523


28,523


28,523


28,523


28,523

Retained earnings


28,121


25,954


25,152


23,633


22,156

Accumulated other comprehensive income (loss)


(779)


54


(482)


782


870


Total Stockholders' Equity


55,888


54,554


53,216


52,960


51,572














Total Liabilities and Stockholders' Equity

$

781,783

$

731,404

$

716,452

$

688,181

$

675,519

 

Community  Heritage Financial, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)
















Three Months Ended


Nine Months Ended




September 30,


June 30,


September 30,


September 30,


September 30,




2021


2021


2020


2021


2020













Interest Income












Loans, including fees

$

6,407,015

$

6,328,253

$

5,811,942

$

19,241,739

$

16,623,282


Securities


436,526


347,943


304,912


1,088,144


766,457


Fed funds sold and other


26,859


5,115


29,246


40,685


139,341


     Total interest income


6,870,400


6,681,311


6,146,099


20,370,568


17,529,080













Interest Expense












Deposits


427,313


442,650


728,081


1,370,982


2,733,798


Borrowed funds


-


-


-


947


48,869


Subordinated debt


238,049


238,049


238,049


714,148


709,356


Other Interest Expense


45,323


51,071


66,878


167,822


106,766


     Total interest expense


710,686


731,770


1,033,009


2,253,900


3,598,789













Net interest income


6,159,714


5,949,541


5,113,091


18,116,668


13,930,292

Provision for loan losses


(245,988)


1,432,697


844,521


2,652,690


1,796,018

Net interest income after provision for loan losses


6,405,702


4,516,844


4,268,570


15,463,978


12,134,274













Non-interest income












Service charges on deposits


180,225


181,006


164,660


555,060


448,491


Earnings bank owned life insurance


40,956


45,307


46,771


137,952


90,314


Gain sale of fixed assets


-


-


-


1,500


-


Gain sale of securities


-


-


164,464


196,091


173,721


Mortage loan income activity


1,252,561


1,313,885


1,973,960


4,026,646


3,929,716


Other non-interest income


211,864


200,732


155,515


585,771


411,106


     Total non-interest income


1,685,606


1,740,930


2,505,370


5,503,020


5,053,348













Non-interest expense












Salaries and employee benefits


2,967,511


2,880,755


3,133,762


8,430,445


8,219,404


Occupancy and equipment


708,358


706,167


694,331


2,091,761


2,057,023


Legal and professional fees


155,208


169,242


200,451


474,478


529,262


Advertising


130,244


131,225


96,098


417,594


318,435


Data processing


544,371


625,055


504,575


1,637,675


1,414,085


FDIC premiums


93,840


108,963


106,675


317,599


159,155


Loss sale of securities


-


-


-


17,826


-


Other intangible amortization


2,083


2,083


2,083


6,250


6,250


Other


412,142


377,273


413,694


1,008,063


1,050,041


     Total non-interest expense


5,013,757


5,000,763


5,151,169


14,401,691


13,753,155

Income before taxes


3,077,551


1,257,011


1,622,771


6,565,308


3,434,467

Income tax expense


820,160


365,343


421,791


1,807,083


874,233

Net Income

$

$2,257,391

$

$891,668

$

$1,200,980

$

$4,758,225

$

$2,560,234













Basic earnings per share

$

1.00

$

0.40

$

0.53

$

2.11

$

1.14

 

Community Heritage Financial, Inc. and Subsidiaries

Selected Financial Data












Income Statement Review
























For the Three Months Ended


For theNine Months Ended



September 30,


June 30, 


September 30,


September 30,


September 30,



2021


2021


2020


2021


2020



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)












Interest Income

$

6,870,400

$

6,681,311

$

6,146,099

$

20,370,568

$

17,529,080

Interest Expense


710,686


731,770


1,033,009


2,253,900


3,598,789

Net interest income


6,159,714


5,949,541


5,113,091


18,116,668


13,930,292

Provsion expense


(245,988)


1,432,697


844,521


2,652,690


1,796,018

Net interest income after provision

$

6,405,702

$

4,516,844

$

4,268,570

$

15,463,978

$

12,134,274












Non-interest income

$

1,685,606

$

1,740,930

$

2,505,370

$

5,503,020

$

5,053,348

Non-interest expense


5,013,757


5,000,763


5,151,169


14,401,691


13,753,156

Merger expenses


-


-


-


-


-












Yield on interest-earning assets


3.71%


3.85%


3.85%


3.88%


3.94%

Cost of interest-bearing liabilities


0.63%


0.69%


0.97%


0.70%


1.20%

Efficiency ratio


63.91%


65.03%


67.61%


60.97%


72.41%












Balance Sheet Review
























September 30,


June 30, 




September 30,





2021


2021




2020





(Unaudited)


(Unaudited)




(Unaudited)



(dollars in thousands)











Total assets

$

781,783

$

731,404



$

675,519



Loans, net of reserve 


564,655


564,065




548,828



Goodwill & intangibles


1,660


1,661




1,668



Deposits


698,546


650,914




587,927



Shareholder's equity


55,888


54,554




51,572

























Asset Quality Review











Non-accrual loans

$

1,471

$

1,656



$

1,246



Trouble debt restructured loans still accruing


963


969




681



Loans 90 days past due still accruing


-


-




294



Foreclosured properties


-


-




-



Total non-performing assets

$

2,434

$

2,625



$

2,221














Non-performing assets to total assets


0.31%


0.36%




0.33%



Non-performing assets to total loans


0.42%


0.46%




0.40%














Summary of Operating Results
























For theThree Months Ended


For the Nine Months Ended





September 30,


September 30,


September 30,


September 30,





2021


2020


2021


2020





(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)














Pre-allowance for Loan Loss provision, pre-tax net income

$

2,831,563

$

2,467,292

$

9,217,998

$

5,230,485



Alllowance for loan loss provision, pre-tax


(245,988)


844,521


2,652,690


1,796,018



Tax expense


820,160


421,791


1,807,083


874,233



Net Income

$

2,257,391

$

1,200,980

$

4,758,225

$

2,560,234














(dollars in thousands)











Charge-offs

$

54

$

12

$

4,655

$

49



(Recoveries)


(550)


(9)


(578)


(29)



Net charge-offs

$

­(496)

$

3

$

4,077

$

20














Per Common Share Data






















Common shares outstanding


2,251,320


2,251,320


2,251,320


2,251,320



Weighted average shares outstanding


2,251,320


2,251,320


2,251,320


2,251,320














Basic Earnings per share

$

1.00

$

0.53

$

2.11

$

1.14



Dividend declared

$

0.04

$

0.04

$

0.12

$

0.12














Book value per share

$

24.82

$

22.91

$

24.82

$

22.91



Tangible book value per share

$

24.09

$

11.17

$

24.09

$

22.17














Selected Financial Ratios (unaudited)






















Return on average assets


1.18%


0.72%


0.87%


0.55%



Return on average equity


15.79%


9.26%


11.38%


6.79%



Allowance for loan losses to total loans


1.06%


1.09%


1.06%


1.09%



Allowance for loan loss to total loans (excluding PPP loans)


1.10%


1.23%


1.10%


1.23%



Non-performing assets to total loans


0.42%


0.40%


0.42%


0.40%



Non-performing assets to total loans (excluding PPP)


0.44%


0.45%


0.44%


0.45%



Net Charge-offs to total loans


-0.09%


0.00%


0.71%


0.00%



Common equity tier 1 (CET1) capital 


10.74%


N/A


10.74%


N/A



Tier1 capital


10.74%


N/A


10.74%


N/A



Total risk based capital


11.88%


N/A


11.77%


N/A



Tier-1 leverage ratio 


8.86%


N/A


8.86%


N/A



Community bank leverage ratio (bank only)**


N/A


9.24%


N/A


9.24%



Average equity to average assets


7.49%


7.73%


7.65%


8.05%



Tangible Common Equity/Tangible Common Assets


6.95%


7.25%


6.95%


7.25%



Net interest margin (bank only, normalized)*


3.40%


3.52%


3.47%


3.53%



Loans to deposits - (EOP)


81.70%


94.37%


81.70%


94.37%



*Normalized margin excludes impact of PPP loans and related on balance sheet liquidity through Brokered deposits and FHLB Borrowing




**As of September 30, 2021 the bank reverted back to the BASEL III regulatory framework for capital reporting and discontinued the CBLR calculation.



 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/community-heritage-financial-inc-reports-record-earnings-for-the-third-quarter-of-2021-301402457.html

SOURCE Community Heritage Financial, Inc.

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