Community Heritage Financial, Inc. Reports Record Earnings for the Second Quarter of 2025

MIDDLETOWN, Md., July 24, 2025 /PRNewswire/ -- Community Heritage Financial, Inc. (the "Company" or "CHF") (OTC PK: CMHF), the parent company of Middletown Valley Bank ("MVB" or the "Bank"), reported record net income of $2.5 million, or $0.84 per diluted share, for the second quarter ended June 30, 2025, an increase of $585 thousand, or 31.1%, in comparison to the first quarter of 2025. Compared to the second quarter of 2024, net income increased $1.0 million, or 71.2%. Net income for the six months ended June 30, 2025 totaled $4.4 million, or $1.48 per diluted share, representing an increase of $1.5 million, or 52.8%, compared to net income of $2.8 million, or $0.98 per diluted share, for the six months ended June 30, 2024.

Balance Sheet

Assets totaled $1.1 billion as of June 30, 2025, representing an increase of $4.2 million since June 30, 2024 and an increase of $75.4 million since December 31, 2024. Growth in the balance sheet since June 30, 2024, totaling $4.2 million, was driven by growth in deposits of $47.3 million, or 5.1%, and growth in shareholders' equity of $9.7 million, or 13.1%, offset by a decline in borrowings and subordinated debt of $52.9 million. 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. Balance sheet growth since December 31, 2024 of $75.4 million was driven primarily by deposit growth of $69.8 million, or 15.4% annualized, which included growth in time deposit, money market, NOW and noninterest-bearing demand account balances of $31.9 million, $20.5 million, $8.8 million and $4.9 million, respectively.

Loan balances outstanding grew to $872.1 million as of June 30, 2025, representing an increase of $31.1 million, or 3.7% from June 30, 2024, and $24.5 million, or 5.8% 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 $21.2 million, $16.9 million, and $8.8 million, respectively, since June 30, 2024. A decline in construction and land development loans of $22.1 million during the same period offset the growth in other loan portfolios. Since December 31, 2024, growth in residential loans, including home equity loans, construction and land development loans, and non-owner occupied commercial real estate loans of $11.3 million, $8.1 million and $5.3 million, respectively, contributed to total loan growth of $24.5 million.

Net Interest Income

Net interest income totaled $8.8 million for the three months ended June 30, 2025, compared to $7.5 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 2.83% during the second quarter of 2024 to 3.13% during the fourth quarter of 2024 and 3.37% during the second quarter of 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 of 2024 and the first half of 2025.

Noninterest Income

Linked quarter 2025, Noninterest income increased $311 thousand during the second quarter of 2025 compared to the first quarter of 2025. Mortgage banking revenue increased $242 thousand with an increase in mortgage origination and sale activity associated with the spring and summer seasons. Earnings on bank-owned life insurance increased $95 thousand because of improved performance of the equity market in the second quarter.

Second Quarter 2025 vs. Second Quarter 2024, Noninterest income increased $171 thousand. Earnings on bank-owned life insurance increased $90 thousand driven by relative performance of the equity market. Mortgage banking revenue and card and merchant services income increased $41 thousand and $25 thousand, respectively, reflecting increased transaction activity.

Six Months June 30, 2025 vs. Six Months June 30, 2024, Noninterest income increased $67 thousand for the six months ended June 30, 2025 compared to the same period in 2024. Mortgage banking revenue and card and merchant services income increased $76 thousand and $49 thousand, respectively, reflecting increased transaction activity. Other non-interest income increased $48 thousand and included broker fees totaling $72 thousand received in the first quarter 2025 for referrals of Small Business Administration ("SBA") qualified loans. Offsetting the noted increases in revenue was a decline of $98 thousand in earnings on bank-owned life insurance as the first quarter of 2024 included receipt of insurance proceeds of $138 thousand. 

Noninterest Expense

Linked quarter 2025, Noninterest expense decreased $62 thousand on a linked quarter basis. The decrease was primarily driven by decreases in salaries and benefits and occupancy and equipment expenses of $187 thousand and $76 thousand, respectively, offset by an increase in data and item processing expense of $95 thousand and an increase in legal and professional fees of $89 thousand. Salaries and benefits decreased due to decreased health insurance costs of $170 thousand associated with stop loss coverage of certain claims activity. Occupancy and equipment expense fell as snow removal costs incurred in the first quarter did not impact the second quarter. A nonrecurring deposit processing loss of $70 thousand contributed to the increase in data and item processing expense. Legal and professional expense increased as the Company, having crossed $1 billion in total assets in 2024, continues preparation for the regulatory requirements associated with the Federal Deposit Insurance Corporation Improvement Act.

Second Quarter 2025 vs. Second Quarter 2024, Noninterest expense increased $59 thousand quarter over quarter. The increase was driven primarily by an increase in salaries and benefits of $72 thousand.

Six Months June 30, 2025 vs. Six Months June 30, 2024, Noninterest expense increased $529 thousand in 2025 compared to 2024. The increase was largely attributable to an increase in salaries and benefits of $575 thousand, offset by a decrease in data and item processing expense of $171 thousand. The increase in salaries and benefits reflected merit increases and increased incentive compensation accruals. A decline in fraud and operating losses associated with deposit processing of $194 thousand contributed to the decrease in data and item processing expense.  

Asset Quality

Asset quality remained strong with non-performing assets to total assets of 0.13% as of June 30, 2025, compared to 0.15% as of December 31, 2024 and 0.16% as of June 30, 2024. The ratio of net charge-offs to average total loans was zero percent for the quarter ended June 30, 2025.

Dividend

A dividend of $0.08 per share was declared by the Board of Directors on July 18, 2025, for stockholders of record as of August 1, 2025, and payable on August 8, 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.  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 Officer301-371-3055

John A. Scaldara, Jr.Executive Vice President and Chief Financial Officer301-371-3070

 

Community Heritage Financial, Inc. and Subsidiaries

‌

Balance Sheets (unaudited)

‌

As of Period End

6/30/2025

3/31/2025

12/31/2024

9/30/2024

6/30/2024

ASSETS

Cash and due from banks

$         67,210,170

$         41,754,293

$         16,510,418

$         90,485,075

$         91,988,101

Securities available-for-sale, at fair value

46,712,422

42,514,398

40,481,911

43,803,206

39,518,549

Securities held-to-maturity

88,807,858

90,382,973

91,374,820

92,558,298

93,944,321

Less allowance for credit losses

92,176

93,416

102,896

110,386

118,787

Total securities held-to-maturity

88,715,682

90,289,557

91,271,924

92,447,912

93,825,534

‌

Total securities

135,428,104

132,803,955

131,753,835

136,251,118

133,344,083

Equity securities, at cost

1,426,700

1,901,700

1,404,700

1,404,600

1,404,600

Loans

872,116,129

863,383,714

847,593,970

847,539,088

841,043,351

Less allowance for loan credit losses

8,675,088

8,525,628

8,279,404

8,167,602

8,186,862

Loans, net

863,441,041

854,858,086

839,314,566

839,371,486

832,856,489

Loans held for sale

1,445,377

564,685

5,106,956

4,591,950

4,739,191

Premises and equipment

6,196,774

5,628,103

5,688,187

5,805,983

6,010,649

Right of use asset

1,816,066

1,939,827

1,911,836

2,031,653

2,152,804

Accrued interest receivable

3,422,469

3,342,795

3,152,505

3,124,150

3,360,417

Deferred tax assets

4,356,321

4,431,764

4,558,255

4,568,943

4,870,431

Bank owned life insurance

7,570,668

7,443,531

7,411,319

7,379,630

7,159,381

Goodwill

1,656,507

1,656,507

1,656,507

1,656,507

1,656,507

Other assets

1,638,591

1,741,146

1,771,483

1,660,574

1,891,044

‌

Total Assets

$   1,095,608,788

$   1,058,066,392

$   1,020,240,567

$   1,098,331,669

$   1,091,433,697

‌

LIABILITIES and SHAREHOLDERS' EQUITY

‌

Liabilities

Deposits:

    Noninterest-bearing demand

$       256,355,584

$       247,511,094

$       251,431,084

$       246,907,558

$       248,150,379

    Interest-bearing

721,494,804

685,201,331

656,575,635

685,892,223

682,397,667

        Total deposits

977,850,388

932,712,425

908,006,719

932,799,781

930,548,046

FHLB advances and other borrowings

15,000,000

25,000,000

15,000,000

65,000,000

65,000,000

Subordinated debt, net

12,046,819

12,043,757

12,040,695

15,000,000

14,977,576

Lease liabilities

1,886,828

2,011,829

1,984,920

2,105,649

2,226,547

Accrued interest payable

567,996

730,113

485,160

2,468,369

1,633,334

Other liabilities

4,321,095

4,380,812

3,694,164

3,662,903

2,853,893

‌

    Total Liabilities

1,011,673,126

976,878,936

941,211,658

1,021,036,702

1,017,239,396

‌

Shareholders' Equity

Common stock

29,289

29,289

29,198

29,159

29,159

Additional paid-in-capital

41,469,625

41,351,223

41,331,966

41,284,421

41,204,072

Retained earnings

48,480,152

46,246,459

44,597,524

43,039,340

41,167,218

Accumulated other comprehensive loss

(6,043,404)

(6,439,515)

(6,929,779)

(7,057,953)

(8,206,148)

‌

    Total Shareholders' Equity

83,935,662

81,187,456

79,028,909

77,294,967

74,194,301

‌

Total Liabilities and Shareholders' Equity

$   1,095,608,788

$   1,058,066,392

$   1,020,240,567

$   1,098,331,669

$   1,091,433,697

 

Community Heritage Financial, Inc. and Subsidiaries

‌

Statements of Income (unaudited)

‌

Three Months Ended

Six Months Ended

6/30/2025

3/31/2025

12/31/2024

9/30/2024

6/30/2024

6/30/2025

6/30/2024

‌

Interest Income

Loans, including fees

$     12,597,796

$     12,228,538

$     12,057,265

$     12,066,857

$     11,471,139

$     24,826,334

$     22,652,683

Securities

888,721

858,632

809,512

773,571

773,717

1,747,353

1,546,320

Fed funds sold and other bank deposits

467,029

119,202

548,309

1,101,997

1,289,874

586,231

2,156,433

Total interest income

13,953,546

13,206,372

13,415,086

13,942,425

13,534,730

27,159,918

26,355,436

‌

Interest Expense

Deposits

4,758,194

4,405,731

4,686,005

5,146,858

5,005,650

9,163,925

9,709,598

Borrowed funds

149,325

189,055

380,370

756,653

750,049

338,380

1,420,965

Subordinated debt

207,250

207,250

209,934

238,049

238,050

414,500

476,099

Total interest expense

5,114,769

4,802,036

5,276,309

6,141,560

5,993,749

9,916,805

11,606,662

‌

Net interest income

8,838,777

8,404,336

8,138,777

7,800,865

7,540,981

17,243,113

14,748,774

Provision for credit losses

148,330

248,558

178,624

(7,396)

168,120

396,888

435,490

Net interest income after provision 

‌

for credit losses

8,690,447

8,155,778

7,960,153

7,808,261

7,372,861

16,846,225

14,313,284

‌

Noninterest income

Mortgage banking revenue

406,440

164,015

470,783

508,209

365,003

570,455

494,752

Card and merchant services

310,082

281,415

314,785

294,243

285,572

591,497

542,936

Service charges on deposits

231,856

235,097

262,583

252,406

237,357

466,953

474,377

Earnings on bank-owned life insurance

118,847

23,920

23,398

86,958

28,755

142,767

240,396

Loss on sale of investment ...