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.

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

SOURCE Community Heritage Financial, Inc.