Community Heritage Financial, Inc. Reports Record Earnings for the Third Quarter of 2019

MIDDLETOWN, Md., Oct. 18, 2019 /PRNewswire/ -- Community Heritage Financial, Inc. ("the Company") (OTCPink: CMHF), the parent company for Middletown Valley Bank ("MVB") and Millennium Financial Group, Inc. ("Mlend",) announced today that, for the quarter ended September 30,  2019, the Company earned net income of $1,000.4 thousand or $0.44 per share compared to net income of $474.2 thousand and earnings per share of $0.21 recorded for the third quarter of 2018. The net income for the quarter ended September 30, 2019 as compared to the year ago quarter ended September 30, 2018, was positively impacted by the performance of Mlend, significant increase in loan growth and a decline in provision for loan losses due to improvement in credit quality which more than offset the increase in non-interest expense and income taxes.

Net income for the first nine months of 2019 was $2.06 million or $0.92 per share compared to $1.7 million or $0.75 per share in 2018. The increase in net income versus the first nine months of 2018 was primarily due to the addition of Mlend in February 2019, significant increase in net interest income, and growth in noninterest income which more than offset the increase in provision for loan loss, noninterest expense, merger and one-time expense and income taxes.    

3Q19 vs. 2Q19 Quarterly Highlights

• Net book value per share increased by $0.46 per share or 2% to $21.38. Tangible book value per share increased by $0.47 or 2% to $20.65.
• Net loans grew by $24.1 million or 6.3% which was primarily funded by a $4.9 million reduction in cash and $9.9 million increase in deposits and $8.7 million reduction in investment securities.
• Deposits grew by $9.9 million or 2.3% while time deposits decreased by $10.7 million of which higher cost brokered deposits accounted for over 90% of the decline. Noninterest bearing deposits accounted for over half of the total deposit growth.
• Net interest margin declined during the quarter to 3.74%, down from 3.82% in 2Q19 primarily due to above average loan fees in the 2^nd quarter of 2019.
• Provision expense was a decrease of $166.4 thousand driven by the Allowance for Loan Losses percentage declining by 1 bps during the quarter due to improvements in credit quality more than offsetting the impact from loan growth. Nonperforming Assets decreased by $174 thousand due to a reduction in nonaccrual loans.
• Net interest income was essentially flat due to loan growth offsetting the slight reduction in net interest margin mentioned above.
• Mlend contributed $215 thousand to the consolidated earnings of Community Heritage Financial, Inc. during the third quarter.

3Q19 vs. 3Q18 Year over Year Highlights

• Net book value per share increased by $1.57 per share or 8% to $21.38. Tangible book value per share increased by $0.84 or 4% to $20.65.
• Net loans grew by $66.0 million or 19.4% which was funded by strong growth in deposits of $57.7 million and $11 million decrease in investment securities and $5 million reduction of cash.
• Deposits grew 15%, or $57.7 million while decreasing higher cost brokered deposits by $16.3 million and net interest margin grew by 19 basis points to 3.74%, up from 3.55% in third quarter of 2018.
• Provision expense decreased by $190.0 thousand driven by a 1 basis point decrease in the Allowance for Loan Losses to 0.98% more than offsetting the loan growth over that period. Nonperforming assets decreased by $2.1 million compared to the third quarter 2018 primarily driven by $1.9 million in nonaccrual loan reductions and $167 thousand in foreclosed properties being sold.
• Net interest income grew by $743 thousand in the nine months ended September 30, 2019 vs. 2018 due to robust loan growth and boost in net interest margin previously mentioned.

A dividend of $0.03 per share was declared by the Board of Directors on October 18, 2019 for stockholders of record as of November 1, 2019 and payable on November 8, 2019.

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.