Community Heritage Financial, Inc. Reports Results for the Second Quarter of 2019

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Jul 19, 2019, 15:04 ET

MIDDLETOWN, Md., July 19, 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 June 30, 2019, the Company earned net income of $758.8 thousand or $0.34 per share compared to net income of $701.5 thousand and earnings per share of $0.31 recorded for the second quarter of 2018. The net income for the quarter ended June 30, 2019 was positively impacted by lower income tax expense due to Bank Holding Company expenses and an adjustment to the first quarter 2019 tax accrual that more than offset the $107 thousand decline in pre-tax income.

Net income for the first six months of 2019 was $1.06 million or $0.47 per share compared to $1.2 million or $0.54 per share in 2018. The decline in net income versus the first six months of 2018 was primarily due to the increase in noninterest expense in 2019 related to the opening of a new branch (Paramount), converting to a Bank Holding Company in late 2018, and opening a new operations center in the first quarter of 2019 as well as continued spending to support the Company's growth.

2Q19 vs. 1Q19 Quarterly Highlights

Net book value per share increased by $0.47 per share or 2% to $20.92. Tangible book value per share increased by $0.47 or 2% to $20.18.
Net loans grew by $20.4 million or 5.6% which was primarily funded by a $13.2 million reduction in cash and $5.9 million increase in deposits and $1.1 million reduction in investment securities.
Deposits grew by 5.9 million or 1.4% while net interest margin grew to 3.82%, up from 3.60% in 1Q19.
Provision expense was an increase of $235.9 thousand driven by loan growth during the quarter while the Allowance for Loan Losses declined slightly to 0.99% from 1.00% in 1Q19. Nonperforming Assets decreased by $735 thousand primarily due to a $727 thousand nonaccrual loan reduction from a payoff.
Net interest income grew by $394.3 thousand due to loan growth and net interest margin improvements mentioned above which more than offset the $236 thousand growth in noninterest expense.
Mlend continued to positively contribute to the consolidated earnings of Community Heritage Financial, Inc. during the second quarter.

2Q19 vs. 2Q18 Year over Year Highlights

Net book value per share increased by $1.23 per share or 6% to $20.92. Tangible book value per share increased by $0.49 or 3% to $20.18.
Net loans grew by $69.9 million or 22.4% which was funded by strong growth in deposits of $75.9 million or 21.9%.
Deposits grew 22%, or $75.9 million while net interest margin grew by 5 basis points to 3.70%, up from 3.65% in 1H18.
Provision expense increased by $298.6 thousand driven by a slight 1 basis point increase in the Allowance for Loan Losses to 0.99% and the significant loan growth over that period. Nonperforming assets decreased by $1.8 million compared to the second quarter 2018 primarily driven by $1.65 million in nonaccrual loan reductions and $167 thousand in foreclosed properties being sold.
Net interest income grew by $1.7 million in the six months ended June 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 July 19, 2019 for stockholders of record as of August 2, 2019 and payable on August 9, 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

Community Heritage Financial, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands)


Balance Sheet	June 30,	June 30,	March 31,	December 31,
	2019	2018	2019	2018
	(unaudited)	(unaudited)	(unaudited)	(audited)
Cash	$ 24,578	$ 22,095	$ 37,789	$ 18,546
FHLB Stock	392	325	392	325
Investments, at market value	45,809	44,122	46,958	47,967
Loans, net of Reserve	382,120	312,191	361,722	354,149
Loans Held for Sale	3,499	-	3,446	-
Fixed assets	10,244	5,868	10,330	6,286
Goodwill	1,659	-	1,655	-
Other assets	8,202	8,386	8,413	8,386
Total Assets	$ 476,504	$ 392,987	$ 470,706	$ 435,658

Deposits	$ 423,188	$ 347,290	$ 417,255	$ 388,544
Borrowings	-	-	-	-
Other liabilities	6,224	1,722	7,416	2,170
Total Liabilities	429,412	349,012	424,670	390,714
Equity	46,980	44,969	46,289	45,666
Unrealized gain(loss), net of tax	112	(994)	(254)	(722)
Total Equity	47,092	43,975	46,035	44,944
Total Liabilities & Equity	$ 476,504	$ 392,987	$ 470,706	$ 435,658



Community Heritage Financial, Inc. and Subsidiaries
Consolidated Statements of Income


	For the Three Months Ended		For the Six Months Ended
Income Statement	June 30,	June 30,	June 30,	June 30,
	2019	2018	2019	2018
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Total interest and fee income	$ 5,369,419	$ 3,820,067	$ 10,260,802	$ 7,366,360
Total interest expense	1,117,455	505,312	2,151,152	949,625
Net interest income	4,251,964	3,314,755	8,109,650	6,416,735
Provision for loan losses	358,290	(21,735)	480,649	182,000
Net interest income after provision	3,893,674	3,336,490	7,629,001	6,234,735
Non-interest income	1,047,091	288,829	1,798,851	570,654
Non-interest expense	4,092,036	2,669,634	7,947,661	5,171,837
Merger expenses & one-time items	-	-	77,596	-
Pre-tax net income	848,729	955,685	1,402,595	1,633,552
Income taxes	89,907	254,149	338,307	430,693
Net income	$ 758,822	$ 701,536	$ 1,064,288	$ 1,202,859

Earnings per common share, basic
and diluted	$0.34	$0.31	$0.47	$0.54

Community Heritage Financial, Inc. and Subsidiaries

*Selected Financial Data*

	June 30,	June 30,	March 31,	December 31,
	2019	2018	2019	2018
(dollars in thousands)	(unaudited)	(unaudited)	(unaudited)	(audited)
Total Assets	$ 476,504	$ 392,987	$ 470,706	$ 435,574
Loans	382,120	314,706	361,722	354,147
Goodwill	1,659	-	1,655	-
Deposits	423,188	347,289	417,255	388,544
Shareholder's equity	47,092	43,975	46,035	44,944

Nonperforming Assets:
Accruing troubled debt restructures	$ 715	$ 745	$ 723	$ 731
Loans 90 past due and still accruing	-	-	-	-
Nonaccrual loans	1,373	3,020	2,100	2,453
Foreclosed properties	-	167	-	-
Total nonperforming assets	$ 2,088	$ 3,932	$ 2,823	$ 3,184


	For the Three Months Ended		For the Six Months Ended
	June 30,	June 30,	June 30,	June 30,
*Summary of Operating Results*	2019	2018	2019	2018
(dollars in thousands)	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Pre-allowance for loan loss provision, pre-tax net income	$ 1,207,019	$ 933,950	$ 1,883,245	$ 1,815,553
Allowance for loan loss provision, pre-tax	358,290	(21,735)	480,649	182,000
Tax expense	89,907	254,149	338,307	430,693
Net Income	$ 758,822	$ 701,536	$ 1,064,289	$ 1,202,860

Charge-Offs	$ 119	$ 90	$ 143	$ 110
(Recoveries)	(8)	(2)	(14)	(7)
Net charge-offs	$ 111	$ 88	$ 129	$ 103

*Per Common Share Data*

Basic earnings per share	$0.34	$0.31	$0.47	$0.54
Common shares outstanding	2,251,320	2,233,820	2,251,320	2,233,820
Weighted average shares outstanding	2,251,137	2,233,820	2,247,220	2,233,820
Dividends declared	$0.03	$0.03	$0.06	$0.06
Book value per share	$20.92	$19.69	$20.92	$19.69
Tangible Book Value per Share	$20.18	$19.69	$20.18	$19.69

*Selected Unaudited Financial Ratios*

Return on average assets	0.45%	0.74%	0.46%	0.66%
Return on average equity	4.54%	6.38%	4.60%	5.61%
Allowance for loan losses to total loans	0.99%	0.98%	0.99%	0.98%
Nonperforming assets to total loans	0.54%	1.20%	0.54%	1.20%
Net charge-offs to average loans	0.03%	0.02%	0.03%	0.02%
Common equity tier 1 to risk-weighted assets	12.36%	15.52%	12.36%	15.52%
Tier 1 capital to risk-weighted assets	12.36%	15.52%	12.36%	15.52%
Total capital to risk-weighted assets	13.59%	16.77%	13.59%	16.77%
Average equity to average assets	9.87%	11.19%	9.96%	11.19%
Net interest margin	3.82%	3.68%	3.70%	3.65%
Loan to deposit ratio	91.20%	90.88%	91.20%	90.88%