MIDDLETOWN, Md., Jan. 21, 2021 /PRNewswire/ -- Community Heritage Financial, Inc. ("the Company") (OTC Pink: CMHF), the parent company for Middletown Valley Bank ("MVB") and Millennium Financial Group, Inc. ("Mlend"), announced today that for the quarter ended December 31, 2020, the Company earned net income of $1.567 million or $0.70 per share, an increase of 30.5% or $366 thousand compared to net income of $1.201 million or $0.53 per share for the third quarter of 2020. Net income for the quarter ended December 31, 2020 as compared to the quarter ended December 31, 2019 was up $1.001 million from $566 thousand and earnings per share increased $0.45 per share from $0.25 per share in the fourth quarter of 2019. Year-to-date net income of $4.127 million increased $1.497 million or 56.9% from $2.631 million for 2019. Earnings per share for the year ended 2020 was $1.83 per share compared to $1.17 per share for 2019, an increase of $0.66 per share.
2020 was an unprecedented year and will serve as a benchmark in history for many years to come. The plans and expectations of every person and every business in the world quickly changed and all were forced to forge a new path and adapt to the changes brought on by the pandemic. As the nation works to recover and move forward to strengthen the economy and work its way through the COVID crisis, Community Heritage Financial, Inc., Middletown Valley Bank and Millennium Financial Group, Inc. remain deeply committed to the communities we serve. Mlend and MVB have continued to support the local economy and extended credit to fund over $250 million in residential mortgage loans to local homeowners and over $64 million via the Paycheck Protection Plan, ("PPP") to local small business owners, which supported the retention of 7,554 jobs in the community. During the fourth quarter, the Bank began the process of assisting those small businesses with the loan forgiveness application process and over $14 million in PPP loans had been granted forgiveness by the end of the year. The Bank continues its commitment to the local economy and has begun processing applications for Phase 2 of the PPP program to offer continued support to local jobs and small businesses. While the pandemic remains in the forefront, the health and safety of our customers and employees remains our highest priority as we have taken steps to return to normal operations and provide customers with Absolutely Exceptional Experiences to serve their financial needs.
Quarterly Highlights – 4Q20 vs 3Q20
- Net book value per share increased to $23.52 per share in the fourth quarter, up $0.61 per share, or 2.67% compared to $22.91 in the third quarter of 2020. Tangible book value per share increased by $0.61 or 2.8% to $22.78 per share compared to $22.17 at September 30, 2020.
- Cash balances increased on a linked quarter basis by 48.5% or $14.1 million. In the fourth quarter of 2020 the PPP loan payoffs due to SBA forgiveness totaled $14 million. This along with $11.8 million in deposit growth added to the cash increase. The bank deployed a portion of the funds in the form of liquid investment securities and also funded core loan growth for the period. 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 46% of total funding at the bank level as of December 31, 2020.
- Net loans grew on a linked quarter basis by $2.7 million as of December 31, 2020. At the end of the fourth quarter the bank had a total of $50.0 million in PPP loans on the balance sheet, a decrease of $14 million resulting from PPP loan forgiveness. Core loan growth totaled $17.4 million for the fourth quarter. The core growth for the fourth quarter came from $2.3 million in residential mortgages and $15.8 million in commercial real estate and C&I loans.
- Overall deposits grew $11.8 million, or 2% for the fourth quarter. The deposit growth for the fourth quarter was affected by the retirement of $10 million in brokered deposits. The brokered deposit decrease was offset by increases in money market accounts totaling $10 million and non-interest-bearing demand deposits totaling $9 million.
- Due to a decrease in the cost of funds of 11 basis points quarter over quarter, the bank normalized margin (excludes impact of PPP loans and fees, FRB Cash and Brokered deposits) increased to 3.66% in the fourth quarter from 3.61% in the third quarter of 2020.
- Provision expense was $1.46 million for the fourth quarter, up from $845 thousand in the third quarter. While credit quality metrics remained strong, metrics related to unemployment and GDP coupled with a bank applied COVID factor moved the provision expense higher for the fourth quarter. The increased provision moved the "loan loss reserve to total loans" ratio (excluding PPP loans) to 1.47% for December 31, 2020, up from 1.22% as of September 30, 2020.
Quarterly Highlights – 4Q20 vs 4Q19
- Net book value per share of $23.52 represents a $1.92 or 8.9% increase over December 31, 2019 book value of $21.60 per share. Tangible book value per share of $22.78 also increased by $1.92 or 9.2% on a year-over-year basis.
- Year-over-year net loan growth was $126.4 million or 29.7%, which includes $50 million in PPP loans. Excluding the PPP loans, core loan growth was $76.4 million or 18% year-over-year.
- Deposits grew $153 million or 34.2% on a year over year basis compared to December 31, 2019. Excluding brokered deposits of $8 million (as of 12/31/20), core deposits increased $144.5 million or 32.3% year-over-year. Most of the growth was in demand deposits ($71 million) and low interest cost money market and savings deposits ($57.5 million).
- As of December 2020, the bank had reduced overall cost of funds to 0.39%, down from 0.97% in December of 2019.
- Year-to date loan loss provision expense through December 31, 2020 totaled $3.25 million (excludes $254 thousand for off-balance sheet and check card loss provision), an increase of $2.49 million compared to $763 thousand through December 31, 2019. Loan growth and economic metrics due to the pandemic (unemployment, GDP and COVID factor) account for the increased provision expense.
- On a total year basis, non-interest income for 2020 grew by $4.439 million compared to non-interest income for 2019. Mortgage activity and secondary sales income (increase of $3.57 million) along with security sale gains of $750 thousand account for most of the increase. The company also booked a $465 thousand gain on the derivative related to interest rate lock commitments on residential mortgage loans for 2020.
- Non-interest expense year to date December 31, 2020 increased $2.8 million compared to December 31, 2019. The increase is directly related to the increased mortgage volume (processing, investor fees, etc.) noted above, while the remaining increased expense is related to additional technology, staffing and processing costs associated with rapid asset growth (33.2% year-over-year).
Dividend
A dividend of $0.04 per share was declared by the Board of Directors on January 19, 2021 for shareholders of record as of February 2, 2021 and payable on February 9, 2021.
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.
Robert E. (BJ) Goetz, Jr.
President & Chief Executive Officer
301-371-3055
www.communityheritageinc.com
Community Heritage Financial, Inc. and Subsidiaries | ||||||||||
Consolidated Balance Sheets | ||||||||||
(dollars in thousands) | ||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||
2020 | 2020 | 2020 | 2020 | 2019 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | ||||||
Assets | ||||||||||
Cash and due from banks | $29,185,895 | $15,043,681 | $49,706,388 | $96,263,005 | $25,065,743 | |||||
Fed funds sold | - | - | - | - | - | |||||
Total cash and cash equivalents | 29,185,895 | 15,043,681 | 49,706,388 | 96,263,005 | 25,065,743 | |||||
Interest-bearing deposits with banks | - | - | - | - | - | |||||
Securities available-for-sale, at fair value | 71,058,845 | 67,440,907 | 69,518,278 | 51,357,044 | 42,640,765 | |||||
Equity securities, at cost | 462,100 | 462,100 | 462,100 | 1,737,100 | 392,200 | |||||
Loans | 558,966,588 | 554,851,127 | 524,512,193 | 450,357,944 | 429,334,750 | |||||
Less allowance for loan loss | 7,480,190 | 6,023,558 | 5,179,211 | 4,552,647 | 4,235,316 | |||||
Loans, net | 551,486,398 | 548,827,569 | 519,332,982 | 445,805,298 | 425,099,435 | |||||
Loans held for sale | 13,900,894 | 21,670,409 | 13,525,399 | 6,765,210 | 3,775,199 | |||||
Premises and equipment, net | 6,399,918 | 6,458,931 | 6,612,225 | 6,719,863 | 6,815,474 | |||||
Right-of-use assets | 2,666,896 | 2,784,840 | 2,899,764 | 2,996,370 | 3,109,423 | |||||
Accrued interest receivable | 2,199,489 | 2,191,831 | 2,002,813 | 1,265,627 | 1,232,624 | |||||
Deferred tax assets | 2,080,834 | 1,796,287 | 978,166 | 1,028,379 | 979,581 | |||||
Bank-owned life insurance | 5,279,741 | 5,214,030 | 5,026,968 | 5,000,147 | 4,966,843 | |||||
Goodwill | 1,656,507 | 1,656,507 | 1,656,507 | 1,656,507 | 1,656,507 | |||||
Intangible assets | 9,028 | 11,111 | 13,195 | 15,278 | 17,361 | |||||
Other real estate owned | - | - | - | - | - | |||||
Other Assets | 2,226,396 | 1,960,467 | 1,740,498 | 1,280,286 | 1,215,938 | |||||
Total Assets | $688,612,940 | $675,518,670 | $673,475,281 | $621,890,113 | $516,967,093 | |||||
Liabilities and Stockholders' Equity | ||||||||||
Liabilities | ||||||||||
Deposits: | ||||||||||
Non-interest-bearing demand | $197,415,650 | $187,971,604 | $181,154,551 | $134,342,517 | $126,449,656 | |||||
Interest-bearing | 402,262,420 | 399,955,185 | 413,742,711 | 385,258,946 | 320,256,855 | |||||
Total Deposits | 599,678,070 | 587,926,789 | 594,897,262 | 519,601,463 | 446,706,511 | |||||
Federal home loan bank advances | - | - | - | - | 30,000,000 | - | ||||
Subordinated debt, net | 14,663,636 | 14,641,212 | 14,618,788 | 14,596,364 | 14,573,940 | |||||
Other borrowings | 8,305,449 | 10,577,345 | 5,784,495 | 616,371 | 289,039 | |||||
Lease liabilities | 2,714,979 | 2,823,382 | 2,934,461 | 3,027,221 | 3,136,351 | |||||
Accrued interest payable | 215,490 | 445,258 | 234,619 | 504,060 | 279,832 | |||||
Other liabilities | 10,074,820 | 7,532,465 | 4,506,634 | 4,295,541 | 3,346,518 | |||||
Total Liabilities | 635,652,444 | 623,946,450 | 622,976,259 | 572,641,020 | 468,332,191 | |||||
Stockholders' Equity | ||||||||||
Common stock | 22,513 | 22,513 | 22,513 | 22,513 | 22,513 | |||||
Surplus | 28,523,004 | 28,523,004 | 28,523,004 | 28,523,004 | 28,523,004 | |||||
Retained earnings | 23,633,375 | 22,156,244 | 21,045,316 | 20,286,492 | 19,866,169 | |||||
Accumulated other comprehensive income (loss) | 781,603 | 870,459 | 908,189 | 417,083 | 223,217 | |||||
Total Stockholders' Equity | 52,960,495 | 51,572,219 | 50,499,022 | 49,249,092 | 48,634,902 | |||||
Total Liabilities and Stockholders' Equity | $688,612,940 | $675,518,670 | $673,475,281 | $621,890,113 | $561,967,093 | |||||
Community Heritage Financial, Inc. and Subsidiaries | ||||||||||
Consolidated Statements of Income | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Twelve Months Ended | |||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||
Interest Income | ||||||||||
Loans, including fees | $6,311,740 | $5,811,942 | $5,189,074 | $22,935,022 | $19,681,478 | |||||
Securities | 307,082 | 304,756 | 195,913 | 1,073,590 | 909,568 | |||||
Fed funds sold and other | 13,044 | 29,402 | 109,577 | 152,726 | 496,974 | |||||
Total interest income | 6,631,865 | 6,146,099 | 5,494,564 | 24,161,338 | 21,088,020 | |||||
Interest Expense | ||||||||||
Deposits | 619,250 | 728,081 | 1,051,829 | 3,353,129 | 4,199,796 | |||||
Borrowed funds | - | - | 1 | 48,869 | 1 | |||||
Subordinated debt | 238,053 | 238,049 | 201,445 | 947,409 | 201,445 | |||||
Other Interest Expense | 63,216 | 66,877 | 7,746 | 170,293 | 85,024 | |||||
Total interest expense | 920,519 | 1,033,008 | 1,261,021 | 4,519,700 | 4,486,265 | |||||
Net interest income | 5,711,346 | 5,113,092 | 4,233,543 | 19,641,638 | 16,601,754 | |||||
Provision for loan losses | 1,456,879 | 844,521 | 227,442 | 3,252,897 | 763,490 | |||||
Net interest income after provision for loan losses | 4,254,467 | 4,268,571 | 4,006,101 | 16,388,741 | 15,838,264 | |||||
Non-interest income | ||||||||||
Service charges on deposits | 199,634 | 164,660 | 153,250 | 648,125 | 590,534 | |||||
Earnings bank owned life insurance | 54,648 | 46,771 | 31,360 | 144,962 | 109,176 | |||||
Gain/(loss) sale of fixed assets | - | 500 | - | 500 | (5,471) | |||||
Gain/(loss) sale of securities | 575,869 | 164,464 | - | 749,590 | (636) | |||||
Mortgage loan income activity | 2,210,046 | 1,973,960 | 792,237 | 6,139,762 | 2,566,355 | |||||
Other non-interest income | 170,711 | 155,515 | 154,471 | 581,817 | 566,002 | |||||
Total non-interest income | 3,210,907 | 2,505,870 | 1,131,318 | 8,264,755 | 3,825,959 | |||||
Non-interest expense | ||||||||||
Salaries and employee benefits | 2,928,023 | 3,133,762 | 2,524,214 | 11,147,427 | 9,460,012 | |||||
Occupancy and equipment | 681,446 | 694,331 | 685,066 | 2,738,468 | 2,498,741 | |||||
Legal and professional fees | 217,174 | 200,451 | 139,289 | 746,435 | 683,696 | |||||
Advertising | 453,077 | 96,098 | 199,255 | 771,512 | 467,185 | |||||
Data processing | 570,630 | 504,575 | 423,509 | 1,984,715 | 1,399,269 | |||||
FDIC premiums | 112,999 | 106,675 | - | 272,154 | 179,323 | |||||
Other intangible amortization | 2,083 | 2,083 | 2,083 | 8,333 | 7,639 | |||||
Loss other real estate owned | - | - | - | - | (12,017) | |||||
Merger and acquisition | - | - | - | - | 77,596 | |||||
Other | 227,229 | 413,695 | 401,796 | 1,277,271 | 1,343,887 | |||||
Total non-interest expense | 5,192,661 | 5,151,670 | 4,375,213 | 18,946,317 | 16,105,332 | |||||
Income before taxes | 2,272,713 | 1,622,771 | 762,206 | 5,707,180 | 3,558,892 | |||||
Income tax expense | 705,528 | 421,791 | 196,120 | 1,579,761 | 928,117 | |||||
Net Income | $1,567,185 | $1,200,980 | $566,086 | $4,127,418 | $2,630,774 | |||||
Basic earnings per share | $0.70 | $0.53 | $0.25 | $1.83 | $1.17 | |||||
Community Heritage Financial, Inc. and Subsidiaries | |||||||||
Selected Financial Data | |||||||||
Income Statement Review | |||||||||
For the Three Months Ended | For the Twelve Months Ended | ||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | |||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||
(Unaudited) | (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||
Interest Income | $6,631,865 | $6,146,099 | $5,494,564 | $24,161,338 | $21,088,020 | ||||
Interest Expense | 920,519 | 1,033,008 | 1,261,021 | 4,519,700 | 4,486,265 | ||||
Net interest income | 5,711,346 | 5,113,092 | 4,233,543 | 19,641,638 | 16,601,754 | ||||
Provision expense | 1,456,879 | 844,521 | 227,442 | 3,252,897 | 763,490 | ||||
Net interest income after provision | $4,254,467 | $4,268,571 | $4,006,101 | $16,388,741 | $15,838,264 | ||||
Non-interest income | $3,210,907 | $2,505,370 | $1,131,318 | $8,264,755 | $3,825,959 | ||||
Non-interest expense | 5,192,661 | 5,151,170 | 4,375,213 | 18,946,317 | 16,105,332 | ||||
Merger expenses | - | - | - | - | 77,596 | ||||
Yield on interest-earning assets | 4.04% | 3.85% | 4.49% | 3.97% | 4.67% | ||||
Cost of interest-bearing liabilities | 0.86% | 0.97% | 1.54% | 1.11% | 1.46% | ||||
Efficiency ratio | 58.20% | 67.61% | 81.55% | 67.89% | 78.80% | ||||
Balance Sheet Review | |||||||||
December 31, | September 30, | December 31, | |||||||
2020 | 2020 | 2019 | |||||||
(Unaudited) | (Unaudited) | (Audited) | |||||||
(dollars in thousands) | |||||||||
Total assets | $688,612,939 | $675,518,670 | $516,967,093 | ||||||
Loans, net of reserve | 551,486,398 | 548,827,569 | 425,099,435 | ||||||
Goodwill & intangibles | 1,665,534 | 1,667,618 | 1,673,868 | ||||||
Deposits | 599,678,070 | 587,926,789 | 446,706,511 | ||||||
Shareholder's equity | 52,960,495 | 51,572,219 | 48,634,902 | ||||||
Asset Quality Review | |||||||||
Non-accrual loans | $1,005,634 | $1,246,457 | $1,155,358 | ||||||
Trouble debt restructured loans still accruing | 932,770 | 681,455 | 700,856 | ||||||
Loans 90 days past due still accruing | - | 294,000 | - | ||||||
Foreclosure properties | - | - | - | ||||||
Total non-performing assets | $1,938,404 | $2,221,912 | $1,856,214 | ||||||
Non-performing assets to total assets | 0.28% | 0.33% | 0.36% | ||||||
Non-performing assets to total loans | 0.38% | 0.40% | 0.43% | ||||||
Summary of Operating Results | |||||||||
For the Three Months Ended | For the Twelve Months Ended | ||||||||
December 31, | December 31, | December 31, | December 31, | ||||||
2020 | 2019 | 2020 | 2019 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Audited) | ||||||
Pre-allowance for Loan Loss provision, pre-tax net income | $3,729,592 | $989,648 | $8,960,077 | $4,322,382 | |||||
Allowance for loan loss provision, pre-tax | 1,456,879 | 227,442 | 3,252,897 | 763,490 | |||||
Tax expense | 705,528 | 196,120 | 1,579,761 | 928,117 | |||||
Net Income | $1,567,185 | $566,086 | $4,127,418 | $2,630,774 | |||||
(dollars in thousands) | |||||||||
Charge-offs | $13,173 | $13,429 | $62,856 | $176,557 | |||||
(Recoveries) | ($6,185) | ($792) | ($34,851) | ($21,731) | |||||
Net charge-offs | $6,988 | $11,637 | $28,004 | $154,827 | |||||
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 | 2,250,064 | |||||
Basic Earnings per share | $0.70 | $0.25 | $1.83 | $1.17 | |||||
Dividend declared | $0.04 | $0.03 | $0.16 | $0.12 | |||||
Book value per share | $23.52 | $21.60 | $23.52 | $21.60 | |||||
Tangible book value per share | $22.78 | $20.86 | $22.78 | $20.86 | |||||
Selected Financial Ratios (unaudited) | |||||||||
Return on average assets | 0.92% | 0.44% | 0.64% | 0.55% | |||||
Return on average equity | 11.65% | 4.67% | 8.06% | 5.55% | |||||
Allowance for loan losses to total loans | 1.34% | 0.99% | 1.34% | 0.99% | |||||
Allowance for loan loss to total loans (excluding PPP loans) | 1.47% | 0.99% | 1.47% | 0.99% | |||||
Non-performing assets to total loans | 0.38% | 0.40% | 0.38% | 0.43% | |||||
Non-performing assets to total loans (excluding PPP) | 0.38% | 0.43% | 0.38% | 0.43% | |||||
Net Charge-offs to total loans | 0.00% | 0.00% | 0.01% | 0.04% | |||||
Tier-1 leverage ratio | N/A | 11.76% | N/A | 11.76% | |||||
Community bank leverage ratio (bank only)** | 9.14% | N/A | 9.14% | N/A | |||||
Average equity to average assets | 7.87% | 9.52% | 8.00% | 9.88% | |||||
Net interest margin (bank only, normalized)* | 3.66% | 3.61% | 3.60% | 3.69% | |||||
Loans to deposits - (EOP) | 93.21% | 96.11% | 93.21% | 96.11% | |||||
*Normalized margin excludes impact of PPP loans and related on balance sheet liquidity through Brokered deposits, FHLB Borrowing and FRB cash | |||||||
**As of March 31, 2020 the bank adopted the community bank leverage ratio (CBLR) for capital reporting |
View original content to download multimedia:http://www.prnewswire.com/news-releases/community-heritage-financial-inc-reports-record-earnings-for-the-fourth-quarter-of-2020-301212798.html
SOURCE Community Heritage Financial, Inc.
