Community Heritage Financial, Inc. Reports Earnings for the Third Quarter of 2020
Community Heritage Financial, Inc. (CMHF) reported a net income of $1.201 million for Q3 2020, compared to $849 thousand in Q2 2020, resulting in $0.53 earnings per share (EPS), up from $0.38 in the previous quarter. Year-to-date, EPS stands at $1.14, an increase from $0.92 in 2019. The company saw significant growth in mortgage loans and commercial loans, with net loans increasing by $30.3 million. Despite increased provisions for loan losses attributed to COVID-19, the bank maintained a strong loan loss reserve ratio of 1.22%.
- Net income increased by $352 thousand compared to Q2 2020.
- Earnings per share grew to $0.53, up from $0.38 in Q2 2020.
- Year-to-date EPS of $1.14, compared to $0.92 in the same period of 2019.
- Net loans increased by $30.3 million, driven by strong core growth.
- Net book value per share rose to $22.91, a 7.1% increase year-over-year.
- Provision expense increased to $1.02 million, up from $706 thousand in Q2 2020.
- Overall deposits decreased by $6.9 million, despite core deposit growth.
MIDDLETOWN, Md., Oct. 16, 2020 /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 September 30, 2020, the Company earned net income of
The COVID-19 pandemic continues to impact daily life and the economies of the United States and the world markets. The ever-changing conditions and uncertainty have caused business and government agencies to react and adapt quickly to survive during these unprecedented times. The banking industry was not spared and was asked to support and help stabilize local economies as the country worked through the crisis. Community Heritage Financial, Middletown Valley Bank and Millennium Financial remain deeply committed to the communities we serve. Mlend and MVB accepted and processed the highest number of residential mortgage loans for a quarter in the history of the company during the third quarter and MVB grew
Quarterly Highlights – 3Q20 vs 2Q20
- Net book value per share increased to
$22.91 per share in the third quarter, up$0.48 per share, or2.1% compared to$22.43 in Q2 of 2020. Tangible book value per share increased by$0.47 or2.1% to$22.17 per share compared to$21.70 at June 30, 2020. - Cash balances decreased significantly quarter over quarter compared to Q2 of 2020. In Q1 of 2020 the bank added on-balance sheet funding in the form of
$35 million in brokered deposits and$30 million in FHLB advances to increase on-balance sheet liquidity at the outbreak of the pandemic. As a result of strong core deposit growth, the FHLB advances were extinguished in Q2 of 2020 and$16.4 million of the brokered deposits matured in Q3 of 2020 and were not renewed. Cash was further used to fund net loan growth of$30.3 million for the quarter. 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 approximately42% of total funding at the bank level as of September 30, 2020. - Net loans grew by
$30.3 million for the third quarter of 2020 with$30.1 million in core growth and an additional$206 thousand in PPP loans. At the end of Q3 the bank had a total of$64.0 million in PPP loans on the balance sheet. Core growth for the quarter came from$6.4 million in residential mortgages and$23.7 million in commercial real estate and C&I loans. - Overall deposits were down
$6.9 million for the third quarter; however, the decrease includes the retirement of$16.4 in brokered deposits. Excluding the brokered deposits, as noted, core deposits grew by$9.5 million for the quarter with most of the growth in demand, money market and savings related deposit products. - Through the deployment of cash and a reduction of 22 basis points in the cost of funds, quarter over quarter bank normalized margin (excludes impact of PPP loans and fees along with extra funding cost through FHLB advances and Brokered deposits) increased from
3.48% in Q2 of 2020 to3.61% in Q3 of 2020. - Provision expense was
$1.02 million for the quarter, up from$706 thousand in the second quarter. While credit quality metrics remained strong, metrics such as unemployment and GDP along with a COVID factor moved provision expense higher for the quarter. The increased provision moved the "loan loss reserve to total loans" ratio to1.22% at the end of September, up from1.12% for June 30, 2020.
Quarterly Highlights – 3Q20 vs 3Q19
- Net book value per share of
$22.91 represents a$1.52 or7.1% increase over September 30, 2019 book value of$21.38 per share. Tangible book value per share also increased by$1.52 or7.4% on a year-over-year basis. - Year over year net loan growth compared to September 30, 2019 was
$142.6 million , which includes$64.0 million in PPP loans. Excluding the PPP loans, core loan growth was$78.6 million or19.4% year-over-year. - Deposits grew
$154.8 million compared to Q3 of 2019 on a year-over-year basis. Excluding additional brokered deposits, core deposits increased$136.3 million year-over-year or31.5% . Most of the growth was in demand deposits ($64.4 million ) and low interest cost money market and savings ($68.6 million ). - Third quarter normalized margin for 2020 at
3.61% came in 6 basis points higher than third quarter margin for 2019 of3.55% . While loan yields have decreased due to market pressure, the bank has been able to maintain margin by cutting the cost of funds in half, from0.98% in September 2019 to0.48% in September of 2020. - Year-to date loan loss Provision expense through Q3 of 2020 totaled
$2.1 million , an increase of$1.4 million compared to$673 thousand through Q3 of 2019. Loan growth and economic metrics due to the pandemic (unemployment, GDP) account for the increased provision expense. - On a year-to-date basis, non-interest income grew by
$2.82 6 million compared to non-interest income through Q3 of 2019. Mortgage activity and secondary sales income account for$2.80 2 million of the increase with very strong activity during Q3 of 2020. - Non-interest expense through Q3 of 2020 was up
$2.4 million compared to Q3 year-to-date 2019. Approximately$900 thousand of the increase is directly related to the increased mortgage volume (commissions, processing, investor fees) noted above while the remaining increased expense is related to additional technology, staffing and processing costs associated with rapid asset growth (38% year-over-year).
Dividend
A dividend of
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) | |||||||||
Balance Sheet | September 30, | September 30, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | ||||||
(unaudited) | (unaudited) | (unaudited) | (audited) | ||||||
Cash | $ 15,094 | $ 19,725 | $ 49,756 | $ 25,065 | |||||
FHLB Stock | 462 | 392 | 462 | 392 | |||||
Investments, at market value | 67,441 | 37,128 | 69,518 | 42,641 | |||||
Loans, net of Reserve | 548,828 | 406,185 | 519,333 | 425,099 | |||||
Loans Held for Sale | 21,670 | 5,208 | 13,525 | 3,775 | |||||
Fixed assets | 9,244 | 10,088 | 6,612 | 6,815 | |||||
Goodwill/Intangible | 1,668 | 1,654 | 1,670 | 1,674 | |||||
Other assets | 11,113 | 8,359 | 12,598 | 11,506 | |||||
Total Assets | $ 675,519 | $ 488,739 | $ 673,475 | $ 516,967 | |||||
Deposits | $ 587,927 | $ 433,081 | $ 594,897 | $ 446,706 | |||||
Subordinated debt, net of unamortized | |||||||||
issuance costs | 14,641 | 14,619 | 14,574 | ||||||
Accrued interest payable | 445 | 109 | 235 | 280 | |||||
Borrowings | 10,577 | - | 5,784 | 289 | |||||
Other liabilities | 10,356 | 7,408 | 7,441 | 6,483 | |||||
Total Liabilities | 623,946 | 440,598 | 622,976 | 468,332 | |||||
Equity | 50,702 | 47,913 | 49,591 | 48,412 | |||||
Unrealized gain(loss), net of tax | 870 | 228 | 908 | 223 | |||||
Total Equity | 51,572 | 48,141 | 50,499 | 48,635 | |||||
Total Liabilities & Equity | $ 675,519 | $ 488,739 | $ 673,475 | $ 516,967 | |||||
Community Heritage Financial, Inc. and Subsidiaries | |||||||||
Consolidated Statements of Income | |||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||
Income Statement | September 30, | September 30, | September 30, | September 30, | |||||
2020 | 2019 | 2020 | 2019 | ||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||
Total interest and fee income | $ 6,146,099 | $ 5,332,701 | $ 17,529,079 | $ 15,593,503 | |||||
Total interest expense | 1,036,252 | 1,081,229 | 3,608,720 | 3,232,381 | |||||
Net interest income | 5,109,847 | 4,251,472 | 13,920,359 | 12,361,122 | |||||
Provision for loan losses | 1,023,596 | 191,866 | 2,087,344 | 672,515 | |||||
Net interest income after provision | 4,086,251 | 4,059,606 | 11,833,015 | 11,688,607 | |||||
Non-interest income | 2,954,161 | 1,483,307 | 6,108,289 | 3,282,158 | |||||
Non-interest expense | 5,417,641 | 4,148,823 | 14,506,837 | 12,096,484 | |||||
Merger expenses & one-time items | - | - | - | 77,596 | |||||
Pre-tax net income | 1,622,771 | 1,394,090 | 3,434,467 | 2,796,685 | |||||
Income taxes | 421,791 | 393,690 | 874,233 | 731,997 | |||||
Net income | $ 1,200,980 | $ 1,000,400 | $ 2,560,234 | $ 2,064,688 | |||||
Earnings per common share, basic and diluted | |||||||||
Community Heritage Financial, Inc. and Subsidiaries | ||||||||
Selected Financial Data | ||||||||
September 30, | September 30, | December 31, | ||||||
2020 | 2019 | 2019 | ||||||
(dollars in thousands) | (unaudited) | (unaudited) | (audited) | |||||
Total Assets | $ 675,519 | $ 488,739 | $ 516,967 | |||||
Loans | 548,828 | 406,185 | 425,099 | |||||
Goodwill | 1,668 | 1,654 | 1,674 | |||||
Deposits | 587,927 | 433,081 | 446,707 | |||||
Shareholder's equity | 51,572 | 48,141 | 48,635 | |||||
Nonperforming Assets: | ||||||||
Accruing troubled debt restructures | $ 681 | $ 708 | $ 701 | |||||
Loans 90 past due and still accruing | 294 | - | - | |||||
Nonaccrual loans | 1,246 | 1,206 | 1,155 | |||||
Foreclosed properties | - | - | - | |||||
Total nonperforming assets | $ 2,221 | $ 1,914 | $ 1,856 | |||||
For the Three Months Ended | For the Nine Months Ended | |||||||
September 30, | September 30, | September 30, | September 30, | |||||
Summary of Operating Results | 2020 | 2019 | 2020 | 2019 | ||||
(dollars in thousands) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||
Pre-allowance for loan loss provision, pre-tax net income | $ 2,646,367 | $ 1,585,956 | $ 5,521,811 | $ 3,469,200 | ||||
Allowance for loan loss provision, pre-tax | 1,023,596 | 191,866 | 2,087,344 | 672,515 | ||||
Tax expense | 421,791 | 393,690 | 874,233 | 731,997 | ||||
Net Income | $ 1,200,980 | $ 1,000,400 | $ 2,560,234 | $ 2,064,688 | ||||
Charge-Offs | $ 12 | $ 21 | $ 49 | $ 164 | ||||
(Recoveries) | (9) | (6) | (29) | (21) | ||||
Net charge-offs | $ 3 | $ 15 | $ 20 | $ 143 | ||||
Per Common Share Data | ||||||||
Basic earnings per share | ||||||||
Common shares outstanding | 2,251,320 | 2,251,320 | 2,251,320 | 2,251,320 | ||||
Weighted average shares outstanding | 2,251,320 | 2,251,137 | 2,251,320 | 2,248,653 | ||||
Dividends declared | ||||||||
Book value per share | ||||||||
Tangible Book Value per Share | ||||||||
Selected Unaudited Financial Ratios | ||||||||
Return on average assets | ||||||||
Return on average equity | ||||||||
Allowance for loan losses to total loans | ||||||||
Allowance for loan loss less PPP loans | ||||||||
Nonperforming assets to total loans | ||||||||
Net charge-offs to average loans | 0.00 | |||||||
Community Bank Leverage Ratio (bank only) | ||||||||
Average equity to average assets | ||||||||
Net interest margin (bank normalized) * | ||||||||
Loan to deposit ratio | ||||||||
*Normalized margin excludes impact of PPP loans and related on balance sheet liquidity through Brokered deposits and FHLB Borrowing | ||||||||
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SOURCE Community Heritage Financial, Inc.
FAQ
What were Community Heritage Financial's earnings for Q3 2020?
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