Community Heritage Financial, Inc. Reports Financial Performance for Q3 2025

Overview of Financial Performance

On October 23, 2025, Community Heritage Financial, Inc. (CHF) announced their financial results for the third quarter ending September 30, 2025. The company reported a net income of $1.9 million, translating to $0.66 per diluted share. This figure represents a 21.6% decrease from the previous quarter and a 5.5% decline when compared to the same period last year.

Year-to-Date Comparisons

Despite the quarterly decline, the company showed an improvement in its year-to-date performance. For the first nine months of 2025, CHF reported net income totaling $6.3 million or $2.13 per diluted share, which marks an increase of $1.4 million or 28.4% from the same period in the previous year, when the net income stood at $4.9 million.

Credit Loss Provisions

A significant factor impacting the financial results for the current quarter was the establishment of a specific reserve of $750,000. This reserve was necessary due to an identified internal theft connected to a commercial line of credit, resulting in a substantial increase in the provision for credit losses, which rose to $961,000 for Q3 2025. Comparatively, this was a stark increase from $148,000 during Q2 2025 and a recapture of $7,000 seen in Q3 2024. Additionally, the total provision for credit losses for the year-to-date reached $1.4 million, significantly higher than the $428,000 recorded for the same period in the previous year.

Asset Quality Indicators

As of September 30, 2025, CHF's allowance for credit losses - loans was 1.07% of total loans, an increase from 0.99% in the previous quarter and 0.96% a year earlier. The ratio of non-performing assets to total assets also increased to 0.19%, compared to 0.13% in Q2 2025 and 0.14% in Q3 2024. Despite these challenges, the company reported a net charge-off ratio of zero percent for the past three quarters, suggesting effective management of non-performing loans.

Balance Sheet Insights

Community Heritage’s total assets stood at $1.1 billion as of September 30, 2025. Despite a recent decrease of $5.9 million since the previous year, total assets saw an increase of $72.2 million compared to December 31, 2024. This growth can primarily be attributed to a $49.5 million increase in deposits, accompanied by a $9.0 million rise in shareholders' equity. The bank successfully managed to reduce borrowings and subordinated debt by $63.0 million, primarily through repayments under the Bank Term Funding Program (BTFP).

Loan Performance

As of the end of September 2025, loans totaled $896.2 million, marking a $52.1 million increase from the previous year, driven primarily by a diverse growth in residential loans and commercial real estate sectors. The sector dealt with a few declines, notably in farmland and multifamily loans, but overall, the lending portfolio exhibited robust growth and diversification.

Net Interest Income

For the three-month period ending September 30, the net interest income reached $9.2 million, which is an increase compared to $7.8 million during the same quarter in 2024. The net interest margin improved significantly to 3.40% from 2.90% a year prior, benefitting from stabilized deposit rates and the impact of recent interest rate cuts by the Federal Reserve.

Non-Interest Income and Expenses

Noninterest income witnessed a slight decrease to $1.05 million, primarily due to a decline in mortgage banking revenue amidst ongoing market challenges. Conversely, there were modest increases in card and merchant service revenues. Noninterest expenses totaled $6.69 million, reflecting operational challenges, including heightened employee benefit costs and other operational expenses.

Dividends Declared

On October 17, 2025, the Board of Directors declared a quarterly cash dividend of $0.08 per common share, payable on November 7, 2025, to shareholders recorded as of October 31, 2025. This reflects the company's commitment to returning value to its investors despite the challenges faced in the current market.

Final Thoughts

In conclusion, while Community Heritage Financial, Inc. faced some difficulties in Q3 2025, particularly regarding credit losses and non-performing assets, the company has demonstrated resilience and growth in several key areas, including total assets and net interest income. Moving forward, the management continues to focus on enhancing operational efficiency and addressing market challenges strategically as they navigate the economic landscape.