#USA #Middletown #Community Heritage #Middletown Valley Bank #CHF

Community Heritage Financial, Inc. Reports Q1 2025 Earnings

Community Heritage Financial, Inc. (CHF), parent company of Middletown Valley Bank (MVB), recently announced its earnings for the first quarter of 2025, revealing substantial financial performance improvements. The bank reported a net income of $1.9 million, equating to $0.64 per diluted share, marking a remarkable increase of $477,000 or 33.9% compared to the previous year's first quarter. This growth trend has continued from the fourth quarter of 2024, when the bank's net income stood at $1.7 million.

Balance Sheet Overview

As of March 31, 2025, total assets of the bank reached $1.06 billion, up by $37.8 million from the previous quarter. However, this figure reflects a decrease of $6.4 million since the same time last year. The fluctuations in the bank's asset holdings were influenced by the Bank Term Funding Program (BTFP) from the Federal Reserve. While the advances provided favorable interest rates during the latter part of 2024, the bank promptly repaid these advances before the final Federal Reserve meeting of the year, where short-term interest rates were a topic of discussion.

The composition of the bank’s borrowing saw a notable reduction, with total borrowings decreasing by $40 million. In contrast, interest-bearing deposits increased by $27.3 million, driven largely by a $41.6 million rise in time deposit balances as customers anticipated upcoming interest rate cuts.

Loan Portfolio Performance

The bank’s loan balances have grown significantly, reaching $863.4 million, which is an increase of $32.8 million or 3.9% year-over-year. The growth in various loan segments was notable, with non-owner occupied commercial real estate loans and residential loans contributing substantially to this total. While construction and land development loans have shown a decrease, the overall loan portfolio’s health appears robust. From the previous quarter, this reflects an annualized growth rate of 7.5%.

Interest Income and Margin

In the first quarter of 2025, the net interest income soared to $8.4 million, significantly up from $7.2 million during the same period last year. The net interest margin (NIM) showcased an upward trajectory from 2.80% in Q1 2024 to 3.36% in Q1 2025. Factors contributing to this positive development include stabilized interest rates on deposits and the bank's strategic repositioning of several investments for higher yields.

Noninterest Income Trends

Despite an overall slight reduction in noninterest income by $105 thousand compared to the last year, certain areas saw positive movements. Mortgage banking revenue experienced a decline due to subdued winter season activity and fluctuating interest rates that raised homeowner affordability concerns. However, the bank also noted increases in other segments, highlighting a diverse operational strategy.

Expense Developments

The expenses linked to noninterest operations have seen an uptick of $471 thousand year-over-year, primarily driven by a hike in salaries and employee benefits. This aligns with increased health claims and enhanced employee incentive programs. Meanwhile, data processing expenses experienced a decrease, emphasizing the bank's ongoing efforts to contain costs without sacrificing growth.

Asset Quality and Dividends

Asset quality remains commendable, with non-performing assets representing just 0.14% of total assets as of March 31, 2025. This reflects the bank's sound risk management strategies. Additionally, the Board of Directors has declared a dividend of $0.08 per share, reinforcing shareholder confidence in the bank's financial stability and ongoing profitability.

Conclusion

Overall, Community Heritage Financial, Inc.'s Q1 2025 earnings report underscores the institution's solid financial foundation, increased profitability, and strategic management amidst changing economic conditions. The bank continues to adapt and grow in a competitive environment, positioning itself favorably for the future.