#United States #Middletown #Middletown Valley Bank #Community Heritage Financial #CHF

Community Heritage Financial: Record Earnings in 2025

Community Heritage Financial, Inc. (CHF), the parent company behind Middletown Valley Bank (MVB), has announced its outstanding financial performance for the year ended December 31, 2025. The company recorded a historic net income of $8.7 million, translating to $2.93 per diluted share. This represents a remarkable increase of approximately 30.6% compared to the previous year’s income of $6.6 million, or $2.27 per diluted common share. This positive outcome was driven by several key factors, notably a significant increase in assets and favorable loan growth.

Financial Highlights

During the reported period, the return on average assets saw a rise from 0.62% in 2024 to 0.80% in 2025. In the fourth quarter of 2025 alone, net income reached $2.4 million, or $0.80 per diluted common share, marking a notable 22.4% increase over the third quarter, and a robust 36.6% increase compared to the fourth quarter of 2024.

The total assets of Community Heritage Financial amounted to $1.1 billion as of December 31, 2025. This reflects a growth of $108.7 million from the previous year's figure. The company's strategy for asset growth was primarily funded by an increase in deposits of $76.8 million (an 8.5% rise), borrowings of $18 million, and a $9.8 million increase in shareholders' equity, which constitutes a growth of 12.4%.

Expanding Loan Portfolio

One of the notable aspects of the company’s performance was the growth in gross loan balances, which reached $927.2 million, an increase of $83.2 million, or 9.9%, from last year. The primary drivers behind this growth were robust increases across various loan categories including construction and land development loans, residential loans, and commercial real estate loans. Specifically, loans for construction and land development surged by $27.3 million, followed by residential loans at $25.9 million, and non-owner occupied commercial real estate loans at $18 million.

Although there were declines in farmland and multifamily loan balances by $2.4 million and $1.8 million respectively, the overall performance in loan growth remained impressive. The Bank's commercial real estate concentration was noted to be 251% of tier 1 capital plus the allowance for credit losses, showcasing the bank's strength and stability in navigating the commercial loan landscape.

Asset Quality and Credit Loss Provisions

In terms of asset quality, the allowance for credit losses (ACL) to total loans ratio increased to 1.06% as of December 31, 2025, up from 0.98% the previous year. This increase mirrors the provision for credit losses which rose to $1.5 million, compared to $607 thousand allotted the year before. A substantial portfolio adjustment was necessitated due to a specific loan reserve linked to internal theft within a borrower’s organization.

Despite these adjustments, non-performing assets remained relatively low, totaling $2.0 million, or 0.18% of total assets, indicating a well-managed credit risk approach. The company reported no net charge-offs for both 2025 and 2024, reflecting a solid performance concerning risk management.

Interest Income and Dividend Declaration

On the income front, net interest income surged significantly to $36.0 million for 2025, up from $30.7 million the previous year. The net interest margin demonstrated a remarkable increase from 2.92% in 2024 to 3.42% in 2025, thanks to the upward repricing of loans during a relatively low-interest rate environment and a decline in the cost of total funds.

During this positive financial climate, the Board of Directors declared a dividend of $0.08 per common share on January 16, 2026, for shareholders of record on January 30, 2026, showing the company’s commitment to returning capital to its investors.

Forward-Looking Statements

Looking forward, the management of Community Heritage Financial, Inc. is optimistic about sustaining this trajectory of growth. Their forward-looking statements indicate an ongoing assessment of the financial landscape, with their strategic initiatives poised to adapt to ever-evolving market conditions. While challenges persist, the fundamentals of the business suggest a strong foundation for ongoing success.

Community Heritage Financial, Inc. continues to demonstrate resilience and operational success in its financial strategy, underscoring its role as a robust player in the banking sector.