Community Heritage Financial, Inc. Achieves Record Profits in Q2 2025 Amid Strong Balance Sheet Growth
Community Heritage Financial, Inc. (CHF), the parent company of Middletown Valley Bank, has announced record earnings for the second quarter of 2025, marking a significant leap in financial performance. The company reported a net income of $2.5 million, equivalent to $0.84 per diluted share. This reflects a substantial increase of 31.1%, or $585 thousand, when compared to the first quarter of the same year. Furthermore, net income soared by 71.2% year-over-year, with an increase of $1.0 million compared to the second quarter of 2024.
The financial health of CHF looks robust, as evidenced by its total assets reaching $1.1 billion as of June 30, 2025. This is an increase of $4.2 million from June 30, 2024, and a growth of $75.4 million since the end of December 2024. The notable growth in the balance sheet was primarily driven by a rise in deposits, which increased by $47.3 million (5.1%), and growth in shareholders' equity that rose by $9.7 million (13.1%). Notably, borrowings and subordinated debt saw a significant decline of $52.9 million during the same period.
The growth trajectory of CHF illustrates how effective strategies, including the utilization of the Bank Term Funding Program (BTFP) through the Federal Reserve Bank, contributed to its fiscal strength. The company had drawn $50 million in advances, leveraging the opportunity for a positive arbitrage between the advance rate and earnings rate available through the Federal Reserve Bank. These advances were strategically repaid before the November 2024 Federal Reserve meeting, following a reduction in short-term interest rates, thus eliminating the arbitrage opportunity.
In terms of loan balances, CHF reported an increase to $872.1 million as of June 30, 2025, representing a 3.7% increase from the previous year and an annualized increase of 5.8% from December 31, 2024. Within this growth, non-owner occupied commercial real estate loans, residential loans, and owner-occupied commercial real estate loans saw increases of $21.2 million, $16.9 million, and $8.8 million, respectively. However, a decline in construction and land development loans, which dropped by $22.1 million, offset some of this growth.
CHF's net interest income totaled $8.8 million for the quarter, compared to $7.5 million during the same quarter in 2024. The net interest margin (NIM) also saw an upward trend, rising from 2.83% in Q2 2024 to 3.37% in Q2 2025. The improvement in NIM can be attributed to stabilized rates on interest-bearing deposits and refinancing of maturing loans at higher rates. The Federal Reserve's interest rate cuts initiated in September 2024 further contributed to the positive shift in margins.
During the second quarter of 2025, CHF's noninterest income also increased by $311 thousand compared to the previous quarter, underscored by a boost in mortgage banking revenue — a result of increased mortgage origination activity during the spring and summer seasons.
On the expense side, noninterest expenses decreased slightly by $62 thousand on a quarter-over-quarter basis. This decrease was primarily attributed to lower salaries and benefits and occupancy costs, which more than offset increases in data processing and legal fees as CHF prepared for regulatory requirements associated with its asset growth.
Regarding asset quality, CHF maintained a strong position with non-performing assets accounting for only 0.13% of total assets as of June 30, 2025, indicating an improvement over the previous year’s figure.
The Board of Directors declared a quarterly dividend of $0.08 per share on July 18, 2025, contributing to the confidence of shareholders amidst the company’s strong financial performance. Looking ahead, CHF appears poised for continued growth and stability as it navigates the current financial landscape, bolstered by its well-capitalized position and effective management strategies.
The financial health of CHF looks robust, as evidenced by its total assets reaching $1.1 billion as of June 30, 2025. This is an increase of $4.2 million from June 30, 2024, and a growth of $75.4 million since the end of December 2024. The notable growth in the balance sheet was primarily driven by a rise in deposits, which increased by $47.3 million (5.1%), and growth in shareholders' equity that rose by $9.7 million (13.1%). Notably, borrowings and subordinated debt saw a significant decline of $52.9 million during the same period.
The growth trajectory of CHF illustrates how effective strategies, including the utilization of the Bank Term Funding Program (BTFP) through the Federal Reserve Bank, contributed to its fiscal strength. The company had drawn $50 million in advances, leveraging the opportunity for a positive arbitrage between the advance rate and earnings rate available through the Federal Reserve Bank. These advances were strategically repaid before the November 2024 Federal Reserve meeting, following a reduction in short-term interest rates, thus eliminating the arbitrage opportunity.
In terms of loan balances, CHF reported an increase to $872.1 million as of June 30, 2025, representing a 3.7% increase from the previous year and an annualized increase of 5.8% from December 31, 2024. Within this growth, non-owner occupied commercial real estate loans, residential loans, and owner-occupied commercial real estate loans saw increases of $21.2 million, $16.9 million, and $8.8 million, respectively. However, a decline in construction and land development loans, which dropped by $22.1 million, offset some of this growth.
CHF's net interest income totaled $8.8 million for the quarter, compared to $7.5 million during the same quarter in 2024. The net interest margin (NIM) also saw an upward trend, rising from 2.83% in Q2 2024 to 3.37% in Q2 2025. The improvement in NIM can be attributed to stabilized rates on interest-bearing deposits and refinancing of maturing loans at higher rates. The Federal Reserve's interest rate cuts initiated in September 2024 further contributed to the positive shift in margins.
During the second quarter of 2025, CHF's noninterest income also increased by $311 thousand compared to the previous quarter, underscored by a boost in mortgage banking revenue — a result of increased mortgage origination activity during the spring and summer seasons.
On the expense side, noninterest expenses decreased slightly by $62 thousand on a quarter-over-quarter basis. This decrease was primarily attributed to lower salaries and benefits and occupancy costs, which more than offset increases in data processing and legal fees as CHF prepared for regulatory requirements associated with its asset growth.
Regarding asset quality, CHF maintained a strong position with non-performing assets accounting for only 0.13% of total assets as of June 30, 2025, indicating an improvement over the previous year’s figure.
The Board of Directors declared a quarterly dividend of $0.08 per share on July 18, 2025, contributing to the confidence of shareholders amidst the company’s strong financial performance. Looking ahead, CHF appears poised for continued growth and stability as it navigates the current financial landscape, bolstered by its well-capitalized position and effective management strategies.
Topics Financial Services & Investing）
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