Community Heritage Financial, Inc. Repositions Investment Portfolio

Rhea-AI Summary

Community Heritage Financial (OTC: CMHF) sold $73.3 million of lower-yielding securities with a 2.73% average yield, realizing an estimated after-tax loss of $3.9 million. Proceeds will fund $68.0 million of available-for-sale securities with an estimated 5.10% tax-equivalent yield.

According to the company, the move is expected to add about $1.1 million to annualized net income, improve net interest margin by 13 basis points, and earn back the loss in 3.6 years. Shareholders’ equity will decline $4.8 million, with tangible book value down $1.64 per share.

Positive

• Reinvestment into $68.0 million higher-yield securities at 5.10% tax-equivalent yield
• Purchased securities expected to add approximately $1.1 million to annualized net income
• Net interest margin projected to improve by about 13 basis points
• Estimated earn-back period of repositioning loss is 3.6 years
• Regulatory capital classification remains well-capitalized after transaction

Negative

• Sale generates approximately $3.9 million after-tax loss on securities
• Consolidated shareholders’ equity projected to decline by about $4.8 million
• Tangible book value expected to fall by approximately $1.64 per share
• Tangible common equity to tangible common assets ratio to decrease about 42 basis points
• Bank’s regulatory capital anticipated to decline by approximately $3.9 million

AI-generated analysis. How Rhea-AI works. Not financial advice.

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MIDDLETOWN, Md., May 20, 2026 /PRNewswire/ -- Community Heritage Financial, Inc. (the "Company" or "CHF") (OTCID: CMHF), the parent company of Middletown Valley Bank ("MVB" or the "Bank"), announced today it initiated a strategic repositioning of its balance sheet with the sale of lower-yielding investment securities with a book value of $73.3 million.

The sale included both securities available-for-sale and securities held-to-maturity. Securities sold had a weighted average yield of 2.73% and the sale transaction produced an after-tax loss of approximately $3.9 million. The Bank expects to use the proceeds from the sale to purchase securities totaling $68.0 million, all of which will be classified as available-for-sale at the time of purchase, with an estimated weighted average tax equivalent yield of 5.10%. On an annualized basis, the purchased securities are expected to add approximately $1.1 million to net income and improve the net interest margin approximately 13 basis points. The estimated earn-back period is 3.6 years.

The Company's consolidated shareholders' equity and tangible book value will decline approximately $4.8 million and $1.64, respectively, upon recognition of the loss associated with the sale of the securities and the mark-to-market of those securities previously classified as held-to-maturity that were not sold and must now be classified as available-for-sale. The sale will result in a decline in the Company's tangible common equity to tangible common asset ratio of approximately 42 basis points. The Bank's regulatory capital will decline approximately $3.9 million with the sale transaction. The Bank's regulatory capital position will continue classification as well-capitalized.

President and CEO Robert E. (BJ) Goetz, Jr. commented, "Management and the Board of Directors chose to allocate capital to reposition the investment securities portfolio as we believe the initial loss is recovered over a reasonable period of time and the accretive impact to earnings will meaningfully enhance future shareholder value."

Forward-Looking Statements

This press release may contain forward-looking statements with respect to the Company's financial condition, results of operations and business initiatives. Forward-looking statements can be identified by words such as "expects", "anticipates", "believes", "estimates", "projects", "continue", "plans", "intends", the negative of these words and other comparable terminology. These forward-looking statements may be included in comments regarding future financial performance, expected levels of future revenue and expenses such as credit losses, growth strategies, new business initiatives, and anticipated trends impacting performance. Forward-looking statements are not historical facts nor an assurance of future performance. While we believe the expectations of forward-looking statements to be reasonable, actual results may differ materially as forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and often outside of the control of the Company. Therefore, users should not rely on forward-looking statements.

Community Heritage Financial, Inc.
Robert E. (BJ) Goetz, Jr.
President & Chief Executive Officer
301-371-3055

John A. Scaldara, Jr.
Executive Vice President and Chief Financial Officer
301-371-3070

View original content to download multimedia:https://www.prnewswire.com/news-releases/community-heritage-financial-inc-repositions-investment-portfolio-302777811.html

SOURCE Community Heritage Financial, Inc.

FAQ

What balance sheet action did Community Heritage Financial (CMHF) announce on May 20, 2026?

Community Heritage Financial announced a strategic repositioning of its investment portfolio by selling lower-yielding securities. According to the company, it sold $73.3 million of investment securities and plans to reinvest $68.0 million of proceeds into higher-yielding, available-for-sale securities to enhance future earnings.

How will Community Heritage Financial’s CMHF portfolio repositioning affect future earnings?

The portfolio repositioning is expected to increase Community Heritage Financial’s earnings over time. According to the company, the new $68.0 million in higher-yield securities should add about $1.1 million to annualized net income and improve net interest margin by approximately 13 basis points.

What is the financial impact of Community Heritage Financial’s CMHF securities sale on book value?

The securities sale will reduce Community Heritage Financial’s equity and tangible book value. According to the company, shareholders’ equity will decline about $4.8 million and tangible book value is expected to fall roughly $1.64 per share after recognizing losses and mark-to-market adjustments.

How does the CMHF investment portfolio repositioning affect regulatory capital at Middletown Valley Bank?

Regulatory capital will decline but remain within well-capitalized levels. According to the company, the sale is expected to reduce the bank’s regulatory capital by approximately $3.9 million, while its overall regulatory capital position will continue to qualify as well-capitalized.

What loss and earn-back period does Community Heritage Financial project from the CMHF securities sale?

The company projects a manageable loss with a defined recovery horizon. According to the company, the sale generates an estimated $3.9 million after-tax loss, with an expected earn-back period of about 3.6 years through higher yields and improved net interest margin.

How will Community Heritage Financial’s CMHF transaction affect its tangible common equity ratio?

The transaction will modestly reduce the tangible common equity ratio. According to the company, the tangible common equity to tangible common assets ratio is expected to decline by around 42 basis points, reflecting the recognized loss and reclassification of certain securities to available-for-sale.