Community Heritage Financial, Inc. Reports Financial Results for the Second Quarter of 2026

Community Heritage Financial, Inc. (the "Company" or "CHF") (OTC: CMHF), the parent company of Middletown Valley Bank ("MVB" or the "Bank"), reported a net loss of $1.1 million, or ($0.37) per diluted common share, for the quarter ended June 30, 2026 and net income of $1.8 million, or $0.59 per diluted common share, for the six months ended June 30, 2026, reflecting the impact of a strategic securities portfolio repositioning completed during the quarter. On May 18, 2026, the Bank executed an investment portfolio repositioning strategy to strengthen the balance sheet, increase future earnings, and enhance shareholder value. The Bank sold securities classified as both available-for-sale ("AFS") and held-to-maturity ("HTM") with an amortized cost balance of $77.3 million and a weighted average yield of 2.73%. The sale of the securities resulted in a pre-tax loss of $5.4 million ($3.9 million after-tax loss), which was recognized in the second quarter of 2026. HTM securities not sold were reclassified to AFS on the transaction date. As of June 30, 2026, the Bank had reinvested $57.0 million of the transaction's $68.3 million proceeds. The Bank intends to reinvest the remaining proceeds prior to the end of the third quarter of 2026 and estimates a weighted average tax-equivalent yield associated with the fully invested proceeds of 5.10%. Also, during the second quarter of 2026, several senior officers of the Bank retired and one-time severance and other benefit costs totaling $337 thousand were incurred. The following table presents selected comparative operating performance measurements for the periods indicated, with the operating performance measurements for the periods ended June 30, 2026 adjusted to exclude the impact of the loss incurred on the sale of securities and the retirement costs 1 : Three Months Ended Six Months Ended 6/30/2026 1 3/31/2026 6/30/2025 6/30/2026 1 6/30/2025 Net income $ 3,018,455 $ 2,852,249 $ 2,468,004 $ 5,870,704 $ 4,350,640 Noninterest income $ 1,200,957 $ 831,316 $ 1,093,184 $ 2,032,273 $ 1,875,501 Noninterest expense $ 7,272,279 $ 7,071,907 $ 6,417,134 $ 14,344,186 $ 12,896,376 Provision for credit losses $ 394,791 $ (77,299) $ 148,330 $ 317,492 $ 396,888 Earnings per common share: Basic $ 1.02 $ 0.97 $ 0.84 $ 2.00 $ 1.49 Diluted $ 1.02 $ 0.97 $ 0.84 $ 1.98 $ 1.48 Annualized return on average assets 1.05 % 1.02 % 0.92 % 1.04 % 0.83 % Annualized return on average equity 13.24 % 12.71 % 11.93 % 12.98 % 10.73 % 1 Financial measures are calculated using methods other than those prescribed by generally accepted accounting principles ("GAAP"). Refer to "Reconciliations of non-GAAP Financial Measures" at the end of the press release. Net Income (Loss) The Company recorded a net loss of $1.1 million for the three months ended June 30, 2026 as a result of the loss on the sale of securities of $5.4 million previously mentioned. Net income, as adjusted 1 , totaled $3.0 million, or $1.02 per diluted common share, for the three months ended June 30, 2026 compared to $2.9 million, or $0.97 per diluted common share, for the three months ended March 31, 2026 and $2.5 million, or $0.84 per diluted common share, for the three months ended June 30, 2025. For the six months ended June 30, 2026, net income, as adjusted 1 , totaled $5.9 million, or $1.98 per diluted common share, compared to the $4.4 million, or $1.48 per diluted common share, for the same period in 2025, representing an increase of 34.9%. Net Interest Income Net interest income totaled $10.6 million during the three months ended June 30, 2026, compared to $10.0 million for the three months ended March 31, 2026 and $8.8 million for the three months ended June 30, 2025. On a quarterly basis, the net interest margin (the "NIM") increased from 3.37% during the second quarter of 2025 to 3.56% during the fourth quarter of 2025, and to 3.67% and 3.78% during the first and second quarters of 2026, respectively.