HV Bancorp, Inc. (the “Company”) (NASDAQ:HVBC), the holding company
of Huntingdon Valley Bank (the “Bank”), reported net income of
$179,000 ($0.08 per basic share) for the quarter ended June 30,
2017 versus net income of $496,000 for the quarter ended June 30,
2016. The Company reported net income of $569,000 ($0.56 per basic
share) for the year ended June 30, 2017 versus net income of $1.0
million for the year ended June 30, 2016.
Net interest income increased $46,000 to
$1,262,000 for the three months ended June 30, 2017 as compared to
$1,216,000 for the three months ended June 30, 2016. The
increase was a result of an increase in our net interest-earning
assets which increased to $36.3 million for the three months ended
June 30, 2017 from $15.2 million for the three months ended June
30, 2016. For the year ended June 30, 2017, net interest income
increased $287,000 to $4.8 million compared to $4.6 million for the
year ended June 30, 2016. The increase was a result of an increase
in the net interest-earning assets to $22.3 million for the year
ended June 30, 2017 from $12.6 million for the year ended June 30,
2016. This increase in net interest-earning assets for the three
months and the year ended June 30, 2017 was primarily due to the
growth in our loan and investment portfolios funded by the new
capital received from the conversion of the Bank from the mutual to
the stock form of organization. Our net interest spread decreased
59 and 39 basis points to 2.35% and 2.46% for the three months and
year ended June 30, 2017 from 2.94% and 2.85% for the three months
and year ended June 30, 2016. Our net interest margin decreased by
54 and 38 basis points to 2.45% and 2.52% for the three months and
year ended June 30, 2017 from 2.99% and 2.90% for the three months
and year ended June 30, 2016 as the increase in average interest
earning assets occurred primarily in the lower yielding interest
earning cash and cash equivalents.
Provision for loan losses increased by $51,000
to $78,000 for the three months ended June 30, 2017, from $27,000
for the three months ended June 30, 2016. This increase was
primarily due to provision expense associated with increased loan
volume and increased general reserves due to changes in the
portfolio mix. Net recoveries of $3,000 were recorded during the
three months ended June 30, 2017 compared to net charge-offs of
$35,000 recorded for the three months ended June 30, 2016.
Provision for loan losses increased by $192,000 to $201,000 for the
year ended June 30, 2017, from $9,000 for the year ended June 30,
2016 primarily as the result of a home equity loan charge-off of
$125,000 and an increase in loans outstanding of $18.4 million
during the year ended June 30, 2017. During the year ended June 30,
2017 and 2016, net charge-offs of $99,000 and $36,000 were
recorded.
Non-interest income decreased $538,000 to $1.4
million for the three months ended June 30, 2017 and decreased
$416,000 to $4.9 million for the year ended June 30, 2017 as
compared to the same periods in 2016. The decrease was primarily
due to a decrease in the income from hedging instruments associated
with the loans held for sale which decreased by $304,000 and
$841,000 for the three months and year ended June 30, 2017,
respectively, as compared to the same periods in 2016 due to less
favorable interest rate environments and decreased volumes of
locked loans for both periods. Additionally, the fair value
of loans held for sale decreased by $298,000 and $962,000 for the
three months and year ended June 30, 2017, respectively, compared
to the same periods in 2016. These two decreases were
partially offset by an increase in the gain on loans held for sale
of $69,000 and $1.4 million for the three months and year ended
June 30, 2017, respectively, compared to the same periods in 2016,
which increased the gain on loans held for sale to $1.1 million and
$5.5 million for the three months and year ended June 30, 2017. The
losses incurred on the hedging instruments are offset by the
increased value of the mark-to-market of loans when committed to
the investor in the secondary market and is ultimately realized
upon the sale of the loan.
Total non-interest expense remained flat at $2.3
million for the three months ended June 30, 2017 and 2016 and
increased to $8.8 million for the year ended June 30, 2017 from
$8.4 million for the year ended June 30, 2016. The increase
during the year ended June 30, 2017 was primarily due to a $352,000
increase in salaries and employee benefits as full time equivalent
employees increased from 65 at June 30, 2016 to 74 at June 30,
2017. In addition, professional and other expenses increased by
$301,000 during the year ended June 30, 2017 as we incurred
additional professional fees of $95,000 as a result of ongoing
compliance associated with being publicly traded as well as
consulting fees of $77,000 for investing in rebranding of the Bank
as part of our growth plan.
Income tax expense was $75,000 and $195,000 for
the three months and year ended June 30, 2017 compared to
$303,000 and $525,000 during the same periods in 2016. Effective
tax rates were 29.5% and 37.9% for the three months ended June 30,
2017 and 2016, respectively and 25.5% and 33.8% for the years ended
June 30, 2017 and 2016, respectively. Due to the increase in
municipal tax free bonds during the three months and year ended
June 30, 2017, income tax expense was reduced which caused lower
effective tax rates for the three months and year ended June 30,
2017 when compared to the same periods in 2016.
Total assets increased $34.8 million, or 19.1%,
to $216.8 million at June 30, 2017 from $182.0 million at June 30,
2016. The increase was primarily the result of increases of $18.4
million in loans receivable, which was primarily the result of a
$16.6 million increase in residential one-to four family loans
which was primarily from our new correspondent lending channel
which originated loans of $9.7 million during 2017. In addition,
investment securities increased by $15.5 million and cash and cash
equivalents increased by $13.2 million which was partially offset
by a decrease of $11.9 million in loans held for sale during the
year ended June 30, 2017.
Total liabilities increased $16.3 million, or
9.6%, to $185.3 million at June 30, 2017 from $169.1 million at
June 30, 2016. The increase was primarily the result of an increase
of $28.7 million in deposits as core deposits (consisting of NOW,
money market, passbook, statement and checking accounts) increased
by $38.3 million primarily from the introduction of a new demand
product attracting clients of local CPA firms, totaling $23.3
million at June 30, 2017. Our core deposits comprised 84% of our
total deposits at June 30, 2017 compared to 74% at June 30, 2016.
Offsetting the increase in core deposits was a decrease of $9.6
million in certificates of deposit which was primarily due to the
Bank’s allowing higher costing certificates of deposit held by
credit unions and banks (through deposit listing services) to
mature without renewing. Partially offsetting the total
liabilities increase of $16.3 million was a decrease of $11.0
million in advances from the Federal Home Loan Bank and a $1.0
million decrease in securities sold under agreements to
repurchase.
Total shareholders’ equity increased $18.5
million to $31.4 million at June 30, 2017 compared to $13.0 million
at June 30, 2016 as a result of the issuance of the Company’s
common stock which increased equity by $20.4 million in January
2017, and net income for the year ended June 30, 2017 of $569,000.
These increases in shareholders’ equity were partially offset by
repurchases of ESOP shares of $2.4 million, established as part of
the creation of the Huntingdon Valley Bank Employee Stock Ownership
Plan.
Travis J. Thompson, President and CEO and
Chairman of the Board commented on the Company’s 2017 year end as
follows:
“While the net-income results are less than
satisfactory to our management team we understand the driving
forces behind this result. The mutual-to-stock conversion required
investing some of our profits in new talented hires, rebranding the
Bank for growth opportunities and absorbing additional professional
fees and loan loss reserves associated with the Bank’s asset growth
and proper capital deployment. We remain committed to our business
strategy of growing the Bank’s earning assets in a methodical and
prudent manner.”
HV Bancorp. Inc., a Pennsylvania Corporation, is the holding
company for Huntingdon Valley Bank, a community bank located in
suburban Philadelphia, which has provided consumer and commercial
banking services since 1871. We currently operate
four full-service locations in Bucks, Montgomery and Philadelphia
counties, Pennsylvania.
Certain statements contained herein are "forward looking
statements" within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Such forward looking statements may be identified by reference to a
future period or periods, or by the use of forward looking
terminology, such as "may," "will," "believe," "expect,"
"estimate," "anticipate," "continue," or similar terms or
variations on those terms, or the negative of those
terms. Such forward-looking statements are subject to risk and
uncertainties described in our SEC filings, which could cause
actual results to differ materially from those currently
anticipated due to a number of factors, which include, but are not
limited to, changes in interest rate environment, changes in
economic conditions, legislative and regulatory changes that
adversely affect the business of the Company and the Bank, and
changes in the securities markets. Except as required by law, the
Company does not undertake any obligation to update any
forward-looking statements to reflect changes in belief,
expectations or events.
|
|
At June 30, |
|
At June 30, |
|
|
|
2017 |
|
|
2016 |
(In thousands
except per share data) |
|
|
|
|
Financial
Condition Data: |
|
|
|
|
Total assets |
|
$ |
216,765 |
|
$ |
182,023 |
Cash and cash
equivalents |
|
|
28,577 |
|
|
15,427 |
Investment securities
available-for-sale, at fair value |
|
|
43,820 |
|
|
33,281 |
Investment securities
held-to-maturity |
|
|
10,809 |
|
|
5,825 |
Loans held for sale at
fair value |
|
|
12,784 |
|
|
24,676 |
Loans receivable,
net |
|
|
111,811 |
|
|
93,450 |
Deposits |
|
|
170,481 |
|
|
141,771 |
Federal Home Loan Bank
advances |
|
|
9,000 |
|
|
20,000 |
Securities sold under
agreements to repurchase |
|
|
2,883 |
|
|
3,929 |
Total
liabilities |
|
|
185,324 |
|
|
169,052 |
Total shareholders’
equity |
|
|
31,441 |
|
|
12,971 |
|
|
For the Three Months Ended
June 30, |
|
For the Year
EndedJune 30, |
|
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
|
2016 |
|
(In thousands
except per share data) |
|
|
|
|
|
Operating
Data: |
|
|
|
|
|
|
|
Interest income |
|
$ |
1,497 |
$ |
1,402 |
|
$ |
5,734 |
|
$ |
5,302 |
|
Interest expense |
|
|
235 |
|
186 |
|
|
891 |
|
|
746 |
|
Net
interest income |
|
|
1,262 |
|
1,216 |
|
|
4,843 |
|
|
4,556 |
|
Provision for loan
losses |
|
|
78 |
|
27 |
|
|
201 |
|
|
9 |
|
Net interest income
after provision for loan losses |
|
|
1,184 |
|
1,189 |
|
|
4,642 |
|
|
4,547 |
|
Gain on sale of loans,
net |
|
|
1,066 |
|
997 |
|
|
5,515 |
|
|
4,116 |
|
Other non-interest
income (loss) |
|
|
336 |
|
943 |
|
|
(573 |
) |
|
1,242 |
|
Non-interest income |
|
|
1,402 |
|
1,940 |
|
|
4,942 |
|
|
5,358 |
|
Non-interest
expense |
|
|
2,332 |
|
2,330 |
|
|
8,820 |
|
|
8,354 |
|
Income before income
taxes |
|
|
254 |
|
799 |
|
|
764 |
|
|
1,551 |
|
Income tax expense |
|
|
75 |
|
303 |
|
|
195 |
|
|
525 |
|
Net income |
|
$ |
179 |
$ |
496 |
|
$ |
569 |
|
$ |
1,026 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share |
|
$ |
0.08 |
N/A |
|
$ |
0.56 |
|
N/A |
|
Average Shares
Outstanding |
|
|
2,182,125 |
N/A |
|
|
1,010,354 |
|
N/A |
|
|
|
At or For the Three Months
EndedJune 30, |
|
At or For the Year
EndedJune 30, |
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
Performance
Ratios: |
|
|
|
|
|
|
Return on average
assets |
|
0.33 |
% |
1.16 |
% |
|
0.28 |
% |
0.62 |
% |
Return on average
equity |
|
2.32 |
|
16.58 |
|
|
2.72 |
|
8.69 |
|
Interest rate spread
(1) |
|
2.35 |
|
2.94 |
|
|
2.46 |
|
2.85 |
|
Net interest margin
(2) |
|
2.45 |
|
2.99 |
|
|
2.52 |
|
2.90 |
|
Efficiency ratio
(3) |
|
87.54 |
|
73.83 |
|
|
90.14 |
|
84.26 |
|
Average
interest-earning assets to average interest- bearing
liabilities |
|
121.32 |
|
110.28 |
|
|
113.16 |
|
108.72 |
|
|
|
|
|
|
|
|
Asset Quality
Ratios: |
|
|
|
|
|
|
Non-performing assets
as a percent of total assets |
|
0.65 |
% |
0.69 |
% |
|
0.65 |
% |
0.69 |
% |
Non-performing loans as
a percent of total loans |
|
1.26 |
|
1.23 |
|
|
1.26 |
|
1.23 |
|
Allowance for loan
losses as a percent of non-performing loans |
|
42.15 |
|
42.53 |
|
|
42.15 |
|
42.53 |
|
Allowance for loan
losses as a percent of total loans |
|
0.53 |
|
0.52 |
|
|
0.53 |
|
0.52 |
|
Net charge-offs to
average outstanding loans during the period (4) |
|
0.00 |
|
0.03 |
|
|
0.09 |
|
0.04 |
|
|
|
|
|
|
|
|
Capital Ratios:
(5) |
|
|
|
|
|
|
Common equity tier 1
capital (to risk weighted assets) |
|
21.21 |
% |
12.04 |
% |
|
21.21 |
% |
12.04 |
% |
Tier 1 leverage (core)
capital (to adjusted tangible assets) |
|
11.23 |
|
7.63 |
|
|
11.23 |
|
7.63 |
|
Tier 1 risk-based
capital (to risk weighted assets) |
|
21.21 |
|
12.04 |
|
|
21.21 |
|
12.04 |
|
Total risk-based
capital (to risk weighted assets) |
|
21.75 |
|
12.49 |
|
|
21.75 |
|
12.49 |
|
Average equity to
average total assets |
|
14.39 |
|
7.03 |
|
|
10.39 |
|
7.10 |
|
_______________________
(1) Represents the difference between the weighted-average yield
on interest-earning assets and the weighted-average cost of
interest-bearing liabilities for the period.(2) The net interest
margin represents net interest income as a percent of average
interest-earning assets for the period.(3) The efficiency ratio
represents non-interest expense divided by the sum of net interest
income and non-interest income.(4) Includes loans held for sale.(5)
Capital ratios are for Huntingdon Valley Bank.
CONTACT:
Joseph C. O’Neill, Jr.
Executive Vice President and Chief Financial Officer
(267) 280-4000 ext. 6232
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