HV Bancorp, Inc. (the “Company”) (Nasdaq Capital Market: HVBC), the
holding company of Huntingdon Valley Bank (the “Bank”), reported
results for the Company for the quarter ended September 30, 2020.
At quarter end, the Company held total assets of $507.7
million (42.4% over prior year), total deposits of $371.1 million
(30.4% increase over prior year) and total equity of $37.2 million
(11.9% increase over prior year). Highlights in the quarter
include record growth in net earnings of 520% over the same period
in 2019 or $2.1 million, or $1.02 per basic and diluted share vs.
net earnings of $333,000, or $0.16 per basic and diluted share in
2019. For the nine months ended September 30, 2020, net
earnings increased 362% over the same period in 2019 or $3.7
million, or $1.82 per basic and diluted share vs. net income of
$803,000, $0.39 per basic and diluted share. For the quarter
end September 30, 2020, ROA and ROE totaled 1.84% and 26.81%,
respectively. Shareholders’ equity increased 11.9% from $33.3
million at September 30, 2019 to $37.2 million at September
30, 2020, which increased book value for the Company from $14.67
per share to $16.75 per share over this same period.
Travis J. Thompson, Esq., Chairman, President
& CEO, commented, “HVB’s historic record third quarter results
are the culmination of a vision shared across the organization that
a small community bank can outperform, given the proper strategic
initiatives and superior execution. The team at HVB believes
what they are doing matters and they approach their work with
dedication, and in light of Covid-19, extreme perseverance. I
could not be more proud of all our employees and what they have
accomplished for our customers, communities and shareholders.
I look forward to continuing to work with this wonderful
group of professionals as we continue to build out our vision of
bringing joy to our customers through banking.”
Finally, Mr. Thompson noted, “The pandemic’s
continued impact on our employees, customers and communities remain
at the forefront of our thoughts and actions. We continue to
monitor all loans to customers potentially at risk due to the
COVID-19 induced economic slowdown and have taken appropriate
measures to adjust our loan loss provisions accordingly. The
physical and financial health and safety of our bank, employees and
customers remain our highest priority.”
Highlights for the quarter and nine months ended
September 30, 2020 include:
- Net income for the quarter was up
520% to $2.1 million compared to $333,000 from the same period in
2019. For the nine months ended, net income was $3.7 million
compared to $803,000 in the same period in 2019, an increase of
362%.
- Book value per share increased from
$14.67 at September 30, 2019 to $16.75 at September 30, 2020.
- Total combined revenue, comprising
interest and non-interest income, for the quarter ended September
30, 2020 was $9.7 million, an increase of $4.4 million or 83.0%
versus the same period in 2019. For the nine months ended September
30, 2020, total interest and non-interest income was $22.2 million,
an increase of $8.4 million or 60.9% versus the same period in
2019.
- Net interest income increased
$744,000 and $1.4 million to $2.8 million and $7.5 million,
respectively for the three and nine months ended September 30, 2020
from $2.1 million and $6.1 million, respectively for the three and
nine months ended September 30, 2019.
- Non-interest income increased $4.0
million and $7.2 million to $6.2 million and $12.3 million,
respectively for the three and nine months ended September 30, 2020
from $2.2 million and $5.1 million, respectively for the three and
nine months ended September 30, 2019.
- The Bank continued the expansion of
its Mortgage Operations successfully hiring three experienced
originators and opening a new sales office in Mt. Laurel, NJ as we
continue to expand market share in the tri-state area.
- Improved Return On Assets (ROA)
& Return On Equity (ROE) of 1.84% and 26.81% for the quarter
and year to date ROA & ROE of 1.25% and 16.38%
respectively.
COVID-19 Update:
- Through participation in the SBA’s
Paycheck Protection Program (“PPP”), the Company processed over 450
applications from new and existing customers with an aggregate
outstanding balance of $75.7 million as of September 30, 2020.
- The Company utilized the Federal
Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”)
to fund a portion of PPP loans during the second and third quarter
of 2020. As of September 30, 2020, the Company had $57.7 million in
PPPLF advances outstanding.
- As of September 30, 2020, the
Company had accommodated 73 loan requests of payment deferrals for
certain borrowers that were impacted by COVID-19. As of September
30, 2020, there were a total of four remaining residential loans in
payment deferral with an outstanding balance of $1.8 million.
- The Company continues to monitor
its liquidity and capital. As of September 30, 2020, our capital
ratios exceeded “well- capitalized” requirements (see selected
consolidated financial data and other data). As of September 30,
2020, the Company maintained $47.1 million, or 9.3% of total
assets, of cash and cash equivalents and $144.8 million, or 28.5%
of total assets, of available borrowing capacity. The $144.8
million of available borrowing capacity consisted of unused
borrowing capacity of $122.7 million at the Federal Home Loan Bank
of Pittsburgh, (“FHLB”), $18.0 million of borrowing capacity with
the PPPLF, $3.0 million of borrowing capacity from the Atlantic
Community Bankers Bank and a $1.1 million line of credit at the
Federal Reserve Bank of Philadelphia.
Balance Sheet: September 30, 2020 compared to September
30, 2019
Total assets increased $151.1 million, or 42.4%, to $507.7
million at September 30, 2020, from $356.6 million at September 30,
2019. The growth in total assets was primarily due to increases of
$61.1 million in loans held for sale, $67.2 million in loans
receivable, $19.9 million in cash and cash equivalents offset by a
decrease of $3.6 million in available-for-sale securities. Included
in total assets at September 30, 2020 and 2019 are right-of-use
assets of $7.9 million and $5.8 million as part of the adoption of
ASU 2016-02, Leases (Topic 842).
Total liabilities increased $147.2 million, or
45.5%, to $470.5 million at September 30, 2020, from $323.3 million
at September 30, 2019. The increase in total liabilities was
primarily from a $57.7 million increase in advances from the PPPLF,
$86.5 million increase in deposits, $2.4 million in other
liabilities and $2.3 million in operating lease liabilities offset
by a $2.1 million decrease in securities sold under agreements to
repurchase. Deposits increased $86.5 million between September 30,
2020 and September 30, 2019 primarily as a result of a $103.6
million increase in our core deposits offset by $17.1 million
decrease in certificates of deposit. Our core deposits (consisting
of demand deposits, money market deposit accounts, passbook and
statement savings accounts, and checking accounts) increased $103.6
million, or 50.6%, to $308.3 million at September 30, 2020 from
$204.7 million at September 30, 2019. Offsetting this increase, was
a decrease of $17.1 million, or 21.4% in certificates of deposit to
$62.8 million at September 30, 2020 from $79.9 million at September
30, 2019. This decrease was primarily from a $24.0 million decrease
in certificates of deposit issued through a broker which have a
higher deposit cost offset by $6.9 million in retail growth.
Total shareholders’ equity increased $3.9
million, or 11.9%, to $37.2 million at September 30, 2020 compared
to $33.3 million at September 30, 2019 primarily due to net
income of $3.9 million.
Balance Sheet: September 30, 2020 compared to December
31, 2019
Total assets increased $153.1 million, or 43.2% to $507.7
million at September 30, 2020, from $354.6 million at December 31,
2019. The growth in total assets was primarily due to increases of
$62.2 million in loans held for sale, $60.8 million in loans
receivable, $26.5 million in cash and cash equivalents, $2.6
million in the mortgage banking derivatives and $1.9 million in the
operating lease right-of-use asset offset by a decrease of $3.2
million in available-for-sale investment securities.
Total liabilities increased $149.5 million, or
46.6%, to $470.5 million at September 30, 2020, from $321.0 million
at December 31, 2019. The increase in total liabilities was
primarily from an $87.3 million increase in deposit, $57.7 million
increase in advances from the PPPLF, $2.1 million increase in
operating lease liabilities and $2.8 million increase in other
liabilities. Deposits increased because of our core deposits
(consisting of demand deposits, money market deposit accounts,
passbook and statement savings accounts, and checking accounts)
which increased $92.8 million, or 43.1%, to $308.3 million at
September 30, 2020 from $215.5 million at December 31, 2019.
Offsetting this increase, was a decrease of $5.5 million, or 8.1%
in certificates of deposit to $62.8 million at September 30, 2020
from $68.3 million at December 31, 2019. This decrease in
certificates of deposit was primarily from a $12.5 million decrease
in certificates of deposit issued through a broker offset by retail
growth of $7.0 million.
Total shareholders’ equity increased $3.6
million, or 10.7% to $37.2 million at September 30, 2020 compared
to $33.6 million at December 31, 2019 primarily due to net
income of $3.7 million.
Income Statement: September 30, 2020
compared to September 30, 2019
Net Interest Income:
Net interest income increased $744,000 to $2.8
million for the quarter ended September 30, 2020, from $2.1 million
for quarter ended September 30, 2019. The increase reflected a
$21.2 million increase in our net interest-earning assets, which
increased to $67.5 million for the quarter ended September 30, 2020
from $46.3 million for the quarter ended September 30, 2019. Net
interest income increased $1.4 million to $7.5 million for the nine
months ended September 30, 2020 from $6.1 million for nine months
ended September 30, 2019. Our net interest-earning assets increased
$17.3 million to $61.3 million for the nine months ended September
30, 2020 from $44.0 million for the nine months ended September 30,
2019.
Provision for loan losses:
Provision for loan losses increased by $180,000
to $424,000 for the quarter ended September 30, 2020 from $244,000
during the quarter ended September 30, 2019 primarily as result of
net charge-offs of $360,000 related to certain medical education
loans during the three months ended September 30, 2020. During the
quarter ended September 30, 2019, we recorded net charge-offs of
$92,000. Provision for loan losses increased by $213,000 to
$985,000 for the nine months ended September 30, 2020 from $772,000
during the nine months ended September 30, 2019. During the nine
months ended September 30, 2020, total charge-offs of $514,000
recorded and $1,000 of recoveries were received compared to total
charge-offs of $398,000 were recorded and $4,000 of recoveries were
received during the nine months ended September 30, 2019. Due to
continued uncertainty of the economic conditions resulting from the
COVID-19 pandemic, the Company increased the qualitative factors in
the calculation of the allowance for loan losses. The Company will
continue to monitor and additional adjustment to the allowance for
loan losses may be necessary.
Non-Interest Income:
Non-interest income was $6.2 million and $12.3
million for the quarter and nine months ended September 30, 2020,
respectively, compared to $2.2 million and $5.1 million for the
same periods in 2019. The increase in non-interest income of $4.0
million to $6.2 million for the quarter ended September 30, 2020
compared to $2.2 million for the same period in 2019 was primarily
due to $1.9 million in change in fair value of loans held for sale,
$1.3 million increase in the gain on sale of loans, net, and an
$838,000 increase on gain on derivative instruments. The increase
in non-interest income of $7.2 million to $12.3 million for the
nine months ended September 30, 2020 from $5.1 million for the nine
months ended September 30, 2019 was primarily a $4.0 million
increase in the gain on sale of loans, net, $1.9 million in change
in fair value of loans held for sale, and an $1.1 million increase
on gain on derivative instruments.
Non-Interest Expense:
Total non-interest expense increased $2.1
million, or 59.4%, to $5.7 million for the quarter ended September
30, 2020 from $3.6 million for the quarter ended September 30, 2019
and increased $4.3 million, or 44.5%, to $13.7 million for the nine
months ended September 30, 2020 from $9.4 million for the nine
months ended September 30, 2019. The increase for the three months
ended September 30, 2020, compared to the three months of September
30, 2019, was primarily as a result of an increase of $1.5 million
in salaries and employee benefits, $405,000 in other expenses and
$117,000 in data processing related operations costs. Salaries and
employee benefits increased as full time equivalent (FTE) employees
increased to 118 as of September 30, 2020 from 95 as of September
30, 2019 primarily as a result of the expansion of the Company’s
lending and business banking operations. For the nine months ended
September 30, 2020, the increase was primarily a result of
additional salaries and employee benefits of $2.8 million, $856,000
in other expenses and $216,000 in data processing related
operations costs.
Income Taxes:
Income tax expense was $785,000 and $1.4 million
for the quarter and nine months ended September 30, 2020,
respectively, compared to $101,000 and $203,000 during the quarter
and nine months ended September 30, 2019. The increase in income
tax expense for the quarter and nine months ended September 30,
2020, respectively compared to the same periods a year ago
reflected an increase in income before taxes.
Net Income & Book
Value:
Net income increased $1.7 million to $2.1
million, or approximately $1.02 per basic and diluted share for the
quarter ended September 30, 2020, as compared to $333,000, or
approximately $0.16 cents per basic and diluted share for the
quarter ended September 30, 2019. Net income increased $2.9 million
to $3.7 million, or approximately $1.82 per basic and diluted share
for the nine months ended September 30, 2020, as compared to
$803,000, or approximately $0.39 cents per basic and diluted share
for the nine months ended September 30, 2019. Book value per share
increased from $14.67 at September 30, 2019 to $16.75 at September
30, 2020.
Asset quality:
At September 30, 2020, the Company’s
non-performing assets totaled $2.3 million, or 0.44% of total
assets compared to $3.7 million or 1.04% at December 31, 2019.
Non-performing assets decreased primarily because of $736,000
decrease in one-to-four family residential real estate loans,
$441,000 decrease in medical education loans and $269,000 decrease
in home equity and HELOCs loans compared to December 31, 2019.
There were no non-accruing troubled debt restructurings at
September 30, 2020 and December 31, 2019.
The allowance for loan losses totaled $1.9
million, or 0.71% of total loans and 84.5% of total non-performing
loans at September 30, 2020 as compared to $1.4 million, or 0.56%
of total loans and 38.8% of total non-performing loans at December
31, 2019.
About HV Bancorp, Inc.
HV Bancorp, Inc. (Nasdaq Capital Market: HVBC)
is a bank holding company headquartered in Doylestown, PA. Through
its wholly owned subsidiary Huntingdon Valley Bank, we primarily
serve communities located in Montgomery, Bucks and Philadelphia
Counties in Pennsylvania, New Castle County in Delaware, and
Burlington County in New Jersey from our executive office, six full
service bank offices and one limited service bank office. We also
operate four loan production offices in our geographical
footprint.
Forward-Looking StatementsCertain 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, the negative impact of severe wide-ranging
and continuing disruptions caused by the spread of coronavirus
COVID-19 on current operations, customers and the economy in
general, changes in interest rate environment, increases in
nonperforming loans, 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 event.
|
Selected Consolidated Financial and Other
Data |
|
|
At September 30, 2020 |
|
|
At December 31, 2019 |
|
|
At September 30, 2019 |
(In
thousands) |
Unaudited |
|
|
Unaudited |
|
|
Unaudited |
Financial Condition Data: |
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
507,739 |
|
|
$ |
354,586 |
|
|
$ |
356,559 |
Cash and cash equivalents |
|
47,126 |
|
|
|
20,625 |
|
|
|
27,255 |
Investment securities
available-for-sale, at fair value |
|
17,961 |
|
|
|
21,156 |
|
|
|
21,588 |
Equity securities |
|
500 |
|
|
|
500 |
|
|
|
500 |
Loans held for sale at fair
value |
|
100,101 |
|
|
|
37,876 |
|
|
|
39,013 |
Loans receivable, net |
|
315,823 |
|
|
|
255,032 |
|
|
|
248,581 |
Deposits |
|
371,116 |
|
|
|
283,767 |
|
|
|
284,576 |
Federal Home Loan Bank
advances |
|
26,228 |
|
|
|
27,000 |
|
|
|
27,000 |
Federal Reserve's PPPLF
advances |
|
57,714 |
|
|
|
— |
|
|
|
— |
Securities sold under
agreements to repurchase |
|
— |
|
|
|
— |
|
|
|
2,104 |
Total liabilities |
|
470,504 |
|
|
|
320,987 |
|
|
|
323,275 |
Total shareholders’
equity |
|
37,235 |
|
|
|
33,599 |
|
|
|
33,284 |
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands except
per share data) |
|
(Unaudited) |
|
(Unaudited) |
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
3,539 |
|
$ |
3,111 |
|
$ |
9,893 |
|
$ |
8,698 |
Interest expense |
|
|
720 |
|
|
1,036 |
|
|
2,411 |
|
|
2,609 |
Net interest income |
|
|
2,819 |
|
|
2,075 |
|
|
7,482 |
|
|
6,089 |
Provision for loan losses |
|
|
424 |
|
|
244 |
|
|
985 |
|
|
772 |
Net interest income after
provision for loan losses |
|
|
2,395 |
|
|
1,831 |
|
|
6,497 |
|
|
5,317 |
Gain on sale of loans,
net |
|
|
3,044 |
|
|
1,680 |
|
|
7,000 |
|
|
2,977 |
Other non-interest income |
|
|
3,151 |
|
|
525 |
|
|
5,284 |
|
|
2,158 |
Non-interest income |
|
|
6,195 |
|
|
2,205 |
|
|
12,284 |
|
|
5,135 |
Non-interest expense |
|
|
5,742 |
|
|
3,602 |
|
|
13,650 |
|
|
9,446 |
Income before income
taxes |
|
|
2,848 |
|
|
434 |
|
|
5,131 |
|
|
1,006 |
Income tax expense |
|
|
785 |
|
|
101 |
|
|
1,423 |
|
|
203 |
Net income |
|
$ |
2,063 |
|
$ |
333 |
|
$ |
3,708 |
|
$ |
803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share-Basic |
|
$ |
1.02 |
|
$ |
0.16 |
|
$ |
1.82 |
|
$ |
0.39 |
Earnings per share
-Diluted |
|
$ |
1.02 |
|
$ |
0.16 |
|
$ |
1.82 |
|
$ |
0.39 |
Dividends Declared per
share |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
Average common shares
outstanding- Basic |
|
|
2,026,875 |
|
|
2,044,303 |
|
|
2,039,106 |
|
|
2,038,799 |
Average common shares
outstanding- Diluted |
|
|
2,026,875 |
|
|
2,044,303 |
|
|
2,039,106 |
|
|
2,043,470 |
Shares outstanding end of
period |
|
|
2,222,802 |
|
|
2,268,917 |
|
|
2,222,802 |
|
|
2,268,917 |
Book value per share |
|
$ |
16.75 |
|
$ |
14.67 |
|
$ |
16.75 |
|
$ |
14.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
Performance Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets(1) |
|
1.84 |
|
% |
0.39 |
|
% |
1.25 |
|
% |
0.33 |
|
% |
Return on average
equity(1) |
|
26.81 |
|
|
4.12 |
|
|
16.38 |
|
|
3.36 |
|
|
Interest rate spread (2) |
|
2.51 |
|
|
2.31 |
|
|
2.47 |
|
|
2.41 |
|
|
Net interest margin (3) |
|
2.63 |
|
|
2.52 |
|
|
2.64 |
|
|
2.59 |
|
|
Efficiency ratio (4) |
|
63.70 |
|
|
84.16 |
|
|
69.06 |
|
|
84.16 |
|
|
Average interest-earning
assets to average interest-bearing liabilities |
|
118.72 |
|
|
116.37 |
|
|
119.33 |
|
|
116.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Ratios
(5): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing assets as a
percent of total assets |
|
0.44 |
|
% |
1.00 |
|
% |
0.44 |
|
% |
1.00 |
|
% |
Non-performing loans as a
percent of total loans |
|
0.71 |
|
|
1.43 |
|
|
0.71 |
|
|
1.43 |
|
|
Allowance for loan losses as a
percent of non-performing loans |
|
84.54 |
|
|
37.55 |
|
|
84.54 |
|
|
37.55 |
|
|
Allowance for loan losses as a
percent of total loans |
|
0.60 |
|
|
0.54 |
|
|
0.60 |
|
|
0.54 |
|
|
Net charge-offs to average
outstanding loans during the period |
|
0.12 |
|
|
0.04 |
|
|
0.18 |
|
|
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios:
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital
(to risk weighted assets) |
|
12.22 |
|
% |
15.25 |
|
% |
12.22 |
|
% |
15.25 |
|
% |
Tier 1 leverage (core) capital
(to adjusted tangible assets) |
|
8.36 |
|
|
8.61 |
|
|
8.36 |
|
|
8.61 |
|
|
Tier 1 risk-based capital (to
risk weighted assets) |
|
12.22 |
|
|
15.25 |
|
|
12.22 |
|
|
15.25 |
|
|
Total risk-based capital (to
risk weighted assets) |
|
12.91 |
|
|
15.94 |
|
|
12.91 |
|
|
15.94 |
|
|
Average equity to average
total assets (7) |
|
6.88 |
|
|
9.48 |
|
|
7.61 |
|
|
9.83 |
|
|
__________________ |
(1)
Annualized for the three and nine months ended September 30, 2020
and 2019. |
(2)
Represents the difference between the weighted-average yield on
interest-earning assets and the weighted-average cost of
interest-bearing liabilities for the period. |
(3) The net
interest margin represents net interest income as a percent of
average interest-earning assets for the period. |
(4) The
efficiency ratio represents non-interest expense dividend by the
sum of the net interest income and non-interest income. |
(5)
Asset quality ratios are end of period ratios. |
(6) Capital
ratios are for Huntingdon Valley Bank. |
(7)
Represents consolidated average equity to average total
assets. |
|
Contact: Joseph C. O’Neill, Jr.,EVP/ Chief Financial
Officer(267) 280-4000
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