HV Bancorp, Inc. (the “Company” or “HVB”) (Nasdaq Capital Market:
HVBC), the holding company of Huntingdon Valley Bank (the “Bank”),
reported operating results for the Company for the year ended
December 31, 2022. Net income for the year ended December 31, 2022,
was $2.2 million ($1.12 per basic share and $1.06 per diluted
share) versus net income of $4.1 million ($2.04 per basic share and
$1.98 per diluted share), for the year ended December 31, 2021. For
2022, net interest income increased to $18.8 million and net
interest margin continues to improve, increasing to 3.42% for the
year ended December 31, 2022 compared to 2021.
Travis J. Thompson, Esq., Chairman & CEO,
commented, “We are pleased to announce our business banking
initiative continues to grow with net interest income increasing
30% year over year, all while expanding our net interest margin 25%
over that same period. This additional income helped off-set the
cyclical nature of our non-interest income, which is currently
lower due to the declining mortgage market, and also off-set the
one-time merger expenses booked in the 4th quarter of 2022.”
Additionally, Mr. Thompson stated, “We are
further pleased to report that HV Bancorp, Inc. has received
shareholder approval at our February 15th, 2023 Special Meeting to
move forward with the planned merger with FCCB. Our shareholders
voted overwhelmingly in favor of the merger with greater than 99%
of the votes cast voting in favor of the proposed transaction.”
As previously announced, on October 18, 2022,
the Company, the Bank, Citizens Financial Services, Inc. (“Citizens
Financial”), First Citizens Community Bank (“FCCB”) and CZFS
Acquisition Company, LLC entered into a merger agreement that
provides that the Company will merge with and into Citizens
Financial, with Citizens Financial remaining as the surviving
corporation (the “Merger”). Following the Merger, the Bank will
merge with and into FCCB, with FCCB remaining as the surviving
bank.
At the effective time of the Merger, each
outstanding share of Company common stock will be converted into
the right to receive, at the election of such holder, either (i)
0.4000 shares of Citizens Financial common stock, or (ii) $30.50 in
cash, together with cash in lieu of fractional shares, if any. All
such elections are subject to adjustment on a pro rata basis, so
that 80% of the aggregate merger consideration paid to the Company
shareholders will be the stock consideration and the remaining 20%
will be the cash consideration.
The Merger is expected to be completed in the
first half of 2023.
Highlights for the year ended December 31, 2022
include:
- For 2022, net interest income was
$18.8 million compared to $14.5 million in 2021, an increase of
30.0%.
- Net interest margin continues to
improve, increasing from 2.57% for the year ended December 31,
2021, to 3.42% for the year ended December 31, 2022.
- Non-interest income decreased by
$5.5 million for the year ended December 31, 2022 from 2021 as a
result of $8.4 million in decreased gain on sale of mortgage loans
from reduced origination volume, which was the result of the rising
interest rate environment combined with limited housing inventory.
Offsetting the decrease in gains on sale of loans for the year
ended December 31, 2022 was a $1.0 million gain on sale of mortgage
servicing rights, net.
- Asset quality improved as
non-performing loans decreased to $3.1 million, or 0.64% of total
loans, at December 31, 2022 from $3.8 million, or 1.14% of total
loans, at December 31, 2021.
Balance Sheet: December 31, 2022, compared to December
31, 2021
Total assets increased $55.7 million to $615.8
million at December 31, 2022, from $560.1 million at December 31,
2021. The increase was primarily the result of increases of $143.8
million in loans receivable, net, $40.9 million in investment
securities, $3.7 million in bank-owned life insurance and $1.1
million in other assets, which were offset by decreases of $104.5
million in cash and cash equivalents, $25.3 million in loans
held-for-sale and $3.2 million in mortgage servicing rights. During
the quarter ended June 30, 2022, the Company transferred
available-for-sale securities to the held-to maturity category with
an amortized cost of approximately $29.8 million at December 31,
2022.
Total liabilities increased $56.2 million to
$573.7 million at December 31, 2022, from $517.5 million at
December 31, 2021. The increase in total liabilities was primarily
from a $61.2 million net increase in deposits offset by decreases
of $3.1 million in advances from the Federal Reserve's Paycheck
Protection Program liquidity facility ("PPPLF"), $1.4 million in
other liabilities and $796,000 in the operating lease liabilities.
Deposits increased $61.2 million to $525.2 million at December 31,
2022, from $464.0 million at December 31, 2021. Our core deposits
(consisting of demand deposits, money market, passbook and
statement and checking accounts) increased $26.4 million to $458.2
million at December 31, 2022 from $431.8 million at December 31,
2021. Certificates of deposit increased $34.8 million to $67.0
million at December 31, 2022 from $32.2 million at December 31,
2021.
Total shareholders’ equity decreased $543,000 to
$42.1 million at December 31, 2022, compared to $42.6 million
at December 31, 2021. This decrease was primarily because of
comprehensive losses of $3.1 million due to the fair value
adjustments, net of deferred tax, on the investment securities
available-for-sale portfolio, which reflects recent increases in
market interest rates and $372,000 in treasury stock repurchases
primarily as part of the stock repurchase plan. Offsetting these
decreases was net income of $2.2 million for the year ended
December 31, 2022, share based compensation expense of $535,000,
ESOP shares committed to be released of $46,000 and a stock option
exercise of $136,000.
Income Statement: For the year ended
December 31, 2022, compared to December 31, 2021
Net Interest Income:
Commensurate with the growth in net
interest-earning assets, net interest income increased $4.3 million
to $18.8 million for the year ended December 31, 2022, from $14.5
million for the year ended December 31, 2021. Our net
interest-earning assets increased $9.0 million to $114.9 million
for the year ended December 31, 2022, from $105.9 million for the
year ended December 31, 2021.
Provision for loan losses:
Provision for loan losses increased by $982,000
to $1.5 million for the year ended December 31, 2022, from $553,000
during the year ended December 31, 2021. During the year ended
December 31, 2022 and 2021, net charge-offs of $316,000 and
$202,000 were recorded.
Non-Interest Income:
Non-interest income was $7.9 million for the
year ended December 31, 2022 compared to $13.4 million for the year
ended December 31, 2021. The decrease in non-interest income of
$5.5 million was primarily due to a $8.4 million decrease in the
gain on sale of loans, net offset by a $1.0 million gain on sale of
mortgage servicing rights, net, $730,000 decrease in the change in
fair value of loans held-for-sale, and a $426,000 decrease in loss
on derivative instruments. Included in other income for the year
ended December 31, 2022, was a $352,000 gain on settlement of
bank-owned life insurance.
Non-Interest Expense:
Total non-interest expense was $22.4 million for
the year ended December 31, 2022, compared to $21.9 million for the
year ended December 31, 2021. For the year ended December 31, 2022,
the increase of $526,000 was primarily a result of $630,000
increase in other expenses and $191,000 increase in professional
fees offset by a decrease of $163,000 in data processing related
operations expense, and $148,000 in salaries and employee benefits
expense. Included in other expenses for the year ended December 31,
2022 was $495,000 in expenses related to the Merger.
Income Taxes:
Income tax expense was $575,000 for the year
ended December 31 2022 compared to $1.5 million during fiscal year
2021. The decrease in income tax expense for the year ended
December 31, 2022, compared to a year ago was a result of a
decrease in income before taxes and tax exempt bank-owned life
insurance death benefits.
Net Income & Book
Value:
Net income decreased $1.9 million to $2.2
million, approximately $1.12 per basic share and $1.06 per diluted
share for the year ended December 31, 2022, as compared to $4.1
million, or approximately $2.04 per basic share and $1.98 per
diluted share for the year ended December 31, 2021. Book value per
share decreased to $18.77 at December 31, 2022, from $19.64 at
December 31, 2021, largely as a result of the drop in fair value of
the investment securities classified as available for sale (AFS).
The drop in value of the AFS portfolio was the result of increases
in market interest rates and is recorded in accumulated other
comprehensive income.
Asset quality:
At December 31, 2022, the Company’s
non-performing assets totaled $3.1 million, or 0.50% of total
assets, compared to $3.8 million or 0.67% of total assets at
December 31, 2021. There was $59,000 in other real estate owned
(“OREO”) included in the non-performing assets at December 31, 2022
compared to no OREO at December 31, 2021. Total non-performing
loans decreased to $3.0 million, or 0.64% of total loans, at
December 31, 2022 from $3.8 million, or 1.14% of total loans, at
December 31, 2021 as a result of non-performing loan decreases of
$1.2 million in one construction loan, decreases of $279,000 in
medical education loans and a $95,000 decrease in commercial
business loans offset by a $821,000 increase in one-to four-family
residential real estate loans compared to December 31, 2021.
The allowance for loan losses totaled $3.6
million, or 0.76% of total loans and 118.54% of total
non-performing loans at December 31, 2022, as compared to $2.4
million, or 0.72% of total loans and 63.10% of total non-performing
loans at December 31, 2021.
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, seven
full service bank offices and one limited service bank office. We
also operate six loan production and sales offices in our
geographical footprint.
Forward-Looking Statements
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, risks related to
the Merger, including regulatory approval, the negative impact of
severe wide-ranging and continuing disruptions caused by the spread
of coronavirus COVID-19 and any other pandemic, epidemic or
health-related crisis on current operations, customers and the
economy in general, inflation and monetary fluctuations and
volatility, 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(Unaudited)
|
At December 31,2022 |
|
|
At December 31,2021 |
|
|
At December 31,2020 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
Financial Condition
Data: |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
615,757 |
|
|
$ |
560,124 |
|
|
$ |
861,607 |
|
Cash and cash equivalents |
|
16,280 |
|
|
|
120,788 |
|
|
|
414,590 |
|
Investment securities
available-for-sale, at fair value |
|
55,664 |
|
|
|
44,512 |
|
|
|
23,518 |
|
Investment securities
held-to-maturity, at amortized cost |
|
29,771 |
|
|
|
— |
|
|
|
— |
|
Equity securities |
|
500 |
|
|
|
500 |
|
|
|
500 |
|
Loans held for sale, at fair
value |
|
15,239 |
|
|
|
40,480 |
|
|
|
83,549 |
|
Loans receivable, net |
|
468,955 |
|
|
|
325,203 |
|
|
|
313,811 |
|
Deposits |
|
525,238 |
|
|
|
463,989 |
|
|
|
730,826 |
|
Federal Home Loan Bank
advances |
|
26,593 |
|
|
|
26,431 |
|
|
|
26,269 |
|
Federal Reserve PPPLF
advances |
|
— |
|
|
|
3,119 |
|
|
|
48,682 |
|
Subordinated debt |
|
9,997 |
|
|
|
9,996 |
|
|
|
— |
|
Total liabilities |
|
573,664 |
|
|
|
517,488 |
|
|
|
822,680 |
|
Total shareholders’
equity |
|
42,093 |
|
|
|
42,636 |
|
|
|
38,927 |
|
|
For the Three Months Ended |
|
|
For the Year Ended |
|
|
December 31, |
|
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
(In thousands except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
7,547 |
|
|
$ |
4,268 |
|
|
|
$ |
22,871 |
|
|
$ |
16,708 |
|
Interest expense |
|
2,093 |
|
|
|
558 |
|
|
|
|
4,033 |
|
|
|
2,213 |
|
Net interest income |
|
5,454 |
|
|
|
3,710 |
|
|
|
|
18,838 |
|
|
|
14,495 |
|
Provision (credit) for loan
losses |
|
176 |
|
|
|
(91 |
) |
|
|
|
1,535 |
|
|
|
553 |
|
Net interest income after
provision for loan losses |
|
5,278 |
|
|
|
3,801 |
|
|
|
|
17,303 |
|
|
|
13,942 |
|
Gain on sale of loans,
net |
|
935 |
|
|
|
3,683 |
|
|
|
|
6,492 |
|
|
|
14,853 |
|
Other non-interest (loss)
income |
|
(64 |
) |
|
|
(1,543 |
) |
|
|
|
1,386 |
|
|
|
(1,429 |
) |
Non-interest income |
|
871 |
|
|
|
2,140 |
|
|
|
|
7,878 |
|
|
|
13,424 |
|
Non-interest expense |
|
5,733 |
|
|
|
5,520 |
|
|
|
|
22,376 |
|
|
|
21,850 |
|
Income before income
taxes |
|
416 |
|
|
|
421 |
|
|
|
|
2,805 |
|
|
|
5,516 |
|
Income tax expense |
|
132 |
|
|
|
70 |
|
|
|
|
575 |
|
|
|
1,464 |
|
Net income |
$ |
284 |
|
|
$ |
351 |
|
|
|
$ |
2,230 |
|
|
$ |
4,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of common
stock- Basic |
$ |
0.14 |
|
|
$ |
0.18 |
|
|
|
$ |
1.12 |
|
|
$ |
2.04 |
|
Earnings per share of common
stock -Diluted |
$ |
0.14 |
|
|
$ |
0.17 |
|
|
|
$ |
1.06 |
|
|
$ |
1.98 |
|
Average common shares
outstanding- Basic |
|
1,995,352 |
|
|
|
1,990,449 |
|
|
|
|
1,995,745 |
|
|
|
1,984,430 |
|
Average common shares
outstanding- Diluted |
|
2,052,582 |
|
|
|
2,068,410 |
|
|
|
|
2,109,733 |
|
|
|
2,045,077 |
|
Shares outstanding of common
stock end of period |
|
2,242,421 |
|
|
|
2,170,397 |
|
|
|
|
2,242,421 |
|
|
|
2,170,397 |
|
Book value per share |
$ |
18.77 |
|
|
$ |
19.64 |
|
|
|
$ |
18.77 |
|
|
$ |
19.64 |
|
|
|
For the Three Months EndedDecember 31, |
|
|
|
For the Year EndedDecember
31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
Performance Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets(1) |
|
|
0.18 |
|
% |
|
0.25 |
|
% |
|
|
0.38 |
|
% |
|
0.69 |
|
% |
Return on average
equity(1) |
|
|
2.86 |
|
|
|
3.60 |
|
|
|
|
5.50 |
|
|
|
10.37 |
|
|
Interest rate spread (2) |
|
|
3.37 |
|
|
|
2.73 |
|
|
|
|
3.23 |
|
|
|
2.48 |
|
|
Net interest margin (3) |
|
|
3.71 |
|
|
2.83 |
|
|
|
|
3.42 |
|
|
2.57 |
|
|
Efficiency ratio (4) |
|
|
90.64 |
|
|
|
94.36 |
|
|
|
|
83.76 |
|
|
|
78.26 |
|
|
Average interest-earning
assets to average interest-bearing liabilities |
|
|
124.36 |
|
|
124.05 |
|
|
|
126.35 |
|
|
|
123.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Ratios
(5): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing assets as a
percent of total assets |
|
|
0.50 |
|
% |
|
0.67 |
|
% |
|
|
0.50 |
|
% |
|
0.67 |
|
% |
Non-performing loans as a
percent of total assets |
|
|
0.49 |
|
|
|
0.67 |
|
|
|
|
0.49 |
|
|
|
0.67 |
|
|
Non-performing loans as a
percent of total loans |
|
|
0.64 |
|
|
|
1.14 |
|
|
|
|
0.64 |
|
|
|
1.14 |
|
|
Allowance for loan losses as a
percent of non-performing loans |
|
|
118.54 |
|
|
|
63.10 |
|
|
|
|
118.54 |
|
|
|
63.10 |
|
|
Allowance for loan losses as a
percent of total loans |
|
0.76 |
|
|
|
0.72 |
|
|
|
0.76 |
|
|
|
0.72 |
|
|
Net charge-offs to average
outstanding loans during the period |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
|
0.08 |
|
|
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios:
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital
(to risk weighted assets) |
|
|
10.67 |
|
% |
|
12.46 |
|
% |
|
|
10.67 |
|
% |
|
12.46 |
|
% |
Tier 1 leverage (core) capital
(to adjusted tangible assets) |
|
|
8.68 |
|
|
8.24 |
|
|
|
|
8.68 |
|
|
8.24 |
|
|
Tier 1 risk-based capital (to
risk weighted assets) |
|
|
10.67 |
|
|
|
12.46 |
|
|
|
|
10.67 |
|
|
|
12.46 |
|
|
Total risk-based capital (to
risk weighted assets) |
|
|
11.38 |
|
|
13.11 |
|
|
|
|
11.38 |
|
|
13.11 |
|
|
Average equity to average
total assets (7) |
|
6.63 |
|
|
7.03 |
|
|
|
6.98 |
|
|
6.62 |
|
|
_______________ |
(1) |
Annualized for the three months ended December 31, 2022 and
2021. |
(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 period end ratios. |
(6) |
Capital ratios are for Huntingdon Valley Bank. |
(7) |
Represents consolidated average equity to average consolidated
total assets. |
Contact: Joseph C. O’Neill, Jr.,EVP/ Chief Financial
Officer(267) 280-4000
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