Standard AVB Financial Corp. (the “Company”) - (NASDAQ: STND), the
holding company for Standard Bank, PaSB, announced earnings for the
quarter ended June 30, 2020 of $1.1 million, or $0.25 per basic
share, compared to $2.1 million, or $0.45 per basic share, for the
quarter ended June 30, 2019. The Company announced earnings
for the six months ended June 30, 2020 of $2.2 million, or $0.50
per basic share, compared to $4.3 million, or $0.92 per basic
share, for the six months ended June 30, 2019. The decrease
in earnings for both periods resulted primarily from a higher
provision for loan losses, equity fair value adjustments and lower
interest income, partially offset by lower interest expense, lower
income taxes and higher net loan sale gains and referral
fees. The Company’s annualized return on average assets and
average equity was 0.44% and 3.20%, respectively, for the quarter
ended June 30, 2020 compared to 0.85% and 6.00%, respectively, for
the quarter ended June 30, 2019. The Company’s annualized return on
average assets and average equity was 0.45% and 3.17%,
respectively, for the six months ended June 30, 2020 compared to
0.88% and 6.17%, respectively, for the six months ended June 30,
2019.
The Company’s board of directors declared a
quarterly cash dividend of $0.221 per share of the Company’s common
stock. The dividend will be payable to stockholders of record
as of August 10, 2020 and will be paid on August 24, 2020.
Andrew W. Hasley, President & CEO, stated,
“While we are disappointed in our net income, we are operating in
unprecedented times which has resulted in a very unstable and
deteriorating economy and ongoing equity market disruptions.
We continue to experience pressure on the interest rate
margin due to the current historically low interest rate
environment.
As a result of the severity and length of the
downturn, the Bank increased its loan loss reserves by an
additional $2.2 million through June 30, 2020. Additionally,
the Bank recognized a loss of $790,000 through June 30, 2020
related to equity fair market adjustments on community bank stocks
held in our investment portfolio. We remain committed to
controlling expenses and maximizing earnings from sources other
than net interest income including residential loan sale gains and
referral fees which increased for the three and six month
periods.
While there has been decisive action taken by
the Federal government and the Federal Reserve System to offset the
negative impact of COVID-19, there remains great uncertainty
regarding the future direction of the economy and how COVID-19 will
ultimately impact local businesses, consumers and our
neighborhoods. Standard Bank ended June with a greater
capacity to absorb losses with an increased level of allowance for
loan losses, regulatory capital well in excess of proscribed
minimums and an abundance of liquidity. Based upon these
factors, the Company made the decision to maintain our dividend at
this time.”
CONSOLIDATED BALANCE SHEET & ASSET QUALITY
OVERVIEW
Total assets at June 30, 2020 increased $76.7
million, or 7.8%, to $1.1 billion, from $984.4 million at December
31, 2019. The increase in total assets included an increase
in cash and cash equivalents of $42.0 million, or 129.5%, an
increase in loans receivable of $29.2 million, or 4.1%, and an
increase in investment securities of $3.4 million, or 2.1%.
The increase in cash and cash equivalents was primarily the
result of an increase in deposits during the period which is
further broken down below. The increase in loans receivable
was due in large part to $41.0 million in Small Business
Administration (“SBA”) Paycheck Protection Program (“PPP”) loans
that were booked in the second quarter partially offset by
prepayments and residential loan sales.
Total deposits at June 30, 2020 increased by
$56.7 million, or 7.7%, to $791.1 million from $734.4 million at
December 31, 2019. The increase resulted from a $73.1
million, or 15.0%, increase in demand and savings accounts
partially offset by a $16.5 million, or 6.7%, decrease in time
deposits. The increase in demand and savings accounts was
primarily the result of PPP loan proceeds deposited into customer
accounts but not yet drawn. Borrowed funds increased by $13.0
million, or 12.7% to $115.9 million at June 30, 2020 from $102.8
million at December 31, 2019. The increase was primarily due
to new Federal Home Loan Bank advances entered into during the
period, partially offset by the repayment of a maturing long-term
advance as well as pay downs on amortizing long term advances
during the period.
Stockholders’ equity increased by $879,000, or
0.6% to $142.7 million at June 30, 2020 from $141.8 million at
December 31, 2019. The increase was the result of net income
earned during the period as well as an increase in accumulated
other comprehensive income partially offset by dividends paid and
stock repurchased during the period. The Company temporarily
suspended its stock repurchase plan on March 19, 2020.
Non-performing loans at June 30, 2020 were $3.6
million, or 0.48% of total loans compared to $2.7 million, or 0.38%
of total loans at December 31, 2019.
The Coronavirus Aid, Relief, and Economic
Security Act (“CARES Act”), was signed into law on March 27, 2020,
and provided for over $2.0 trillion in emergency economic relief to
individuals and businesses impacted by the COVID-19 pandemic.
The CARES Act authorized the SBA to temporarily guarantee loans
under a new 7(a) loan program, the PPP. As a qualified SBA
lender, the Company was automatically authorized to originate PPP
loans. As of June 30, 2020, Standard Bank had received
approval from the SBA for 399 PPP loans totaling $41.8 million
which generated $1.6 million in fees to be recognized over the life
of the loans. We continue to make these loans available to
customers and noncustomers.
The Company is also providing assistance to
individuals and small business clients directly impacted by the
COVID-19 pandemic by allowing borrowers to defer loan
payments. As of June 30, 2020, the Bank had granted payment
deferrals for 414 commercial loans totaling $133.3 million and 187
consumer loans totaling $25.3 million. All of these loans
were initially provided a deferral period of 90 days. The
Company remains fully committed to serving our customers and
communities and our relationship managers have actively reached out
to our loyal customer base offering PPP loans and loan payment
deferrals, as needed.
It is anticipated that certain industries will
continue to suffer losses as a result of the COVID-19
pandemic. The Bank’s loan portfolio consists of commercial
real estate, commercial business loans and residential loans that
may be primarily impacted. The largest commercial loan
concentrations are to the lessors of residential properties and the
lessors of nonresidential properties representing 33.0% and 22.9%
of the commercial loan portfolio at June 30, 2020,
respectively.
OPERATING RESULTS OVERVIEW
Net interest income was $6.8 million for the
three months ended June 30, 2020 compared to $7.2 million for the
three months ended June 30, 2019. Net interest income was
$13.6 million for the six months ended June 30, 2020 compared to
$14.3 million for the six months ended June 30, 2019. The net
interest margin for the three months ended June 30, 2020 was 2.83%,
compared to 3.12% for the same period in the prior year. The
net interest margin for the six months ended June 30, 2020 was
2.92%, compared to 3.17% for the same period in the prior
year. The decreases in net interest income and net interest
margin for both periods were primarily due to a decrease in the
yield on interest-earning assets partially offset by a decrease in
the cost of interest-bearing liabilities and an increase in the
balance of interest-earning deposits.
A provision for loan losses of $1.6 million was
recorded for the three months ended June 30, 2020, compared to
$181,000 for the three months ended June 30, 2019. A
provision for loan losses of $2.2 million was recorded for the six
months ended June 30, 2020, compared to $290,000 for the six months
ended June 30, 2019. The increased provision for loan losses
for both the quarter and year to date periods was impacted by the
increasing concern over the pandemic’s impact on the local,
regional and national economy as well as the hotel sector where it
was determined necessary to build reserves.
Noninterest income totaled $1.3 million for the
quarter ended June 30, 2020, compared to $1.1 million for the
quarter ended June 30, 2019. The increase in noninterest
income for the three months ended June 30, 2020 was primarily the
result of an increase in residential loan sale gains and referral
fees partially offset by a decrease in the net equity securities
fair value adjustment. Noninterest income totaled $1.9
million for the six months ended June 30, 2020, compared to $2.2
million for the six months ended June 30, 2019. The decrease
in noninterest income for the six months ended June 30, 2020 was
primarily the result of a decrease in the net equity securities
fair value adjustment partially offset by an increase in the loan
sale gains and referral fees.
Noninterest expenses totaled $5.2 million for
the quarter ended June 30, 2020, compared to $5.4 million for the
quarter ended June 30, 2019. The decrease in noninterest
expenses for the three months ended June 30, 2020 was primarily the
result of a decrease in compensation and employee benefits due to
the deferral of compensation costs related to the origination of
PPP loans during the period. Noninterest expenses totaled
$10.7 million for the six months ended June 30, 2020, compared to
$10.9 million for the six months ended June 30, 2019. The
decrease in noninterest expenses for the six months ended June 30,
2020 was primarily the result of a decrease in federal deposit
insurance expense and core deposit amortization partially offset by
an increase in other operating expenses. The lower federal
deposit insurance expense during the period was due to the
application of small bank credits to the first and second quarter
2020 assessments.
Income tax expense totaled $174,000 for the
quarter ended June 30, 2020, compared to $587,000 for the quarter
ended June 30, 2019. Income tax expense totaled $368,000 for
the six months ended June 30, 2020, compared to $1.1 million for
the six months ended June 30, 2019. The decrease in income
tax expense was primarily the result of a decrease in taxable
income as well as a lower effective tax rate for the period.
Standard AVB Financial Corp., with total assets
of $1.1 billion at June 30, 2020, is the parent company of Standard
Bank, PaSB, a Pennsylvania chartered savings bank that operates 17
offices serving individuals and small to mid-sized businesses in
Allegheny, Westmoreland and Bedford Counties, in Pennsylvania and
Allegany County in Maryland. Standard Bank is a member of the
FDIC and an Equal Housing Lender.
This news release may contain a number of
forward-looking statements, as that term is defined in the Private
Securities Litigation Reform Act of 1995.
Such forward-looking statements are subject to risks and
uncertainties which could cause actual results to differ materially
from those currently anticipated due to a number of factors.
In addition, the COVID-19 pandemic is having an adverse impact on
the Company, its customers and the communities it serves. Given its
ongoing and dynamic nature, it is difficult to predict the full
impact of the COVID-19 outbreak on our business. The extent of such
impact will depend on future developments, which are highly
uncertain, including when the coronavirus can be controlled and
abated and when and how the economy may be reopened or remain
reopened. The Company undertakes no obligation to update
these forward-looking statements to reflect events or circumstances
that occur after the date on which such statements were made.
Standard AVB
Financial Corp. |
|
|
Financial
Highlights |
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|
(Dollars in
thousands, except per share data) |
|
|
(Unaudited) |
|
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OPERATIONS DATA: |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
Interest and Dividend Income |
|
$ |
8,684 |
|
|
$ |
9,501 |
|
|
$ |
17,720 |
|
|
$ |
18,813 |
|
|
|
Interest Expense |
|
|
|
1,878 |
|
|
|
2,338 |
|
|
|
4,085 |
|
|
|
4,501 |
|
|
|
Net Interest Income |
|
|
|
6,806 |
|
|
|
7,163 |
|
|
|
13,635 |
|
|
|
14,312 |
|
|
|
Provision for Loan Losses |
|
|
1,620 |
|
|
|
181 |
|
|
|
2,170 |
|
|
|
290 |
|
|
|
Net Interest
Income after Provision for Loan Losses |
|
|
|
|
5,186 |
|
|
|
6,982 |
|
|
|
11,465 |
|
|
|
14,022 |
|
|
|
Noninterest Income |
|
|
|
1,335 |
|
|
|
1,093 |
|
|
|
1,870 |
|
|
|
2,231 |
|
|
|
Noninterest Expenses |
|
|
|
5,210 |
|
|
|
5,390 |
|
|
|
10,720 |
|
|
|
10,857 |
|
|
|
Income before Income Tax Expense |
|
1,311 |
|
|
|
2,685 |
|
|
|
2,615 |
|
|
|
5,396 |
|
|
|
Income Tax Expense |
|
|
|
174 |
|
|
|
587 |
|
|
|
368 |
|
|
|
1,130 |
|
|
|
Net Income |
|
|
$ |
1,137 |
|
|
$ |
2,098 |
|
|
$ |
2,247 |
|
|
$ |
4,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share - Basic |
|
$ |
0.25 |
|
|
$ |
0.45 |
|
|
$ |
0.50 |
|
|
$ |
0.92 |
|
|
|
Earnings Per Share - Diluted |
|
$ |
0.25 |
|
|
$ |
0.44 |
|
|
$ |
0.49 |
|
|
$ |
0.90 |
|
|
|
Annualized Return on Average Assets |
|
0.44 |
% |
|
|
0.85 |
% |
|
|
0.45 |
% |
|
|
0.88 |
% |
|
|
Average Assets |
|
|
$ |
1,036,798 |
|
|
$ |
984,482 |
|
|
$ |
1,006,170 |
|
|
$ |
976,772 |
|
|
|
Annualized Return on Average Equity |
|
3.20 |
% |
|
|
6.00 |
% |
|
|
3.17 |
% |
|
|
6.17 |
% |
|
|
Average Equity |
|
|
$ |
142,317 |
|
|
$ |
140,239 |
|
|
$ |
142,127 |
|
|
$ |
139,431 |
|
|
|
Efficiency Ratio |
|
|
|
61.73 |
% |
|
|
63.64 |
% |
|
|
64.16 |
% |
|
|
63.72 |
% |
|
|
Net Interest Spread |
|
|
|
2.55 |
% |
|
|
2.78 |
% |
|
|
2.62 |
% |
|
|
2.83 |
% |
|
|
Net Interest Margin |
|
|
|
2.83 |
% |
|
|
3.12 |
% |
|
|
2.92 |
% |
|
|
3.17 |
% |
|
|
Annualized
Noninterest Expense to Average Assets |
|
|
|
|
2.02 |
% |
|
|
2.20 |
% |
|
|
2.14 |
% |
|
|
2.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL CONDITION DATA: |
June
30, |
|
December
31, |
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
Total Assets |
|
|
$ |
1,061,381 |
|
|
$ |
984,387 |
|
|
|
|
|
|
|
Cash and Cash Equivalents |
|
|
74,414 |
|
|
|
32,427 |
|
|
|
|
|
|
|
Investment Securities |
|
|
|
167,971 |
|
|
|
164,566 |
|
|
|
|
|
|
|
Loans Receivable, Net |
|
|
742,179 |
|
|
|
712,965 |
|
|
|
|
|
|
|
Deposits |
|
|
|
|
791,075 |
|
|
|
734,406 |
|
|
|
|
|
|
|
Borrowed Funds |
|
|
|
115,872 |
|
|
|
102,838 |
|
|
|
|
|
|
|
Total Stockholders' Equity |
|
|
142,727 |
|
|
|
141,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Value Per Share |
|
|
$ |
30.62 |
|
|
$ |
30.25 |
|
|
|
|
|
|
|
Tangible Book Value Per Share |
|
$ |
24.73 |
|
|
$ |
24.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses |
|
$ |
6,968 |
|
|
$ |
4,882 |
|
|
|
|
|
|
|
Non-Performing Loans |
|
$ |
3,606 |
|
|
$ |
2,716 |
|
|
|
|
|
|
|
Allowance for Loan Losses to Total Loans |
|
0.93 |
% |
|
|
0.68 |
% |
|
|
|
|
|
|
Allowance
for Loan Losses to Non-Performing Loans |
|
|
|
|
193.23 |
% |
|
|
179.75 |
% |
|
|
|
|
|
|
Non-Performing Assets to Total Assets |
|
0.39 |
% |
|
|
0.32 |
% |
|
|
|
|
|
|
Non-Performing Loans to Total Loans |
|
0.48 |
% |
|
|
0.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
CONTACTS:Andrew W. Hasley
President
Chief Executive
Officer412.856.0363
Timothy K. Zimmerman Senior Executive Vice President Chief
Operating Officer 412.856.0363
Susan A. ParenteExecutive Vice PresidentChief Financial
Officer412.856.0363
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