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Section 1: 10-Q (10-Q)

hvbc-10q_20181231.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from   to                to           

Commission file number: 001-37981

 

HV BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Pennsylvania

 

46-4351868

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

3501 Masons Mill Road Suite 401 Huntingdon Valley, Pennsylvania  19006

(Address of Principal Executive Offices and Zip Code)

(267) 280-4000

(Registrant's Telephone Number, Including Area Code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes      No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company” or an “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  As of February 10, 2019, there were 2,255,125 outstanding shares of the issuer’s common stock.

 

 

 

 


 

 

INDEX

 

 

 

 

 

 

PART I – FINANCIAL INFORMATION

1

 

 

 

 

 

 

Item 1 – Consolidated Financial Statements – Unaudited

1

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

6

 

 

 

 

 

 

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

38

 

 

 

 

 

 

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

56

 

 

 

 

 

 

Item 4 – Controls and Procedures

56

 

 

 

 

 

 

PART II OTHER INFORMATION

58

 

 

 

 

Item 1 – Legal Proceedings

58

 

 

 

 

 

 

Item 1A – Risk Factors

58

 

 

 

 

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

58

 

 

 

 

Item 3 – Defaults upon Senior Securities

58

 

 

 

 

Item 4 – Mine Safety Disclosures

58

 

 

 

 

Item 5 – Other Information

58

 

 

 

 

Item 6 – Exhibits

58

 

 

 

SIGNATURES

59

 

 

 


 

PART I – FINANCIAL INFORMATION

Item 1 – Consolidated Financial Statements – Unaudited

HV BANCORP, INC. AND SUBSIDIARY

Unaudited Consolidated Statements of Financial Condition as of December 31, 2018 and June 30, 2018 (Dollars in thousands, except share and per share data)

 

 

At December 31,

 

 

At June 30,

 

 

 

2018

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

1,371

 

 

$

1,345

 

Interest-earning deposits with banks

 

 

15,621

 

 

 

13,400

 

Cash and cash equivalents

 

 

16,992

 

 

 

14,745

 

Investment securities available-for-sale, at fair value

 

 

30,439

 

 

 

30,847

 

Investment securities held-to-maturity

 

 

14,286

 

 

 

13,905

 

Equity securities

 

 

500

 

 

 

 

Loans held for sale, at fair value

 

 

15,339

 

 

 

13,558

 

Loans receivable, net of allowance for loan losses of $956 at

   December 31, 2018 and $871 at June 30, 2018

 

 

231,988

 

 

 

212,696

 

Bank-owned life insurance

 

 

6,096

 

 

 

6,016

 

Restricted investment in bank stock

 

 

737

 

 

 

1,190

 

Premises and equipment, net

 

 

2,029

 

 

 

1,873

 

Accrued interest receivable

 

 

1,034

 

 

 

940

 

Prepaid income taxes

 

 

223

 

 

 

254

 

Deferred income taxes, net

 

 

454

 

 

 

526

 

Prepaid expenses

 

 

265

 

 

 

267

 

Mortgage banking derivatives

 

 

391

 

 

 

817

 

Other assets

 

 

110

 

 

 

128

 

Total Assets

 

$

320,883

 

 

$

297,762

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Deposits

 

$

273,461

 

 

$

235,403

 

Advances from the Federal Home Loan Bank

 

 

10,000

 

 

 

22,000

 

Securities sold under agreements to repurchase

 

 

2,463

 

 

 

5,739

 

Advances from borrowers for taxes and insurance

 

 

1,961

 

 

 

2,276

 

Deferred gain on sale - leaseback of building

 

 

285

 

 

 

294

 

Other liabilities

 

 

1,302

 

 

 

1,329

 

Total Liabilities

 

 

289,472

 

 

 

267,041

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

Preferred  Stock, $0.01 par value, 2,000,000 shares authorized; no shares

   issued and outstanding as of December 31, 2018 and June 30, 2018

 

 

 

 

 

 

Common Stock, $0.01 par value, 20,000,000 shares authorized;

   2,255,125 and 2,259,125 shares issued and outstanding as of   December 31, 2018 and June 30, 2018

 

 

23

 

 

 

23

 

Additional paid-in capital

 

 

20,487

 

 

 

20,368

 

Retained earnings

 

 

13,686

 

 

 

13,277

 

Accumulated other comprehensive loss

 

 

(548

)

 

 

(648

)

Unearned Employee Stock Option Plan

 

 

(2,237

)

 

 

(2,299

)

Total Shareholders' Equity

 

 

31,411

 

 

 

30,721

 

Total Liabilities and Shareholders' Equity

 

$

320,883

 

 

$

297,762

 

 

See Notes to the Unaudited Consolidated Financial Statements

 

1


 

HV BANCORP, INC. AND SUBSIDIARY

Unaudited Consolidated Statements of Income for the Three and Six Months Ended December 31, 2018 and 2017; (Dollars in thousands, except per share data)

 

 

 

For the Three Months Ended

December 31,

 

 

For the Six Months Ended

December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

2,356

 

 

$

1,517

 

 

$

4,655

 

 

$

2,867

 

Interest and dividends on investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

97

 

 

 

91

 

 

 

198

 

 

 

209

 

Nontaxable

 

 

73

 

 

 

65

 

 

 

148

 

 

 

130

 

Interest on mortgage-backed securities and collateralized

   mortgage obligations

 

 

103

 

 

 

94

 

 

 

206

 

 

 

179

 

Interest on interest-earning deposits

 

 

115

 

 

 

97

 

 

 

188

 

 

 

202

 

Total Interest Income

 

 

2,744

 

 

 

1,864

 

 

 

5,395

 

 

 

3,587

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

686

 

 

 

231

 

 

 

1,200

 

 

 

447

 

Interest on advances from the Federal Home Loan Bank

 

 

53

 

 

 

45

 

 

 

152

 

 

 

75

 

Interest on securities sold under agreements to repurchase

 

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

Total Interest Expense

 

 

740

 

 

 

277

 

 

 

1,354

 

 

 

524

 

Net interest income

 

 

2,004

 

 

 

1,587

 

 

 

4,041

 

 

 

3,063

 

Provision for Loan Losses

 

 

24

 

 

 

80

 

 

 

83

 

 

 

79

 

Net interest income after provision for loan losses

 

 

1,980

 

 

 

1,507

 

 

 

3,958

 

 

 

2,984

 

Non-Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees for customer services

 

 

35

 

 

 

185

 

 

 

107

 

 

 

230

 

Increase in cash surrender value of bank-owned life insurance

 

 

40

 

 

 

41

 

 

 

80

 

 

 

75

 

Gain on sale of loans, net

 

 

591

 

 

 

909

 

 

 

1,492

 

 

 

2,145

 

Gain on sale of available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

34

 

Loss from derivative instruments

 

 

(49

)

 

 

(74

)

 

 

(366

)

 

 

(464

)

Change in fair value of loans held-for-sale

 

 

57

 

 

 

(140

)

 

 

118

 

 

 

(95

)

Other

 

 

2

 

 

 

2

 

 

 

3

 

 

 

3

 

Total Non-Interest Income

 

 

676

 

 

 

923

 

 

 

1,434

 

 

 

1,928

 

Non-Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

1,381

 

 

 

1,267

 

 

 

2,641

 

 

 

2,401

 

Occupancy

 

 

281

 

 

 

260

 

 

 

535

 

 

 

525

 

Federal deposit insurance premiums

 

 

72

 

 

 

26

 

 

 

142

 

 

 

56

 

Data processing related operations

 

 

172

 

 

 

125

 

 

 

343

 

 

 

277

 

Loss on sale of other real estate owned

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Real estate owned expense

 

 

 

 

 

6

 

 

 

 

 

 

27

 

Professional fees

 

 

197

 

 

 

113

 

 

 

398

 

 

 

285

 

Other expenses

 

 

410

 

 

 

357

 

 

 

832

 

 

 

741

 

Total Non-Interest Expense

 

 

2,513

 

 

 

2,157

 

 

 

4,891

 

 

 

4,315

 

Income before income taxes

 

 

143

 

 

 

273

 

 

 

501

 

 

 

597

 

Income Tax Expense

 

 

4

 

 

 

94

 

 

 

92

 

 

 

182

 

Net Income

 

$

139

 

 

$

179

 

 

$

409

 

 

$

415

 

Net Income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

 

$

0.08

 

 

$

0.20

 

 

$

0.19

 

Diluted

 

$

0.07

 

 

$

0.08

 

 

$

0.20

 

 

$

0.19

 

See Notes to the Unaudited Consolidated Financial Statements

2


 

HV BANCORP, INC. AND SUBSIDIARY

 

Unaudited Consolidated Statements of Comprehensive Income for the Three and Six Ended December 31, 2018 and 2017 (Dollars in thousands)

 

 

 

For the Three Months Ended

December 31,

 

 

For the Six Months Ended

December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Comprehensive Income, Net of Taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

139

 

 

$

179

 

 

$

409

 

 

$

415

 

Other comprehensive gain (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on available-for-sale securities (pre-tax $264 and ($176); $142 and ($205) respectively)

 

 

186

 

 

 

(153

)

 

 

100

 

 

 

(165

)

Less: Reclassification for gains included in income (pre-tax $0 and $0; $0 and $34, respectively) (1)

 

 

 

 

 

 

 

 

 

 

 

25

 

Other comprehensive gain (loss)

 

 

186

 

 

 

(153

)

 

 

100

 

 

 

(190

)

Comprehensive Income

 

$

325

 

 

$

26

 

 

$

509

 

 

$

225

 

 

(1)

Amounts are included in gain on sale of available-for-sale securities on the Consolidated Statements of Income as a separate element within non-interest income. Income tax expense is included in the Consolidated Statements of Income.

See Notes to the Unaudited Consolidated Financial Statements

 

3


 

HV BANCORP, INC. AND SUBSIDIARY

Unaudited Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended December 31, 2018 and 2017 (Dollars in thousands, except per share data)

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Unearned

ESOP

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Shares

 

 

Total

 

Balance, October 1, 2018

 

 

2,259,125

 

 

$

23

 

 

$

20,435

 

 

$

13,547

 

 

$

(734

)

 

$

(2,268

)

 

$

31,003

 

ESOP shares committed to be

released

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

31

 

 

 

33

 

Stock option expense

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

10

 

Restricted stock expense

 

 

 

 

 

 

 

 

40

 

 

 

 

 

 

 

 

 

 

 

 

40

 

Forfeiture of restricted stock award

 

 

(4,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

139

 

 

 

 

 

 

 

 

 

139

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

186

 

 

 

 

 

 

186

 

Balance, December 31, 2018

 

 

2,255,125

 

 

$

23

 

 

$

20,487

 

 

$

13,686

 

 

$

(548

)

 

$

(2,237

)

 

$

31,411

 

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Unearned

ESOP

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Shares

 

 

Total

 

Balance, October 1, 2017

 

 

2,182,125

 

 

$

22

 

 

$

20,369

 

 

$

13,783

 

 

$

(148

)

 

$

(2,362

)

 

$

31,664

 

ESOP shares committed

   to be released

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

23

 

Net income

 

 

 

 

 

 

 

 

 

 

 

179

 

 

 

 

 

 

 

 

 

179

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(153

)

 

 

 

 

 

(153

)

Balance, December 31, 2017

 

 

2,182,125

 

 

$

22

 

 

$

20,369

 

 

$

13,962

 

 

$

(301

)

 

$

(2,339

)

 

$

31,713

 

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Unearned

ESOP

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Shares

 

 

Total

 

Balance, July 1, 2018

 

 

2,259,125

 

 

$

23

 

 

$

20,368

 

 

$

13,277

 

 

$

(648

)

 

$

(2,299

)

 

$

30,721

 

ESOP shares committed to be

released

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

62

 

 

 

67

 

Stock option expense

 

 

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

28

 

Restricted stock expense

 

 

 

 

 

 

 

 

86

 

 

 

 

 

 

 

 

 

 

 

 

86

 

Forfeiture of restricted stock award

 

 

(4,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

409

 

 

 

 

 

 

 

 

 

409

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100

 

 

 

 

 

 

100

 

Balance, December 31, 2018

 

 

2,255,125

 

 

$

23

 

 

$

20,487

 

 

$

13,686

 

 

$

(548

)

 

$

(2,237

)

 

$

31,411

 

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Unearned

ESOP

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Shares

 

 

Total

 

Balance, July 1, 2017

 

 

2,182,125

 

 

$

22

 

 

$

20,369

 

 

$

13,547

 

 

$

(111

)

 

$

(2,386

)

 

$

31,441

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47

 

 

 

47

 

Net income

 

 

 

 

 

 

 

 

 

 

 

415

 

 

 

 

 

 

 

 

 

415

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(190

)

 

 

 

 

 

(190

)

Balance, December 31, 2017

 

 

2,182,125

 

 

$

22

 

 

$

20,369

 

 

$

13,962

 

 

$

(301

)

 

$

(2,339

)

 

$

31,713

 

 

See Notes to the Unaudited Consolidated Financial Statements

4


 

HV BANCORP, INC. AND SUBSIDIARY

Unaudited Consolidated Statements of Cash Flows (Dollars in thousands)

Six Months Ended December 31,

 

2018

 

 

2017

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

409

 

 

$

415

 

Adjustments to reconcile net income to net cash (used in) provided by

   operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

162

 

 

 

106

 

Impairment of real estate owned, net

 

 

 

 

 

14

 

Amortization of net deferred loan costs

 

 

94

 

 

 

67

 

Amortization of net securities premiums

 

 

56

 

 

 

73

 

Loss in sale of real estate owned

 

 

 

 

 

3

 

Gain on sale of available-for-sale securities

 

 

 

 

 

(34

)

Loss from derivative instruments

 

 

366

 

 

 

464

 

Provision for loan losses

 

 

83

 

 

 

79

 

Deferred income taxes

 

 

30

 

 

 

(91

)

Accretion of deferred gain on sale-leaseback transaction

 

 

(9

)

 

 

(8

)

Earnings on bank owned life insurance

 

 

(80

)

 

 

(75

)

Stock base compensation expense

 

 

114

 

 

 

 

ESOP compensation expense

 

 

67

 

 

 

47

 

Loans held for sale:

 

 

 

 

 

 

 

 

Originations, net of prepayments

 

 

(75,781

)

 

 

(80,066

)

Proceeds from sales

 

 

75,610

 

 

 

82,634

 

Gain on sales

 

 

(1,492

)

 

 

(2,145

)

Change in fair value of loans held for sale

 

 

(118

)

 

 

95

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

Accrued interest receivable

 

 

(94

)

 

 

(153

)

Prepaid federal income taxes

 

 

31

 

 

 

133

 

Prepaid and other assets

 

 

20

 

 

 

88

 

Other liabilities

 

 

33

 

 

 

(90

)

Net cash (used in) provided by operating activities

 

 

(499

)

 

 

1,556

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Net Increase in loans receivable

 

 

(19,469

)

 

 

(48,178

)

Activity in available-for-sale securities:

 

 

 

 

 

 

 

 

Proceeds from sales

 

 

 

 

 

11,158

 

Maturities and repayments

 

 

2,027

 

 

 

1,186

 

Purchases

 

 

(1,533

)

 

 

(2,665

)

Activity in held-to-maturity securities:

 

 

 

 

 

 

 

 

Maturities and repayments

 

 

619

 

 

 

11

 

Purchases

 

 

(1,000

)

 

 

(635

)

Purchase of equity securities

 

 

(500

)

 

 

 

Purchases of restricted investment in bank stock

 

 

(1,294

)

 

 

 

Redemption of restricted investment in bank stock

 

 

1,747

 

 

 

(106

)

Purchases of bank-owned life insurance

 

 

 

 

 

(1,856

)

Proceeds from sale of real estate owned

 

 

 

 

 

124

 

Purchases of premises and equipment

 

 

(318

)