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Section 1: 10-Q (10-Q)

hvbc-10q_20190331.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 March 31, 2019

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)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value

 

HVBC

 

The NASDAQ Stock Market, LLC

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 May 10, 2019, there were 2,259,125 outstanding shares of the issuer’s common stock.

 

 

 


 

INDEX

 

 

 

 

 

 

PART I – FINANCIAL INFORMATION

2

 

 

 

 

 

 

Item 1 – Consolidated Financial Statements – Unaudited

2

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

8

 

 

 

 

 

 

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

40

 

 

 

 

 

 

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

57

 

 

 

 

 

 

Item 4 – Controls and Procedures

57

 

 

 

 

 

 

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 March 31, 2019 and June 30, 2018 (Dollars in thousands, except share and per share data)

 

 

At March 31,

 

 

At June 30,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

1,501

 

 

$

1,345

 

Interest-earning deposits with banks

 

 

11,381

 

 

 

13,400

 

Cash and cash equivalents

 

 

12,882

 

 

 

14,745

 

Investment securities available-for-sale, at fair value

 

 

26,834

 

 

 

30,847

 

Investment securities held-to-maturity

 

 

14,279

 

 

 

13,905

 

Equity securities

 

 

500

 

 

 

 

Loans held for sale, at fair value

 

 

4,485

 

 

 

13,558

 

Loans receivable, net of allowance for loan losses of $1,055 at

March 31, 2019 and $871 at June 30, 2018

 

 

235,729

 

 

 

212,696

 

Bank-owned life insurance

 

 

6,135

 

 

 

6,016

 

Restricted investment in bank stock

 

 

733

 

 

 

1,190

 

Premises and equipment, net

 

 

2,158

 

 

 

1,873

 

Accrued interest receivable

 

 

1,087

 

 

 

940

 

Prepaid income taxes

 

 

316

 

 

 

254

 

Deferred income taxes, net

 

 

259

 

 

 

526

 

Prepaid expenses

 

 

373

 

 

 

267

 

Mortgage banking derivatives

 

 

850

 

 

 

817

 

Other assets

 

 

65

 

 

 

128

 

Total Assets

 

$

306,685

 

 

$

297,762

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Deposits

 

$

259,129

 

 

$

235,403

 

Advances from the Federal Home Loan Bank

 

 

10,000

 

 

 

22,000

 

Securities sold under agreements to repurchase

 

 

2,778

 

 

 

5,739

 

Advances from borrowers for taxes and insurance

 

 

1,619

 

 

 

2,276

 

Deferred gain on sale - leaseback of building

 

 

282

 

 

 

294

 

Other liabilities

 

 

1,068

 

 

 

1,329

 

Total Liabilities

 

 

274,876

 

 

 

267,041

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

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

   issued and outstanding as of March 31, 2019 and June 30, 2018

 

 

 

 

 

 

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

   2,259,125  shares issued and outstanding as of March 31, 2019

   and June 30, 2018

 

 

23

 

 

 

23

 

Additional paid-in capital

 

 

20,548

 

 

 

20,368

 

Retained earnings

 

 

13,748

 

 

 

13,277

 

Accumulated other comprehensive loss

 

 

(302

)

 

 

(648

)

Unearned Employee Stock Option Plan

 

 

(2,208

)

 

 

(2,299

)

Total Shareholders' Equity

 

 

31,809

 

 

 

30,721

 

Total Liabilities and Shareholders' Equity

 

$

306,685

 

 

$

297,762

 

 

See Notes to the Unaudited Consolidated Financial Statements

 

2


HV BANCORP, INC. AND SUBSIDIARY

Unaudited Consolidated Statements of Income for the Three and Nine Months Ended March 31, 2019 and 2018; (Dollars in thousands, except per share data)

 

 

For the Three Months Ended

March 31,

 

 

For the Nine Months Ended

March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

2,330

 

 

$

1,667

 

 

$

6,985

 

 

$

4,534

 

Interest and dividends on investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

109

 

 

 

96

 

 

 

307

 

 

 

305

 

Nontaxable

 

 

72

 

 

 

75

 

 

 

220

 

 

 

205

 

Interest on mortgage-backed securities and

   collateralized mortgage obligations

 

 

102

 

 

 

104

 

 

 

308

 

 

 

283

 

Interest on interest-earning deposits

 

 

115

 

 

 

84

 

 

 

303

 

 

 

286

 

Total Interest Income

 

 

2,728

 

 

 

2,026

 

 

 

8,123

 

 

 

5,613

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

689

 

 

 

243

 

 

 

1,889

 

 

 

690

 

Interest on advances from the Federal Home

   Loan Bank

 

 

45

 

 

 

60

 

 

 

197

 

 

 

135

 

Interest on securities sold under agreements

   to repurchase

 

 

1

 

 

 

1

 

 

 

3

 

 

 

3

 

Total Interest Expense

 

 

735

 

 

 

304

 

 

 

2,089

 

 

 

828

 

Net interest income

 

 

1,993

 

 

 

1,722

 

 

 

6,034

 

 

 

4,785

 

Provision for Loan Losses

 

 

241

 

 

 

76

 

 

 

324

 

 

 

155

 

Net interest income after provision for loan losses

 

 

1,752

 

 

 

1,646

 

 

 

5,710

 

 

 

4,630

 

Non-Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees for customer services

 

 

30

 

 

 

227

 

 

 

137

 

 

 

457

 

Increase in cash surrender value of bank-owned

   life insurance

 

 

39

 

 

 

39

 

 

 

119

 

 

 

114

 

Gain on sale of loans, net

 

 

890

 

 

 

620

 

 

 

2,382

 

 

 

2,765

 

Gain on sale of available-for-sale securities, net

 

 

4

 

 

 

1

 

 

 

4

 

 

 

35

 

Gain (Loss) from derivative instruments, net

 

 

395

 

 

 

185

 

 

 

29

 

 

 

(279

)

Change in fair value of loans held-for-sale

 

 

(376

)

 

 

(22

)

 

 

(258

)

 

 

(117

)

Other

 

 

4

 

 

 

5

 

 

 

7

 

 

 

8

 

Total Non-Interest Income

 

 

986

 

 

 

1,055

 

 

 

2,420

 

 

 

2,983

 

Non-Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

1,591

 

 

 

1,452

 

 

 

4,232

 

 

 

3,853

 

Occupancy

 

 

322

 

 

 

282

 

 

 

857

 

 

 

807

 

Federal deposit insurance premiums

 

 

62

 

 

 

28

 

 

 

204

 

 

 

84

 

Data processing related operations

 

 

189

 

 

 

157

 

 

 

532

 

 

 

434

 

Loss on sale of other real estate owned

 

 

 

 

 

 

 

 

 

 

 

3

 

Real estate owned expense

 

 

 

 

 

2

 

 

 

 

 

 

29

 

Professional fees

 

 

132

 

 

 

147

 

 

 

530

 

 

 

432

 

Other expenses

 

 

404

 

 

 

487

 

 

 

1,236

 

 

 

1,228

 

Total Non-Interest Expense

 

 

2,700

 

 

 

2,555

 

 

 

7,591

 

 

 

6,870

 

Income before income taxes

 

 

38

 

 

 

146

 

 

 

539

 

 

 

743

 

Income Tax (Benefit) Expense

 

 

(24

)

 

 

14

 

 

 

68

 

 

 

196

 

Net Income

 

$

62

 

 

$

132

 

 

$

471

 

 

$

547

 

Net Income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.03

 

 

$

0.07

 

 

$

0.23

 

 

$

0.27

 

Diluted

 

$

0.03

 

 

$

0.07

 

 

$

0.23

 

 

$

0.27

 

See Notes to the Unaudited Consolidated Financial Statements

 

 

3


HV BANCORP, INC. AND SUBSIDIARY

 

Unaudited Consolidated Statements of Comprehensive Income for the Three and Nine Ended March 31, 2019 and 2018 (Dollars in thousands)

 

 

 

For the Three Months Ended

March 31,

 

 

For the Nine Months Ended

March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Comprehensive Income, Net of Taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

62

 

 

$

132

 

 

$

471

 

 

$

547

 

Other comprehensive gain (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (losses) on available-for-sale securities (pre-tax

  $352 and ($377); $494 and ($616), respectively)

 

 

249

 

 

 

(265

)

 

 

349

 

 

 

(431

)

Less: Reclassification for gains included in income (pre-tax $4 and $1; $4 and $35, respectively) (1)

 

 

3

 

 

 

1

 

 

 

3

 

 

 

25

 

Other comprehensive gain (loss)

 

 

246

 

 

 

(266

)

 

 

346

 

 

 

(456

)

Comprehensive Income (Loss)

 

$

308

 

 

$

(134

)

 

$

817

 

 

$

91

 

 

(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

 

4


HV BANCORP, INC. AND SUBSIDIARY

Unaudited Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended March 31, 2019 and 2018 (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, January 1, 2019

 

 

2,255,125

 

 

$

23

 

 

$

20,487

 

 

$

13,686

 

 

$

(548

)

 

$

(2,237

)

 

$

31,411

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

29

 

 

 

31

 

Stock option expense

 

 

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

Restricted stock expense

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

 

 

 

45

 

Net income

 

 

 

 

 

 

 

 

 

 

 

62

 

 

 

 

 

 

 

 

 

62

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

246

 

 

 

 

 

 

246

 

Restricted stock awards

 

 

4,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

 

 

2,259,125

 

 

$

23

 

 

$

20,548

 

 

$

13,748

 

 

$

(302

)

 

$

(2,208

)

 

$

31,809

 

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Unearned

ESOP

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Shares

 

 

Total

 

Balance, January 1, 2018

 

 

2,182,125

 

 

$

22

 

 

$

20,369

 

 

$

13,962

 

 

$

(301

)

 

$

(2,339

)

 

$

31,713

 

Special dividend declared on common stock ($0.50)

 

 

 

 

 

 

 

 

 

 

 

(1,091

)

 

 

 

 

 

 

 

 

(1,091

)

ESOP shares committed

   to be released

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

20

 

Net income

 

 

 

 

 

 

 

 

 

 

 

132

 

 

 

 

 

 

 

 

 

132

 

Reclassification of certain income tax effects from accumulated other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

(51

)

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(266

)

 

 

 

 

 

(266

)

Balance, March 31, 2018

 

 

2,182,125

 

 

$

22

 

 

$

20,369

 

 

$

13,054

 

 

$

(618

)

 

$

(2,319

)

 

$

30,508

 

 

 

 

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

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

91

 

 

 

98

 

Stock option expense

 

 

 

 

 

 

 

 

42

 

 

 

 

 

 

 

 

 

 

 

 

42

 

Restricted stock expense

 

 

 

 

 

 

 

 

131

 

 

 

 

 

 

 

 

 

 

 

 

131

 

Forfeiture of restricted stock award

 

 

(4,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

471

 

 

 

 

 

 

 

 

 

471

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

346

 

 

 

 

 

 

346

 

Restricted stock awards

 

 

4,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

 

 

2,259,125

 

 

$

23

 

 

$

20,548

 

 

$

13,748

 

 

$

(302

)

 

$

(2,208

)

 

$

31,809

 

 

5


 

 

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

 

Special dividend declared on common stock ($0.50)

 

 

 

 

 

 

 

 

 

 

 

(1,091

)

 

 

 

 

 

 

 

 

(1,091

)

ESOP shares committed

   to be released

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67

 

 

 

67

 

Net income

 

 

 

 

 

 

 

 

 

 

 

547

 

 

 

 

 

 

 

 

 

547

 

Reclassification of certain income tax effects from accumulated other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

(51

)

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(456

)

 

 

 

 

 

(456

)

Balance, March 31, 2018

 

 

2,182,125

 

 

$

22

 

 

$

20,369

 

 

$

13,054

 

 

$

(618

)

 

$

(2,319

)

 

$

30,508

 

 

See Notes to the Unaudited Consolidated Financial Statements

 

6


HV BANCORP, INC. AND SUBSIDIARY

Unaudited Consolidated Statements of Cash Flows (Dollars in thousands)

Nine Months Ended March 31,

 

2019

 

 

2018

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

471

 

 

$

547

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

260

 

 

 

167

 

Impairment of real estate owned, net

 

 

 

 

 

14

 

Amortization of net deferred loan costs

 

 

151

 

 

 

111

 

Amortization of net securities premiums

 

 

83

 

 

 

104

 

Loss on sale of real estate owned

 

 

 

 

 

3

 

Gain on sale of available-for-sale securities

 

 

(4

)

 

 

(35

)

(Gain) Loss from derivative instruments

 

 

(29

)

 

 

279

 

Provision for loan losses

 

 

324

 

 

 

155

 

Deferred income taxes

 

 

123

 

 

 

(95

)

Accretion of deferred gain on sale-leaseback transaction

 

 

(12

)

 

 

(12

)

Earnings on bank owned life insurance

 

 

(119

)

 

 

(114

)

Stock base compensation expense

 

 

173

 

 

 

 

ESOP compensation expense

 

 

98

 

 

 

67

 

Loans held for sale:

 

 

 

 

 

 

 

 

Originations, net of prepayments

 

 

(92,887

)

 

 

(102,300

)

Proceeds from sales

 

 

104,084

 

 

 

109,507

 

Gain on sales

 

 

(2,382

)

 

 

(2,765

)

Change in fair value of loans held for sale

 

 

258

 

 

 

117

 

Changes in assets and liabilities which provided (used) cash:

 

 

 

 

 

 

 

 

Accrued interest receivable

 

 

(147

)

 

 

(234

)

Prepaid federal income taxes

 

 

(62

)

 

 

(37

)

Prepaid and other assets

 

 

(43

)

 

 

19

 

Other liabilities