STND Standard AVB Financial Corporation

Standard AVB Financial Corp. (the “Company”) - (NASDAQ: STND), the holding company for Standard Bank, PaSB, announced earnings for the quarter ended March 31, 2021 of $2.1 million, or $0.46 per basic share, compared to $1.1 million, or $0.24 per basic share, for the quarter ended March 31, 2020. Net income for the quarter was impacted by merger-related expenses of $151,000 ($121,000 after tax) related to the pending merger with Dollar Mutual Bancorp. Excluding the after tax impact of the merger-related expenses, net income would have been $2.2 million or $0.46 per basic share, for the quarter ended March 31, 2021.   The increase in earnings resulted primarily from changes in the net equity securities fair value adjustment period over period and decreases in interest expense and the provision for loan losses, partially offset by a decrease in interest income and an increase in income tax expense.

The Company’s annualized return on average assets and average equity were 0.82% and 5.92%, respectively, (0.87% and 6.26%, respectively, excluding the merger-related expenses) for the quarter ended March 31, 2021 compared to 0.46% and 3.14%, respectively, for the quarter ended March 31, 2020.

The Company’s board of directors declared a quarterly cash dividend of $0.221 per share on the Company’s common stock. The dividend will be payable to stockholders of record as of May 10, 2021 and will be paid on May 24, 2021.

On September 25, 2020, the Company and Dollar Mutual Bancorp jointly announced the signing of a definitive merger agreement pursuant to which Dollar Mutual Bancorp will acquire the Company in an all cash transaction for an aggregate purchase price of $158 million.   The shareholders of the Company approved the merger on January 19, 2021 and the transaction is expected to close in the first half of 2021, pending regulatory approvals and the satisfaction or waiver of other customary closing conditions.

Andrew W. Hasley, President & CEO, stated, “We are pleased with the financial results we have been able to achieve while continuing to navigate through such a challenging economic and operating environment. The continued historically low interest rates have resulted in a contraction of our net interest margin from pre-pandemic levels; however, net interest income has increased. Non-interest income remains diversified, noninterest expenses have been prudently managed and credit quality has remained strong. We have continued to support our customer base and community all while maintaining socially responsible practices and being responsive to changes required as a result of the ongoing guidance and mandates from the federal, state and local government regarding COVID-19.

The Company ended March with an allowance for loan losses sufficient to absorb credit losses and an abundance of liquidity and regulatory capital well in excess of the prescribed minimums. Taking all of this into consideration, the Company made the decision to maintain our dividend.”

CONSOLIDATED BALANCE SHEET & ASSET QUALITY OVERVIEW

Total assets was $1.1 billion at both March 31, 2021 and December 31, 2020. During the quarter ended March 31, 2021, there was an increase in cash and cash equivalents of $38.8 million, or 76.8%, partially offset by a decrease in loans receivable of $23.3 million, or 3.2%, and a decrease in investment securities of $2.1 million, or 1.1%. The increase in cash and cash equivalents was also impacted by an increase in deposits during the period which is further discussed below. The decrease in loans receivable was the result of loan payoffs and amortization exceeding loan production during the period.

Total deposits at March 31, 2021 increased by $23.9 million, or 3.0%, to $833.1 million from $809.2 million at December 31, 2020.   The increase resulted from a $25.4 million, or 4.2%, increase in demand and savings accounts partially offset by a $1.5 million, or 0.8%, decrease in time deposits. The increase in demand and savings accounts was primarily the result of inflows from several sources during the period including additional government stimulus, second round Paycheck Protection Program (“PPP”) loan proceeds, and maturing time deposits.   Borrowed funds decreased by $10.8 million, or 11.7% to $82.2 million at March 31, 2021 from $93.0 million at December 31, 2020. The decrease was due to the maturity and repayment of Federal Home Loan Bank advances during the period.

Stockholders’ equity decreased by $894,000, or 0.6% to $145.1 million at March 31, 2021 from $146.0 million at December 31, 2020. The decrease was the result of a decrease in accumulated other comprehensive income and dividends paid during the period offset by net income earned.

Non-performing loans at March 31, 2021 were $4.6 million, or 0.64% of total loans compared to $5.0 million, or 0.67% of total loans at December 31, 2020.   The Company’s allowance for loan losses increased $138,000, or 1.8%, to $8.0 million at March 31, 2021. Based upon Management’s understanding of the credit quality of the loan portfolio, the Company has provided sufficient reserves for possible losses in the portfolio.

The Company is a qualified Small Business Administration (“SBA”) lender and was automatically authorized to originate PPP loans. The initial PPP loan program closed on August 8, 2020. The Company is continuing to work with customers to submit the required information to the SBA in order to receive the maximum amount of loan forgiveness on those loans. To date, the Company has received loan forgiveness on 165 loans totaling over $18.0 million out of the 428 loans totaling over $42.0 million approved under the first round of the PPP program. On December 27, 2020, an additional round of PPP funding was established. The Company is continuing to participate in the program, which opened mid-January for new loan applications and remains open through May 31, 2021. The Company has processed 93 applications totaling over $8.1 million under the second round of the PPP program.

The Company has continued to provide assistance to individuals and small business clients directly impacted by the COVID-19 pandemic by allowing borrowers to defer loan payments.   As of March 31, 2021, the Bank had payment deferrals for eight commercial loans totaling $9.2 million and five consumer loans totaling $1.0 million. All of these loans were initially provided a deferral period of 90 days and, if necessary, additional deferral periods were provided upon request. The Company remains fully committed to serving our customers and communities through this uncertain time.

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 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 36.4% and 24.5% of the commercial loan portfolio at March 31, 2021, respectively. Additionally, the Bank has approximately $15.7 million in total exposure to the hotel sector.

OPERATING RESULTS OVERVIEW

Net interest income was $7.2 million for the three months ended March 31, 2021 compared to $6.8 million for the three months ended March 31, 2020.   The net interest margin for the three months ended March 31, 2021 was 2.96%, compared to 3.02% for the same period in the prior year. The increase in net interest income for the quarter was primarily due to a decrease in both the balance and cost of interest-bearing liabilities as well as an increase in the balance of interest-earning assets partially offset by a decrease in the yield on interest-earning assets.

A provision for loan losses of $150,000 was recorded for the three months ended March 31, 2021, compared to $550,000 for the three months ended March 31, 2020. The provision for the prior year quarter was impacted by a number of things including increases in several qualitative factors, some of which were directly impacted by the COVID-19 pandemic, an increase in loan balances included in the allowance calculation and increased reserves required on a few loans which had experienced a deterioration in quality.

Noninterest income totaled $1.2 million for the quarter ended March 31, 2021, compared to $535,000 for the quarter ended March 31, 2020.   The increase in noninterest income for the three months ended March 31, 2021 was primarily the result of a $730,000 change in the net equity securities fair value adjustment partially offset by decreases in investment management fees and service charges.

Noninterest expenses totaled $5.6 million for the quarter ended March 31, 2021, compared to $5.5 million for the quarter ended March 31, 2020. Excluding merger-related expenses, noninterest expenses totaled $5.4 million for the quarter ended March 31, 2021. The decrease in noninterest expenses, excluding merger-related expenses, for the quarter ended March 31, 2021 was primarily the result of a decrease in compensation expenses partially offset by an increase in federal deposit insurance.   The higher federal deposit insurance during the period was the result of the elimination of the small bank credits which had been applied in the prior period and have since been fully utilized.

Income tax expense totaled $528,000 for the quarter ended March 31, 2021, compared to $194,000 for the quarter ended March 31, 2020.   The increase in income tax expense was primarily the result of an increase in taxable income as well as a higher effective tax rate for the period.

Standard AVB Financial Corp., with total assets of $1.1 billion at March 31, 2021, 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
(Dollars in thousands, except per share data)
(Unaudited)
OPERATIONS DATA:	Three Months Ended March 31,
	2021				2020
Interest and Dividend Income	$	8,582			$	9,036
Interest Expense		1,375				2,207
Net Interest Income		7,207				6,829
Provision for Loan Losses		150				550
Net Interest Income after Provision for Loan Losses		7,057				6,279
Noninterest Income		1,170				535
Noninterest Expenses		5,576				5,510
Income before Income Tax Expense		2,651				1,304
Income Tax Expense		528				194
Net Income	$	2,123			$	1,110
Earnings Per Share - Basic	$	0.46			$	0.24
Earnings Per Share - Diluted	$	0.46			$	0.24
Annualized Return on Average Assets		0.82	%			0.46	%
Average Assets	$	1,048,584			$	975,543
Annualized Return on Average Equity		5.92	%			3.14	%
Average Equity	$	145,423			$	141,938
Efficiency Ratio		63.65	%			66.66	%
Net Interest Spread		2.71	%			2.70	%
Net Interest Margin		2.96	%			3.02	%
Annualized Noninterest Expense to Average Assets		2.16	%			2.27	%
FINANCIAL CONDITION DATA:	March 31,				December 31,
	2021				2020
Total Assets	$	1,064,615			$	1,051,588
Cash and Cash Equivalents		89,310				50,513
Investment Securities		186,214				188,279
Loans Receivable, Net		711,407				734,752
Deposits		833,146				809,240
Borrowed Funds		82,150				92,979
Total Stockholders' Equity		145,057				145,951
Book Value Per Share	$	30.39			$	30.57
Tangible Book Value Per Share	$	24.70			$	24.86
Allowance for Loan Losses	$	7,979			$	7,841
Non-Performing Loans	$	4,638			$	4,965
Allowance for Loan Losses to Total Loans		1.11	%			1.06	%
Allowance for Loan Losses to Non-Performing Loans		172.04	%			157.93	%
Non-Performing Assets to Total Assets		0.47	%			0.52	%
Non-Performing Loans to Total Loans		0.64	%			0.67	%

STANDARD AVB FINANCIAL CORP.RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES

EXPLANATION OF OUR USE OF NON-GAAP MEASURES

In addition to the results of operations presented in accordance with generally accepted accounting principles (GAAP), our management uses, and this exhibit contains, certain non-GAAP financial measures. We believe these non-GAAP financial measures provide information useful to investors in understanding our underlying operational performance, our business and performance trends, and facilitate comparisons with the performance of others in the financial service industry.

Although we believe these non-GAAP financial measures enhance investors’ understanding of our business and performance, they should not be considered an alternative to GAAP. The reconciliation of these non-GAAP financial measures from GAAP to non-GAAP follows.

Standard AVB Financial Corp.
Reconciliation of Certain Non-GAAP Financial Measures
(Dollars in thousands, except per share data)
(Unaudited)
Noninterest expense, net income, basic earnings per share, diluted earnings per share, return on average assets and return on average equity excluding merger-related expenses are all non-GAAP measures. The following table reconciles noninterest expense to noninterest expense excluding merger-related expenses and net income to net income excluding merger-related expenses. Additionally, basic earnings per share, diluted earnings per share, return on average assets and return on average equity utilizing both net income and net income excluding merger-related expenses are presented for the respective periods:
	Three Months Ended March 31,
	2021				2020
Noninterest Expense (GAAP)	$	5,576			$	5,510
Merger-related expenses (GAAP)		(151	)			-
Noninterest expense, excluding merger-related expenses	$	5,425			$	5,510
Net Income (GAAP)	$	2,123			$	1,110
After tax merger-related expenses (GAAP)		121				-
Net income, excluding merger-related expenses	$	2,244			$	1,110
Earnings Per Share - Basic
GAAP	$	0.46			$	0.24
Excluding merger-related expenses	$	0.46			n/a
Earnings Per Share - Diluted
GAAP	$	0.46			$	0.24
Excluding merger-related expenses	$	0.46			n/a
Average Assets (GAAP)	$	1,048,584			$	975,543
Return on Average Assets
GAAP		0.82	%			0.46	%
Excluding merger-related expenses		0.87	%		n/a
Average Equity (GAAP)	$	145,423			$	141,938
Return on Average Equity
GAAP		5.92	%			3.14	%
Excluding merger-related expenses		6.26	%		n/a
Tangible book value per common share is a non-GAAP measure and is calculated based on tangible book value divided by period-end common shares outstanding. The following tables reconcile book value and book value per share to tangible book value and tangible book value per share for the periods indicated:
	March 31, 2021				December 31, 2020
Total Stockholders' Equity (GAAP)	$	145,057			$	145,951
Goodwill and Other Intangible Assets, Net		(27,138	)			(27,247	)
Tangible Book Value	$	117,919			$	118,704
Common Shares Outstanding		4,773,716				4,773,995
Book Value Per Share (GAAP)	$	30.39			$	30.57
Goodwill and Other Intangible Assets, Net Per Share		(5.68	)			(5.71	)
Tangible Book Value Per Share	$	24.70			$	24.86

CONTACTS:
Andrew W. Hasley	Timothy K. Zimmerman	Susan A. Parente
President	Senior Executive Vice President	Executive Vice President
Chief Executive Officer	Chief Operating Officer	Chief Financial Officer
412.856.0363	412.856.0363	412.856.0363