Annual Meeting of Shareholders May 19, 2020
Safe Harbor Statement This document contains certain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." There are several factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Standard AVB Financial’s most recent reports on Form 10 -Q, 8-K and 10-K filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov. Standard AVB Financial does not undertake any obligation to update the forward-looking statements made in this document. 2
An Overview of Standard AVB In 2017, completed merger with Allegheny Valley Bancorp, Inc. for approximately $56.5 million. On May 25, 2018 rejoined Nasdaq and began trading on the Nasdaq Capital Market. Operates 17 full-service community banking offices throughout southwestern Pennsylvania and Western Maryland. The Bank’s market area has transitioned from heavy industry to more specialized industries and service providers, including: technology, health care, education, energy and finance. Local economic expansion driven by substantial medical investment (UPMC) and an influx of tech jobs and innovation (Google, Facebook, & Uber). 3 Source: S&P Global Market Intelligence.
STND AVB Mission Statement The Mission of the Bank is to establish and maintain mutually beneficial long term relationships with customers, businesses, professionals and the communities we serve. We will do so by providing highly valued financial products and services while making a noticeable positive contribution to the social and economic well-being in the markets we serve. 4
Financial Highlights 2018 2019 3/31/2020 Total Assets $971,796 $984,387 $991,793 Total Loans $733,396 $717,847 $715,370 Total Deposits $717,874 $734,406 $729,536 Loans / Deposits 102.16% 97.75% 98.06% ROAA 0.90% 0.90% 0.46% ROATCE 8.95% 8.29% 4.29% Efficiency Ratio 65.33% 65.64% 66.66% Non-Performing Assets / Total Assets 0.33% 0.43% 0.32% Net Charge-Offs / Average Loans 0.04% 0.04% 0.03% 5 Dollars in thousands.
Quarterly Net Income (EPS Basic) 2020Q1 Earnings impacted by the equity fair value adjustment related to the securities portfolio and additional provision due to COVID-19. $5,000 $0.70 $0.60 $0.53 $4,000 $0.50 $0.46 $0.45 $0.44 $3,000 $0.40 $0.36 Adjusted for $674k pre-tax $2,464 net equity $0.30 $0.24 $2,000 securities fair $2,169 $2,098 $2,075 value $1,684 adjustment $0.20 $1,000 $1,110 $0.10 $0 $0.00 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 Net Income EPS (Basic) 6 Dollars in thousands.
Net Interest Margin Reflects the impact of the U.S. Treasury yield curve. Intense pressure on the margin with increasing deposit costs and essentially flat pricing for loans. 5.00% 3.79% 3.80% 4.00% 3.74% 3.67% 3.67% 3.66% 3.44% 62 bps 42 bps 3.00% 3.17% 3.18% 3.17% 3.12% 3.11% 3.02% 2.99% 2.00% 1.00% 0.00% 9/30/2018 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 STND NIM Peer Median NIM 7 Peer group detailed on page 31.
Expense Control Consistent record of efficient operations. Emphasis remains on maximizing technology and efficiency of operations. 80.00% 71.92% 69.70% 68.98% 70.00% 66.72% 65.95% 65.60% 65.65% 66.66% 65.64% 65.33% 63.80% 63.60% 60.00% 61.55% 59.58% 50.00% 40.00% 9/30/2018 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 STND Efficiency Ratio Peer Median Efficiency Ratio 8 Peer group detailed on page 31.
Lending Strategy Continue to build strong, mutually beneficial and profitable customer relationships Deploy resources to expand commercial business and real estate loans Offer a full breadth of residential mortgage products and sell the majority of long term / fixed rate loans Loans sold in 2019 were $20 million and in 2020Q1 were $5.4 million Total gain on sale of mortgage loans from January 2019 to March 2020 was $373,000 Maintain solid credit quality 9
Loan Composition Detail 2018 3/31/2020 % Change 1-4 Family Residential and Construction $253,913 $228,809 (9.9%) CRE and Construction 308,775 330,246 7.0% HELOC and Lines of Credit 123,373 106,691 (13.5%) Commercial Business Loans 46,196 49,112 6.3% Other 1,139 512 (55.0%) Gross Loans & Leases $733,396 $715,370 (2.5%) 10 Dollars in thousands.
Loan Composition Detail 12/31/2018 3/31/2020 Commercial Commercial Other Other Business Loans Business Loans 0.2% 0.1% 6.9% 6.3% 1-4 Family 1-4 Family Residential and HELOC and HELOC and Residential and Construction Lines of Credit Lines of Credit Construction 34.6% 16.8% 14.9% 32.0% CRE and CRE and Construction Construction 46.2% 42.1% CRE / TRBC: 155% CRE / TRBC: 157% Yield on Loans: 4.25% Yield on Loans: 4.36% Source: Company documents and S&P Global Market Intelligence. 11 Note: Data as of 3/31/20.
Asset Quality STND’s asset quality remains strong and better than its peers. 1.25% 1.08% 1.00% 0.87% 0.75% 0.64% 0.52% 0.50% 0.43% 0.34% 0.33% 0.32% 0.25% 0.00% 12/31/2017 12/31/2018 12/31/2019 3/31/2020 STND NPAs / Assets Peer Median NPAs / Assets 12 Peer group detailed on page 31.
Loan Loss Reserve Coverage Reserve coverage reflects the impact of the merger since AVB’s loan portfolio was marked-to-market. Reserve coverage relates only to the non-marked portion of the portfolio, which represents approximately 70% of total loan receivables outstanding. Additional Provision in 2020Q1 due to COVID-19. 1.00% 0.75% 0.75% 0.68% 0.60% 0.55% 0.50% 0.54% 0.39% 0.37% 0.37% 0.25% 0.00% 12/31/2017 12/31/2018 12/31/2019 3/31/2020 LLR / Loans NPLs / Loans 13
Core Deposit Growth Consistently focused on building broader customer relationships and targeting small/medium sized business customers to increase core deposits. $800 $734.4 $729.5 $717.9 $694.8 $700 $600 67.7% 66.6% 65.6% 69.5% $500 $400 $300 $200 34.4% 33.4% 32.3% 30.5 % $100 $0 12/31/2017 12/31/2018 12/31/2019 3/31/2020 Time Deposits Demand, Savings & Club Accounts 14 Dollars in millions.
Our Mission & Values Drive Our Response to COVID-19 Response Plan • Goal = Protect our Employees, Customers and Communities we serve • Immediate Work from Home Program • Separated key back office personnel into alternative work locations • Closed community banking office lobbies – Drive-thru only with customer appointments • As transaction volumes decreased, closed some community banking offices and limited hours in others • Implemented all workplace Social Distancing and Government required safety measures • Increased Communication: Board of Directors, Customers and Employees 15
Our Mission & Values Drive Our Response to COVID-19 Employees • Fully Implemented Centers for Disease Control and Prevention (CDC) and PA Dept. of Health Guidelines for Workplace Safety and Families First Coronavirus (FFCR) Act • Established 10% bonus pay for employees not able to work from home • Initiated once a week lunch for employees at bank offices • Held Town Hall style meetings for all employees • Provided flexible scheduling and accommodations for staff with unique situations 16
Our Mission & Values Drive Our Response to COVID-19 Customers • Established Plan for Consumer and Commercial Loan Payment Deferrals – Up to 90 Days • Offered Payroll Protection Program (PPP) loans ‒ Provided PPP loans for customers and non-customers • Significant outreach to commercial customers initiated by Relationship Managers • Increased ATM as well as PIN and Signature based debit card limits • Enhanced mobile deposit banking parameters by increasing both business and consumer limits • Web-site enhancement communicating programs and initiatives undertaken for customers • Doubled Associates allocated to our Customer Care Center 17
Our Mission & Values Drive Our Response to COVID-19 Credit • Implemented early identification program for larger dollar credit exposures and high-risk industries • Updated qualitative factors in ALLL model • Implemented comprehensive plan for proactively monitoring and managing credit risk as a result of the COVID-19 Pandemic • Participated in two rounds of PPP: ~360 loans approved, $40 million funded, and 4,600 jobs saved • Processed deferrals for approximately 20% of the total loan portfolio 18
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