Standard Bank, PaSB 401(k) Plan
December 31, 2019
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Page
Number
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Independent Auditor’s Report
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1-2
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Statements of Net Assets Available for Benefits
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3
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Statements of Changes in Net Assets Available for Benefits
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4
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Notes to Financial Statements
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5-11
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Supplemental Schedule
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12
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Signature
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13
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees/Plan Administrator
Standard Bank, PaSB 401(k) Plan
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of the Standard Bank, PaSB 401(k) Plan (the “Plan”) as of December 31, 2019 and 2018; the related statement of changes in net
assets available for benefits for the year ended December 31, 2019; and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements
present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2019 and 2018, and the changes in net assets available for benefits for the year ended December 31, 2019, in conformity with
accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm
registered with the Public Plan Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan, in accordance with U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Supplemental Information
The supplemental information in the accompanying schedule, Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2019, has been subjected to audit procedures performed in conjunction
with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but includes supplemental information required by the
Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included
determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented
in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the
Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedule is fairly stated in all material
respects in relation to the financial statements as a whole.
We have served as the Plan’s auditor since 2019.
Cranberry Township, Pennsylvania
June 29, 2020
See accompanying notes to financial statements.
See accompanying notes to financial statements.
Standard Bank, PaSB 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2019 and 2018
The following brief description of the Standard Bank, PaSB 401(k) Plan (the “Plan”) is provided for general information purposes only. Participants
should refer to the Plan Document for a more comprehensive description of the Plan’s provisions.
The Plan is a defined contribution plan covering the employees of Standard Bank, PaSB (the “Bank”) a subsidiary of Standard AVB
Financial Corp. (the “Company”). Employees who are 18 or older are eligible to contribute to the Plan after completing 250 hours of service within 3 months following their date of hire. If 250 hours are not completed within the specified time
period, they are subject to a service requirement of one year. Participants are eligible to receive employer matching contributions immediately upon entering the Plan. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”). The Plan includes a 401(k) before-tax savings feature, which permits participants to defer compensation under Section 401(k) of the Internal Revenue Code. The Plan is not covered by the Pension
Benefit Guaranty Corporation.
The Plan investments are administered by Pentegra Trust Company (the “Trustee”).
Each year, participants may voluntarily contribute up to 75% of their compensation not to exceed the annual dollar amount limit established by the Internal
Revenue Service (“IRS”) ($19,000 for 2019 and $18,500 for 2018). Participants of the Plan who are or will be 50 years old by the Plan year-end may elect to defer a catch-up contribution in excess of this limit. The maximum catch-up
contribution allowable by the IRS was $6,000 for both 2019 and 2018. The Plan allows participants to designate all or a portion of their deferral contributions as after-tax contributions into a Roth account. Participants may also contribute
amounts representing distributions from other qualified retirement plans (rollovers). Participant contributions to the Plan are recorded in the period that payroll deductions are made from the participants. Participants direct the investment of
all contributions into various investment options offered by the Plan.
The Bank makes a safe harbor matching contribution equal to 100% of employee salary deferrals that do not exceed 3% of employee compensation plus 50% of
employee salary deferrals between 3% and 5% of employee compensation. Each year the Bank may make discretionary profit sharing contributions to the Plan. To be eligible for the discretionary contribution, participants must employed on the last
day of the Plan Year. Any profit sharing contributions are 100% vested when made. There were no discretionary contributions made for 2019. Contributions are subject to certain limitations.
Each participant’s account is credited with the participant’s contribution, allocations of the Bank’s
Standard Bank, PaSB 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2019 and 2018
matching and discretionary contributions and Plan earnings. Allocations are based on participant earnings, account balances or specific participant
transactions, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested balance.
Participants are immediately 100% vested in their voluntary and rollover contributions plus actual earnings thereon. Additionally, the
Bank’s matching, safe harbor and profit sharing contributions plus earnings thereon are immediately 100% vested.
Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50 percent of their vested account
balance. The loans are secured by the balance in the participant’s account and bear an interest rate commensurate with the current Prime rate plus 1 percent. All loans are subject to specified repayment terms and must be repaid within a
five-year period. However, loans used exclusively for the purchase of a primary residence may be financed over a period of up to 15 years. Principal and interest is paid ratably through payroll deductions over the term of the loan. Each
participant is granted up to two loans at a time. At December 31, 2019 and 2018, notes receivable from participants totaled $138,100 and $115,628, respectively.
The Plan provides for normal retirement benefits to be paid upon reaching age 65. Upon termination of service, permanent disability, or death, a
participant, or in the case of death their beneficiary, will be eligible to receive an amount equal to the value of the participant’s vested interest in their account. Distributions in all cases may be made via a single lump-sum payment,
installments over a period of not more than your assumed life expectancy or partial withdrawals of as least $1,000.
The Plan provides for hardship withdrawals as well as the withdrawal of all or a portion of any rollover contributions.
The Plan is a safe harbor 401(k) plan. As such, all contributions are immediately 100% vested and there are no forfeitures. Prior to the adoption of the
safe harbor provisions, any non-vested portion of a terminated participants account was forfeited in the plan year of their termination. Forfeited non-vested account balances are able to be used to reduce Bank contributions or pay Plan
expenses. As of December 31, 2019 and 2018, the forfeited account balance was $0 and $3,701, respectively. During the year ended December 31, 2019, all forfeitures were utilized to reduce Bank contributions to the Plan. There were no
forfeitures used to offset Bank contributions or pay for Plan expenses during the year ended December 31, 2018.
Participants are entitled to invest a portion of their account in Company stock. The provisions of
Standard Bank, PaSB 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2019 and 2018
the Plan stipulate that participants may only invest up to 20% of any new salary deferrals into employer stock.
These funds are invested in a unitized fund of Standard AVB Financial Corp. common stock. Unitized accounting is a method of valuing a group of assets
using units in place of shares and assigning a unit value on a daily basis. These units are priced daily to determine the fair value of the fund. The unitized fund is comprised solely of Standard AVB Financial Corp. common stock and a money
market fund and is administered by Pentegra Trust Company.
The accompanying financial statements are prepared on the accrual basis of accounting.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires
the plan administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosures of contingent assets and liabilities. Actual results could differ from those estimates.
The Plan’s investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. See Note 5 for further discussion regarding fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date. The Plan presents, in the Statements of Changes in Net Assets Available for Benefits, the net appreciation (depreciation) in fair value of its investments, which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on investments bought and sold as well as held during the year.
Notes receivable from participants are measured at their unpaid principal balance plus any accrued interest. Interest income is
recorded on the accrual basis. Delinquent participant loans are reclassified as distributions based upon the terms of the plan document. No allowance for credit losses has been recorded as of December 31, 2019 or 2018. If a participant ceases
to make loan repayments and the plan administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.
Distributions to participants are recorded when paid by the Trustee.
Standard Bank, PaSB 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2019 and 2018
Although it has not expressed any intent to do so, the Bank has the right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
Certain administrative expenses of the Plan including audit, trustee and recordkeeping fees are paid by the Bank or by balances from
forfeited non-vested accounts and, as such, are not reflected as expenses of the Plan. Administrative expenses paid by the Bank on behalf of the Plan totaled $22,098 for plan year 2019.
Other administrative expenses including loan processing fees and certain partial distribution fees are paid by individual participants
of the Plan. These fees are reflected on the accompanying Statements of Changes in Net Assets Available for Benefits.
Certain comparative amounts for the prior year have been reclassified to conform to current-year classifications. Such classifications had no effect on
the net increase in plan assets or net assets available for benefits.
The Internal Revenue Service has determined and informed the Company that the Plan is designed in accordance with applicable sections of the Internal
Revenue Code (IRC) by letter dated March 31, 2014. The plan has been amended since receiving the opinion letter, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable
requirements of the IRC.
The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2019, there are no uncertain
positions taken or expected to be taken that would require recognition of a tax liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no
audits for any tax periods in progress. The Plan Administrator believes it is no longer subject to income tax examinations for years prior to 2016.
Certain Plan investments consist of shares of Company common stock and loans to participants which are secured by the balances in the participant
accounts. The Bank is the Plan Sponsor, and the Company is the Parent Company of the Plan Sponsor; and therefore, these transactions qualify as party-in-interest transactions that are exempt under ERISA.
At December 31, 2019 and 2018, the Plan held 71,442 and 82,322 shares of Company common stock in the Standard AVB Financial Corp. Common Stock Fund.
Dividends in the amount of $67,983 were received on common stock for the year ended December 31, 2019. Therefore, related
Standard Bank, PaSB 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2019 and 2018
transactions qualify as related party transactions. All other transactions which may be considered parties-in-interest transactions relate to normal
Plan management and administrative services and related payment of fees which are discussed further in Note 2g.
The Plan provides enhanced disclosures about assets and liabilities carried at fair value. Disclosures follow a hierarchal framework that prioritizes
the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. The three
levels of the fair value hierarchy are described below:
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to
the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used
for the years ending December 31, 2019 and 2018.
Money market funds: Valued at amortized cost which approximates fair value.
Mutual funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are
open-end mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily net asset value (NAV) and to transact at that price. The mutual funds held by the Plan are deemed to be
actively traded.
Standard AVB Financial Corp. Common Stock Fund: Common stock held is valued at the closing price reported on
Nasdaq which is the active market on which the stock is traded, while the money market fund, which comprises the remaining assets, is valued at amortized cost which approximates fair value.
Common trust funds: Valued at the NAV of shares held by the plan at year end adjusted for any
Standard Bank, PaSB 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2019 and 2018
cash held for liquidity purposes and any fees imposed by the fund. The net asset value per unit is determined by dividing the net assets by the number of
units outstanding on the day of valuation. In accordance with the terms of the Plan of Trust, the net asset value of the fund is determined daily. Units are issued and redeemed daily, at the daily net asset value. Also the net investment income
and realized and unrealized gains on investments are not distributed.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of
future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different fair value measurement at the reporting date.
The following tables set forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2019 and
2018:
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate,
market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could
materially affect participants’ account balances and the amounts reported in the Statement of Net Assets Available for Benefits.
As of December 31, 2019 and 2018, the Plan had the following three investments that individually exceeded ten percent of net assets
available for benefits:
Standard Bank, PaSB 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2019 and 2018
The investment in the Corporation’s common stock is further described in Note 4.
On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic. The rapidly developing pandemic
has generated significant uncertainty in the global economy and volatility in financial markets. The COVID-19 pandemic has affected and may continue to affect the market price of the Standard AVB Financial Corp. common stock fund and other Plan
assets. Due to the ongoing economic uncertainty and volatility caused by COVID-19, the resulting financial impact to the Plan cannot be reasonably estimated.
Following this declaration, the U.S. Federal government passed the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” on
March 27, 2020. The CARES Act allows eligible plan participants to request penalty-free distributions of up to $100,000 before December 31, 2020 for qualifying reasons associated with the COVID-19 pandemic, permits increasing the limit for plan
loans, permits suspension of loan payments due for up to one year, and permits individuals to stop receiving 2020 required minimum distributions. Written amendments to the Plan to reflect these operational changes will be adopted at a later
date in accordance with applicable law and IRS guidance.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who
administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.