STANDARD AVB FINANCIAL CORP. The following discussion and analysis provides further detail on the financial condition and results of operations of the Company. This section should be read in conjunction with the Notes to Consolidated Financial Statements (Unaudited) presented elsewhere in this Quarterly Report on Form 10-Q. The Company's critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as ofMarch 31, 2021 have remained unchanged from the disclosures presented in the Company's audited financial statements for the year endedDecember 31, 2020 contained in the Company's Annual Report on Form 10-K as filed with theSecurities and Exchange Commission onMarch 31, 2021 .Standard AVB Financial Corp. is aMaryland corporation that provides a wide array of retail and commercial financial products and services to individuals, families and businesses through 17 banking offices located in thePennsylvania counties ofAllegheny ,Westmoreland andBedford andAllegany County, Maryland through its wholly-owned subsidiaryStandard Bank .
Proposed Merger with Dollar
OnSeptember 25, 2020 the Company, and Dollar announced they had entered into a definitive agreement under which Dollar will acquire the Company in an all cash transaction valued at approximately$158 million . The Company's stockholders will receive$33.00 for each share of Company common stock that they own. The transaction was approved by the Company's stockholders onJanuary 19, 2021 and all necessary regulatory approvals and waivers have been received. The parties expect that the propsed merger will be completed after market hours onMay 28, 2021 , pending the satisfaction or waiver of customary closing conditions. However, it is possible that factors outside the control of both companies could result in the merger being completed at a different time or not at all.
Non-GAAP Financial Measures
In addition to the results of operations presented in accordance with generally
accepted accounting principles (GAAP), Management uses, and this exhibit
contains, certain non-GAAP financial measures. Management believes these
non-GAAP financial measures provide information useful to investors in
understanding the Company's underlying operational performance, business and
performance trends, and facilitate comparisons with the performance of others in
the financial service industry. Although Management believes these non-GAAP
financial measures enhance investors' understanding of the Company's business
and performance, they should not be considered an alternative to GAAP.
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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 net income to net income excluding merger-related expenses and presents 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 for the periods presented (dollars in thousands, except per share
data):
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
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 $ 0.24Excluding 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 % 3.15 %Excluding merger-related expenses 6.26 %
n/a
Comparison of Financial Condition at
General. The Company's total assets was$1.1 billion at bothMarch 31, 2021 andDecember 31, 2020 , respectively. Cash and cash equivalents increased$38.8 million , or 76.8%, net loans receivable decreased$23.3 million , or 3.2%, and investment and mortgage-backed securities decreased$2.1 million , or 1.1%, for the three months endedMarch 31, 2021 . Cash and Cash Equivalents. Cash and cash equivalents increased$38.8 million , or 76.8%, to$89.3 million atMarch 31, 2021 from$50.5 million atDecember 31, 2020 . The increase in cash and cash equivalents was primarily the result of a$23.9 million increase in deposits and a$22.7 decrease in loans partially offset by a$10.8 decrease in FHLB advances.Investment Securities . Investment securities available for sale decreased$1.6 million , or 1.7%, to$88.4 million atMarch 31, 2021 from$90.0 million atDecember 31, 2020 . Purchases of investment securities totaled$7.4 million during the three months endedMarch 31, 2021 which included$641,000 in securities purchased but not settled as of quarter end. The purchases during the period were offset by calls and maturities of$7.5 million and a$1.5 million decrease in the unrealized gain on investment securities during the three months endedMarch 31, 2021 .Equity Securities . Equity securities available for sale were$2.6 million at bothMarch 31, 2021 andDecember 31, 2020 , respectively. There were no purchases or sales of equity securities during the three months endedMarch 31, 2021 . 33
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Mortgage-Backed Securities . The Company's mortgage-backed securities available for sale decreased$555,000 , or 0.6%, to$95.0 million atMarch 31, 2021 from$95.5 million atDecember 31, 2020 . Purchases of mortgage-backed securities totaling$14.5 million during the three months endedMarch 31, 2021 were offset by repayments of$8.1 million , sales of$5.7 million , and a$1.0 million decrease in the unrealized gain on mortgage-backed securities during the period. Loans. AtMarch 31, 2021 , net loans were$711.4 million , or 66.8% of total assets, compared to$734.8 million , or 69.9% of total assets atDecember 31, 2020 . One-to-four family residential and construction loans, commercial business loans, home equity loans and lines of credit, and other loans decreased$12.6 million or 6.6%,$7.5 million or 9.6%,$5.0 million or 5.2%, and$55,000 or 10.9%, respectively. The decreases were a result of loan payoffs and amortization exceeding loan production during the period. Commercial real estate and construction loans increased$1.9 million , or 0.5%. Deposits. The Company accepts deposits primarily from the areas in which the Bank's offices are located. The Company has consistently focused on building broader customer relationships and targeting small business customers to increase core deposits. The Company also relies on customer service to attract and retain deposits. The Company offers a variety of deposit accounts with a range of interest rates and terms. Deposit accounts consist of savings accounts, time deposits, money market accounts, commercial and consumer checking accounts and individual retirement accounts. Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market interest rates, liquidity requirements and deposit growth goals. Deposits increased$23.9 million , or 3.0%, to$833.1 million atMarch 31, 2021 from$809.2 million atDecember 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 during the three months endedMarch 31, 2021 . The increase in demand and savings accounts resulted from increases in both business and consumer products. The increases were primarily the result of inflows from several sources including additional government stimulus, second round PPP loan proceeds, and maturing time deposits. Non-interest-bearing checking accounts, savings accounts, and interest-bearing checking accounts increased$16.7 million or 9.5%,$9.9 million or 5.8%, and$1.5 million or 1.2%, respectively. Money market accounts decreased$2.7 million , or 2.2% during the period. Borrowings. Borrowed funds, which includes short and long-term borrowings and securities sold under agreements to repurchase, decreased by$10.8 million , or 11.7%, to$82.2 million atMarch 31, 2021 from$93.0 million atDecember 31, 2020 . The decrease was primarily due to a decrease in long-term borrowings resulting from$8.5 million in maturities and an additional$2.3 million in principal repayments. Financing lease liabilities, which are also included in long-term borrowings, were$2.9 million atMarch 31, 2021 and$3.0 million atDecember 31, 2020 . There were no short-term borrowings atMarch 31, 2021 orDecember 31, 2020 . Stockholders' Equity. Stockholders' equity decreased$894,000 , or 0.6%, to$145.1 million atMarch 31, 2021 from$146.0 million atDecember 31, 2020 . The decrease was a result of a$2.0 million decrease in accumulated other comprehensive income related to changes in the fair value of available for sale debt securities and$1.0 million in dividends paid during the period partially offset by net income of$2.1 million . 34 Table of Contents Average Balance and Yields The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated (dollars in thousands). No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense. For the Three Months Ended March 31, 2021 2020 Average Average Outstanding Outstanding Balance Interest Yield/
Rate Balance Interest Yield/ Rate Interest-earning assets: Loans
$ 734,044 $ 7,575 4.13 %$ 712,469 $ 7,813 4.36 % Investment and mortgage-backed securities 186,585 888 1.90 % 159,493 992 2.49 % FHLB and other restricted stock 8,718 106 4.97 % 7,579 143 7.57 % Interest-earning deposits 56,528 13 0.09 % 27,800 88 1.28 % Total interest-earning assets 985,875 8,582 3.49 % 907,341 9,036 3.96 % Noninterest-earning assets 62,709 68,202 Total assets$ 1,048,584 $ 975,543 Interest-bearing liabilities: Savings accounts$ 178,208 40 0.09 % 144,801 53 0.15 % Time Deposits 205,895 797 1.57 % 239,852 1,283 2.15 % Money market accounts 120,982 60 0.20 % 103,871 265 1.03 % Demand and NOW accounts 124,821 53 0.17 % 109,592 71 0.26 % Total interest-bearing deposits 629,906 950 0.61 % 598,116 1,672 1.12 % Borrowings 83,343 423 2.03 % 99,195 531 2.14 % Securities sold under agreements to repurchase 3,439 2 0.20 % 3,980 4 0.44 % Total interest-bearing liabilities 716,688 1,375 0.78 % 701,291 2,207 1.26 % Noninterest-bearing deposits 184,418 129,217
Noninterest-bearing liabilities 2,055
3,097
Total liabilities 903,161 833,605
Stockholders' equity 145,423 141,938
Total liabilities and
stockholders' equity $ 1,048,584 $ 975,543
Net interest income $ 7,207 $ 6,829
Net interest rate spread (1) 2.71 % 2.70 %
Net interest-earning assets (2) $ 269,187 $ 206,050
Net interest margin (3) 2.96 % 3.02 %
Average interest-earning assets
to interest-bearing liabilities 137.56 % 129.47 %
Net interest rate spread represents the difference between the yield on (1) average interest-earning assets and the cost of average interest-bearing
liabilities.
(2) Net interest-earning assets represents total interest-earning assets less
total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average total
interest-earning assets.
Comparison of Operating Results for the Three Months Ended
General. Net income for the quarter endedMarch 31, 2021 was$2.1 million compared to$1.1 million for the quarter endedMarch 31, 2020 , an increase of$1.0 million , or 91.3%. Net income for the quarter endedMarch 31, 2021 was impacted by merger expenses of$151,000 ($121,000 after tax) related to the pending merger with Dollar. Excluding the after tax impact of the merger-related expenses, net income would have been$2.2 million . Earnings per share for the current period was$0.46 for basic and$0.46 for fully diluted ($0.46 and$0.46 , respectively, excluding the merger-related expenses) compared to$0.24 for basic and$0.24 for fully diluted for the same period in 2020. 35
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The Company's annualized return on average assets (ROA) and annualized return on average equity (ROE) for the quarter endedMarch 31, 2021 were 0.82% and 5.92%, respectively, (0.87% and 6.26%, respectively, excluding the merger-related expenses) compared to 0.46% and 3.15%, respectively, for the quarter endedMarch 31, 2020 . Net Interest Income. Net interest income for the quarter endedMarch 31, 2021 was$7.2 million , an increase of 5.5%, compared to$6.8 million for the quarter endedMarch 31, 2020 . The increase was primarily the result of 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. The net interest rate spread and net interest margin were 2.71% and 2.96%, respectively, for the three months endedMarch 31, 2021 , compared to 2.70% and 3.02%, respectively, for the three months endedMarch 31, 2020 . Interest and Dividend Income. Total interest and dividend income decreased$454,000 , or 5.0%, to$8.6 million for the three months endedMarch 31, 2021 compared to$9.0 million for the three months endedMarch 31, 2020 . The decrease was primarily the result of a 47 basis point decrease in the average yield on interest-earning assets to 3.49% for the three months endedMarch 31, 2021 from 3.96% for the same period in the prior year as a result of lower short-term interest rates. The decrease in total interest and dividend income resulting from the decrease in the average yield was partially offset by an increase in the average balance of interest-earning assets of$78.5 million , or 8.7%, to$985.9 million for the three months endedMarch 31, 2021 compared to the same period in the prior year. Interest income on loans decreased$238,000 , or 3.1%, to$7.6 million for the three months endedMarch 31, 2021 compared to$7.8 million for the three months endedMarch 31, 2020 . The decrease was primarily the result of a 23 basis point decrease in the average yield on loans receivable to 4.13% for the three months endedMarch 31, 2021 from 4.36% for the same period in the prior year. The decrease in interest income resulting from the decrease in the average yield was partially offset by an increase in the average balance of loans receivable of$21.6 million , or 3.0%, to$734.0 million for the three months endedMarch 31, 2021 compared to the same period in the prior year. Interest income on investment and mortgage-backed securities decreased$104,000 , or 10.5%, to$888,000 for the three months endedMarch 31, 2021 compared to$992,000 for the three months endedMarch 31, 2020 . The decrease was primarily the result of a 59 basis point decrease in the average yield earned on investment and mortgage-backed securities to 1.90% for the quarter endedMarch 31, 2021 from 2.49% for the same period in the prior year. The decrease in interest income resulting from the decrease in the average yield was partially offset by an increase in the average balance of investment and mortgage-backed securities of$27.1 million , or 17.0%, to$186.6 million for the three months endedMarch 31, 2021 compared to the same period in the prior year. Dividend income on FHLB and other restricted stock decreased$37,000 , or 25.9%, to$106,000 for the three months endedMarch 31, 2021 compared to$143,000 for the three months endedMarch 31, 2020 . The decrease primarily resulted from a 260 basis point decrease in the average yield to 4.97% for the three months endedMarch 31, 2021 from 7.57% for the same period in the prior year. The FHLB decreased the dividend yield on both activity and membership stock as of the first quarter of 2021. The decrease in interest income resulting from the decrease in the average yield was partially offset by an increase in the average balance of FHLB stock and other restricted stock of$1.1 million , or 15.0%, to$8.7 million for the three months endedMarch 31, 2021 compared to the same period in the prior year. Interest income on interest-earning deposits decreased$75,000 , or 85.2%, to$13,000 for the three months endedMarch 31, 2021 compared to$88,000 for the three months endedMarch 31, 2020 . The decrease was primarily the result of a 119 basis point decrease in the average yield on interest-earning deposits to 0.09% for the three months endedMarch 31, 2021 from 1.28% for the same period in the prior year as a result of lower short-term interest rates. The decrease in interest income resulting from the decrease in the average yield was partially offset by an increase in the average balance of interest-earning deposits of$28.7 million , or 103.3%, to$56.5 million for the three months endedMarch 31, 2021 compared to the same period in the prior year. Interest Expense. Total interest expense decreased$832,000 , or 37.7%, to$1.4 million for the three months endedMarch 31, 2021 compared to$2.2 million for the three months endedMarch 31, 2020 . The decrease was primarily the result of a 48 basis point decrease in the average cost of interest-bearing liabilities to 0.78% for the three months endedMarch 31, 2021 from 1.26% for the three months endedMarch 31, 2020 as a result of lower short-term interest rates. The decrease in total interest expense resulting from the decrease in the average cost was partially offset by an increase in the average balance of interest-bearing liabilities of$15.4 million , or 2.2%, to$716.7 million for the three months endedMarch 31, 2021 compared to the same period in the prior year. 36 Table of Contents
Interest expense on deposits decreased$722,000 , or 43.2%, to$1.0 million for the three months endedMarch 31, 2021 from$1.7 million for the three months endedMarch 31, 2020 . The decrease was primarily the result of a 51 basis point decrease in the average cost of interest-bearing deposits to 0.61% for the three months endedMarch 31, 2021 from 1.12% for the same period in the prior year due to lower short-term interest rates. Additionally, the average balance of time deposits decreased$34.0 million , or 14.2%, for the three months endedMarch 31, 2021 compared to the same period in the prior year. Partially offsetting those decreases was an increase in the average balance of savings, money market, and demand and NOW deposit accounts of$33.4 million or 23.1%,$17.1 million or 16.5%, and$15.2 million or 13.9%, respectively, for the three months endedMarch 31, 2021 compared to the same period in the prior year. Interest expense on borrowed funds decreased$108,000 , or 20.3%, to$423,000 for the three months endedMarch 31, 2021 from$531,000 for the three months endedMarch 31, 2020 . The decrease was primarily the result of a decrease in the average balance of borrowings of$15.9 million , or 16.0%, to$83.3 million for the three months endedMarch 31, 2021 compared to the same period in the prior year. Additionally, there was an 11 basis point decrease in the average cost of borrowings to 2.03% for the three months endedMarch 31, 2021 from 2.14% for the same period in the prior year. The decrease in the average cost of borrowed funds was primarily the result of maturities during the quarter ended March
31, 2021.
Provision for Loan Losses. Provision for loan losses decreased$400,000 , or 72.7%, to$150,000 for the three months endedMarch 31, 2021 compared to$550,000 for the three months endedMarch 31, 2020 . In management's judgment, the allowance for loan losses is sufficient to cover losses inherent in the loan portfolio relative to loan mix, economic conditions and historical loss experience. 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. See Footnote 9 in the Notes to Consolidated Financial Statements (Unaudited) for additional information. Noninterest Income. Noninterest income increased$635,000 , or 118.7%, to$1.2 million for the three months endedMarch 31, 2021 compared to$535,000 for the three months endedMarch 31, 2020 . The increase was primarily the result of a$731,000 change in the net equity securities fair value adjustment partially offset by decreases in investment management fees and service charges of$105,000 or 47.7%, and$71,000 or 9.7%, respectively, for the quarter endedMarch 31, 2021 compared to the same period in the prior year Noninterest Expenses. Noninterest expenses totaled$5.6 million for the quarter endedMarch 31, 2021 , compared to$5.5 million for the quarter endedMarch 31, 2020 . Excluding the merger-related expenses of$151,000 , noninterest expenses totaled$5.4 million for the quarter endedMarch 31, 2021 . The decrease in noninterest expenses, excluding merger-related expenses, was primarily the result of a$152,000 , or 4.5%, decrease in compensation and employee benefits expenses partially offset by a$111,000 , or 252.3%, increase in federal deposit insurance for the three months endedMarch 31, 2021 compared to the same period in the prior year. 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. The Company recorded a provision for income tax of$528,000 for the three months endedMarch 31, 2021 compared to$194,000 for the three months endedMarch 31, 2020 . The increase in income tax was primarily the result of an increase in taxable income as well as a higher effective tax rate for the period. The effective tax rate was 19.9% for the three months endedMarch 31, 2021 compared to 14.9% for the three months endedMarch 31, 2020 . 37 Table of Contents
Non-Performing and Problem Assets
The table below sets forth the amounts and categories of non-performing assets at the dates indicated (dollars in thousands).
March 31 ,December 31, 2021 2020 Non-accrual loans:
One-to-four family residential and construction$ 1,759 $
1,911
Commercial real estate and construction 2,031
2,196
Home equity loans and lines of credit 171
173 Commercial business 677 683 Other - 2 Total nonaccrual loans 4,638 4,965
Loans past due 90 days and still accruing -
-
Total non-performing loans 4,638 4,965
Foreclosed real estate 329 488
Total non-performing assets $ 4,967 $ 5,453
Ratios:Non-accrual loans to total loans 0.64 % 0.67 % Non-performing loans to total loans 0.64 % 0.67 % Non-performing assets to total assets 0.47 %
0.52 % Allowance for loan losses to non-performing loans 172.04 % 157.93 %
As of
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations. The Company's primary sources of funds consist of deposit inflows, loan repayments and sales, advances and short-term borrowings from the FHLB, repurchase agreements and maturities, principal repayments and sales of available-for-sale securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general market interest rates, economic conditions and competition. The Company's Asset/Liability Management Committee, under the direction of the Chief Financial Officer, is responsible for establishing and monitoring liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the funding needs of the Company including borrowing needs and deposit withdrawals of the Bank's customers as well as unanticipated contingencies. AtMarch 31, 2021 , the Company's cash and cash equivalents amounted to$89.3 million . Management believes there are sufficient sources of liquidity to satisfy short- and long-term liquidity needs as ofMarch 31, 2021 . Time deposits due within one year ofMarch 31, 2021 totaled$105.1 million , or 12.6% of total deposits. If these deposits do not remain with the Bank, it may be required to seek other sources of funds, including loan and securities sales, repurchase agreements and FHLB advances and short-term borrowings. The Company believes, however, based on historical experience and current market interest rates, it will retain upon maturity a large portion of time deposits with maturities of one year or less. The Company's maximum borrowing capacity at the FHLB atMarch 31, 2021 was$386.6 million . The Company is committed to serving both its individual and commercial customers through these difficult and unprecedented times. In light of the COVID-19 pandemic, the Company has increased the monitoring of its current liquidity and anticipated funding needs. Additionally, the Company has been proactive in positioning itself with additional liquidity in anticipation of the need to assist customers. Finally, the Company has successfully tested all of its contingency funding sources. Stockholders' equity decreased$894,000 , or 0.6%, to$145.1 million atMarch 31, 2021 from$146.0 million atDecember 31, 2020 . The decrease was a result of a$2.0 million decrease in accumulated other comprehensive income related to changes in the fair value of available for sale debt securities and$1.0 million in dividends paid during the period partially offset by net income of$2.1
million.
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Current regulatory requirements specify that the Bank and similar institutions
must maintain regulatory capital sufficient to meet tier 1 leverage, common
equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios
of at least 4.00%, 4.50%, 6.00% and 8.00%, respectively. At March 31, 2021 , the
Bank was in compliance with all regulatory capital requirements with ratios of
11.35%, 17.37%, 17.37% and 18.57%, respectively, and was considered "well
capitalized" under regulatory guidelines.
As a result of the Economic Growth, Regulatory Relief, and Consumer Protection
Act, the federal banking agencies have adopted a rule to establish for
institutions with assets of less than $10 billion that meet other specified
criteria a "community bank leverage ratio" (the ratio of a bank's tangible
equity capital to average total consolidated assets) that such institutions may
elect to utilize in lieu of the generally applicable leverage and risk-based
capital requirements noted above. The federal banking agencies adopted 9% as the
applicable ratio, however, in response to COVID-19, they temporarily reduced the
ratio to 8% effective March 31, 2020 . Institutions with capital meeting the
specified requirements and electing to follow the alternative framework will be
considered compliant with all applicable regulatory capital and leverage
requirements, including the requirement to be "well capitalized." The Bank did
not utilize the community bank leverage ratio framework in its March 31, 2021
Call Report and maintains the right to opt-in or opt-out of the framework in any
subsequent quarter.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
Commitments. As a financial services provider, the Company routinely is a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans the Bank makes. AtMarch 31, 2021 , there were$117.6 million in loan commitments outstanding of which$55.4 million were for commercial loans and lines,$35.6 million were for one- to four-family and construction loans, and$26.6 million were for standby letters of credit and other commitments including consumer overdraft lines.
Contractual Obligations. In the ordinary course of operations, the Company enters into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.
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