PAOLI, Pa., April 29, 2015 (GLOBE NEWSWIRE) -- Malvern Bancorp, Inc. (Nasdaq:MLVF) (the "Company"), parent company of Malvern Federal Savings Bank ("MFSB" or the "Bank"), today reported operating results for the second quarter ended March 31, 2015. Net income amounted to $1.0 million, or $0.16 per share, for the quarter ended March 31, 2015, an increase of $1.4 million or approximately 336.6 percent as compared with the net loss of $426,000, or $0.07 per share, for the quarter ended March 31, 2014.
"Our second quarter earnings reflect the execution of our business plans coupled with improvement of fundamentals. We continued to see positive trends in our business during the second quarter, as we continue to reposition Malvern. Continued actions taken at right sizing our infrastructure and to re-focus our business model have yielded results," said Anthony C. Weagley, Chief Executive Officer & President of Malvern Bancorp, Inc.
For the six months ended March 31, 2015, net income amounted to $1.3 million, or $0.21 per share, compared with the net loss of $362,000, or $0.06 per share, for the six months ended March 31, 2014.
Highlights for the quarter include:
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Non-performing assets ("NPAs") were at 0.52 percent of total assets at March 31, 2015, compared to 0.97 percent at March 31, 2014 and 0.80 percent at September 30, 2014. The allowance for loan losses as a percentage of total non-performing loans was 252.6 percent at March 31, 2015 compared to 147.2 percent at March 31, 2014 and 191.9 percent at September 30, 2014.
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The Company's ratio of shareholders' equity to total assets was 12.68 percent at March 31, 2015, compared to 12.88 percent at March 31, 2014, and 14.16 percent at September 30, 2014.
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Book value per common share rose to $12.20 at March 31, 2015, compared to $11.48 at March 31, 2014 and $11.71 at September 30, 2014.
- The efficiency ratio, a non-GAAP measure, was 76.6 percent for the second quarter of fiscal 2015 on an annualized basis, compared to 109.4 percent in the second quarter of fiscal 2014 and 87.8 percent in the fourth quarter of fiscal 2014.
| Selected Financial Ratios | |||||
| (unaudited; annualized where applicable) | |||||
| As of or for the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Return on average assets | 0.64% | 0.22% | 0.21% | 0.27% | -0.29% |
| Return on average equity | 5.05% | 1.65% | 1.53% | 2.05% | -2.26% |
| Net interest margin (tax equivalent basis) | 2.58% | 2.61% | 2.70% | 2.76% | 2.74% |
| Loans / deposits ratio | 85.57% | 87.61% | 94.10% | 88.61% | 89.74% |
| Shareholders' equity / total assets | 12.68% | 12.91% | 14.16% | 13.26% | 12.88% |
| Efficiency ratio (1) | 76.6% | 87.5% | 87.8% | 92.6% | 109.4% |
| Book value per common share | $12.20 | $11.88 | $11.71 | $11.69 | $11.48 |
| (1) Information reconciling non-GAAP measures to GAAP measures is presented elsewhere in this press release. | |||||
Net Interest Income
For the three months ended March 31, 2015, total interest income on a fully tax equivalent basis increased $101,000 or 2.0 percent, to $5.2 million, compared to the three months ended March 31, 2014. Interest income rose in the quarter ended March 31, 2015, compared to the comparable period in fiscal 2014 primarily due to a $26.9 million increase in the average balance of our investment securities. Total interest expense increased by $69,000, or 5.5 percent, to $1.3 million, for the three months ended March 31, 2015, compared to the comparable period in fiscal 2014.
Net interest income on a fully tax equivalent basis was $3.9 million for the three months ended March 31, 2015, increasing $32,000, or 0.8 percent, from $3.8 million for the comparable three month period in fiscal 2014. The change for the three months ended March 31, 2015, primarily was the result of an increase in average interest earning assets, which increased $38.2 million. The net interest spread on an annualized tax-equivalent basis was at 2.43 percent and 2.59 percent for the three months ended March 31, 2015 and March 31, 2014, respectively. For the quarter ended March 31, 2015, the Company's net interest margin on a tax equivalent basis decreased to 2.58 percent as compared to 2.74 percent for the same three month period in 2014. "The increase in our cash position, while a positive trend from a growth perspective, did have a dampening effect on net interest margin in the quarter. We expect to see an improvement in margin as the cash is deployed to earning-assets," commented Mr. Weagley.
The 5.5 percent increase in interest expense for the quarter primarily reflects higher volumes of borrowings. The average cost of funds was 1.04 percent for both the quarter ended March 31, 2015 and March 31, 2014 and on a linked sequential quarter decreased three basis points compared to the first quarter of fiscal 2015.
For the six months ended March 31, 2015, total interest income on a fully tax equivalent basis decreased $258,000 or 2.5 percent, to $10.0 million, compared $10.3 million for the six months ended March 31, 2014. Total interest expense decreased by $9,000, or 0.4 percent, to $2.6 million, for the six months ended March 31, 2015, compared to the comparable period in fiscal 2014. Interest income declined for the six months ended March 31, 2015, compared to the comparable period in fiscal 2014 primarily due to a $23.4 million decline in average loan balance. Compared to the same period in fiscal 2014, for the six months ended March 31, 2015, average interest earning assets increased $12.7 million while net interest spread and margin decreased on an annualized tax-equivalent basis by 16 basis points and 15 basis points, respectively.
Earnings Summary for the Period Ended March 31, 2015
The following table presents condensed consolidated statements of operations data for the periods indicated.
| Condensed Consolidated Statements of Operations (unaudited) | |||||
| (dollars in thousands, except per share data) | |||||
| For the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Net interest income | $ 3,836 | $ 3,561 | $ 3,617 | $ 3,826 | $ 3,818 |
| Provision for loan losses | — | 90 | 183 | — | — |
| Net interest income after provision for loan losses | 3,836 | 3,471 | 3,434 | 3,826 | 3,818 |
| Other income | 745 | 511 | 446 | 744 | 457 |
| Other expense | 3,573 | 3,661 | 3,569 | 4,179 | 4,700 |
| Income (loss) before income tax expense | 1,008 | 321 | 311 | 391 | (425) |
| Income tax expense | -- | -- | 17 | -- | 1 |
| Net income (loss) | $ 1,008 | $ 321 | $ 294 | $ 391 | $ (426) |
| Earnings (loss) per common share: | |||||
| Basic | $ 0.16 | $ 0.05 | $ 0.05 | $ 0.06 | $ (0.07) |
| Weighted average common shares outstanding: | |||||
| Basic | 6,391,521 | 6,387,932 | 6,384,319 | 6,380,726 | 6,377,121 |
Other Income
Other income increased $288,000 for the second quarter of fiscal 2015 compared with the same period in fiscal 2014. During the second quarter of fiscal 2015, the Company recorded $266,000 in net gains on sales of investment securities compared to no net gains on sales of investment securities for the same period in fiscal 2014. Excluding net securities gains and losses, a non-GAAP measure, the Company recorded other income of $479,000 for the three months ended March 31, 2015 compared to other income of $457,000 for the three months ended March 31, 2014 and $446,000 for the three months ended September 30, 2014. Increases in other income in the second quarter of fiscal 2015 when compared to the second quarter of fiscal 2014 (excluding securities gains) were primarily from an increase of $40,000 in service charges on deposit accounts, partially offset by a decrease in bank owned life insurance income of $9,000, and a decrease of $9,000 in net gain on sale of loans.
For the six months ended March 31, 2015, total other income increased $291,000 compared to the same period in fiscal 2014, primarily as a result of $278,000 related to an increase in net gains on sales of investment securities, partially offset by decreased income on bank owned life insurance and net gain on sale of loans. Excluding net securities gains and losses, a non-GAAP measure, the Company recorded other income of $964,000 for the six months ended March 31, 2015 compared to other income, (excluding net securities gains), of $951,000 for the comparable period in fiscal 2014, an increase of $13,000 or 1.4 percent.
The following table presents the components of other income for the periods indicated.
| (in thousands, unaudited) | |||||
| For the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Service charges on deposit accounts | $ 264 | $ 270 | $ 235 | $ 230 | $ 224 |
| Rental income – other | 64 | 64 | 64 | 63 | 64 |
| Net gains on sales of investments, net | 266 | 26 | -- | 69 | -- |
| Loss on disposal of fixed assets | -- | -- | -- | (41) | -- |
| Gain on sale of loans, net | 20 | 19 | 13 | 283 | 29 |
| Bank-owned life insurance | 131 | 132 | 134 | 140 | 140 |
| Total other income | $ 745 | $ 511 | $ 446 | $ 744 | $ 457 |
Other Expense
Total other expense for the second quarter of fiscal 2015 amounted to $3.6 million, which was approximately $88,000 or 2.4 percent lower than other expense for the three months ended December 31, 2014. The reduction in other expense in the second quarter of fiscal 2015 was primarily related to a decrease in employee salaries and benefits, which decreased $178,000 from the quarter ended December 31, 2014, as well as, a $25,000 decrease in advertising and a $10,000 reduction in other operating expenses. The decrease from the prior quarter in fiscal 2015 also reflects lower employee benefit costs. These decreases were partially offset by increases in professional fees of $91,000, occupancy expense of $41,000, Federal deposit insurance premium of $17,000 and other real estate owned expense of $23,000.
The decrease in other expense for the three months ended March 31, 2015, when compared to the quarter ended March 31, 2014, was approximately $1.1 million, or 24.0 percent. Decreases primarily reflected reductions in salaries and employee benefits of $522,000 primarily due to workforce reductions, professional fees of $256,000 reflecting lower expenses related to loan workout, occupancy expense of $124,000 primarily attributable to a decrease in rent expense of $21,000 and building and equipment expenses of $76,000 primarily due to elimination of expenses related to a branch closure in fiscal 2014 as well as a reduction in expenses associated with janitorial, snow removal and related activities, advertising expense of $156,000, data processing of $7,000 and a $143,000 improvement in other real estate owned expense, net. These decreases were partially offset by an increase of $74,000 in other operating expense and $7,000 in federal deposit insurance premium. The increase in other operating expense was primarily due to an increase of $76,000 in director compensation and a $45,000 increase in insurance and bond expense.
For the six months ended March 31, 2015, total other expense decreased $1.7 million, or 18.9 percent, compared to the same fiscal period in 2014. Decreases primarily included $861,000 in salaries and employee benefits primarily due to workforce reductions, $216,000 in occupancy expense, $229,000 in advertising costs, $398,000 in professional fees, $192,000 in other real estate owned expense, $17,000 in Federal deposit insurance premium and $35,000 in data processing. These decreases were partially offset by an increase in other operating expenses of $286,000.
The following table presents the components of other expense for the periods indicated.
| (in thousands, unaudited) | |||||
| For the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Salaries and employee benefits | $ 1,550 | $ 1,728 | $ 1,636 | $ 1,995 | $ 2,072 |
| Occupancy expense | 465 | 424 | 415 | 571 | 589 |
| Federal deposit insurance premium | 184 | 167 | 183 | 184 | 177 |
| Advertising | 60 | 85 | 86 | 101 | 216 |
| Data processing | 301 | 302 | 312 | 295 | 308 |
| Professional fees | 434 | 343 | 567 | 463 | 690 |
| Other real estate owned (income) expense, net | (59) | (36) | (470) | 74 | 84 |
| Other operating expenses | 638 | 648 | 840 | 496 | 564 |
| Total other expense | $ 3,573 | $ 3,661 | $ 3,569 | $ 4,179 | $ 4,700 |
Statement of Condition Highlights at March 31, 2015
Commenting on the balance sheet, Mr. Weagley indicated: "Our efforts to change the balance sheet continued during the second quarter. Asset quality is stable. We continue to right-size our operations, and are poised to take advantage of the signs for growth we see in our markets and transition to a commercial bank balance sheet." Highlights as of March 31, 2015 included:
- Balance sheet strength, with total assets amounting to $631.1 million at March 31, 2015, increasing $88.8 million, or 16.4 percent compared to September 30, 2014 and increased $46.6 million, or 8.0 percent compared to March 31, 2014.
- Net loans were $377.3 million at March 31, 2015, decreasing $8.7 million, or 2.3 percent and $31.7 million, or 7.8 percent, from September 30, 2014 and March 31, 2014, respectively. Total residential mortgage loans decreased $6.1 million, or 2.6 percent, from September 30, 2014. Total construction and development loans decreased $731,000, or 10.5 percent compared to September 30, 2014. Consumer loans decreased by $3.5 million, or 4.8 percent and commercial loans increased by $1.8 million, or 2.3 percent compared to September 30, 2014. Total residential mortgage loans decreased $25.0 million, or 10.0 percent, from March 31, 2014. Total construction and development loans decreased $4.1 million, or 39.8 percent compared to March 31, 2014. Consumer loans decreased by $4.7 million or 6.4 percent and commercial loans increased by $2.3 million, or 3.0 percent compared to March 31, 2014.
- Deposits totaled $444.1 million at March 31, 2015, an increase of $31.2 million or 7.6 percent compared to September 30, 2014 and a decrease of $14.6 million, or 3.2 percent, since March 31, 2014. Total demand, savings, money market, and certificates of deposit less than $100,000 increased $11.1 million or 3.6 percent from September 30, 2014 and decreased $17.2 million or 5.1 percent from March 31, 2014. During fiscal 2015, we have focused on allowing our non-household relatively higher costing certificates of deposit to run off while attempting to increase our relatively lower costing core and commercial deposits as a source of funds.
- Borrowings totaled $98.0 million, $48.0 million and $45.0 million at March 31, 2015, September 30, 2014 and March 31, 2014, respectively.
Condensed Consolidated Statements of Condition
The following table presents condensed consolidated statements of condition data as of the dates indicated.
| Condensed Consolidated Statements of Condition (unaudited) | |||||
| (in thousands) | |||||
| At quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Cash and due from depository institutions | $ 1,056 | $ 1,404 | $ 1,203 | $ 1,155 | $ 1,136 |
| Interest bearing deposits in depository institutions | 50,587 | 46,648 | 17,984 | 41,300 | 12,909 |
| Investment securities, available for sale | 113,557 | 135,786 | 100,943 | 104,985 | 122,208 |
| Investment securities held to maturity | 50,697 | — | — | — | — |
| Restricted stock, at cost | 4,602 | 3,805 | 3,503 | 3,495 | 3,376 |
| Loans receivable, net of allowance for loan losses | 377,340 | 383,389 | 386,074 | 392,582 | 409,058 |
| Other real estate owned | 1,430 | 1,494 | 1,964 | 1,645 | 2,358 |
| Accrued interest receivable | 2,168 | 1,623 | 1,322 | 1,300 | 1,380 |
| Property and equipment, net | 6,592 | 6,718 | 6,823 | 6,897 | 7,031 |
| Deferred income taxes | 2,940 | 2,419 | 2,376 | 2,575 | 2,532 |
| Bank-owned life insurance | 18,527 | 18,397 | 18,264 | 21,003 | 20,863 |
| Other assets | 1,610 | 1,487 | 1,808 | 1,151 | 1,503 |
| Total assets | $ 631,106 | $ 603,170 | $ 542,264 | $ 578,088 | $ 584,554 |
| Deposits | $ 444,146 | $ 440,625 | $ 412,953 | $ 446,036 | $ 458,723 |
| Borrowings | 98,000 | 78,000 | 48,000 | 48,000 | 45,000 |
| Other liabilities | 8,934 | 6,660 | 4,539 | 7,385 | 5,562 |
| Shareholders' equity | 80,026 | 77,885 | 76,772 | 76,667 | 75,269 |
| Total liabilities and shareholders' equity | $ 631,106 | $ 603,170 | $ 542,264 | $ 578,088 | $ 584,554 |
The following table reflects the composition of the Company's deposits as of the dates indicated.
| Deposits (unaudited) | |||||
| (in thousands) | |||||
| At quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Demand: | |||||
| Non-interest bearing | $ 25,111 | $ 22,242 | $ 23,059 | $ 22,782 | $ 24,756 |
| Interest-bearing | 87,921 | 86,948 | 81,921 | 88,072 | 89,610 |
| Savings | 44,848 | 44,747 | 44,917 | 46,645 | 44,601 |
| Money market | 70,066 | 69,553 | 59,529 | 61,291 | 63,542 |
| Time | 216,200 | 217,135 | 203,527 | 227,246 | 236,214 |
| Total deposits | $ 444,146 | $ 440,625 | $ 412,953 | $ 446,037 | $ 458,723 |
Loans
Total loans were $380.1 million at March 31, 2015. Mr. Weagley commented: "Outstanding loan balances remained relatively stable with a continued decrease experienced primarily in the residential components of our portfolios. We had a sustained level of higher loan pay downs during the quarter which dampened the effects of gross new loan origination volume, which we continue see as a bright spot." The Company's total loans in the second quarter of 2015 decreased $6.0 million, to $380.1 million at March 31, 2015, from $386.0 million at December 31, 2014. The allowance for loan losses amounted to $4.6 million at both March 31, 2015 and December 31, 2014, respectively. The Company had approximately $17.3 million in new loan originations and advances during the second quarter of fiscal 2015. This new loan activity and advances were offset by prepayments, scheduled payments, maturities and payoffs of $23.2 million. Average loans during the second quarter of fiscal 2015 totaled $384.9 million as compared to $412.5 million during the second quarter of fiscal 2014, representing a 6.7 percent decrease.
At the end of the second quarter of fiscal 2015, the loan portfolio remained well weighted toward the core residential portfolio, with single-family residential real estate accounting for 59.3 percent of the loan portfolio. At March 31, 2015, commercial loans accounted for 21.0 percent of the loan portfolio, and consumer loans represented 18.1 percent of the loan portfolio at such date. Construction and development loans accounted for only 1.7 percent of the loan portfolio at March 31, 2015. Total loans decreased $8.5 million, to $380.1 million at March 31, 2015 compared to $388.6 million at September 30, 2014. The $8.5 million reduction in loan portfolio at March 31, 2015 compared to September 30, 2014, primarily reflected reductions of $6.1 million in residential mortgage loans, $731,000 in construction and development loans and $3.5 million in consumer loans. These decreases were partially offset by a $1.8 million increase in commercial loans at March 31, 2015 as compared to September 30, 2014. At March 31, 2014, total loans were $411.6 million. The decreased loan balance in the loan portfolio at March 31, 2015 compared to March 31, 2014, primarily reflected reductions of $25.0 million in residential mortgage loans, $4.1 million in construction and development loans and $4.7 million in consumer loans.
The following reflects the composition of the Company's loan portfolio as of the dates indicated.
| Loans (unaudited) | |||||
| (in thousands) | |||||
| At quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Residential mortgage | $ 225,232 | $ 229,507 | $ 231,324 | $ 235,050 | $ 250,280 |
| Construction and Development: | |||||
| Residential and commercial | 5,922 | 6,039 | 5,964 | 7,484 | 8,500 |
| Land | 344 | -- | 1,033 | 1,537 | 1,908 |
| Total construction and development | 6,266 | 6,039 | 6,997 | 9,021 | 10,408 |
| Commercial: | |||||
| Commercial real estate | 68,858 | 67,274 | 71,579 | 69,788 | 69,992 |
| Multi-family | 5,508 | 5,450 | 1,032 | 2,086 | 2,065 |
| Other | 5,506 | 5,603 | 5,480 | 5,492 | 5,510 |
| Total commercial | 79,872 | 78,327 | 78,091 | 77,366 | 77,567 |
| Consumer: | |||||
| Home equity lines of credit | 23,073 | 24,430 | 22,292 | 21,914 | 20,147 |
| Second mortgages | 43,013 | 45,051 | 47,034 | 48,866 | 50,170 |
| Other | 2,610 | 2,675 | 2,839 | 3,011 | 3,074 |
| Total consumer | 68,696 | 72,156 | 72,165 | 73,791 | 73,391 |
| Total loans | 380,066 | 386,029 | 388,577 | 395,228 | 411,646 |
| Deferred loan costs, net | 1,886 | 1,960 | 2,086 | 2,212 | 2,259 |
| Allowance for loan losses | (4,612) | (4,600) | (4,589) | (4,858) | (4,847) |
| Loans Receivable, net | $ 377,340 | $ 383,389 | $ 386,074 | $ 392,582 | $ 409,058 |
At March 31, 2015, the Company had $40.4 million in overall undisbursed loan commitments, which consisted primarily of unused commercial lines of credit, home equity lines of credit and available usage from active construction facilities. Included in the overall undisbursed commitments are the Company's "Approved, Accepted but Unfunded" pipeline, which includes approximately $5.3 million in construction and $8.5 million in commercial real estate loans and $4.2 million in residential mortgage loans expected to fund over the next 90 days.
Asset Quality
Non-accrual loans were $1.8 million at March 31, 2015, as compared to $2.4 million at September 30, 2014 and $3.3 million at March 31, 2014. Other real estate owned was $1.4 million at March 31, 2015, as compared with $2.0 million at September 30, 2014 and $2.4 million at March 31, 2014, respectively. Troubled debt restructured loans, which are performing loans, were $109,000 at March 31, 2015, $1.0 million at September 30, 2014 and $1.5 million at March 31, 2014, respectively. The $900,000 decrease in troubled debt restructured loans at March 31, 2015 compared to September 30, 2014 was due to a commercial loan with an outstanding balance of approximately $900,000 being paid-off during the second quarter of fiscal 2015.
At March 31, 2015, non-performing assets totaled $3.3 million, or 0.52 percent of total assets, as compared with $4.4 million, or 0.80 percent, at September 30, 2014 and $5.7 million, or 0.97 percent, at March 31, 2014. The decrease from March 31, 2014 reflects the Company's continued diligence to satisfactorily work out certain problem assets. The portfolio of remaining non-accrual loans at March 31, 2015 was comprised of eight residential real estate loans with an aggregate outstanding balance of approximately $861,000, five consumer loans with an aggregate outstanding balance of approximately $328,000, and two construction and development loan relationships with an outstanding balance of $33,000, which had originally been included in our October 2013 bulk loan sale. The Company had been required to repurchase these loans in November 2013, and one loan was placed on non-accrual status during the first quarter of fiscal 2014. Additionally, there were four commercial loans with an aggregate outstanding balance of $604,000 that were on non-accrual status at March 31, 2015.
The following table presents the components of non-performing assets and other asset quality data for the periods indicated.
| (dollars in thousands, unaudited) | |||||
| As of or for the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Non-accrual loans (1) | $ 1,826 | $ 2,334 | $ 2,391 | $ 3,092 | $ 3,292 |
| Loans 90 days or more past due and still accruing | — | — | — | — | — |
| Total non-performing loans | 1,826 | 2,334 | 2,391 | 3,092 | 3,292 |
| Other real estate owned | 1,430 | 1,494 | 1,964 | 1,645 | 2,358 |
| Total non-performing assets | $ 3,256 | $ 3,828 | $ 4,355 | $ 4,737 | $ 5,650 |
| Performing troubled debt restructured loans | $ 109 | $ 1,007 | $ 1,009 | $ 1,246 | $ 1,546 |
| Non-performing assets / total assets | 0.52% | 0.63% | 0.80% | 0.82% | 0.97% |
| Non-performing loans / total loans | 0.48% | 0.60% | 0.62% | 0.78% | 0.80% |
| Net charge-offs (recoveries) | $ (12) | $ 79 | $ 452 | $ (11) | $ (2) |
| Net charge-offs (recoveries) / average loans (2) | 0.01% | 0.08% | 0.19% | 0.11% | 0.16% |
| Allowance for loan losses / total loans | 1.21% | 1.19% | 1.18% | 1.23% | 1.18% |
| Allowance for loan losses / non-performing loans | 252.57% | 197.09% | 191.93% | 157.1% | 147.2% |
| Total assets | $ 631,106 | $ 603,170 | $ 542,264 | $ 578,088 | $ 584,544 |
| Total loans | 380,066 | 386,029 | 388,577 | 395,228 | 411,646 |
| Average loans | 384,915 | 389,544 | 395,067 | 412,457 | 412,522 |
| Allowance for loan losses | 4,612 | 4,600 | 4,589 | 4,858 | 4,847 |
| (1) Eleven loans totaling approximately $615,000 or (33.7%) of the total non-accrual loan balance were making payments at March 31, 2015. | |||||
| (2) Annualized. | |||||
The allowance for loan losses at March 31, 2015 amounted to approximately $4.6 million, or 1.21 percent of total loans, compared to 1.18 percent of total loans at September 30, 2014 and March 31, 2014. We had no provision for loan losses during the quarter ended March 31, 2015 compared to $183,000 and zero, respectively, during the quarters ended September 30, 2014 and March 31, 2014. Provision expense was lower during the quarter ended March 31, 2015 due to a decline in charge-offs history, generally, and lower charge-offs during the quarter ended March 31, 2015.
Capital
At March 31, 2015, our total shareholders' equity amounted to $80.0 million, or 12.68 percent of total assets compared to 76.8 million at September 30, 2014 and $75.3 million at March 31, 2014. The Company's book value per common share was $12.20 at March 31, 2015, compared to $11.71 at September 30, 2014 and $11.48 at March 31, 2014.
At March 31, 2015, the Bank's ratio of tier 1 risk-based capital to risk-weighted assets was 18.23 percent and its ratio of tier 1 capital to adjusted total assets was 17.03 percent, compared to 20.75 percent and 19.50 percent, respectively, at September 30, 2014 and 19.53 percent and 18.28 percent, respectively, at March 31, 2014. At March 31, 2015, the Bank was in compliance with all applicable regulatory capital requirements.
Non-GAAP Financial Measures
Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management believes that the supplemental non-GAAP information provided in this press release is utilized by market analysts and others to evaluate a company's financial condition and, therefore, that such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures presented by other companies.
The Company's other income is presented in the table below including and excluding net investment securities gains. We believe that many investors desire to evaluate other income without regard for such gains.
| (in thousands) | |||||
| For the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Other income | $ 745 | $ 511 | $ 446 | $ 744 | $ 457 |
| Less: Net investment securities gains | 266 | 26 | -- | 69 | -- |
| Other income, excluding net investment securities gains | $ 479 | $ 485 | $ 446 | $ 675 | $ 457 |
"Efficiency ratio" is a non-GAAP financial measure and is defined as other expense, excluding certain non-core items, as a percentage of net interest income on a tax equivalent basis plus other income, excluding net securities gains, calculated as follows:
| (dollars in thousands) | |||||
| For the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Other expense | $ 3,573 | $ 3,661 | $ 3,569 | $ 4,179 | $ 4,700 |
| Less: non-core items(1) | 242 | 110 | — | — | — |
| Other expense, excluding non-core items | $ 3,331 | $ 3,551 | $ 3,569 | $ 4,179 | $ 4,700 |
| Net interest income (tax equivalent basis) | $ 3,871 | $ 3,575 | $ 3,621 | $ 3,836 | $ 3,839 |
| Other income, excluding net investment securities gains | 479 | 485 | 446 | 675 | 457 |
| Total | $ 4,350 | $ 4,060 | $ 4,067 | $ 4,511 | $ 4,296 |
| Efficiency ratio | 76.6% | 87.5% | 87.8% | 92.6% | 109.4% |
| (1) Included in non-core items are professional fees of approximately $97,000, advertising expense of $11,000 and other operating expense of $134,000 for the quarter ended March 31, 2015. For the quarter ended December 31, 2014, included in non-core items were professional fees of approximately $38,000, advertising expense of $16,000 and other operating expense of $56,000. | |||||
The Company's efficiency ratio, calculated on a GAAP basis without excluding net investment securities gains and without deducting non-core items, from other expense follows:
| For the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Efficiency ratio on a GAAP basis | 72.7% | 87.2% | 87.8% | 91.4% | 109.9% |
Net interest margin, which is non-interest income as a percentage of average interest-earning assets, is presented on a fully tax equivalent ("TE") basis as we believe this non-GAAP measure is the preferred industry measurement for this item. The TE basis adjusts GAAP interest income and yields for the tax benefit of income on certain tax-exempt investments using the federal statutory rate of 34% for each period presented. Below is a reconciliation of GAAP net interest income to the TE basis and the related GAAP basis and TE net interest margins for the periods presented:
| (dollars in thousands) | |||||
| For the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Net interest income (GAAP) | $ 3,836 | $ 3,561 | $ 3,617 | $ 3,826 | $ 3,818 |
| Tax-equivalent adjustment(1) | 35 | 14 | 4 | 11 | 21 |
| TE net interest income | $ 3,871 | $ 3,575 | $ 3,621 | $ 3,837 | $ 3,839 |
| Net interest income margin (GAAP) | 2.56% | 2.60% | 2.70% | 2.75% | 2.72% |
| Tax-equivalent effect | 0.02 | 0.01 | — | 0.01 | 0.02 |
| Net interest margin (TE) | 2.58% | 2.61% | 2.70% | 2.76% | 2.74% |
| (1) Reflects adjustment to GAAP interest income. | |||||
The following table sets forth the Company's consolidated average statements of condition for the periods presented.
| Condensed Consolidated Average Statements of Condition (unaudited) | |||||
| (in thousands) | |||||
| For the quarter ended: | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
| Investment securities | $ 151,746 | $ 114,129 | $ 103,458 | $ 114,631 | $ 124,888 |
| Loans | 384,915 | 389,544 | 395,067 | 412,457 | 412,522 |
| Allowance for loan losses | (4,614) | (4,600) | (4,851) | (4,829) | (4,869) |
| All other assets | 95,921 | 77,776 | 71,930 | 65,131 | 60,187 |
| Total assets | $ 627,968 | $ 576,849 | $ 565,604 | $ 587,390 | $ 592,728 |
| Non-interest bearing deposits | $ 27,002 | $ 26,770 | $ 26,057 | $ 24,834 | $ 25,660 |
| Interest-bearing deposits | 419,367 | 393,225 | 408,937 | 430,780 | 442,481 |
| Borrowings | 94,556 | 72,945 | 47,998 | 49,014 | 43,342 |
| Other liabilities | 7,272 | 6,151 | 5,549 | 6,551 | 5,829 |
| Shareholders' equity | 79,771 | 77,758 | 77,063 | 76,211 | 75,416 |
| Total liabilities and shareholders' equity | $ 627,968 | $ 576,849 | $ 565,604 | $ 587,390 | $ 592,728 |
About Malvern Bancorp
Malvern Bancorp, Inc. is the holding company for Malvern Federal Savings Bank. Malvern Federal Savings Bank is a federally-chartered, FDIC-insured savings bank that was originally organized in 1887 and now serves as one of the oldest banks headquartered on the Philadelphia Mainline. For more than a century, Malvern Federal has been committed to helping people build prosperous communities as a trusted financial partner, forging lasting relationships through teamwork, respect and integrity. The Bank conducts business from its headquarters in Paoli, Pennsylvania, a suburb of Philadelphia, as well as seven other financial centers located throughout Chester and Delaware Counties, Pennsylvania. Its primary market niche is providing personalized service to its client base. The Bank focuses its lending activities on retail clients, commercial lending to small and medium-sized businesses, real estate developers and high net worth individuals.
For further information regarding Malvern Bancorp, Inc., please visit our web site at http://www.malvernfederal.com
Forward-Looking Statements
This press release contains certain forward looking statements. 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." Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the business of Malvern Bancorp, Inc., and changes in the securities markets. Except as required by law, the Company does not undertake any obligation to update any forward-looking statements to reflect changes in beliefs, expectations or events.
| MALVERN BANCORP, INC AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CONDITION | ||
| (in thousands, except for share and per share data) | March 31, | September 30, |
| 2015 | 2014 | |
| (Unaudited) | ||
| ASSETS | ||
| Cash and due from depository institutions | $ 1,056 | $ 1,203 |
| Interest bearing deposits in depository institutions | 50,587 | 17,984 |
| Total cash and cash equivalents | 51,643 | 19,187 |
| Investment securities available for sale, at fair value | 113,557 | 100,943 |
| Investment securities held to maturity (fair value of $50,312 and $0) | 50,697 | — |
| Restricted stock, at cost | 4,602 | 3,503 |
| Loans receivable, net of allowance for loan losses | 377,340 | 386,074 |
| Other Real estate owned | 1,430 | 1,964 |
| Accrued interest receivable | 2,168 | 1,322 |
| Property and equipment, net | 6,592 | 6,823 |
| Deferred income taxes, net | 2,940 | 2,376 |
| Bank-owned life insurance | 18,527 | 18,264 |
| Other assets | 1,610 | 1,808 |
| Total assets | $ 631,106 | $ 542,264 |
| LIABILITIES | ||
| Deposits: | ||
| Non-interest bearing | $ 25,111 | $ 23,059 |
| Interest-bearing: | 419,035 | 389,894 |
| Total deposits | 444,146 | 412,953 |
| FHLB Advances | 98,000 | 48,000 |
| Advances from borrowers for taxes and insurance | 4,367 | 1,786 |
| Accrued interest payable | 307 | 149 |
| Other liabilities | 4,260 | 2,604 |
| Total liabilities | 551,080 | 465,492 |
| SHAREHOLDERS' EQUITY | ||
| Preferred stock, $0.01 par value, 10,000,000 shares, authorized, no issued | — | — |
| Common stock, $0.01 par value, authorized 40,000,000 shares authorized, issued and outstanding: 6,558,473 shares at March 31, 2015 and September 30, 2014 | 66 | 66 |
| Additional paid in capital | 60,331 | 60,317 |
| Retained earnings | 21,445 | 20,116 |
| Unearned Employee Stock Ownership Plan (ESOP) shares | (1,848) | (1,922) |
| Accumulated other comprehensive loss | 32 | (1,805) |
| Total shareholders' equity | 80,026 | 76,772 |
| Total liabilities and shareholders' equity | $ 631,106 | $ 542,264 |
| MALVERN BANCORP, INC AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| Three Months Ended March 31, | Six Months Ended March 31 | |||
| (in thousands, except for share data) | 2015 | 2014 | 2015 | 2014 |
| (unaudited) | ||||
| Interest and Dividend Income | ||||
| Loans, including fees | $ 4,126 | $ 4,445 | $ 8,328 | $ 8,972 |
| Investment securities, taxable | 778 | 549 | 1,292 | 1,104 |
| Investment securities, tax-exempt | 96 | 54 | 133 | 108 |
| Dividends, restricted stock | 142 | 19 | 179 | 33 |
| Interest-bearing cash accounts | 24 | 12 | 47 | 27 |
| Total Interest and Dividend Income | 5,166 | 5,079 | 9,979 | 10,244 |
| Interest Expense | ||||
| Deposits | 859 | 999 | 1,718 | 2,066 |
| Borrowings | 471 | 262 | 864 | 525 |
| Total Interest Expense | 1,330 | 1,261 | 2,582 | 2,591 |
| Net interest income | 3,836 | 3,818 | 7,397 | 7,653 |
| Provision for Loan Losses | — | — | 90 | 80 |
| Net Interest Income after Provision for Loan Losses | 3,836 | 3,818 | 7,307 | 7,573 |
| Other Income | ||||
| Service charges and other fees | 264 | 224 | 534 | 482 |
| Rental income-other | 64 | 64 | 128 | 128 |
| Net gains on sales of investments, net | 266 | — | 292 | 14 |
| Net gains on sale of loans, net | 20 | 29 | 39 | 56 |
| Earnings on bank-owned life insurance | 131 | 140 | 263 | 285 |
| Total Other Income | 745 | 457 | 1,256 | 965 |
| Other Expense | ||||
| Salaries and employee benefits | 1,550 | 2,072 | 3,278 | 4,139 |
| Occupancy expense | 465 | 589 | 889 | 1,105 |
| Federal deposit insurance premium | 184 | 177 | 351 | 368 |
| Advertising | 60 | 216 | 145 | 374 |
| Data processing | 301 | 308 | 603 | 638 |
| Professional fees | 434 | 690 | 777 | 1,175 |
| Other real estate owned (income) expense, net | (59) | 84 | (95) | 97 |
| Other operating expenses | 638 | 564 | 1,286 | 1,000 |
| Total Other Expense | 3,573 | 4,700 | 7,234 | 8,896 |
| Income (Loss) before income tax expense | 1,008 | (425) | 1,329 | (358) |
| Income tax expense | — | 1 | — | 4 |
| Net Income (Loss) | $ 1,008 | $ (426) | $ 1,329 | $ (362) |
| Earnings (Loss) per common share | ||||
| Basic | $ 0.16 | $ (0.07) | $ 0.21 | $ (0.06) |
| Weighted Average Common Shares Outstanding | ||||
| Basic | 6,391,521 | 6,377,121 | 6,389,687 | 6,357,307 |
| MALVERN BANCORP, INC AND SUBSIDIARIES | |||
| SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA | |||
| Three Months Ended | |||
| (in thousands, except for share and per share data) (annualized where applicable) | 3/31/2015 | 12/31/2014 | 3/31/2014 |
| (unaudited) | |||
| Statements of Operations Data | |||
| Interest income | $ 5,166 | $ 4,813 | $ 5,079 |
| Interest expense | 1,330 | 1,252 | 1,261 |
| Net interest income | 3,836 | 3,561 | 3,835 |
| Provision for loan losses | — | 90 | 80 |
| Net interest income after provision for loan losses | 3,836 | 3,471 | 3,818 |
| Other income | 745 | 511 | 457 |
| Other expense | 3,573 | 3,661 | 4,700 |
| Income (loss) before income tax expense | 1,008 | 321 | (425) |
| Income tax expense | — | — | 1 |
| Net income (loss) | $ 1,008 | $ 321 | $ (426) |
| Earnings (Loss) per Common Share | |||
| Basic | $ 0.16 | $ 0.05 | $ (0.07) |
| Statements of Condition Data (Period-End) | |||
| Investment securities available for sale, at fair value | $ 113,557 | $ 135,786 | $ 122,208 |
| Investment securities held to maturity (fair value of $50,312, $0 and $0) | 50,697 | — | — |
| Loans, net of allowance for loan losses | 377,340 | 383,389 | 409,058 |
| Total assets | 631,106 | 603,170 | 584,554 |
| Deposits | 444,146 | 440,625 | 458,723 |
| Borrowings | 98,000 | 78,000 | 45,000 |
| Shareholders' equity | 80,026 | 77,885 | 75,269 |
| Common Shares Dividend Data | |||
| Cash dividends | $ — | $ — | $ — |
| Weighted Average Common Shares Outstanding | |||
| Basic | 6,391,521 | 6,387,932 | 6,373,532 |
| Operating Ratios | |||
| Return on average assets | 0.64% | 0.22% | (0.29)% |
| Return on average equity | 5.05% | 1.65% | (2.26)% |
| Average equity / average assets | 12.70% | 13.48% | 12.72% |
| Book value per common share (period-end) | $ 12.20 | $ 11.88 | $ 11.48 |
| Non-Financial Information (Period-End) | |||
| Common shareholders of record | 494 | 487 | 475 |
| Full-time equivalent staff | 76 | 84 | 103 |