PAOLI, Pa., May 10, 2022 (GLOBE NEWSWIRE) -- Malvern Bancorp, Inc. (NASDAQ: MLVF) (the “Company”), the parent company of Malvern Bank, National Association (the “Bank”), today reported operating results for the second fiscal quarter ended March 31, 2022. Net income amounted to $522,000, or $0.07 per fully diluted common share, compared with $2.2 million, or $0.30 per fully diluted common share, for the quarter ended March 31, 2021. Annualized return on average assets (“ROAA”) was 0.18 percent for the quarter ended March 31, 2022, compared to 0.73 percent for the quarter ended March 31, 2021, and annualized return on average equity (“ROAE”) was 1.43 percent for the quarter ended March 31, 2022, compared with 6.14 percent for the quarter ended March 31, 2021.
For the six months ended March 31, 2022, net income amounted to $2.5 million, or $0.34 per fully diluted common share, compared with net income of $4.5 million, or $0.60 per fully diluted common share, for the six months ended March 31, 2021. The annualized ROAA was 0.44 percent for the six months ended March 31, 2022, compared to 0.73 percent for the six months ended March 31, 2021, and the annualized ROAE was 3.50 percent for the six months ended March 31, 2022, compared with 6.26 percent for the six months ended March 31, 2021.
The decrease in net income and diluted earnings per share from the second quarter of 2021 were primarily due to the recording of a $1.7 million valuation allowance adjustment on a $13.6 million commercial real estate loan classified as impaired and held for sale. The valuation allowance adjustment in the current quarter is the result of the ongoing monitoring and evaluation of the loan’s value in light of indications of interest received with respect to the note. The valuation allowance adjustment consists of approximately $395,000 in reduced value and approximately $1.3 million in real estate tax payments. The Bank paid real estate taxes in arrears to improve the marketability of the note. The loan’s carrying value at March 31, 2022 is $11.9 million.
This non-accrual loan, secured by commercial real estate in New York City, was transferred to held for sale with an aggregate book balance of $13.6 million at September 30, 2021, reflecting the Bank’s intent to sell the loan. There can be no assurances that a sale can be consummated, or that a sale can be consummated at the carrying value of the loan, as market and sales prices are subject to various factors. Tax payments will continue in the approximate amount of $274,000 annually, unless and until the property is sold. If this loan is sold at an amount less than the carrying value of the loan, such sale would result in a loss and impact the Company’s operating results.
“Management has prioritized and will continue to prioritize asset quality and balance sheet strength in taking what we believe are the necessary steps to improve credit quality and strengthen our balance sheet. We are making progress with our asset quality issues and near term these actions have elevated our expenses and overshadow net earnings.” commented Anthony C. Weagley, President and Chief Executive Officer.
Statement of Income Highlights at March 31, 2022
- Net interest margin (“NIM”) increased 27 basis points to 2.81 percent for the quarter ended March 31, 2022, compared to 2.54 percent for the quarter ended March 31, 2021. The increase was driven by a reduction in interest expense, partially offset by a decrease in interest-earning assets.
- Total interest expense decreased $1.4 million, or 50.7 percent, to $1.4 million for the quarter ended March 31, 2022, compared to $2.7 million for the quarter ended March 31, 2021, which resulted primarily from the reduction of costs on interest-bearing deposits.
- The Company did not record a provision for loan losses during the quarter ended March 31, 2022, or the quarter ended March 31, 2021.
| Linked Quarter Financial Ratios | ||||||||||||||
| (unaudited) | ||||||||||||||
| As of or for the quarter ended: | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||
| Return on average assets(1) | 0.18 | % | 0.69 | % | (2.06 | %) | 0.53 | % | 0.73 | % | ||||
| Return on average equity(1) | 1.43 | % | 5.61 | % | (16.59 | %) | 4.35 | % | 6.14 | % | ||||
| Net interest margin(1) | 2.81 | % | 2.78 | % | 2.61 | % | 2.70 | % | 2.54 | % | ||||
| Loans / deposits ratio | 94.57 | % | 95.06 | % | 97.41 | % | 104.84 | % | 108.14 | % | ||||
| Shareholders' equity / total assets | 13.11 | % | 12.54 | % | 11.76 | % | 12.50 | % | 12.09 | % | ||||
| Efficiency ratio(2) | 91.1 | % | 66.3 | % | 68.7 | % | 73.6 | % | 63.5 | % | ||||
| Book value per common share | $ | 18.95 | 18.97 | $ | 18.65 | $ | 19.44 | $ | 19.17 | |||||
| ____________ | ||||||||||||||
| (1) Annualized | ||||||||||||||
| (2) 3/31/2022 Quarter includes the impact of the valuation allowance adjustment related to the above mentioned HFS commercial real estate loan. | ||||||||||||||
| Linked Quarter Income Statement Data | |||||||||||||||
| (unaudited) | |||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||
| For the quarter ended: | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
| Net interest income | $ | 6,954 | $ | 7,158 | $ | 6,825 | $ | 7,129 | $ | 6,802 | |||||
| Provision for loan losses | - | - | 10,626 | - | - | ||||||||||
| Net interest income (loss) after provision for loan losses | 6,954 | 7,158 | (3,801 | ) | 7,129 | 6,802 | |||||||||
| Other income | 561 | 727 | 579 | 793 | 1,167 | ||||||||||
| Other expense | 6,845 | 5,228 | 5,084 | 5,832 | 5,063 | ||||||||||
| Income before income tax expense | 670 | 2,657 | (8,306 | ) | 2,090 | 2,906 | |||||||||
| Income tax expense (benefit) | 148 | 640 | (2,116 | ) | 489 | 682 | |||||||||
| Net income (loss) | $ | 522 | $ | 2,017 | $ | (6,190 | ) | $ | 1,601 | $ | 2,224 | ||||
| Earnings (loss) per common share | |||||||||||||||
| Basic | 0.07 | 0.27 | (0.82 | ) | 0.21 | 0.30 | |||||||||
| Diluted | 0.07 | 0.27 | (0.82 | ) | 0.21 | 0.30 | |||||||||
| Weighted average common shares outstanding | |||||||||||||||
| Basic | 7,554,955 | 7,551,606 | 7,548,958 | 7,545,371 | 7,529,408 | ||||||||||
| Diluted | 7,556,194 | 7,553,208 | 7,550,766 | 7,546,200 | 7,530,151 | ||||||||||
Net Interest Income
Net interest income was $7.0 million for the quarter ended March 31, 2022, an increase of $152,000, or 2.2 percent, from $6.8 million for the quarter ended March 31, 2021. The increase was driven by a decrease in interest paid on deposits and borrowings of $1.4 million, partially offset by decreased interest income of $1.2 million, primarily related to a decline in average loans. The average yield on interest-earning assets declined 21 basis points for the quarter ended March 31, 2022, to 3.35 percent, when compared to the same period in 2021 primarily due to the decrease in average loan balances and average yield on loans. The average rate on interest-bearing liabilities fell 49 basis points to 0.59 percent compared to the quarter ended March 31, 2021, due to decreases in market rates of interest. Net interest margin increased to 2.81 percent for the quarter ended March 31, 2022, from 2.54 percent for the same period in 2021. The margin improvement in the current period, in large part reflected the decline in interest-bearing liabilities partially offset by the decline in yield earned on interest-earning assets.
Net interest income was $14.1 million for the six months ended March 31, 2022, and a slight increase compared to the six months ended March 31, 2021. Consistent with the quarter, the slight increase was primarily driven by a reduction in interest expense as the cost of interest-bearing deposits decreased by 50 basis points compared to the six months ended March 31, 2021. The cost of interest-bearing liabilities decreased by 55 basis points compared to the six months ended March 31, 2021.
Other Income
Other income decreased $606,000, or 51.9 percent, during the quarter ended March 31, 2022, compared to the quarter ended March 31, 2021. The decrease in other income was primarily due to a decrease in net gains on sale of investments and loans of $522000 to $11,000 for the quarter ended March 31, 2022, compared to $533,000 for the quarter ended March 31, 2021. This decrease was partially offset by an increase in earnings on bank-owned life insurance of $122,000 during quarter ended March 31, 2022.
Similar to the quarter, other income for the six months ended March 31, 2022, decreased by $1.1 million mainly due to reductions in the net gains on sale of investments and loans of $1.2 million.
Other Expense
Other expense for the quarter ended March 31, 2022, increased $1.8 million to $6.8 million when compared to the quarter ended March 31, 2021. This increase was primarily due to a $1.7 million valuation allowance recorded on one loan held for sale, discussed above.
For the six months ended March 31, 2022, other expenses amounted to $12.1 million, an increase of $2.0 million, compared to the six months ended March 31, 2021. The primary components of the increase were the aforementioned valuation allowance and increased professional fees.
Income Taxes
The Company recorded income tax expense of $148,000 during the quarter ended March 31, 2022, compared to $682,000 for the quarter ended March 31, 2021. The effective tax rate for the Company for the quarters ended March 31, 2022 and March 31, 2021 were 22.1 percent and 23.5 percent, respectively. The reduction in the tax rate was due to the tax free income received from the additional bank-owned life insurance.
For the six months ended March 31, 2022, the Company recorded income tax expense of $788,000, compared to $1.4 million for the six months ended March 31, 2021.
Statement of Condition Highlights at March 31, 2022
- Non-performing assets (“NPAs”) were 0.55 percent and 0.72 percent of total assets at March 31, 2022, and September 30, 2021 respectively.
- Non-performing loans (“NPLs”) were 0.14 percent and 0.40 percent of total loans at March 31, 2022, and September 30, 2021, respectively.
- Total assets were $1.1 billion at March 31, 2022, a decrease of $106.9 million, or 8.9 percent, compared to September 30, 2021. The decrease was primarily due to a $103.7 million decline in loans receivable driven by payoffs and pay downs during the period and a $21.3 million decrease in loans held-for-sale, mainly loans that were sold during the period.
- Total liabilities were $1.0 billion at March 31, 2022, a decrease of $109.2 million, or 10.2 percent, compared to September 30, 2021. The decrease was primarily due to the repayment of a $30.0 million FHLB advance and a decrease of $83.7 million in total deposits.
- Book value per common share amounted to $18.95 at March 31, 2022, compared to $18.65 at September 30, 2021.
| Linked Quarter Statement of Condition Data | ||||||||||
| (in thousands, unaudited) | ||||||||||
| At the quarter ended: | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||
| Cash and due from depository institutions | $ | 49,674 | 104,568 | $ | 99,670 | $ | 90,441 | $ | 99,358 | |
| Interest bearing deposits in depository institutions | 72,349 | 30,336 | $ | 36,920 | 14,513 | 9,556 | ||||
| Investment securities, available for sale, at fair value | 54,183 | 41,718 | 40,813 | 34,502 | 28,899 | |||||
| Equity Securities | 1,445 | 1,491 | 1,500 | — | — | |||||
| Investment securities held to maturity | 48,512 | 39,045 | 28,507 | 31,795 | 25,834 | |||||
| Restricted stock, at cost | 6,462 | 6,294 | 7,776 | 7,896 | 8,891 | |||||
| Loans Held-for-sale | 11,933 | 13,616 | 33,199 | — | — | |||||
| Loans receivable, net of allowance for loan losses | 799,310 | 858,203 | 902,981 | 940,735 | 974,596 | |||||
| Other real estate owned | 4,961 | 4,961 | 4,961 | 4,961 | 5,796 | |||||
| Accrued interest receivable | 3,478 | 3,394 | 3,512 | 3,370 | 3,598 | |||||
| Operating lease right-of-use-assets | 1,523 | 1,663 | 1,796 | 2,168 | 2,322 | |||||
| Property and equipment, net | 5,486 | 5,635 | 5,777 | 5,902 | 6,040 | |||||
| Deferred income taxes, net | 3,632 | 3,461 | 3,530 | 3,389 | 3,535 | |||||
| Bank-owned life insurance | 25,896 | 26,224 | 26,056 | 25,889 | 25,725 | |||||
| Other assets | 13,441 | 12,591 | 12,145 | 20,183 | 12,269 | |||||
| Total assets | $ | 1,102,285 | $ | 1,153,200 | $ | 1,209,143 | $ | 1,185,744 | $ | 1,206,419 |
| Deposits | $ | 854,437 | 912,688 | $ | 938,159 | $ | 907,704 | $ | 912,213 | |
| FHLB advances | 60,000 | 60,000 | 90,000 | 90,000 | 110,000 | |||||
| Subordinated debt | 25,000 | 24,974 | 24,934 | 24,895 | 24,855 | |||||
| Operating lease liabilities | 1,556 | 1,691 | 1,830 | 2,204 | 2,357 | |||||
| Other liabilities | 16,742 | 9,290 | 12,052 | 12,749 | 11,143 | |||||
| Shareholders’ equity | 144,550 | 144,557 | 142,168 | 148,192 | 145,851 | |||||
| Total liabilities and shareholders’ equity | $ | 1,102,285 | $ | 1,153,200 | $ | 1,209,143 | $ | 1,185,744 | $ | 1,206,419 |
| Condensed Consolidated | ||||||||||
| Average Statement of Condition | ||||||||||
| (in thousands, unaudited) | ||||||||||
| For the quarter ended: | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||
| Investment securities | $ | 97,697 | $ | 82,126 | $ | 75,004 | $ | 71,811 | $ | 58,559 |
| Interest-bearing cash accounts | 36,452 | 32,775 | 26,339 | 16,914 | 21,506 | |||||
| Loans, net of allowance for loan losses | 846,420 | 899,430 | 933,727 | 955,012 | 977,876 | |||||
| All other assets | 148,374 | 163,117 | 165,439 | 164,288 | 165,942 | |||||
| Total assets | $ | 1,128,943 | $ | 1,177,448 | $ | 1,200,509 | $ | 1,208,025 | $ | 1,223,883 |
| Non-interest-bearing deposits | $ | 54,501 | 54,092 | 51,534 | 52,799 | 50,327 | ||||
| Interest-bearing deposits | 829,050 | 876,269 | 869,914 | 868,099 | 866,153 | |||||
| FHLB advances | 60,000 | 66,847 | 90,000 | 99,505 | 116,889 | |||||
| Other short-term borrowings | - | 120 | - | - | 3,111 | |||||
| Subordinated debt | 24,990 | 24,952 | 24,917 | 24,877 | 24,835 | |||||
| Other liabilities | 14,250 | 11,408 | 14,907 | 15,399 | 17,751 | |||||
| Shareholders’ equity | 146,152 | 143,760 | 149,237 | 147,346 | 144,817 | |||||
| Total liabilities and shareholders’ equity | $ | 1,128,943 | $ | 1,177,448 | $ | 1,200,509 | $ | 1,208,025 | $ | 1,223,883 |
Deposits
Total deposits decreased $83.7 million, or 8.9 percent, from $938.2 million at September 30, 2021 to $854.4 million at March 31, 2022. The decrease in deposits was primarily related to a reduction of $57.2 million in money market deposits and a reduction of $34.2 million in interest bearing demand deposits, partially offset by increases of $7.6 million in the Savings, Time, and non-interest bearing deposit categories collectively.
The Company continues to focus on the maintenance, development, and expansion of its deposit base. Management believes that the emphasis on serving the needs of our communities will provide a long-term relationship base which in turn will allow the Company to efficiently compete for and retain deposits in its market.
The following table reflects the composition of the Company’s deposits as of the dates indicated.
| (in thousands, unaudited) | ||||||||||
| At quarter ended: | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||
| Demand: | ||||||||||
| Non-interest-bearing | $ | 54,712 | $ | 60,320 | $ | 53,849 | $ | 53,365 | $ | 54,210 |
| Interest-bearing | 302,468 | 335,411 | 336,645 | 329,372 | 313,865 | |||||
| Savings | 54,074 | 56,342 | 50,582 | 51,011 | 49,601 | |||||
| Money market | 328,324 | 346,023 | 385,480 | 359,040 | 338,100 | |||||
| Time | 114,859 | 114,592 | 111,603 | 114,916 | 156,437 | |||||
| Total deposits | $ | 854,437 | $ | 912,688 | $ | 938,159 | $ | 907,704 | $ | 912,213 |
Loans
Total net loans amounted to $799.3 million at March 31, 2022, compared to $903.0 million at September 30, 2021, resulting in a net decrease of $103.7 million, or 11.5 percent, for the period and was driven primarily by higher commercial loan payoffs and paydowns during the period. Loans held-for-sale amounted to $11.9 million at March 31, 2022, compared to $33.2 million at September 30, 2021. This decline was primarily related to the sale of three commercial loans. Average gross loan balances for the quarter ended March 31, 2022, totaled $856.9 million as compared to $945.5 million for the quarter ended September 30, 2021, representing a decrease of $88.6 million, or 9.4 percent.
At March 31, 2022, gross loans, which excludes loans held-for-sale, remained weighted toward two primary components: the commercial and core residential portfolios, with commercial loans accounting for 71.9 percent and single-family residential real estate loans accounting for 22.0 percent of the gross loan portfolio at such date. Construction and development loans amounted to 3.7 percent and consumer loans represented 2.4 percent of the gross loan portfolio at such date. The decrease in the gross loan portfolio at March 31, 2022, compared to September 30, 2021, primarily reflected decreases of $48.3 million in commercial loans, $21.0 million in residential mortgage loans, and 33.5 million in construction and development loans.
The following table reflects the Company’s loan portfolio composition, excluding loans held-for-sale.
| (in thousands, unaudited) | |||||||||||||||
| At quarter ended: | 03/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
| Residential mortgage | $ | 177,669 | $ | 187,516 | $ | 198,710 | $ | 201,737 | $ | 218,165 | |||||
| Construction and Development: | |||||||||||||||
| Residential and commercial | 25,558 | 56,876 | 61,492 | 61,484 | 76,257 | ||||||||||
| Land | 4,603 | 2,138 | 2,204 | 2,253 | 3,596 | ||||||||||
| Total construction and development | 30,161 | 59,014 | 63,696 | 63,737 | 79,853 | ||||||||||
| Commercial: | |||||||||||||||
| Commercial real estate | 400,974 | 416,248 | 426,915 | 478,032 | 482,611 | ||||||||||
| Farmland | 15,624 | 15,582 | 10,297 | 10,335 | 7,344 | ||||||||||
| Multi-family | 54,788 | 54,448 | 66,332 | 66,725 | 67,122 | ||||||||||
| Commercial and industrial | 101,354 | 106,493 | 115,246 | 97,955 | 94,706 | ||||||||||
| Other | 7,978 | 7,433 | 10,954 | 10,896 | 9,927 | ||||||||||
| Total commercial | 580,718 | 600,204 | 629,744 | 663,943 | 661,710 | ||||||||||
| Consumer: | |||||||||||||||
| Home equity lines of credit | 12,283 | 13,174 | 13,491 | 12,822 | 15,936 | ||||||||||
| Second mortgages | 4,969 | 5,384 | 5,884 | 7,039 | 8,114 | ||||||||||
| Other | 2,237 | 2,282 | 2,299 | 2,372 | 2,650 | ||||||||||
| Total consumer | 19,489 | 20,840 | 21,674 | 22,233 | 26,700 | ||||||||||
| Total loans | 808,037 | 867,574 | 913,824 | 951,650 | 986,428 | ||||||||||
| Deferred loan costs, net | 574 | 667 | 629 | 685 | 769 | ||||||||||
| Allowance for loan losses | (9,301 | ) | (10,037 | ) | (11,472 | ) | (11,600 | ) | (12,601 | ) | |||||
| Loans Receivable, net | 799,310 | $ | 858,204 | $ | 902,981 | $ | 940,735 | $ | 974,596 | ||||||
At March 31, 2022, the Company had $142.3 million in overall undisbursed loan commitments, which consisted primarily of available usage from active construction facilities, unused commercial lines of credit, and home equity lines of credit.
Asset Quality
Non-accrual loans, excluding loans held-for-sale, totaled $1.1 million at March 31, 2022, and $3.7 million at September 30, 2021. The decrease in non-accrual loans was primarily due to partial charge downs totaling $2.2 million taken during the six month period ended March 31, 2022 related to one non-accrual commercial and industrial loan. Performing troubled debt restructured (“TDR”) loans were $5.8 million at March 31, 2022, and $17.6 million at September 30, 2021. The decrease is primarily related to two TDR commercial real estate loans totaling $11.4 million that were sold during the period, as part of the note sale consummated during the December 31, 2021 period end.
At March 31, 2022, NPAs totaled $6.1 million, or 0.55 percent of total assets, as compared with $8.7 million, or 0.72 percent of total assets, at September 30, 2021. The decrease in NPAs is due to the decrease in non-accrual loans as described above. Other real estate owned or OREO, which is comprised of one commercial real estate property, totaled $5.0 million as of quarters ended March 31, 2022 and September 30, 2021.
Non-Performing Asset and Other Asset Quality Data:
| As of or for the quarter ended: | 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||
| Non-accrual loans | $ | 1,101 | $ | 1,790 | $ | 3,697 | $ | 23,547 | $ | 22,281 | |||||
| Loans 90 days or more past due and still accruing | 3 | - | - | 212 | 765 | ||||||||||
| Total non-performing loans | 1,104 | 1,790 | 3,697 | 23,759 | 23,046 | ||||||||||
| OREO | 4,961 | 4,961 | 4,961 | 4,961 | 5,796 | ||||||||||
| Total NPAs | $ | 6,065 | $ | 6,751 | $ | 8,658 | $ | 28,720 | $ | 28,842 | |||||
| Performing TDR loans | $ | 5,787 | $ | 6,310 | $ | 17,601 | $ | 23,352 | $ | 22,697 | |||||
| NPAs / total assets | 0.55 | % | 0.59 | % | 0.72 | % | 2.42 | % | 2.39 | % | |||||
| Non-performing loans / total loans | 0.14 | % | 0.21 | % | 0.40 | % | 2.50 | % | 2.34 | % | |||||
| Net charge-offs | 736 | 1,436 | 10,754 | 1,001 | 434 | ||||||||||
| Net charge-offs /average loans(1) | 0.40 | % | 0.63 | % | 4.55 | % | 0.41 | % | 0.18 | % | |||||
| Allowance for loan losses / total loans | 1.15 | % | 1.16 | % | 1.26 | % | 1.22 | % | 1.28 | % | |||||
| Allowance for loan losses / non-performing loans | 842.5 | % | 560.7 | % | 310.3 | % | 48.8 | % | 54.7 | % | |||||
| Total assets | 1,102,285 | 1,153,200 | 1,209,143 | 1,185,744 | 1,206,419 | ||||||||||
| Total gross loans | 808,037 | 867,574 | 913,824 | 951,650 | 986,428 | ||||||||||
| Average net loans | 846,420 | 913,587 | 945,457 | 967,615 | 990,913 | ||||||||||
| Allowance for loan losses | 9,301 | 10,037 | 11,472 | 11,600 | 12,601 | ||||||||||
| ___________________________ | |||||||||||||||
| (1) Annualized. | |||||||||||||||
The allowance for loan losses at March 31, 2022 amounted to approximately $9.3 million, or 1.15 percent of total gross loans, compared to $11.5 million, or 1.26 percent of total gross loans, at September 30, 2021. The decline reflected the $2.2 million charge off described above and the overall decline in total loans at March 31, 2022 of $106.1 million compared to September 30, 2021. The Company did not record a provision for loan losses for the quarter ended March 31, 2022, compared to $550,000 provision for loan losses for the quarter ended March 31, 2021.
Capital
At March 31, 2022, the Company’s total shareholders’ equity amounted to $144.6 million, or 13.1 percent of total assets, compared to $142.2 million, or 11.8 percent of total assets at September 30, 2021, which continues to exceed all regulatory capital guidelines. At March 31, 2022, the Bank’s common equity Tier 1 capital ratio was 18.27 percent, Tier 1 leverage ratio was 14.29 percent, Tier 1 risk-based capital ratio was 18.27 percent and the total risk-based capital ratio was 19.34 percent. At September 30, 2021, the Bank’s common equity Tier 1 capital ratio was 16.13 percent, Tier 1 leverage ratio was 13.14 percent, Tier 1 risk-based capital ratio was 16.13 percent, and the total risk-based capital ratio was 17.32 percent.
About Malvern Bancorp, Inc.
Malvern Bancorp, Inc. is the holding company for Malvern Bank, National Association (“Malvern Bank”), an institution that was originally organized in 1887 as a federally-chartered savings bank. Malvern Bank now serves as one of the oldest banks headquartered on the Philadelphia Main Line. For more than a century, Malvern Bank has been committed to helping people build prosperous communities as a trusted financial partner, forging lasting relationships through teamwork, respect, and integrity.
Malvern Bank conducts business from its headquarters in Paoli, Pennsylvania, a suburb of Philadelphia, and through its nine other banking locations in Chester and Delaware counties, Pennsylvania, Morristown, New Jersey, its New Jersey regional headquarters and Palm Beach Florida. The Bank also maintains representative offices in Allentown, Pennsylvania. The Bank’s primary market niche is providing personalized service to its client base.
Malvern Bank, through its Private Banking division, provides personalized investment advisory services to individuals, families, businesses, and non-profits. These services include banking, liquidity management, investment services, 401(k) accounts and planning, custody, tailored lending, wealth planning, trust and fiduciary services, family wealth advisory services and philanthropic advisory services.
The Bank offers insurance services though Malvern Insurance Associates, LLC, which provides clients a rich array of financial services, including commercial and personal insurance and commercial and personal lending.
For further information regarding Malvern Bancorp, Inc., please visit our web site at http://ir.malvernbancorp.com. For information regarding Malvern Bank, please visit our web site at http://www.mymalvernbank.com.
Forward-Looking Statements
The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company, including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, and shareholder value creation.
Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the effects of, and changes in, trade, monetary and fiscal policies and laws, including changes in interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the impact of competition and the acceptance of the Company’s products and services by new and existing customers; the impact of changes in financial services policies, laws and regulations; technological changes; any oversupply of inventory and deterioration in values of real estate in the markets in which the Company operates, both residential and commercial; the effect of changes in accounting policies and practices, as may be adopted from time-to-time by bank regulatory agencies, the Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; possible other-than-temporary impairment of securities held by the company; the effects of the Company’s lack of a widely-diversified loan portfolio, including the risks of geographic and industry concentrations; ability to attract deposits and other sources of liquidity; changes in the competitive environment among financial and bank holding companies and other financial service providers; unanticipated regulatory or judicial proceedings; and the Company’s ability to manage the risk involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s Annual Report Filed on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).
Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic, including the outbreak of its variants on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus and its variants can be controlled, the effects on general economic conditions, and when and how the economy may be fully reopened, and when and how it will remain as such. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we are subject to any of the following risks, any of which could continue to have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; the economy , and particularly commercial real estate markets may be affected; there may be high levels of unemployment , loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; if the economy is unable to continue to substantially reopen and stay open, and there are high levels of unemployment for extended period of time, loan delinquencies, problem assets, and foreclosures may increase resulting in increased charges and reduced income; collateral for loans, especially commercial real estate, may continue to decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; due to fluctuation in interest rates, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our NIM and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experiences additional resolution costs.
The Company undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, unless required by law.
| MALVERN BANCORP, INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||
| March 31, 2022 | September 30, 2021 | ||||||
| (in thousands, except for share and per share data) | (unaudited) | ||||||
| ASSETS | |||||||
| Cash and due from depository institutions | $ | 49,674 | $ | 99,670 | |||
| Interest bearing deposits in depository institutions | 72,349 | 36,920 | |||||
| Total cash and cash equivalents | 122,023 | 136,590 | |||||
| Investment securities available for sale, at fair value (amortized cost of $56,863 and $40,756 at March 31, 2022 and September 30, 2021, respectively) | 54,183 | 40,813 | |||||
| Equity Securities (amortized cost of $1,500 at March 2022 & September 2021) | 1,445 | 1,500 | |||||
| Investment securities held to maturity (fair value of $45,716 and $28,913 at March 31, 2022 and September 30, 2021, respectively) | 48,512 | 28,507 | |||||
| Restricted stock, at cost | 6,462 | 7,776 | |||||
| Loans Held-for-sale | 11,933 | 33,199 | |||||
| Loans receivable, net of allowance for loan losses | 799,310 | 902,981 | |||||
| Other real estate owned | 4,961 | 4,961 | |||||
| Accrued interest receivable | 3,478 | 3,512 | |||||
| Operating lease right-of-use-assets | 1,523 | 1,796 | |||||
| Property and equipment, net | 5,486 | 5,777 | |||||
| Deferred income taxes, net | 3,632 | 3,530 | |||||
| Bank-owned life insurance | 25,896 | 26,056 | |||||
| Other assets | 13,441 | 12,145 | |||||
| Total assets | $ | 1,102,285 | $ | 1,209,143 | |||
| LIABILITIES | |||||||
| Deposits: | |||||||
| Non-interest bearing | $ | 54,712 | $ | 53,849 | |||
| Interest-bearing | 799,725 | 884,310 | |||||
| Total deposits | 854,437 | 938,159 | |||||
| FHLB advances | 60,000 | 90,000 | |||||
| Subordinated debt | 25,000 | 24,934 | |||||
| Advances from borrowers for taxes and insurance | 1,841 | 1,022 | |||||
| Accrued interest payable | 352 | 572 | |||||
| Operating lease liabilities | 1,556 | 1,830 | |||||
| Other liabilities | 14,549 | 10,458 | |||||
| Total liabilities | 957,735 | 1,066,975 | |||||
| SHAREHOLDERS’ EQUITY | |||||||
| Common stock, $0.01 par value, 50,000,000 shares authorized; 7,819,627 and 7,625,111 issued and outstanding, respectively, at March 31, 2022, and 7,816,832 and 7,622,316 issued and outstanding, respectively, at September 30, 2021 | 76 | 76 | |||||
| Additional paid in capital | 85,678 | 85,524 | |||||
| Retained earnings | 62,835 | 60,296 | |||||
| Unearned Employee Stock Ownership Plan (ESOP) shares | (829 | ) | (901 | ) | |||
| Accumulated other comprehensive (loss) income | (347 | ) | 36 | ||||
| Treasury stock, at cost: 194,516 shares at March 31, 2022 and September 30, 2021 | (2,863 | ) | (2,863 | ) | |||
| Total shareholders’ equity | 144,550 | 142,168 | |||||
| Total liabilities and shareholders’ equity | $ | 1,102,285 | $ | 1,209,143 | |||
| MALVERN BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
| (in thousands, except for share data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (unaudited) | ||||||||||||||||
| Interest and Dividend Income | ||||||||||||||||
| Loans, including fees | $ | 7,628 | $ | 9,069 | $ | 15,856 | $ | 19,145 | ||||||||
| Investment securities, taxable | 521 | 321 | 976 | 668 | ||||||||||||
| Investment securities, tax-exempt | 64 | 23 | 100 | 47 | ||||||||||||
| Dividends, restricted stock | 75 | 119 | 166 | 260 | ||||||||||||
| Interest-bearing cash accounts | 16 | 7 | 29 | 15 | ||||||||||||
| Total Interest and Dividend Income | 8,304 | 9,539 | 17,127 | 20,135 | ||||||||||||
| Interest Expense | ||||||||||||||||
| Deposits | 828 | 1,805 | 1,873 | 4,062 | ||||||||||||
| Short-term borrowings | - | 3 | - | 48 | ||||||||||||
| Long-term borrowings | 183 | 546 | 420 | 1,153 | ||||||||||||
| Subordinated debt | 339 | 383 | 722 | 766 | ||||||||||||
| Total Interest Expense | 1,350 | 2,737 | 3,015 | 6,029 | ||||||||||||
| Net interest income | 6,954 | 6,802 | 14,112 | 14,106 | ||||||||||||
| Provision for Loan Losses | - | - | - | 550 | ||||||||||||
| Net Interest Income after Provision for | 6,954 | 6,802 | 14,112 | 13,556 | ||||||||||||
| Loan Losses | ||||||||||||||||
| Other Income | ||||||||||||||||
| Service charges and other fees | 219 | 419 | 673 | 666 | ||||||||||||
| Rental income | 48 | 54 | 100 | 108 | ||||||||||||
| Net gains on sale and call of investments | - | 259 | - | 614 | ||||||||||||
| Net gains on sale of loans | 11 | 274 | 63 | 678 | ||||||||||||
| Earnings on bank-owned life insurance | 283 | 161 | 452 | 325 | ||||||||||||
| Total Other Income | 561 | 1,167 | 1,288 | 2,391 | ||||||||||||
| Other Expense | ||||||||||||||||
| Salaries and employee benefits | 2,347 | 2,275 | 4,642 | 4,547 | ||||||||||||
| Occupancy expense | 546 | 568 | 1,061 | 1,110 | ||||||||||||
| Federal deposit insurance premium | 71 | 83 | 147 | 159 | ||||||||||||
| Advertising | 32 | 32 | 64 | 64 | ||||||||||||
| Data processing | 359 | 306 | 679 | 634 | ||||||||||||
| Professional fees | 868 | 884 | 1,923 | 1,547 | ||||||||||||
| Net other real estate owned expense, net | - | 3 | 5 | 31 | ||||||||||||
| Pennsylvania shares tax | 169 | 169 | 339 | 339 | ||||||||||||
| Other operating expenses | 2,453 | 743 | 3,213 | 1,604 | ||||||||||||
| Total Other Expense | 6,845 | 5,063 | 12,073 | 10,035 | ||||||||||||
| Income before income tax expense | 670 | 2,906 | 3,327 | 5,912 | ||||||||||||
| Income tax expense | 148 | 682 | 788 | 1,415 | ||||||||||||
| Net Income | $ | 522 | $ | 2,224 | $ | 2,539 | $ | 4,497 | ||||||||
| Earnings per common share | ||||||||||||||||
| Basic | $ | 0.07 | $ | 0.30 | $ | 0.34 | $ | 0.60 | ||||||||
| Diluted | $ | 0.07 | $ | 0.30 | $ | 0.34 | $ | 0.60 | ||||||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Basic | 7,554,955 | 7,529,408 | 7,553,262 | 7,527,588 | ||||||||||||
| Diluted | 7,556,194 | 7,530,151 | 7,554,459 | 7,528,189 | ||||||||||||
| MALVERN BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||
| SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA | ||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||
| (in thousands, except for share and per share data) (annualized where applicable) | 3/31/2022 | 12/31/2021 | 3/31/2021 | |||||||||||
| (unaudited) | ||||||||||||||
| Statements of Operations Data | ||||||||||||||
| Interest income | $ | 8,304 | $ | 8,823 | $ | 9,539 | ||||||||
| Interest expense | 1,350 | 1,665 | 2,737 | |||||||||||
| Net interest income | 6,954 | 7,158 | 6,802 | |||||||||||
| Provision for loan losses | - | - | - | |||||||||||
| Net interest income after provision for loan losses | 6,954 | 7,158 | 6,802 | |||||||||||
| Other income | 561 | 727 | 1,167 | |||||||||||
| Other expense | 6,845 | 5,228 | 5,063 | |||||||||||
| Income before income tax expense | 670 | 2,657 | 2,906 | |||||||||||
| Income tax expense | 148 | 640 | 682 | |||||||||||
| Net income | $ | 522 | $ | 2,017 | $ | 2,224 | ||||||||
| Earnings (per Common Share) | ||||||||||||||
| Basic | $ | 0.07 | $ | 0.27 | $ | 0.30 | ||||||||
| Diluted | $ | 0.07 | $ | 0.27 | $ | 0.30 | ||||||||
| Statements of Condition Data (Period-End) | ||||||||||||||
| Equity Securities | $ | 1,445 | $ | 1,491 | $ | 1,502 | ||||||||
| Investment securities available for sale, at fair value | 54,183 | 41,718 | 27,397 | |||||||||||
| Investment securities held to maturity (fair value of $45,716, $39,316, and $26,367, respectively) | 48,512 | 39,045 | 25,834 | |||||||||||
| Loans Held-for-sale | 11,933 | 13,616 | - | |||||||||||
| Loans, net of allowance for loan losses | 799,310 | 858,203 | 974,596 | |||||||||||
| Total assets | 1,102,285 | 1,153,200 | 1,206,419 | |||||||||||
| Deposits | 854,437 | 912,688 | 912,213 | |||||||||||
| FHLB advances | 60,000 | 60,000 | 110,000 | |||||||||||
| Subordinated debt | 25,000 | 24,974 | 24,855 | |||||||||||
| Shareholders' equity | 144,550 | 144,557 | 145,851 | |||||||||||
| Common Shares Dividend Data | ||||||||||||||
| Cash dividends | $ | - | $ | - | $ | - | ||||||||
| Weighted Average Common Shares Outstanding | ||||||||||||||
| Basic | 7,554,955 | 7,551,606 | 7,529,408 | |||||||||||
| Diluted | 7,556,194 | 7,553,208 | 7,530,151 | |||||||||||
| Operating Ratios | ||||||||||||||
| Return on average assets | 0.18 | % | 0.69 | % | 0.73 | % | ||||||||
| Return on average equity | 1.43 | % | 5.61 | % | 6.14 | % | ||||||||
| Average equity / average assets | 12.95 | % | 12.21 | % | 11.83 | % | ||||||||
| Book value per common share (period-end) | $ | 18.95 | $ | 18.97 | $ | 19.17 | ||||||||
| Non-Financial Information (Period-End) | ||||||||||||||
| Common shareholders of record | 373 | 376 | 381 | |||||||||||
| Full-time equivalent staff | 79 | 79 | 81 | |||||||||||
Investor Contacts:
Joseph D. Gangemi
Corporate Investor Relations
610-695-3676
Investor Relations Contact:
Nathanial Jordan
610-695-3646
