Malvern Bancorp, Inc. Reports Second Quarter Operating

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

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