Malvern Bancorp, Inc. Reports Third Fiscal Quarter

PAOLI, Pa., Aug. 08, 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 third fiscal quarter ended June 30, 2022. Net income amounted to $1.8 million, or $0.24 per fully diluted common share, compared with $1.6 million, or $0.21 per fully diluted common share, for the quarter ended June 30, 2021. Annualized return on average assets (“ROAA”) was 0.69% for the quarter ended June 30, 2022, compared to 0.53% for the quarter ended June 30, 2021, and annualized return on average equity (“ROAE”) was 5.06% for the quarter ended June 30, 2022, compared with 4.35% for the quarter ended June 30, 2021.

For the nine months ended June 30, 2022, net income amounted to $4.4 million, or $0.58 per fully diluted common share, compared with net income of $6.1 million, or $0.81 per fully diluted common share, for the nine months ended June 30, 2021. Annualized ROAA was 0.52% for the nine months ended June 30, 2022, compared to 0.67% for the nine months ended June 30, 2021, and annualized ROAE was 4.02% for the nine months ended June 30, 2022, compared with 5.61% for the nine months ended June 30, 2021.

Statement of Income Highlights for the three months ended June 30, 2022

  • Net interest margin (“NIM”) increased 27 basis points to 2.97% for the quarter ended June 30, 2022, compared to 2.70% for the quarter ended June 30, 2021. The increase was driven by a reduction in interest expense, partially offset by a decrease in interest-earning assets.
  • Total interest expense decreased $1.0 million, or 44.8%, to $1.3 million for the quarter ended June 30, 2022, compared to $2.3 million for the quarter ended June 30, 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 June 30, 2022.
Linked Quarter Financial Ratios          
(unaudited)          
           
As of or for the quarter ended: 6/30/2022   3/31/2022   12/31/2021     9/30/2021     6/30/2021  
Return on average assets (1) 0.69 % 0.18 % 0.69 %   (2.06 %)    0.53 %
Return on average equity (1) 5.06 % 1.43 % 5.61 %   (16.59 %)   4.35 %
Net interest margin (1) 2.97 % 2.81 % 2.78 %   2.61 %    2.70 %
Loans / deposits ratio 102.91 % 94.57 % 95.06 %   97.41 %   104.84 %
Shareholders’ equity / total assets 14.11 % 13.11 % 12.54 %   11.76 %   12.50 %
Efficiency ratio (2) 70.0 % 91.1 % 66.3 %   68.7 %   73.6 %
Book value per common share $19.03   $18.95   $18.97   $18.65   $19.44  

_________________
(1)   Annualized.
(2)   3/31/2022 quarter includes the impact of a valuation allowance adjustment related to a held-for-sale commercial real estate loan.

Linked Quarter Income Statement Data          
(unaudited)          
(in thousands, except share and per share data)          
           
For the quarter ended: 6/30/2022 3/31/2022 12/31/2021   9/30/2021   6/30/2021
Net interest income $ 7,293 $ 6,954 $ 7,158 $ 6,825   $ 7,129
Provision for loan losses         10,626    
Net interest income (loss) after provision for loan losses   7,293   6,954   7,158   (3,801 )   7,129
Other income   482   561   727   579     793
Other expense   5,439   6,845   5,228   5,084     5,832
Income (loss) before income tax expense   2,336   670   2,657   (8,306 )   2,090
Income tax expense (benefit)   502   148   640   (2,116 )   489
Net income (loss) $ 1,834 $ 522 $ 2,017 $ (6,190 ) $ 1,601
Earnings (loss) per common share          
Basic   0.24   0.07   0.27   (0.82 )   0.21
Diluted   0.24   0.07   0.27   (0.82 )   0.21
Weighted average common shares outstanding          
Basic   7,569,806   7,554,955   7,551,606   7,548,958     7,545,371
Diluted   7,574,266   7,556,194   7,553,208   7,550,766     7,546,200
                       

Net Interest Income

Net interest income was $7.3 million for the quarter ended June 30, 2022, an increase of $164,000, or 2.3%, from $7.1 million for the quarter ended June 30, 2021. For the quarter ended June 30, 2022, NIM increased by 27 basis points to 2.97%, as compared to 2.70% for the quarter ended June 30, 2021. This increase was primarily driven by a reduction in interest expense as the cost of borrowings decreased by 58 basis points and interest-bearing deposits decreased by 25 basis points compared to the quarter ended June 30, 2021. The cost of interest-bearing liabilities decreased by 33 basis points compared to the quarter ended June 30, 2021. The overall reduction of interest-bearing liabilities was offset in part by a 9 basis point reduction of interest-earning assets compared to the quarter ended June 30, 2021.

Net interest income was $21.4 million for the nine months ended June 30, 2022, an increase of $170,000, or 0.8%, from $21.2 million for the nine months ended June 30, 2021. For the nine months ended June 30, 2022, NIM increased by 23 basis points to 2.85%, as compared to 2.62% for the nine months ended June 30, 2021. Consistent with the current quarter, this increase was primarily driven by the 42 basis point decrease in cost of interest-bearing deposits compared to the nine months ended June 30, 2021. The cost of borrowings decreased by 18 basis points compared to the nine months ended June 30, 2021. The cost of interest-bearing liabilities decreased by 47 basis points compared to the nine months ended June 30, 2021.

Interest Income

For the quarters ended June 30, 2022 and June 30, 2021, total interest income was $8.6 million and $9.4 million, respectively. Total interest income decreased for the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, primarily due to the decrease in average loan balances of $146.5 million.

For the nine months ended June 30, 2022, total interest income was $25.7 million, a decrease of $3.9 million or 13.1%, from $29.6 for the nine months ended June 30, 2021. The average balance of our total loans decreased $133.1 million, or 13.3%, for the nine months ended June 30, 2022 as compared to the same period in fiscal year 2021, while the average yield on loans decreased by 12 basis points for the nine months ended June 30, 2022 compared with the same period in fiscal year 2021. The decrease in average total loan volume was primarily due to increased paydowns and payoff activity. During the nine months ended June 30, 2022 compared to the same period in fiscal year 2021, the volume-related factors during the period contributed to a decrease in interest income on loans of $1.2 million, while the rate-related factors decreased interest income on loans by $3.3 million.

Interest Expense

For the quarter ended June 30, 2022, interest expense decreased by $1.0 million, or 44.8%, to $1.3 million, compared to $2.3 million for the quarter ended June 30, 2021. The decrease in interest expense is primarily attributable to interest rate related factors, as the average rate on interest-bearing liabilities in the current quarter fell 33 basis points to 0.59% compared to 0.92% for the quarter ended June 30, 2021.

Total interest expense decreased by $4.0 million, or 48.6%, to $4.3 million for the nine months ended June 30, 2022, compared to $8.3 million for the nine months ended June 30, 2021. The decrease in interest expense on deposits is primarily attributable to rate related factors. The annualized average rate on total interest-bearing liabilities decreased to 0.63% for the nine months ended June 30, 2022, from 1.10% for the nine months ended June 30, 2021. This decrease primarily reflects a decrease in the average rate of interest-bearing deposits of 42 basis points and a decrease in the average rate of borrowings of 18 basis points. The decrease in the average rate of interest-bearing deposits consisted of a 50 basis points decrease in the average rate of certificates of deposit, a 55 basis points decrease in the average rate of money market accounts and a 17 basis points decrease in average rate of other interest-bearing deposit accounts.

Other Income

Other income decreased $311,000, or 39.2%, during the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021. The decrease in other income was primarily due to a decrease in net gains on sale of investments and loans by $215,000 to $15,000 for quarter ended June 30, 2022, compared to $230,000 for the quarter ended June 30, 2021. In addition, service charges and other fees decreased by $96,000 during quarter ended June 30, 2022 compared to the quarter ended June 30, 2021.

For the nine months ended June 30, 2022, total other income decreased $1.4 million, or 44.4%, to $1.8 million compared to $3.2 million the same period in 2021. This decrease was primarily the result of a $1.4 million decrease in net gains on sale of investments and loans.

Other Expense

Other expense for the quarter ended June 30, 2022 decreased $393,000, or 6.7%, to $5.4 million when compared to the quarter ended June 30, 2021. The decrease was primarily due to a decrease of $591,000 in other real estate owned (“OREO”) expense, partially offset by an increase of $212,000 in professional fees. The increase in professional fees was primarily due to legal fees associated with loan workouts and disclosure and other matters concerning nonperforming loans. Also, during the quarter ended June 30, 2022, the Company adjusted the carrying value of the OREO property by $198,000 based on a negotiated sales price. A purchase agreement has been executed and is currently under a due diligence period, and is expected to settle during the fourth fiscal quarter.

Other expense for the nine months ended June 30, 2022, increased $1.6 million, or 10.4%, when compared to the nine months ended June 30, 2021. The increase was primarily due to an increased valuation allowance of $359,000 recorded during the March 31, 2022 period and $1.3 million in real estate tax expense on loans held for sale.

Income Taxes

The Company recorded income tax expense of $502,000 during the quarter ended June 30, 2022, compared to $489,000 for the quarter ended June 30, 2021. The effective tax rates for the Company for the quarters ended June 30, 2022 and June 30, 2021 were 21.5% and 23.4%, respectively.

For the nine months ended June 30, 2022 income tax expense decreased by $614,000, or 32.2%, to $1.3 million from $1.9 million for the nine months ended June 30, 2021. The effective tax rates for the Company for the nine months ended June 30, 2022 and 2021 were 22.8% and 23.8%, respectively.

Statement of Condition Highlights at June 30, 2022

  • Non-performing assets (“NPAs”) were 0.61% and 0.72% of total assets at June 30, 2022 and September 30, 2021, respectively.
  • Non-performing loans (“NPLs”) were 0.18% and 0.40% of total loans at June 30, 2022 and September 30, 2021, respectively.
  • Total assets were $1.0 billion at June 30, 2022, a decrease of $179.6 million, or 14.9%, compared to September 30, 2021. The decrease was primarily due to a $97.0 million decline in net loans receivable driven by payoffs and pay downs during the nine month period, and a $19.3 million decrease in loans held-for-sale.
  • Total liabilities were $884.3 million at June 30, 2022, a decrease of $184.5 million, or 17.3%, compared to September 30, 2021. The decrease was primarily due to a decrease of $146.5 million in total deposits, and the repayment of a $30.0 million FHLB advance. The prior reduction in deposits were in line with the Bank’s overall funding strategy to reduce excess balance sheet cash and better match funding needs.
  • Book value per common share amounted to $19.03 at June 30, 2022, compared to $18.65 at September 30, 2021.
Linked Quarter Statement of Condition Data          
(in thousands, unaudited)          
At the quarter ended: 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
Cash and due from depository institutions $ 9,560 $ 49,674   104,568 $ 99,670 $ 90,441
Interest bearing deposits in depository institutions   30,199   72,349   30,336   36,920   14,513
Investment securities, available for sale, at fair value   53,080   54,183   41,718   40,813   34,502
Equity securities   1,412   1,445   1,491   1,500  
Investment securities held to maturity, at amortized cost   52,350   48,512   39,045   28,507   31,795
Restricted stock, at cost   6,027   6,462   6,294   7,776   7,896
Loans held-for-sale   13,863   13,244   13,616   33,199  
Loans receivable, net of allowance for loan losses   805,957   799,310   858,203   902,981   940,735
Other real estate owned   4,763   4,961   4,961   4,961   4,961
Accrued interest receivable   3,671   3,478   3,394   3,512   3,370
Property and equipment, net   5,365   5,486   5,635   5,777   5,902
Deferred income taxes, net   3,975   3,632   3,461   3,530   3,389
Bank-owned life insurance   26,063   25,896   26,224   26,056   25,889
Other assets   13,268   14,964   14,254   13,941   22,351
Total assets $ 1,029,553 $ 1,103,596 $ 1,153,200 $ 1,209,143 $ 1,185,744
Deposits $ 791,694 $ 854,437 $ 912,688 $ 938,159 $ 907,704
FHLB advances   60,000   60,000   60,000   90,000   90,000
Secured borrowings          
Subordinated debt   25,000   25,000   24,974   24,934   24,895
Other liabilities   7,569   19,609   10,981   13,882   14,953
Shareholders’ equity   145,290   144,550   144,557   142,168   148,192
Total liabilities and shareholders’ equity $ 1,029,553 $ 1,103,596 $ 1,153,200 $ 1,209,143 $ 1,185,744
                     
Condensed Consolidated          
Average Statement of Condition          
(in thousands, unaudited)          
           
For the quarter ended: 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
Investment securities $ 113,539 $ 97,697 $ 82,126 $ 75,004 $ 71,811
Interest-bearing cash accounts   48,161   36,452   32,775   26,339   16,914
Loans, net of allowance for loan losses   811,829   846,420   899,430   933,727   955,012
All other assets   93,481   148,374   163,117   165,439   164,288
Total assets $ 1,067,010 $ 1,128,943 $ 1,177,448 $ 1,200,509 $ 1,208,025
Non-interest-bearing deposits $ 57,479 $ 54,501 $ 54,092 $ 51,534 $ 52,799
Interest-bearing deposits   767,843   829,050   876,269   869,914   868,099
FHLB advances   60,000   60,000   66,847   90,000   99,505
Other short-term borrowings       120    
Subordinated debt   25,000   24,990   24,952   24,917   24,877
Other liabilities   11,658   14,250   11,408   14,907   15,399
Shareholders’ equity   145,030   146,152   143,760   149,237   147,346
Total liabilities and shareholders’ equity $ 1,067,010 $ 1,128,943 $ 1,177,448 $ 1,200,509 $ 1,208,025
                     

Deposits

Total deposits decreased $146.5 million, or 15.6%, from $938.2 million at September 30, 2021 to $791.7 million at June 30, 2022. The decrease in deposits was primarily related to a reduction of $84.3 million in money market deposits and a reduction of $66.1 million in interest bearing demand deposits, partially offset by increases of $6.6 million in savings and non-interest-bearing demand deposits categories, collectively.

The Company continues to focus on the maintenance, development, and expansion of its deposit base strategically with its funding requirements and liquidity needs, with an emphasis on serving the needs of its communities to provide a long-term relationship base 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: 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
Demand:          
Non-interest-bearing $ 56,731 $ 54,712 $ 60,320 $ 53,849 $ 53,365
Interest-bearing   270,532   302,468   335,411   336,645   329,372
Savings   54,184   54,074   56,342   50,582   51,011
Money market   301,165   328,324   346,023   385,480   359,040
Time   109,082   114,859   114,592   111,603   114,916
Total deposits $ 791,694 $ 854,437 $ 912,688 $ 938,159 $ 907,704
                     

Loans

Total net loans amounted to $806.0 million at June 30, 2022, compared to $903.0 million at September 30, 2021, resulting in a net decrease of $97.0 million, or 10.6%, for the period driven by higher loan payoffs and paydowns during the period primarily in the commercial loan category. Loans held-for-sale amounted to $13.9 million at June 30, 2022, compared to $33.2 million at September 30, 2021. The decline in loans held-for-sale was primarily related to the sale in the December 31, 2021 quarter of three commercial loans totaling $18.9 million. Average loan balances for the quarter ended June 30, 2022, totaled $821.1 million as compared to $933.7 million for the quarter ended September 30, 2021, representing a decrease of $112.6 million or 12.1%.

At June 30, 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 73.2% and single-family residential real estate loans accounting for 21.6% of the gross loan portfolio at such date. Construction and development loans amounted to 2.8% and consumer loans represented 2.4% of the gross loan portfolio at such date. The decrease in the gross loan portfolio at June 30, 2022, compared to September 30, 2021, primarily reflected decreases of $29.5 million in commercial loans, $11.2 million in residential mortgage loans, and $4.7 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:   06/30/2022     03/31/2022     12/31/2021     9/30/2021     6/30/2021  
Residential mortgage $ 176,499   $ 177,669   $ 187,516   $ 198,710   $ 201,737  
Construction and Development:          
Residential and commercial   20,459     25,558     56,876     61,492     61,484  
Land   2,054     4,603     2,138     2,204     2,253  
Total construction and development   22,513     30,161     59,014     63,696     63,737  
Commercial:          
Commercial real estate   407,783     400,974     416,248     426,915     478,032  
Farmland   15,348     15,624     15,582     10,297     10,335  
Multi-family   54,879     54,788     54,448     66,332     66,725  
Commercial and industrial   104,504     101,354     106,493     115,246     97,955  
Other   13,955     7,978     7,433     10,954     10,896  
Total commercial   596,469     580,718     600,204     629,744     663,943  
Consumer:          
Home equity lines of credit   12,432     12,283     13,174     13,491     12,822  
Second mortgages   4,605     4,969     5,384     5,884     7,039  
Other   2,182     2,237     2,282     2,299     2,372  
Total consumer   19,219     19,489     20,840     21,674     22,233  
Total loans   814,700     808,037     867,574     913,824     951,650  
Deferred loan costs, net   566     574     667     629     685  
Allowance for loan losses   (9,309 )   (9,301 )   (10,037 )   (11,472 )   (11,600 )
Loans Receivable, net $ 805,957   $ 799,310   $ 858,204   $ 902,981   $ 940,735  
                               

At June 30, 2022, the Company had $130.9 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 June 30, 2022, and $3.7 million at September 30, 2021. The decrease in non-accrual loans was primarily due a partial charge-off of $1.4 million related to one non-accrual commercial and industrial loan. The partial charge-off was the result of the ongoing monitoring and evaluation of classified loan values and is reflective of changes in current market and economic conditions. Performing troubled debt restructured (“TDR”) loans were $5.8 million at June 30, 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 December 31, 2021 period.

At June 30, 2022, NPAs totaled $6.2 million, or 0.61% of total assets, as compared with $8.7 million, or 0.72% of total assets, at September 30, 2021. The decrease in NPAs is due to the decrease in non-accrual loans as described above.

OREO, which is comprised of one commercial real estate property, totaled $4.8 million at June 30, 2022 and $5.0 million at September 30, 2021. Excluding the OREO property, NPAs totaled $1.5 million, or 0.14% of total assets, at June 30, 2022, and $3.7 million, or 0.31% of total assets, at September 30, 2021.

Non-Performing Asset and Other Asset Quality Data:        
           
(dollars in thousands, unaudited)          
As of or for the quarter ended:   06/30/2022     3/31/2022     12/31/2021     9/30/2021     6/30/2021  
Non-accrual loans $ 1,075   $ 1,101   $ 1,790   $ 3,697   $ 23,547  
Loans 90 days or more past due and still accruing   401     3             212  
Total non-performing loans   1,476     1,104     1,790     3,697     23,759  
OREO   4,763     4,961     4,961     4,961     4,961  
Total NPAs $ 6,239   $ 6,065   $ 6,751   $ 8,658   $ 28,720  
Performing TDR loans $ 5,753   $ 5,787   $ 6,310   $ 17,601   $ 23,352  
           
NPAs / total assets   0.61 %   0.55 %   0.59 %   0.72 %   2.42 %
Non-performing loans / total loans   0.18 %   0.14 %   0.21 %   0.40 %   2.50 %
Net charge-offs $ (8 ) $ 736   $ 1,436   $ 10,754   $ 1,001  
Net charge-offs /average loans(1)   (0.00 %)   0.35 %   0.63 %   4.61 %   0.41 %
Allowance for loan losses / total loans   1.14 %   1.15 %   1.16 %   1.26 %   1.22 %
Allowance for loan losses / non-performing loans   630.7 %   842.5 %   560.7 %   310.3 %   48.8 %
           
Total assets $ 1,029,553   $ 1,103,596   $ 1,153,200   $ 1,209,143   $ 1,185,744  
Total gross loans   814,700     808,037     867,574     913,824     951,650  
Average net loans   811,829     846,420     899,430     933,727     955,012  
Allowance for loan losses   9,309     9,301     10,037     11,472     11,600  

_________________
(1)   Annualized.

The allowance for loan losses at June 30, 2022 amounted to $9.3 million, or 1.14% of total gross loans, compared to $11.5 million, or 1.26% of total gross loans, at September 30, 2021. The Company did not record a provision for loan losses for the quarter ended June 30, 2022, compared to $10.6 million provision for loan losses for the quarter ended September 30, 2021. The decline reflected a $2.2 million charge off during the March 31, 2022 period and the overall decline in total loans at June 30, 2022 of $99.1 million compared to September 30, 2021.

Capital

At June 30, 2022 the Company’s total shareholders’ equity amounted to $145.3 million, or 14.1% of total assets, compared to $142.2 million, or 11.8% of total assets at September 30, 2021, which continues to exceed all regulatory capital requirements. At June 30, 2022, the Bank’s common equity Tier 1 capital ratio was 18.79%, Tier 1 leverage ratio was 15.33%, Tier 1 risk-based capital ratio was 18.79% and the total risk-based capital ratio was 19.87%. At September 30, 2021, the Bank’s common equity Tier 1 capital ratio was 16.13%, Tier 1 leverage ratio was 13.14%, Tier 1 risk-based capital ratio was 16.13% and the total risk-based capital ratio was 17.32%.

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 a representative office 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; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; 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 ongoing 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 and the effects on general economic conditions. 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 there are high levels of unemployment for extended periods 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.

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          
           
  June 30, 2022   September 30, 2021
(in thousands, except for share data) (unaudited)      
ASSETS          
Cash and due from depository institutions $ 9,560     $ 99,670  
Interest bearing deposits in depository institutions   30,199       36,920  
Total cash and cash equivalents   39,759       136,590  
Investment securities available for sale, at fair value   53,080       40,813  
Equity securities, at fair value   1,412       1,500  
Investment securities held to maturity, at amortizing cost   52,350       28,507  
Restricted stock, at cost   6,027       7,776  
Loans held-for-sale   13,863       33,199  
Loans receivable, net of allowance for loan losses   805,957       902,981  
Other real estate owned   4,763       4,961  
Accrued interest receivable   3,671       3,512  
Property and equipment, net   5,365       5,777  
Deferred income taxes, net   3,975       3,530  
Bank-owned life insurance   26,063       26,056  
Other assets   13,268       13,941  
Total assets $ 1,029,553     $ 1,209,143  
LIABILITIES          
Deposits:          
Non-interest bearing $ 56,731     $ 53,849  
Interest-bearing   734,963       884,310  
Total deposits   791,694       938,159  
FHLB advances   60,000       90,000  
Subordinated debt   25,000       24,934  
Advances from borrowers for taxes and insurance   2,388       1,022  
Accrued interest payable   350       572  
Other liabilities   4,831       12,288  
Total liabilities   884,263       1,066,975  
SHAREHOLDERS’ EQUITY          
Common stock, $0.01 par value, 50,000,000 shares authorized; 7,828,344 and 7,633,828 issued and outstanding, respectively, at June 30, 2022, and 7,816,832 and 7,622,316 issued and outstanding, respectively, at September 30, 2021   76       76  
Additional paid in capital   85,838       85,524  
Retained earnings   64,669       60,296  
Unearned Employee Stock Ownership Plan (ESOP) shares   (792 )     (901 )
Accumulated other comprehensive (loss) income   (1,638 )     36  
Treasury stock, at cost: 194,516 shares at June 30, 2022 and September 30, 2021   (2,863 )     (2,863 )
Total shareholders’ equity   145,290       142,168  
Total liabilities and shareholders’ equity $ 1,029,553     $ 1,209,143  
               
MALVERN BANCORP, INC. AND SUBSIDIARIES          
CONSOLIDATED STATEMENTS OF INCOME          
                         
    Three Months Ended June 30,   Nine Months Ended June 30,
(in thousands, except for share data)     2022     2021     2022     2021
(unaudited)                        
Interest and Dividend Income                        
Loans, including fees   $ 7,653   $ 8,895   $ 23,509   $ 28,040
Investment securities, taxable     588     378     1,564     1,046
Investment securities, tax-exempt     141     30     241     77
Dividends, restricted stock     80     110     246     370
Interest-bearing deposits     95     6     124     21
Total Interest and Dividend Income     8,557     9,419     25,684     29,554
Interest Expense                        
Deposits     812     1,446     2,685     5,508
Short-term borrowings                 48
Long-term borrowings     158     461     578     1,614
Subordinated debt     294     383     1,016     1,149
Total Interest Expense     1,264     2,290     4,279     8,319
Net interest income     7,293     7,129     21,405     21,235
Provision for Loan Losses                 550
Net Interest Income after Provision for     7,293     7,129     21,405     20,685
Loan Losses
Other Income                        
Service charges and other fees     248     344     921     1,010
Rental income     48     55     148     163
Net gains on sale and call of investments         165         779
Net gains on sale of loans     15     65     78     743
Earnings on bank-owned life insurance     171     164     623     489
Total Other Income     482     793     1,770     3,184
Other Expense                        
Salaries and employee benefits     2,350     2,259     6,992     6,806
Occupancy expense     542     546     1,603     1,656
Federal deposit insurance premium     68     77     215     236
Advertising     33     12     97     76
Data processing     305     301     984     935
Professional fees     1,053     841     2,976     2,388
Other real estate owned expense, net     244     835     249     866
Pennsylvania shares tax     127     170     466     509
Other operating expenses     717     791     3,930     2,395
Total Other Expense     5,439     5,832     17,512     15,867
Income before income tax expense     2,336     2,090     5,663     8,002
Income tax expense     502     489     1,290     1,904
Net Income   $ 1,834   $ 1,601   $ 4,373   $ 6,098
Earnings per common share                        
Basic   $ 0.24   $ 0.21   $ 0.58   $ 0.81
Diluted   $ 0.24   $ 0.21   $ 0.58   $ 0.81
Weighted Average Common Shares Outstanding                        
Basic     7,569,806     7,545,371     7,559,868     7,533,516
Diluted     7,574,266     7,546,200     7,560,605     7,534,068
                         
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 data) (annualized where applicable)  6/30/2022
   3/31/2022
   6/30/2021
(unaudited)                
Statements of Income Data                
Interest income $ 8,557     $ 8,304     $ 9,419  
Interest expense   1,264       1,350       2,290  
Net interest income   7,293       6,954       7,129  
Provision for loan losses                
Net interest income after provision for loan losses   7,293       6,954       7,129  
Other income   482       561       793  
Other expense   5,439       6,845       5,832  
Income before income tax expense   2,336       670       2,090  
Income tax expense   502       148       489  
Net income $ 1,834     $ 522     $ 1,601  
Earnings (per Common Share)                
Basic $ 0.24     $ 0.07     $ 0.21  
Diluted $ 0.24     $ 0.07     $ 0.21  
Statements of Financial Condition Data (Period-End)                
Equity securities $ 1,412     $ 1,445     $  
Investment securities available for sale, at fair value   53,080       54,183       34,502  
Investment securities held to maturity   52,350       48,512       31,795  
Loans held-for-sale   13,863       13,244        
Loans, net of allowance for loan losses   805,957       799,310       940,735  
Total assets   1,029,553       1,103,596       1,185,744  
Deposits   791,694       854,437       907,704  
FHLB advances   60,000       60,000       90,000  
Subordinated debt   25,000       25,000       24,895  
Shareholders’ equity   145,290       144,550       148,192  
Common Shares Dividend Data                
Cash dividends $     $     $  
Weighted Average Common Shares Outstanding                
Basic   7,569,806       7,554,955       7,545,371  
Diluted   7,574,266       7,556,194       7,546,200  
Operating Ratios                
Return on average assets   0.69 %     0.18 %     0.53 %
Return on average equity   5.06 %     1.43 %     4.35 %
Average equity / average assets   13.59 %     12.95 %     12.20 %
Book value per common share (period-end) $ 19.03     $ 18.95     $ 19.44  
Non-Financial Information (Period-End)                
Common shareholders of record   371       373       380  
Full-time equivalent staff   76       79       80  
                       

Investor Contacts:
Joseph D. Gangemi
Corporate Investor Relations
610-695-3676

Investor Relations Contact:
Nathanial Jordan
610-695-3646

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