Malvern Bancorp, Inc. Reports Fourth Quarter and Fiscal Year End Operating Results

Malvern Bancorp, Inc.
Malvern Bancorp, Inc.

PAOLI, Pa., Dec. 02, 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 fourth fiscal quarter and year ended September 30, 2022. Net income amounted to $2.6 million, or $0.34 per fully diluted common share, compared with a net loss of ($6.2) million, or ($0.82) per fully diluted common share, for the quarter ended September 30, 2021. Annualized return on average assets (“ROAA”) was 1.01% for the quarter ended September 30, 2022, compared to (2.06%) for the quarter ended September 30, 2021, and annualized return on average equity (“ROAE”) was 7.08% for the quarter ended September 30, 2022, compared with (16.59%) for the quarter ended September 30, 2021.

For the fiscal year ended September 30, 2022, net income amounted to $7.0 million, or $0.92 per fully diluted common share, compared with a net loss of ($92,000), or ($0.01) per fully diluted common share, for the fiscal year ended September 30, 2021. ROAA was 0.63% for the fiscal year ended September 30, 2022, compared to (0.01%) for the fiscal year ended September 30, 2021, and ROAE was 4.79% for the fiscal year ended September 30, 2022, compared with (0.06%) for the fiscal year ended September 30, 2021.

“In our fourth quarter we earned $2.6 million in net income and net revenue of $8.5 million with improved returns on average assets and average equity of 1.01% and 7.08% respectively. Results for the period were driven by growth in net interest income supported by stable levels of loans and deposits. Overall our businesses continued to benefit from good underlying consumer and business conditions as well as new business at a measured pace and by continuing to deepen and expand existing relationships, said Anthony C. Weagley, President & CEO. “Credit quality improved during the period and remains stable; during the quarter our net charge-off ratio improved compared to the same period in 2021. We continue to focus on maintaining a sound balance sheet supported by strong capital and liquidity positions. In light of the shifting economic environment and broader macro factors, we continue to plan for continued volatility and the resultant possible outcomes and will continue to manage the Bank in a conservative, disciplined manner, continued Mr. Weagley.

Statement of Operations Highlights for the three months and year ended September 30, 2022

  • Net interest margin (“NIM”) increased 65 basis points to 3.26% for the quarter ended September 30, 2022, compared to 2.61% for the quarter ended September 30, 2021. The increase was primarily driven by a reduction in total interest expense.

  • Total interest expense decreased $4.7 million, or 45.1%, to $5.7 million for the fiscal year ended September 30, 2022, compared to $10.4 million for the fiscal year ended September 30, 2021, which resulted primarily from a decrease in average rate and volume of interest-bearing liabilities.

  • Net interest income increased $1.3 million, or 4.5%, to $29.3 million for the fiscal year ended September 30, 2022, compared to $28.1 million for the fiscal year ended September 30, 2021, which resulted from a decrease in average rate and volume of interest-bearing liabilities.

  • The Company did not record a provision for loan losses during the quarter or fiscal year ended September 30, 2022.

Linked Quarter Financial Ratios

 

 

 

 

 

 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

As of or for the quarter ended:

9/30/2022

 

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

Return on average assets (1)

 

1.01

%

 

0.69

%

 

0.18

%

 

0.69

%

 

(2.06

%)

Return on average equity (1)

 

7.08

%

 

5.06

%

 

1.43

%

 

5.61

%

 

(16.59

%)

Net interest margin (1)

 

3.26

%

 

2.97

%

 

2.81

%

 

2.78

%

 

2.61

%

Loans / deposits ratio

 

103.19

%

 

102.91

%

 

94.57

%

 

95.06

%

 

97.41

%

Shareholders' equity / total assets

 

14.02

%

 

14.11

%

 

13.11

%

 

12.54

%

 

11.76

%

Efficiency ratio (2)

 

62.1

%

 

70.0

%

 

91.1

%

 

66.3

%

 

68.7

%

Book value per common share

$

19.18

 

$

19.03

 

$

18.95

 

$

18.97

 

$

18.65

 

 

 

 

 

 

 

(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 QuarterIncome Statement Data

 

 

 

 

 

(unaudited)

 

 

 

 

 

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

For the quarter ended:

9/30/2022

 

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

Net interest income

$

7,909

 

$

7,293

 

$

6,954

 

$

7,158

 

$

6,825

 

Provision for loan losses

 

-

 

 

-

 

 

-

 

 

-

 

 

10,626

 

Net interest income (loss) after provision for loan losses

 

7,909

 

 

7,293

 

 

6,954

 

 

7,158

 

 

(3,801

)

Other income

 

557

 

 

482

 

 

561

 

 

727

 

 

579

 

Other expense

 

5,254

 

 

5,439

 

 

6,845

 

 

5,228

 

 

5,084

 

Income (loss) before income tax expense

 

3,212

 

 

2,336

 

 

670

 

 

2,657

 

 

(8,306

)

Income tax expense (benefit)

 

634

 

 

502

 

 

148

 

 

640

 

 

(2,116

)

Net income (loss)

$

2,578

 

$

1,834

 

$

522

 

$

2,017

 

$

(6,190

)

Earnings (loss) per common share

 

 

 

 

 

Basic

 

0.34

 

 

0.24

 

 

0.07

 

 

0.27

 

 

(0.82

)

Diluted

 

0.34

 

 

0.24

 

 

0.07

 

 

0.27

 

 

(0.82

)

Weighted average common shares outstanding

 

 

 

 

 

Basic

 

7,574,870

 

 

7,569,806

 

 

7,554,955

 

 

7,551,606

 

 

7,548,958

 

Diluted

 

7,581,105

 

 

7,574,266

 

 

7,556,194

 

 

7,553,208

 

 

7,550,766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

Net interest income was $7.9 million for the quarter ended September 30, 2022, an increase of $1.1 million, or 15.9%, from $6.8 million for the quarter ended September 30, 2021. For the quarter ended September 30, 2022, NIM increased by 65 basis points to 3.26%, as compared to 2.61% for the quarter ended September 30, 2021. This increase was primarily driven by a reduction in total interest expense as the cost of interest-bearing liabilities decreased by 14 basis points, driven by lower interest rates and average balances of deposits and borrowings, compared to the quarter ended September 30, 2021.

Net interest income was $29.3 million for the fiscal year ended September 30, 2022, an increase of $1.3 million, or 4.5%, from $28.1 million for the fiscal year ended September 30, 2021. For the fiscal year ended September 30, 2022, NIM increased by 33 basis points to 2.95%, as compared to 2.62% for the fiscal year ended September 30, 2021. Consistent with the current quarter, this increase was primarily driven by the decrease in cost of interest-bearing liabilities compared to the fiscal year ended September 30, 2021.

Interest Income

For the quarters ended September 30, 2022 and September 30, 2021, total interest income was $9.3 million and $8.9 million, respectively. Total interest income increased $453,000, or 5.1% for the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021, primarily due to rising interest rates resulting in additional interest income from net loans and investment securities partially offset by lower average loans and investment securities.

For the fiscal year ended September 30, 2022, total interest income was $35.0 million, a decrease of $3.4 million or 8.9%, from $38.4 for the fiscal year ended September 30, 2021. The decrease was driven by a decline in interest earning assets of $78.9 million, resulting from a $129.3 million, or 13.1%, decline in average loans partially offset by an increase of $38.4 million, or 65.5%, of investment securities for the fiscal year ended September 30, 2022, as compared to the same period in fiscal year 2021. During the fiscal year ended September 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 $4.8 million, while the rate-related factors increased interest income on loans by $247,000.

Interest Expense

For the quarter ended September 30, 2022, interest expense decreased by $631,000, or 31.0%, to $1.4 million, compared to $2.0 million for the quarter ended September 30, 2021. The decrease in interest expense is attributable to lower interest rates and lower average deposits during the comparable period. Total interest-bearing liabilities declined $172.8 million, or 17.6%, to $812.0 million, and the average rate on interest-bearing liabilities fell 14 basis points to 0.69%, compared to 0.83%, during the fiscal year ended September 30, 2022 compared to the same period in fiscal year 2021.

Total interest expense decreased by $4.7 million, or 45.1%, to $5.7 million for the fiscal year ended September 30, 2022, compared to $10.4 million for the fiscal year ended September 30, 2021. Similar to the quarter ended September 30, 2022, the decrease in interest expense is attributable to lower interest rates and lower average deposits and borrowings. The annualized average rate on total interest-bearing liabilities decreased to 0.64% for the fiscal year ended September 30, 2022, from 1.03% for the fiscal year ended September 30, 2021. This decrease primarily reflects a decrease in the average rate of interest-bearing deposits of 0.34% and a decrease in the average rate of borrowings of 0.23%. The decrease in the average rate of interest-bearing deposits consisted of a 40 basis points decrease in the average rate of certificates of deposit, a 22 basis points decrease in the average rate of money market accounts, and a 39 basis points decrease in average rate of other interest-bearing deposit accounts.

Other Income

Other income decreased $22,000, or 3.8%, during the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021. The decrease in other income was primarily due to a decrease in net gains on sale of loans by $23,000 to $22,000 for quarter ended September 30, 2022, compared to $45,000 for the quarter ended September 30, 2021.

For the fiscal year ended September 30, 2022, total other income decreased $1.4 million, or 38.2%, to $2.3 million compared to $3.8 million for the fiscal year ended September 30, 2021. This decrease was primarily the result of a $1.5 million decrease in net gains on sale of investment securities and mortgage loans.

Other Expense

Other expense for the quarter ended September 30, 2022 increased $170,000, or 3.3%, to $5.3 million when compared to the quarter ended September 30, 2021. The increase was primarily due to an increase of $108,000 in other operating expense, primarily related to ongoing real estate taxes paid on one loan held for sale, and a $65,000 increase in professional fees.

Other expense for the fiscal year ended September 30, 2022 increased $1.8 million, or 8.7%, to $22.8 when compared to the fiscal year ended September 30, 2021. The increase was primarily due to $1.5 million of real estate tax expense and $359,000 valuation allowance adjustment on a $13.3 million loan held for sale. Professional fees increased by $653,000 to $3.8 million at September 30, 2022, from $3.2 million at September 30, 2021, primarily due to legal fees associated with loan workouts and related matters concerning nonperforming loans. These increases were offset by a decrease in other real estate owned (“OREO”) expenses of $561,000 to $305,000 at September 30, 2022, when compared to $866,000 for the fiscal year ended September 30, 2021.

Income Taxes

The Company recorded income tax expense of $634,000 during the quarter ended September 30, 2022, compared to an income tax benefit of $2.1 million for the quarter ended September 30, 2021. The effective tax rates for the Company for the quarters ended September 30, 2022 and September 30, 2021 were 19.74% and 25.48%, respectively.

For the fiscal year ended September 30, 2022 income tax expense increased by $2.1 million, to $1.9 million from an income tax benefit of $212,000 for the fiscal year ended September 30, 2021. The effective tax rates for the Company for the fiscal years ended September 30, 2022 and 2021 were 21.68% and 69.74%, respectively.

Statement of Financial Condition Highlights at September 30, 2022

  • Non-performing assets (“NPAs”) were 0.12% and 0.72% of total assets at September 30, 2022 and September 30, 2021, respectively.

  • Non-performing loans (“NPLs”) were 0.12% and 0.40% of total loans at September 30, 2022 and September 30, 2021, respectively.

  • The Bank disposed of one $4.7 million other real estate owned property at carrying value and recorded one new $259,000 other real estate owned property, during the September 30, 2022 quarter end period.

  • Total assets were $1.0 billion at September 30, 2022, a decrease of $164.8 million, or 13.6%, compared to September 30, 2021.   The decrease was primarily due to a $101.1 million decline in net loans receivable driven by payoffs and pay downs during the fiscal year period, and $95.0 million decline in cash and due from depository institutions.

  • Total liabilities were $897.9 million at September 30, 2022, a decrease of $169.1 million, or 15.8%, compared to September 30, 2021. The decrease was primarily due to a decrease of $152.8 million in total deposits, and the repayment of a $10.0 million FHLB advance.

  • Book value per common share amounted to $19.18 at September 30, 2022, compared to $18.65 at September 30, 2021.

Linked Quarter Statement of Condition Data

 

 

 

 

 

(in thousands, unaudited)

 

 

 

 

 

At the quarter ended:

9/30/2022

6/30/2022

3/31/2022

12/31/2021

9/30/2021

Cash and due from depository institutions

$

4,677

$

9,560

$

49,674

 

104,568

$

99,670

Interest bearing deposits in depository institutions

 

48,590

 

30,199

 

72,349

 

30,336

 

36,920

Investment securities, available for sale, at fair value

 

49,844

 

53,080

 

54,183

 

41,718

 

40,813

Equity securities

 

1,374

 

1,412

 

1,445

 

1,491

 

1,500

Investment securities held to maturity, at amortized cost

 

58,767

 

52,350

 

48,512

 

39,045

 

28,507

Restricted stock, at cost

 

7,104

 

6,027

 

6,462

 

6,294

 

7,776

Loans held-for-sale

 

13,780

 

13,863

 

13,244

 

13,616

 

33,199

Loans receivable, net of allowance for loan losses

 

801,854

 

805,957

 

799,310

 

858,203

 

902,981

Other real estate owned

 

259

 

4,763

 

4,961

 

4,961

 

4,961

Accrued interest receivable

 

4,252

 

3,671

 

3,478

 

3,394

 

3,512

Property and equipment, net

 

5,231

 

5,365

 

5,486

 

5,635

 

5,777

Deferred income taxes, net

 

3,722

 

3,975

 

3,632

 

3,461

 

3,530

Bank-owned life insurance

 

26,233

 

26,063

 

25,896

 

26,224

 

26,056

Other assets

 

18,673

 

13,268

 

14,964

 

14,254

 

13,941

Total assets

$

1,044,360

$

1,029,553

$

1,103,596

$

1,153,200

$

1,209,143

Deposits

$

785,323

$

791,694

$

854,437

$

912,688

$

938,159

FHLB advances

 

80,000

 

60,000

 

60,000

 

60,000

 

90,000

Subordinated debt

 

25,000

 

25,000

 

25,000

 

24,974

 

24,934

Other liabilities

 

7,592

 

7,569

 

19,609

 

10,981

 

13,882

Shareholders’ equity

 

146,445

 

145,290

 

144,550

 

144,557

 

142,168

Total liabilities and shareholders’ equity

$

1,044,360

$

1,029,553

$

1,103,596

$

1,153,200

$

1,209,143

 

 

 

 

 

 


Condensed Consolidated

 

 

 

 

 

Average Statement of Condition

 

 

 

 

 

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

For the quarter ended:

9/30/2022

6/30/2022

3/31/2022

12/31/2021

9/30/2021

Investment securities

$

116,004

$

113,539

$

97,697

$

82,126

$

75,004

Interest-bearing cash accounts

 

26,581

 

48,161

 

36,452

 

32,775

 

26,339

Loans, net of allowance for loan losses

 

817,938

 

811,829

 

846,420

 

899,430

 

933,727

All other assets

 

62,134

 

93,481

 

148,374

 

163,117

 

165,439

Total assets

$

1,022,657

$

1,067,010

$

1,128,943

$

1,177,448

$

1,200,509

Non-interest-bearing deposits

$

57,195

$

57,479

$

54,501

$

54,092

$

51,534

Interest-bearing deposits

 

718,760

 

767,843

 

829,050

 

876,269

 

869,914

FHLB advances

 

67,174

 

60,000

 

60,000

 

66,847

 

90,000

Other short-term borrowings

 

1,087

 

-

 

-

 

120

 

-

Subordinated debt

 

25,000

 

25,000

 

24,990

 

24,952

 

24,917

Other liabilities

 

7,762

 

11,658

 

14,250

 

11,408

 

14,907

Shareholders’ equity

 

145,678

 

145,030

 

146,152

 

143,760

 

149,237

Total liabilities and shareholders’ equity

$

1,022,657

$

1,067,010

$

1,128,943

$

1,177,448

$

1,200,509

 

 

 

 

 

 

Deposits

Total deposits decreased $152.8 million, or 16.3%, from $938.2 million at September 30, 2021 to $785.3 million at September 30, 2022. The decrease in deposits was primarily related to a reduction of $105.8 million in money market deposits and $95.8 million in interest-bearing deposits, partially offset by an increase of $39.9 million in time deposits.

The Company continues to focus on the maintenance and development 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:

9/30/2022

6/30/2022

3/31/2022

12/31/2021

9/30/2021

Demand:

 

 

 

 

 

Non-interest-bearing

$

58,014

$

56,731

$

54,712

$

60,320

$

53,849

Interest-bearing

 

240,819

 

270,532

 

302,468

 

335,411

 

336,645

Savings

 

55,288

 

54,184

 

54,074

 

56,342

 

50,582

Money market

 

279,699

 

301,165

 

328,324

 

346,023

 

385,480

Time

 

151,503

 

109,082

 

114,859

 

114,592

 

111,603

Total deposits

$

785,323

$

791,694

$

854,437

$

912,688

$

938,159

 

 

 

 

 

 

Loans

Total net loans amounted to $801.9 million at September 30, 2022, compared to $903.0 million at September 30, 2021, resulting in a net decrease of $101.1 million, or 11.2%, for the period, driven by higher loan payoffs and paydowns during the period primarily in the commercial and construction and development loan categories. Loans held-for-sale amounted to $13.8 million at September 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 year ended September 30, 2022 totaled $854.8 million as compared to $984.1 million for the same period ending September 30, 2021, representing a decrease of $129.3 million or 13.1%.

At September 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 72.8% and single-family residential real estate loans accounting for 21.7% of the gross loan portfolio at such date. Construction and development loans amounted to 3.1% and consumer loans represented 2.4% of the gross loan portfolio at such date. The decrease in the gross loan portfolio at September 30, 2022, compared to September 30, 2021, primarily reflected decreases of $40.0 million in commercial loans, $22.8 million in residential mortgage loans, and $38.8 million in construction and development loans.

The following table reflects the Company’s loan portfolio composition, excluding loans held-for-sale.

Loans

 

 

 

 

 

(in thousands, unaudited)

 

 

 

 

 

At quarter ended:

9/30/2022

 

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

Residential mortgage

$

175,957

 

$

176,499

 

$

177,669

 

$

187,516

 

$

198,710

 

Construction and Development:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential and commercial

 

24,362

 

 

20,459

 

 

25,558

 

 

56,876

 

 

61,492

 

Land

 

550

 

 

2,054

 

 

4,603

 

 

2,138

 

 

2,204

 

Total construction and development

 

24,912

 

 

22,513

 

 

30,161

 

 

59,014

 

 

63,696

 

Commercial:

 

 

 

 

 

Commercial real estate

 

406,914

 

 

407,783

 

 

400,974

 

 

416,248

 

 

426,915

 

Farmland

 

11,506

 

 

15,348

 

 

15,624

 

 

15,582

 

 

10,297

 

Multi-family

 

55,295

 

 

54,879

 

 

54,788

 

 

54,448

 

 

66,332

 

Commercial and industrial

 

102,703

 

 

104,504

 

 

101,354

 

 

106,493

 

 

115,246

 

Other

 

13,356

 

 

13,955

 

 

7,978

 

 

7,433

 

 

10,954

 

Total commercial

 

589,774

 

 

596,469

 

 

580,718

 

 

600,204

 

 

629,744

 

Consumer:

 

 

 

 

 

Home equity lines of credit

 

13,233

 

 

12,432

 

 

12,283

 

 

13,174

 

 

13,491

 

Second mortgages

 

4,395

 

 

4,605

 

 

4,969

 

 

5,384

 

 

5,884

 

Other

 

2,136

 

 

2,182

 

 

2,237

 

 

2,282

 

 

2,299

 

Total consumer

 

19,764

 

 

19,219

 

 

19,489

 

 

20,840

 

 

21,674

 

Total loans

 

810,407

 

 

814,700

 

 

808,037

 

 

867,574

 

 

913,824

 

Deferred loan costs, net

 

537

 

 

566

 

 

574

 

 

667

 

 

629

 

Allowance for loan losses

 

(9,090

)

 

(9,309

)

 

(9,301

)

 

(10,037

)

 

(11,472

)

Loans Receivable, net

$

801,854

 

$

805,957

 

$

799,310

 

$

858,204

 

$

902,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2022 the Company had $139.6 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 $753,000 at September 30, 2022, and $3.7 million at September 30, 2021. The decrease in non-accrual loans was primarily due a charge-off of $2.4 million related to one non-accrual commercial and industrial loan during the fiscal year and then transferred to OREO at a carrying value of $259,000. The decrease in OREO of $4.7 million at September 30, 2022, compared to September 30, 2021, was attributed to a sale at carrying value and the transfer of a new commercial and industrial loan to OREO during the quarter totaling $259,000. Excluding the OREO property, NPAs totaled $1.0 million, or 0.10% of total assets, at September 30, 2022, and $3.7 million, or 0.31% of total assets, at September 30, 2021.

Performing troubled debt restructured (“TDR”) loans were $4.8 million at September 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 September 30, 2022, NPAs totaled $1.3 million, or 0.12% 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 and OREO as described above.

Non-Performing Asset and Other Asset Quality Data:

 

 

 

 

 

 

 

 

 

 

(dollars in thousands, unaudited)

 

 

 

 

 

As of or for the quarter ended:

9/30/2022

 

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

Non-accrual loans

$

753

 

$

1,075

 

$

1,101

 

$

1,790

 

$

3,697

 

Loans 90 days or more past due and still accruing

 

243

 

 

401

 

 

3

 

 

-

 

 

-

 

Total non-performing loans

 

996

 

 

1,476

 

 

1,104

 

 

1,790

 

 

3,697

 

OREO

 

259

 

 

4,763

 

 

4,961

 

 

4,961

 

 

4,961

 

Total NPAs

$

1,255

 

$

6,239

 

$

6,065

 

$

6,751

 

$

8,658

 

Performing TDR loans

$

4,810

 

$

5,753

 

$

5,787

 

$

6,310

 

$

17,601

 

 

 

 

 

 

 

NPAs / total assets

 

0.12

%

 

0.61

%

 

0.55

%

 

0.59

%

 

0.72

%

Non-performing loans / total loans

 

0.12

%

 

0.18

%

 

0.14

%

 

0.21

%

 

0.40

%

Net charge-offs

$

215

 

$

(8

)

$

736

 

$

1,436

 

$

10,754

 

Net charge-offs /average loans(1)

 

0.11

%

 

(0.00

%)

 

0.35

%

 

0.63

%

 

4.61

%

Allowance for loan losses / total loans

 

1.12

%

 

1.14

%

 

1.15

%

 

1.16

%

 

1.26

%

Allowance for loan losses / non-performing loans

 

912.7

%

 

630.7

%

 

842.5

%

 

560.7

%

 

310.3

%

 

 

 

 

 

 

Total assets

$

1,044,360

 

$

1,029,553

 

$

1,103,596

 

$

1,153,200

 

$

1,209,143

 

Total gross loans

 

810,407

 

 

814,700

 

 

808,037

 

 

867,574

 

 

913,824

 

Average net loans

 

817,938

 

 

811,829

 

 

846,420

 

 

899,430

 

 

933,727

 

Allowance for loan losses

 

9,090

 

 

9,309

 

 

9,301

 

 

10,037

 

 

11,472

 

________________
(1)   Annualized.


The allowance for loan losses at September 30, 2022 amounted to $9.1 million, or 1.12% 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 September 30, 2022, compared to $10.6 million provision for loan losses for the quarter ended September 30, 2021. The decline reflects the overall improvement in asset quality and decline in total loans of $101.1 million at September 30, 2022 compared to September 30, 2021.

Capital

At September 30, 2022 the Company’s total shareholders’ equity amounted to $146.4 million, or 14.0% 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 September 30, 2022, the Bank’s common equity Tier 1 capital ratio was 19.27%, Tier 1 leverage ratio was 16.30%, Tier 1 risk-based capital ratio was 19.27% and the total risk-based capital ratio was 20.34%. 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 or outcomes in such 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, it is difficult to predict the full impact of COVID-19 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

 

 

 

 

 

 

 

September 30, 2022

 

September 30, 2021

 

 

 

 

 

 

 

 

(in thousands, except for share data)

(unaudited)

ASSETS

 

 

 

 

 

Cash and due from depository institutions

$

4,677

 

 

$

99,670

 

Interest bearing deposits in depository institutions

 

48,590

 

 

 

36,920

 

Total cash and cash equivalents

 

53,267

 

 

 

136,590

 

Investment securities available for sale, at fair value

 

49,844

 

 

 

40,813

 

Equity securities, at fair value

 

1,374

 

 

 

1,500

 

Investment securities held to maturity, at amortizing cost

 

58,767

 

 

 

28,507

 

Restricted stock, at cost

 

7,104

 

 

 

7,776

 

Loans held-for-sale

 

13,780

 

 

 

33,199

 

Loans receivable, net of allowance for loan losses

 

801,854

 

 

 

902,981

 

Other real estate owned

 

259

 

 

 

4,961

 

Accrued interest receivable

 

4,252

 

 

 

3,512

 

Property and equipment, net

 

5,231

 

 

 

5,777

 

Deferred income taxes, net

 

3,722

 

 

 

3,530

 

Bank-owned life insurance

 

26,233

 

 

 

26,056

 

Other assets

 

18,673

 

 

 

13,941

 

Total assets

$

1,044,360

 

 

$

1,209,143

 

LIABILITIES

 

 

 

 

 

Deposits:

 

 

 

 

 

Non-interest bearing

$

58,014

 

 

$

53,849

 

Interest-bearing

 

727,309

 

 

 

884,310

 

Total deposits

 

785,323

 

 

 

938,159

 

FHLB advances

 

80,000

 

 

 

90,000

 

Subordinated debt

 

25,000

 

 

 

24,934

 

Advances from borrowers for taxes and insurance

 

1,002

 

 

 

1,022

 

Accrued interest payable

 

543

 

 

 

572

 

Other liabilities

 

6,047

 

 

 

12,288

 

Total liabilities

 

897,915

 

 

 

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 September 30, 2022, and 7,816,832 and 7,622,316 issued and outstanding, respectively, at September 30, 2021

 

76

 

 

 

76

 

Additional paid in capital

 

85,917

 

 

 

85,524

 

Retained earnings

 

67,247

 

 

 

60,296

 

Unearned Employee Stock Ownership Plan (ESOP) shares

 

(756

)

 

 

(901

)

Accumulated other comprehensive (loss) income

 

(3,176

)

 

 

36

 

Treasury stock, at cost: 194,516 shares at September 30, 2022 and September 30, 2021

 

(2,863

)

 

 

(2,863

)

Total shareholders’ equity

 

146,445

 

 

 

142,168

 

Total liabilities and shareholders’ equity

$

1,044,360

 

 

$

1,209,143

 

 

 

 

 

 

 


MALVERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

(in thousands, except for share data)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Interest and Dividend Income

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

8,323

 

 

$

8,330

 

 

$

31,832

 

 

$

36,370

 

Investment securities, taxable

 

 

617

 

 

 

403

 

 

 

2,181

 

 

 

1,449

 

Investment securities, tax-exempt

 

 

153

 

 

 

30

 

 

 

394

 

 

 

107

 

Dividends, restricted stock

 

 

96

 

 

 

89

 

 

 

342

 

 

 

459

 

Interest-bearing deposits

 

 

126

 

 

 

10

 

 

 

250

 

 

 

31

 

Total Interest and Dividend Income

 

 

9,315

 

 

 

8,862

 

 

 

34,999

 

 

 

38,416

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

849

 

 

 

1,240

 

 

 

3,534

 

 

 

6,748

 

Short-term borrowings

 

 

4

 

 

 

-

 

 

 

4

 

 

 

48

 

Long-term borrowings

 

 

198

 

 

 

415

 

 

 

776

 

 

 

2,029

 

Subordinated debt

 

 

355

 

 

 

382

 

 

 

1,371

 

 

 

1,531

 

Total Interest Expense

 

 

1,406

 

 

 

2,037

 

 

 

5,685

 

 

 

10,356

 

Net interest income

 

 

7,909

 

 

 

6,825

 

 

 

29,314

 

 

 

28,060

 

Provision for Loan Losses

 

 

-

 

 

 

10,626

 

 

 

-

 

 

 

11,176

 

Net Interest Income after Provision for

 

 

7,909

 

 

 

(3,801

)

 

 

29,314

 

 

 

16,884

 

Loan Losses

Other Income

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and other fees

 

 

316

 

 

 

313

 

 

 

1,237

 

 

 

1,323

 

Rental income

 

 

48

 

 

 

54

 

 

 

196

 

 

 

217

 

Net gains on sale and call of investments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

779

 

Net gains on sale of loans

 

 

22

 

 

 

45

 

 

 

100

 

 

 

788

 

Earnings on bank-owned life insurance

 

 

171

 

 

 

167

 

 

 

794

 

 

 

656

 

Total Other Income

 

 

557

 

 

 

579

 

 

 

2,327

 

 

 

3,763

 

Other Expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

2,401

 

 

 

2,337

 

 

 

9,393

 

 

 

9,143

 

Occupancy expense

 

 

535

 

 

 

542

 

 

 

2,138

 

 

 

2,198

 

Federal deposit insurance premium

 

 

62

 

 

 

77

 

 

 

277

 

 

 

313

 

Advertising

 

 

32

 

 

 

33

 

 

 

129

 

 

 

109

 

Data processing

 

 

275

 

 

 

332

 

 

 

1,259

 

 

 

1,267

 

Professional fees

 

 

855

 

 

 

790

 

 

 

3,831

 

 

 

3,178

 

Other real estate owned expense, net

 

 

56

 

 

 

-

 

 

 

305

 

 

 

866

 

Pennsylvania shares tax

 

 

126

 

 

 

169

 

 

 

592

 

 

 

678

 

Other operating expenses

 

 

912

 

 

 

804

 

 

 

4,842

 

 

 

3,199

 

Total Other Expense

 

 

5,254

 

 

 

5,084

 

 

 

22,766

 

 

 

20,951

 

Income (loss) before income tax expense (benefit)

 

 

3,212

 

 

 

(8,306

)

 

 

8,875

 

 

 

(304

)

Income tax expense (benefit)

 

 

634

 

 

 

(2,116

)

 

 

1,924

 

 

 

(212

)

Net Income (loss)

 

$

2,578

 

 

$

(6,190

)

 

$

6,951

 

 

$

(92

)

Earnings (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.34

 

 

$

(0.82

)

 

$

0.92

 

 

$

(0.01

)

Diluted

 

$

0.34

 

 

$

(0.82

)

 

$

0.92

 

 

$

(0.01

)

Weighted Average Common Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

7,574,870

 

 

 

7,548,958

 

 

 

7,563,648

 

 

 

7,537,408

 

Diluted

 

 

7,581,105

 

 

 

7,550,766

 

 

 

7,564,212

 

 

 

7,538,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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)

 

9/30/2022

 

 

6/30/2022

 

 

9/30/2021

(unaudited)

 

 

 

 

 

 

 

 

Statements of Operations Data

 

 

 

 

 

 

 

 

Interest income

$

 

9,315

 

 

$

 

8,557

 

 

$

 

8,862

 

Interest expense

 

 

1,406

 

 

 

 

1,264

 

 

 

 

2,037

 

Net interest income

 

 

7,909

 

 

 

 

7,293

 

 

 

 

6,825

 

Provision for loan losses

 

 

-

 

 

 

 

-

 

 

 

 

10,626

 

Net interest income (loss) after provision for loan losses

 

 

7,909

 

 

 

 

7,293

 

 

 

 

(3,801

)

Other income

 

 

557

 

 

 

 

482

 

 

 

 

579

 

Other expense

 

 

5,254

 

 

 

 

5,439

 

 

 

 

5,084

 

Income (loss) before income tax expense (benefit)

 

 

3,212

 

 

 

 

2,336

 

 

 

 

(8,306

)

Income tax expense (benefit)

 

 

634

 

 

 

 

502

 

 

 

 

(2,116

)

Net income (loss)

$

 

2,578

 

 

$

 

1,834

 

 

$

 

(6,190

)

Earnings (Loss) (per Common Share)

 

 

 

 

 

 

 

 

Basic

$

 

0.34

 

 

$

 

0.24

 

 

$

 

(0.82

)

Diluted

$

 

0.34

 

 

$

 

0.24

 

 

$

 

(0.82

)

Statements of Financial Condition Data (Period-End)

 

 

 

 

 

 

 

 

Equity securities

$

 

1,374

 

 

$

 

1,412

 

 

$

 

1,500

 

Investment securities available for sale, at fair value

 

 

49,844

 

 

 

 

53,080

 

 

 

 

40,813

 

Investment securities held to maturity

 

 

58,767

 

 

 

 

52,350

 

 

 

 

28,507

 

Loans held-for-sale

 

 

13,780

 

 

 

 

13,863

 

 

 

 

33,199

 

Loans, net of allowance for loan losses

 

 

801,854

 

 

 

 

805,957

 

 

 

 

902,981

 

Total assets

 

 

1,044,360

 

 

 

 

1,029,553

 

 

 

 

1,209,143

 

Deposits

 

 

785,323

 

 

 

 

791,694

 

 

 

 

938,159

 

FHLB advances

 

 

80,000

 

 

 

 

60,000

 

 

 

 

90,000

 

Subordinated debt

 

 

25,000

 

 

 

 

25,000

 

 

 

 

24,934

 

Shareholders' equity

 

 

146,445

 

 

 

 

145,290

 

 

 

 

142,168

 

Common Shares Dividend Data

 

 

 

 

 

 

 

 

Cash dividends

$

 

-

 

 

$

 

-

 

 

$

 

-

 

Weighted Average Common Shares Outstanding

 

 

 

 

 

 

 

 

Basic

 

 

7,574,870

 

 

 

 

7,569,806

 

 

 

 

7,548,958

 

Diluted

 

 

7,581,105

 

 

 

 

7,574,266

 

 

 

 

7,550,766

 

Operating Ratios

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.01

%

 

 

 

69.00

%

 

 

 

(2.06

%)

Return on average equity

 

 

7.08

%

 

 

 

5.06

%

 

 

 

(16.59

%)

Average equity / average assets

 

 

14.25

%

 

 

 

13.59

%

 

 

 

12.43

%

Book value per common share (period-end)

 

$

19.18

 

 

 

$

19.03

 

 

 

$

18.65

 

Non-Financial Information (Period-End)

 

 

 

 

 

 

 

 

Common shareholders of record

 

 

369

 

 

 

 

371

 

 

 

 

379

 

Full-time equivalent staff

 

 

77

 

 

 

 

76

 

 

 

 

81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Media Contact:
Nathanial Jordan
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