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

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

610-695-3646

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