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
