Market Overview

Malvern Bancorp, Inc. Reports Net Income of $1.2 Million or $0.18 Per Share for the Fourth Quarter of Fiscal 2015, Representing a 296.0% Increase Over the Fourth Quarter of Fiscal 2014

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PAOLI, Pa., Oct. 30, 2015 (GLOBE NEWSWIRE) -- Malvern Bancorp, Inc. (NASDAQ: MLVF) (the "Company"), parent company of Malvern Federal Savings Bank ("MFSB" or the "Bank"), today reported operating results for the fourth quarter ended September 30, 2015.  Net income amounted to $1.2 million, or $0.18 per share, for the quarter ended September 30, 2015, an increase of $870,000 or 296.0 percent as compared with the net income of $294,000, or $0.05 per share, for the quarter ended September 30, 2014.

For the twelve months ended September 30, 2015, net income amounted to $3.7 million, or $0.58 per share, compared with the net income of $323,000, or $0.05 per share, for fiscal 2014.

"We feel that we have created the proper momentum for Malvern, our fourth quarter and year-to-date earnings reflect our fundamental core strength.  We have a solid framework with which to scale the organization and increase profitability. The results for the fourth quarter performance reflect continued growth in income, stable asset quality, and an improved infrastructure cost.  As previously stated we are pleased with the significant improvements accomplished here since the transition began last September and with the financial returns achieved," said Anthony C. Weagley, Chief Executive Officer & President of Malvern Bancorp, Inc.

Highlights for the quarter include:

  • Return on average assets ("ROAA") was 0.72% for the three months ended September 30, 2015, compared to 0.21% a year earlier, and return on average equity ("ROAE") rose to 5.77% for the three months ended September 30, 2015, compared with 1.53% for the three months ended September 30, 2014.
  • The Company originated $39.3 million in new loans in the fourth quarter which was offset in part with $19.8 million in payoffs, prepayments and maturities from its portfolio; $2.5 million in residential mortgage loans, $28.0 million in commercial loans, $6.5 million in construction and development loans and $2.3 million in consumer loans.  
  • Non-performing assets ("NPAs") were at 0.39 percent of total assets at September 30, 2015, compared to 0.44 percent at June 30, 2015 and 0.80 percent at September 30, 2014. The allowance for loan losses as a percentage of total non-performing loans was 333.6 percent at September 30, 2015 compared to 337.1 percent at June 30, 2015 and 191.9 percent at September 30, 2014.
  • The Company's ratio of shareholders' equity to total assets was 12.41 percent at September 30, 2015, compared to 12.79 percent at June 30, 2015, and 14.16 percent at September 30, 2014.
  • Book value per common share amounted to $12.41 at September 30, 2015, compared to $12.17 at June 30, 2015 and $11.71 at September 30, 2014.
  • The efficiency ratio, a non-GAAP measure, was 73.9 percent for the fourth quarter of fiscal 2015 on an annualized basis, compared to 69.0 percent in the third quarter of fiscal 2015 and 87.8 percent in the fourth quarter of fiscal 2014.
  • The Company's balance sheet reflected growth of $113.4 million coupled with stable asset quality, and capital levels that exceeded accepted standards for a well-capitalized institution. 
      
Selected Financial Ratios  (unaudited; annualized where applicable)     
      
As of or for the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Return on average assets 0.72% 0.77% 0.64% 0.22% 0.21%
Return on average equity 5.77% 6.01% 5.05% 1.65% 1.53%
Net interest margin (tax equivalent basis) 2.71% 2.61% 2.58% 2.61% 2.70%
Loans / deposits ratio 84.68% 84.54% 85.57% 87.61% 94.10%
Shareholders' equity / total assets 12.41% 12.79% 12.68% 12.91% 14.16%
Efficiency ratio (1) 73.9% 69.0% 76.6% 87.5% 87.8%
Book value per common share$  12.41 $  12.17 $  12.20 $  11.88 $  11.71 

_____________

(1) Information reconciling non-GAAP measures to GAAP measures is presented elsewhere in this press release.

Net Interest Income

For the three months ended September 30, 2015, total interest income on a fully tax equivalent basis increased $585,000 or 12.1 percent, to $5.4 million, compared to the three months ended September 30, 2014. Interest income rose in the quarter ended September 30, 2015, compared to the comparable period in fiscal 2014 primarily due to an $85.0 million increase in the average balance of our investment securities. Total interest expense increased by $150,000, or 12.4 percent, to $1.4 million, for the three months ended September 30, 2015, compared to the comparable period in fiscal 2014.  

Net interest income on a fully tax equivalent basis was $4.1 million for the three months ended September 30, 2015, increasing $435,000, or 12.0 percent, from $3.6 million for the comparable three month period in fiscal 2014. The change for the three months ended September 30, 2015 primarily was the result of an increase in average interest earning assets, which increased $62.7 million.  The net interest spread on an annualized tax-equivalent basis was at 2.59 percent and 2.55 percent for the three months ended September 30, 2015 and September 30, 2014, respectively. For the quarter ended September 30, 2015, the Company's net interest margin on a tax equivalent basis increased slightly to 2.71 percent as compared to 2.70 percent for the same three month period in fiscal 2014. "We continue to carry excess liquidity in our cash pool. As we previously have discussed, this is a positive trend as we generate funding for the Company and in turn positions the Company to fuel increased loan originations.  During the fourth quarter we were able to add $39.3 million in gross loan originations to the balance sheet keeping pace with funding," commented Mr. Weagley. 

The 12.4 percent increase in interest expense for the quarter primarily reflects higher volumes of borrowings. The increased borrowings for the period are tied primarily to an interest rate swap that was executed to improve interest rate risk. The average cost of funds was 1.03 percent for the quarter ended September 30, 2015 as compared to 1.06 percent for the same three month period in fiscal 2014 and on a linked sequential quarter basis increased one basis point compared to the third quarter of fiscal 2015. 

For the twelve months ended September 30, 2015, total interest income on a fully tax equivalent basis increased $425,000 or 2.1 percent, to $20.6 million, compared to $20.2 million for fiscal 2014. Total interest expense increased by $177,000, or 3.5 percent, to $5.2 million, for the twelve months ended September 30, 2015, compared to fiscal 2014.  Interest income increased for the twelve months ended September 30, 2015, compared to fiscal 2014 primarily due to a $40.9 million increase in the average balance of our investment securities. Compared to fiscal 2014, for the twelve months ended September 30, 2015, average interest earning assets increased $33.2 million while net interest spread and margin decreased on a tax-equivalent basis by 11 basis points and 12 basis points, respectively.

Earnings Summary for the Period Ended September 30, 2015

The following table presents condensed consolidated statements of income data for the periods indicated.

Condensed Consolidated Statements of Income (unaudited)
      
(dollars in thousands, except per share data)     
For the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Net interest income$  3,979 $  3,838 $  3,836 $  3,561 $  3,617 
Provision for loan losses        90  183 
Net interest income after  provision for loan losses 3,979  3,838  3,836  3,471  3,434 
Other income 639  640  745  511  446 
Other expense 3,454  3,273  3,573  3,661  3,569 
Income before income tax expense 1,164  1,205  1,008  321  311 
Income tax expense -  -  -  -  17 
Net income$  1,164 $  1,205 $  1,008 $  321 $  294 
Earnings per common share:     
Basic$  0.18 $   0.19 $  0.16 $  0.05 $  0.05 
Weighted average common shares outstanding:  
Basic 6,398,720  6,395,126  6,391,521  6,387,932  6,384,319 
                

Other Income

Other income increased $193,000 for the fourth quarter of fiscal 2015 compared with the same period in fiscal 2014.  During the fourth quarter of fiscal 2015, the Company recorded $78,000 in net gains on sales of investment securities compared to no net gains on sales of investment securities for the same period in fiscal 2014. Excluding net securities gains and losses, a non-GAAP measure, the Company recorded other income of $561,000 for the three months ended September 30, 2015 compared to other income of $446,000 for the three months ended September 30, 2014 and $495,000 for the three months ended June 30, 2015.  Increases in other income in the fourth quarter of fiscal 2015 when compared to the fourth quarter of fiscal 2014 (excluding securities gains) were primarily from an increase of bank owned life insurance income of $151,000 and $34,000 in net gain on sale of loans, which were partially offset by a decrease in service charges of $66,000 and a decrease in rental income of $4,000. 

For the twelve months ended September 30, 2015, total other income increased $380,000 compared to fiscal 2014, primarily as a result of $432,000 related to an increase in net gains on sales of investment securities, an increase in service charges on deposit accounts of $42,000, an increase in bank owned life insurance income of $121,000 and a decrease of $41,000 in loss of disposal of fixed assets, partially offset by decreased income on rental income and net gain on sale of loans.

The following table presents the components of other income for the periods indicated.

(in thousands, unaudited)     
For the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Service charges on deposit accounts$  169 $  286 $  264 $  270 $  235 
Rental income – other 60  61  64  64  64 
Net gains on sales of investments, net 78  145  266  26  - 
Loss on disposal of fixed assets -  -  -  -  - 
Gain on sale of loans, net 47  16  20  19  13 
Bank-owned life insurance 285  132  131  132  134 
Total other income$  639 $  640 $  745 $  511 $  446 
 

Other Expense

Total other expense for the fourth quarter of fiscal 2015 amounted to $3.5 million, which was approximately $181,000 or 5.5 percent higher than other expense for the three months ended June 30, 2015.  The increase in other expense in the fourth quarter of fiscal 2015 was primarily related to an increase in employee salaries and benefits, which increased $54,000 from the quarter ended June 30, 2015, as well as, a $12,000 increase in occupancy expense, a $27,000 increase in federal deposit insurance premium, a $9,000 increase in data processing expense, a $66,000 increase in professional fees and a $42,000 increase in other operating expense. These increases were partially offset by decreases in advertising of $14,000 and other real estate owned expense of $15,000.   

The decrease in other expense for the three months ended September 30, 2015, when compared to the quarter ended September 30, 2014, was $115,000, or 3.2 percent. Decreases primarily reflected reductions in salaries and employee benefits of $249,000, professional fees of $137,000, primarily reflecting lower expenses related to loan workouts, advertising expense of $46,000 and a $230,000 decrease in other operating expense.  These decreases were partially offset by increases of $47,000 in federal deposit insurance premium, 9,000 in data processing expense, $4,000 in occupancy expense and a $487,000 change in other real estate owned income/expense, net. The change in other real estate owned expense was primarily due to a $500,000 insurance reimbursement of a fire claim for a property located in Melrose Park, Pennsylvania received during the fourth quarter of fiscal 2014. 

For the twelve months ended September 30, 2015, total other expense was reduced by $2.7 million, or 16.2 percent, compared to fiscal 2014. Decreases primarily included $1.8 million in salaries and employee benefits primarily due to workforce reductions, $376,000 in occupancy expense, $322,000 in advertising costs, $634,000 in professional fees and $9,000 in data processing expense. These decreases were partially offset by a $253,000 reduction in other real estate owned income and by an increase in other operating expenses of $128,000 and a $49,000 increase in federal deposit insurance premium.

The following table presents the components of other expense for the periods indicated.

(in thousands, unaudited)     
 For the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
 Salaries and employee benefits$  1,387 $  1,333 $  1,550 $  1,728 $  1,636 
 Occupancy expense 419  407  465  424  415 
 Federal deposit insurance premium 230  203  184  167  183 
 Advertising 40  54  60  85  86 
 Data processing 321  312  301  302  312 
 Professional fees 430  364  434  343  567 
 Other real estate owned expense (income), net 17  32  (59) (36) (470)
 Other operating expenses 610  568  638  648  840 
 Total other expense$  3,454 $  3,273 $  3,573 $  3,661 $  3,569 
  

Statement of Condition Highlights at September 30, 2015

Commenting on the balance sheet, Mr. Weagley indicated: "Our efforts to change the balance sheet continued during the fourth quarter with marked results in the gross amount of commercial loan generation.  We continue to execute on our business plans and are positioning the Company to take advantage of the growth activity we are achieving in our markets, which includes our new loan production location in New Jersey.  Our business plans call for us to achieve the transition to a commercial bank balance sheet. The new Malvern brand has been successfully launched." Highlights as of September 30, 2015 included:

  • Balance sheet strength, with total assets amounting to $656.0 million at September 30, 2015, increasing $113.4 million, or 20.9 percent compared to September 30, 2014.



  • On a linked sequential basis, the Company's gross loans in the fourth quarter of 2015 increased $19.5 million, to $394.2 million at September 30, 2015, from $374.7 million at June 30, 2015.  The $19.5 million increase in the loan portfolio at September 30, 2015 compared to June 30, 2015, primarily reflected an increase of $25.6 million in commercial loans and a $1.0 million increase in construction and development loans. These increases were partially offset by a $4.2 million decrease in residential mortgage loans and a $2.9 million reduction in consumer loans at September 30, 2015 as compared to June 30, 2015.
            


  • Deposits totaled $465.5 million at September 30, 2015, an increase of $52.6 million or 12.7 percent compared to September 30, 2014.  Total demand, savings, money market, and certificates of deposit less than $100,000 increased $43.0 million or 14.0 percent from September 30, 2014. During fiscal 2015, we have focused on allowing our relatively higher costing non-household certificates of deposit to run off while attempting to increase our relatively lower costing core and commercial deposits as a source of funds.



  • Borrowings totaled $103.0 million and $48.0 million at September 30, 2015 and September 30, 2014, respectively.



Condensed Consolidated Statements of Condition

The following table presents condensed consolidated statements of condition data as of the dates indicated.

Condensed Consolidated Statements of Condition (unaudited)
      
(in thousands)     
At quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Cash and due from depository institutions$  16,026 $  3,460 $  1,056 $  1,404 $  1,203 
Interest bearing deposits in depository institutions 24,237  20,833  50,587  46,648  17,984 
Investment securities, available for sale, at fair value 128,354  130,509  113,557  135,786  100,943 
Investment securities held to maturity 57,221  59,243  50,697     
Restricted stock, at cost 4,765  4,369  4,602  3,805  3,503 
Loans held for sale   657       
Loans receivable, net of allowance for loan losses 391,307  371,897  377,340  383,389  386,074 
Other real estate owned 1,168  1,366  1,430  1,494  1,964 
Accrued interest receivable 2,484  2,404  2,168  1,623  1,322 
Property and equipment, net 6,535  6,502  6,592  6,718  6,823 
Deferred income taxes 2,874  2,816  2,940  2,419  2,376 
Bank-owned life insurance 17,905  18,659  18,527  18,397  18,264 
Other assets 2,814  1,529  1,610  1,487  1,808 
Total assets$  655,690 $   624,244 $  631,106 $  603,170 $  542,264 
Deposits$  465,522 $  443,218 $  444,146 $  440,625 $  412,953 
Borrowings 103,000  93,000  98,000  78,000  48,000 
Other liabilities 5,777  8,214  8,934  6,660  4,539 
Shareholders' equity 81,391  79,812  80,026  77,885  76,772 
Total liabilities and shareholders' equity$  655,690 $  624,244 $  631,106 $  603,170 $  542,264 
 

The following table reflects the composition of the Company's deposits as of the dates indicated.

Deposits (unaudited)       
(in thousands)     
At quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Demand:     
  Non-interest bearing$  27,010 $  26,877 $  25,111 $  22,242 $  23,059 
  Interest-bearing 82,897  85,085  87,921  86,948  81,921 
Savings 45,189  44,949  44,848  44,747  44,917 
Money market 108,706  78,963  70,066  69,553  59,529 
Time 201,720  207,344  216,200  217,135  203,527 
  Total deposits$  465,522 $  443,218 $  444,146 $  440,625 $  412,953 
 

Loans

Total net loans were $391.3 million at September 30, 2015 compared to $386.1 million at September 30, 2014.  The allowance for loan losses amounted to $4.7 million and $4.6 million at September 30, 2015 and September 30, 2014, respectively. Average loans during the fourth quarter of fiscal 2015 totaled $383.1 million as compared to $395.1 million during the fourth quarter of fiscal 2014, representing a 3.0 percent decrease.

At the end of fiscal 2015, the loan portfolio remained weighted toward the core residential portfolio, with single-family residential real estate loans accounting for 54.5 percent of the loan portfolio, construction and development loans for 2.0 percent, commercial loans accounting for 27.5 percent, and consumer loans representing 16.0 percent of the loan portfolio at such date. Total loans increased $5.6 million, to $394.2 million at September 30, 2015 compared to $388.6 million at September 30, 2014.  The $5.6 million increase in the loan portfolio at September 30, 2015 compared to September 30, 2014, primarily reflected an increase of $30.4 million in commercial loans and a $822,000 increase in construction and development loans. These increases were partially offset by a $16.4 million decrease in residential mortgage loans and a $9.2 million reduction in consumer loans at September 30, 2015 as compared to September 30, 2014.  

For the year ended September 30, 2015, the company originated total new volume of $92.7 million which was offset in part with payoffs, prepayments and maturities totaling $87.1 million.  The payoffs were primarily contained to the consumer and residential portfolios.   "With the strength of the pipelines and a tapering of payoff activity, we see solid growth in the loan portfolio moving into the next quarter and in 2016," commented Mr. Weagley.

The following reflects the composition of the Company's loan portfolio as of the dates indicated.

Loans (unaudited)      
(in thousands)     
At quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Residential mortgage$214,958 $219,197 $225,232 $229,507 $231,324 
Construction and Development:     
Residential and commercial 5,677  6,751  5,922  6,039  5,964 
Land 2,142  25  344  -  1,033 
Total construction and development 7,819  6,776  6,266  6,039  6,997 
Commercial:     
Commercial real estate 87,686  67,617  68,858  67,274  71,579 
Multi-family 7,444  5,451  5,508  5,450  1,032 
Other 13,380  9,839  5,506  5,603  5,480 
Total commercial 108,510  82,907  79,872  78,327  78,091 
Consumer:     
Home equity lines of credit 22,919  23,173  23,073  24,430  22,292 
Second mortgages 37,633  40,121  43,013  45,051  47,034 
Other 2,359  2,523  2,610  2,675  2,839 
Total consumer 62,911  65,817  68,696  72,156  72,165 
Total loans 394,198  374,697  380,066  386,029  388,577 
Deferred loan costs, net 1,776  1,774  1,886  1,960  2,086 
Allowance for loan losses (4,667) (4,574) (4,612) (4,600) (4,589)
Loans Receivable, net$391,307 $371,897 $377,340 $383,389 $386,074 
 

At September 30, 2015, the Company had $67.7 million in overall undisbursed loan commitments, which consisted primarily of unused commercial lines of credit, home equity lines of credit and available usage from active construction facilities.   Included in the overall undisbursed commitments are the Company's "Approved, Accepted but Unfunded" pipeline, which includes approximately $9.0 million in construction and $15.0 million in commercial real estate loans and $2.8 million in residential mortgage loans expected to fund over the next 90 days. "We continue to see a surge in activity and growth in our commercial portfolio with our additional work in progress in current pipelines of $88.1 million," said Mr. Weagley.       

Asset Quality

Non-accrual loans were $1.4 million at September 30, 2015, as compared to $1.4 million at June 30, 2015 and $2.4 million at September 30, 2014.  Other real estate owned, ("OREO") was $1.2 million at September 30, 2015, as compared with $1.4 million at June 30, 2015 and $2.0 million at September 30, 2014, respectively.  Total performing troubled debt restructured loans were $1.1 million at September 30, 2015, $109,000 at June 30, 2015 and $1.0 million at September 30, 2014, respectively.  The $82,000 increase in troubled debt restructured loans at September 30, 2015 compared to September 30, 2014 was due to a commercial loan with an outstanding balance of approximately $900,000 being paid-off during the second quarter of fiscal 2015 and two commercial loans with an outstanding balance of approximately $982,000 being classified as TDRs during the fourth quarter of fiscal 2015.

At September 30, 2015, non-performing assets totaled $2.6 million, or 0.39 percent of total assets, as compared with $2.7 million, or 0.44 percent, at June 30, 2015 and $4.4 million, or 0.80 percent, at September 30, 2014.  The decrease from September 30, 2014 reflects the Company's continued diligence to satisfactorily work out certain problem assets.  The portfolio of remaining non-accrual loans at September 30, 2015 was comprised of six residential real estate loans with an aggregate outstanding balance of approximately $599,000, five consumer loans with an aggregate outstanding balance of approximately $199,000, one construction and development loan with an outstanding balance of $12,000 and four commercial loans with an aggregate outstanding balance of $589,000 that were on non-accrual status at September 30, 2015. Of the non-accrual loans, two commercial loans to one borrower, with an aggregate balance of $492,000, were restructured during the quarter ended June 30, 2015.  These loans are classified as troubled debt restructured loans at September 30, 2015. The borrower is currently making principal and interest payments as agreed under the terms of the restructuring. Though these loans are classified as TDRs, the Company believes that over sufficient time with consistent payments from the borrowers, these loans can return to accruing status.

The following table presents the components of non-performing assets and other asset quality data for the periods indicated.

(dollars in thousands, unaudited)     
As of or for the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Non-accrual loans(1)$  1,399 $   1,357 $  1,826 $  2,334 $  2,391 
Loans 90 days or more past due and still accruing          
Total non-performing loans 1,399  1,357  1,826  2,334  2,391 
Other real estate owned 1,168  1,366  1,430  1,494  1,964 
Total non-performing assets$  2,567 $  2,723 $  3,256 $  3,828 $  4,355 
Performing troubled debt restructured loans$  1,091 $  109 $  109 $  1,007 $  1,009 
      
Non-performing assets / total assets 0.39% 0.44% 0.52% 0.63% 0.80%
Non-performing loans / total loans 0.35% 0.36% 0.48% 0.60% 0.62%
Net charge-offs (recoveries)$  (93)$  38 $  (12)$  79 $  452 
Net charge-offs (recoveries) / average loans(2) 0.00% 0.04% 0.01% 0.08% 0.19%
Allowance for loan losses / total loans 1.18% 1.22% 1.21% 1.19% 1.18%
Allowance for loan losses / non-performing loans 333.60% 337.07% 252.57% 197.09% 191.93%
      
Total assets$655,690 $624,244 $631,106 $603,170 $542,264 
Total loans 394,198  374,697  380,066  386,029  388,577 
Average loans  383,092  378,953  384,915  389,544  395,067 
Allowance for loan losses 4,667  4,574  4,612  4,600  4,589 

_________________

(1) Seven loans totaling approximately $931,000 or (66.6%) of the total non-accrual loan balance were making payments at September 30, 2015. 

(2) Annualized.

The allowance for loan losses at September 30, 2015 amounted to approximately $4.7 million, or 1.18 percent of total loans, compared to 1.18 percent of total loans at September 30, 2014. The Company had no provision for loan losses during the quarter ended September 30, 2015 compared to $183,000 during the quarter ended September 30, 2014.  Provision expense was lower during the quarter ended September 30, 2015 due to a decline in charge-offs history, generally, and a net recovery position during the quarter ended September 30, 2015.

Capital

At September 30, 2015, our total shareholders' equity amounted to $81.4 million, or 12.41 percent of total assets compared to $76.8 million at September 30, 2014.  The Company's book value per common share was $12.41 at September 30, 2015, compared to $11.71 at September 30, 2014.

At September 30, 2015, the Bank's common equity tier 1 ratio was 15.90 percent, tier 1 leverage ratio was 10.80 percent, tier 1 risk-based capital ratio was 15.90 percent and the total risk-based capital ratio was 16.99 percent.  At September 30, 2014, the Bank's tier 1 leverage ratio was 12.09 percent, tier 1 risk-based capital ratio was 19.50 percent and the total risk-based capital ratio was 20.75 percent.  At September 30, 2015, the Bank was in compliance with all applicable regulatory capital requirements.

Non-GAAP Financial Measures

Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management believes that the supplemental non-GAAP information provided in this press release is utilized by market analysts and others to evaluate a company's financial condition and, therefore, that such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures presented by other companies.

The Company's other income is presented in the table below including and excluding net investment securities gains. The Company's management believes that many investors desire to evaluate other income without regard for such gains.

(in thousands)     
For the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Other income$  639 $  640 $  745 $  511 $  446 
Less: Net investment securities gains 78  145  266  26  - 
Other income, excluding net investment securities gains$  561 $  495 $  479 $  485 $  446 
 

"Efficiency ratio" is a non-GAAP financial measure and is defined as other expense, excluding certain non-core items, as a percentage of net interest income on a tax equivalent basis plus other income, excluding net securities gains, calculated as follows:

(dollars in thousands)     
For the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Other expense$  3,454 $  3,273 $  3,573 $  3,661 $  3,569 
Less: non-core items(1) 42  244  242  110   
Other expense, excluding non-core items$3,412 $3,029 $3,331 $3,551 $3,569 
      
Net interest income (tax equivalent basis)$  4,056 $  3,898 $  3,871 $  3,575 $  3,621 
Other income, excluding net investment securities gains 561  495  479  485  446 
Total$ 4,617 $  4,393 $  4,350 $  4,060 $  4,067 
      
Efficiency ratio 73.9% 69.0% 76.6% 87.5% 87.8%
______________________     
(1) Included in non-core items are costs which include expenses related to the Company's corporate restructuring initiatives,
  such as professional fees, litigation and settlement costs, severance costs, external payroll development costs  related to
  such restructuring initiatives. The Company believes these adjustments are necessary to provide the most accurate
  measure of core operating results as a means to evaluate comparative results.


 

The Company's efficiency ratio, calculated on a GAAP basis without excluding net investment securities gains and without deducting non-core items, from other expense follows:

For the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Efficiency ratio on a GAAP basis 73.9% 67.6% 72.7% 87.2% 87.8%
      

Net interest margin, which is non-interest income as a percentage of average interest-earning assets, is presented on a fully tax equivalent ("TE") basis as we believe this non-GAAP measure is the preferred industry measurement for this item.  The TE basis adjusts GAAP interest income and yields for the tax benefit of income on certain tax-exempt investments using the federal statutory rate of 34% for each period presented.  Below is a reconciliation of GAAP net interest income to the TE basis and the related GAAP basis and TE net interest margins for the periods presented:

(dollars in thousands)     
For the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Net interest income (GAAP)$  3,979 $  3,838 $  3,836 $  3,561 $  3,617 
Tax-equivalent adjustment(1)  77  60  35  14  4 
TE net interest income$  4,056 $  3,898 $  3,871 $  3,575 $  3,621 
      
Net interest income margin (GAAP) 2.66% 2.57% 2.56% 2.60% 2.70%
Tax-equivalent effect   0.05    0.04    0.02    0.01   
Net interest margin (TE) 2.71% 2.61% 2.58% 2.61% 2.70%
____________________     
(1) Reflects tax-equivalent adjustment for tax exempt loans and investments.
      

The following table sets forth the Company's consolidated average statements of condition for the periods presented.

Condensed Consolidated Average Statements of Condition (unaudited)
      
(in thousands)     
For the quarter ended:9/30/156/30/153/31/1512/31/149/30/14
Investment securities$  188,424 $  178,713 $  151,746 $  114,129 $  103,458 
Loans 383,092  378,953  384,915  389,544  395,067 
Allowance for loan losses (4,596) (4,649) (4,614) (4,600) (4,851)
All other assets 82,892  76,915  95,921  77,776  71,930 
Total assets$  649,812 $  629,932 $  627,968 $  576,849 $  565,604 
Non-interest bearing deposits$  32,477 $  28,943 $  27,002 $  26,770 $  26,057 
Interest-bearing deposits 428,205  415,646  419,367  393,225  408,937 
Borrowings 101,802  96,462  94,556  72,945  47,998 
Other liabilities 6,549  8,674  7,272  6,151  5,549 
Shareholders' equity 80,779  80,207  79,771  77,758  77,063 
Total liabilities and shareholders' equity$  649,812 $  629,932 $  627,968 $  576,849 $  565,604 
      

About Malvern Bancorp

Malvern Bancorp, Inc. is the holding company for Malvern Federal Savings Bank. Malvern Federal Savings Bank is a federally-chartered, FDIC-insured savings bank that was originally organized in 1887 and now serves as one of the oldest banks headquartered on the Philadelphia Main Line. For more than a century, Malvern Federal has been committed to helping people build prosperous communities as a trusted financial partner, forging lasting relationships through teamwork, respect and integrity. The Bank conducts business from its headquarters in Paoli, Pennsylvania, a suburb of Philadelphia, as well as seven other financial centers located throughout Chester and Delaware Counties, Pennsylvania. Its primary market niche is providing personalized service to its client base. The Bank focuses its lending activities on retail clients, commercial lending to small and medium-sized businesses, real estate developers and high net worth individuals.

For further information regarding Malvern Bancorp, Inc., please visit our web site at http://ir.malvernfederal.com. For information regarding Malvern Federal Savings Bank, please visit our web site at http://www.malvernfederal.com.

Forward-Looking Statements

This press release contains certain forward looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate" and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the business of Malvern Bancorp, Inc., and changes in the securities markets. Except as required by law, the Company does not undertake any obligation to update any forward-looking statements to reflect changes in beliefs, expectations or events.                                                                                                                                                 

 
MALVERN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
 
(in thousands, except for share and per share data) September 30,
2015
  September 30,
2014
(unaudited)      
ASSETS       
Cash and due from depository institutions $ 16,026  $ 1,203  
Interest bearing deposits in depository institutions   24,237    17,984  
Total cash and cash equivalents   40,263    19,187  
Investment securities available for sale, at fair value   128,354    100,943  
Investment securities held to maturity (fair value of $56,825 and $0)   57,221      
Restricted stock, at cost   4,765    3,503  
Loans receivable, net of allowance for loan losses   391,307    386,074  
Other Real estate owned   1,168    1,964  
Accrued interest receivable   2,484    1,322  
Property and equipment, net   6,535    6,823  
Deferred income taxes, net   2,874    2,376  
Bank-owned life insurance   17,905    18,264  
Other assets   2,814    1,808  
  Total assets $ 655,690  $ 542,264  
LIABILITIES       
Deposits:       
Non-interest bearing $ 27,010  $ 23,059  
Interest-bearing:   438,512    389,894  
Total deposits   465,522    412,953  
FHLB Advances   103,000    48,000  
Advances from borrowers for taxes and insurance   1,806    1,786  
Accrued interest payable   396    149  
Other liabilities   3,575    2,604  
  Total liabilities   574,299    465,492  
SHAREHOLDERS' EQUITY       
Preferred stock, $0.01 par value, 10,000,000 shares, authorized, not issued         
Common stock, $0.01 par value, authorized 40,000,000 shares authorized, issued and outstanding: 6,558,473 shares at September 30, 2015 and  September 30, 2014     66      66  
Additional paid in capital   60,365    60,317  
Retained earnings   23,814    20,116  
Unearned Employee Stock Ownership Plan (ESOP) shares   (1,775)   (1,922) 
Accumulated other comprehensive loss   (1,079)   (1,805) 
  Total shareholders' equity   81,391    76,772  
  Total liabilities and shareholders' equity $ 655,690  $ 542,264  



MALVERN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 
  Three Months Ended September 30, Twelve Months Ended September 30,
(in thousands, except for share data)  2015   2014    2015    2014 
(unaudited)            
Interest and Dividend Income            
Loans, including fees $4,128 $ 4,288  $ 16,484  $ 17,736 
Investment securities, taxable  922   486    3,073    2,109 
Investment securities, tax-exempt  217   8    522    145 
Dividends, restricted stock  67   36    311    123 
Interest-bearing cash accounts  10   14    72    54 
Total Interest and Dividend Income  5,344   4,832    20,462    20,167 
Interest Expense            
Deposits  870   923    3,431    3,969 
Borrowings  495   292    1,817    1,102 
Total Interest Expense  1,365   1,215    5,248    5,071 
Net interest income  3,979   3,617    15,214    15,096 
Provision for Loan Losses     183    90    263 
Net Interest Income after Provision for Loan Losses  3,979   3,434    15,124    14,833 
Other Income            
Service charges and other fees  169   235    989

    947 
Rental income-other  60   64    249    255 
Net gains on sales of investments  78       515    83 
Loss on disposal of fixed assets             (41)
Net gains on sale of loans  47   13    102    352 
Earnings on bank-owned life insurance  285   134    680    559 
Total Other Income  639   446    2,535    2,155 
Other Expense            
Salaries and employee benefits  1,387   1,636    5,998    7,770 
Occupancy expense  419   415    1,715    2,091 
Federal deposit insurance premium  230   183    784    735 
Advertising  40   86    239    561 
Data processing  321   312    1,236    1,245 
Professional fees  430   567    1,571    2,205 
Other real estate owned (income) expense, net  17   (470)   (46)   (299)
Other operating expenses  610   840    2,464    2,336 
Total Other Expense  3,454   3,569    13,961    16,644 
Income before income tax expense  1,164   311    3,698    344 
Income tax expense     17        21 
Net Income  $1,164 $ 294  $ 3,698  $ 323 
             
Earnings per common share            
Basic $0.18 $ 0.05  $ 0.58  $ 0.05 
Weighted Average Common Shares Outstanding            
Basic  6,398,720   6,384,319    6,393,330    6,378,930 



MALVERN BANCORP, INC AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA  
  
 Three Months Ended
(in thousands, except for share and per share data) (annualized where applicable) 9/30/20156/30/20159/30/2014
(unaudited)     
Statements of Operations Data   
    
Interest income$  5,344 $  5,139 $  4,832 
Interest expense 1,365  1,301  1,215 
Net interest income 3,979  3,838  3,617 
Provision for loan losses     183 
Net interest income after provision for loan losses 3,979  3,838  3,434 
Other income 639  640  446 
Other expense 3,454  3,273  3,569 
Income before income tax expense 1,164  1,205  311 
Income tax expense     17 
Net income$  1,164 $  1,205 $    294 
Earnings (per Common Share)   
Basic$  0.18 $  0.19 $  0.05 
Statements of Condition Data (Period-End)   
Investment securities available for sale, at fair value$  128,354 $  130,509 $  100,943 
Investment securities held to maturity (fair value of $56,825, $58,181 and $0) 57,221  59,243   
Loans, net of allowance for loan losses 391,307  371,897  386,074 
Total assets 655,690  624,244  542,264 
Deposits 465,522  443,218  412,953 
Borrowings 103,000  93,000  48,000 
Shareholders' equity 81,391  79,812  76,772 
Common Shares Dividend Data    
Cash dividends$ $ $ 
Weighted Average Common Shares Outstanding   
Basic 6,398,720  6,395,126  6,384,319 
Operating Ratios   
Return on average assets 0.72% 0.77% 0.21%
Return on average equity 5.77% 6.01% 1.53%
Average equity / average assets 12.43% 12.73% 13.62%
Book value per common share (period-end)$  12.41 $  12.17 $  11.71 
Non-Financial Information (Period-End)   
Common shareholders of record 483  488    485 
Full-time equivalent staff 71  71    93 

 

Investor Contact: Joseph D. Gangemi Senior Vice President & Chief Financial Officer (610) 695-3676 Media Contact: David Culver, VP Public Relations Boyd Tamney Cross (610) 254-7426

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