Market Overview

Malvern Bancorp, Inc. Reports Net Income of $1.2 Million or $0.19 Per Share for the Third Quarter of Fiscal 2015, Representing a 208.18% Increase Over the Third Quarter of Fiscal 2014

Share:

PAOLI, Pa., July 29, 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 third quarter ended June 30, 2015.  Net income amounted to $1.2 million, or $0.19 per share, for the quarter ended June 30, 2015, an increase of $814,000 or approximately 208.2 percent as compared with the net income of $391,000, or $0.06 per share, for the quarter ended June 30, 2014.

"Our third quarter and year-to-date earnings are strong and reflect increasing momentum as we continue to expand our banking relationships, improve fundamentals and move forward with our business model for the new Malvern.   Third quarter performance reflects stable asset quality, a rise in net income and continued success in positioning the Company for growth.  We are pleased with the significant improvements accomplished here since the transition began last September and with the financial returns delivered thus far," said Anthony C. Weagley, Chief Executive Officer & President of Malvern Bancorp, Inc.

For the nine months ended June 30, 2015, net income amounted to $2.5 million, or $0.40 per share, compared with the net income of $29,000, or $0.00 per share, for the nine months ended June 30, 2014.

Highlights for the quarter include:

  • Return on average assets (ROAA) was 0.77% for the three months ended June 30, 2015, compared to 0.27% a year earlier, and return on average equity (ROAE) rose to 6.01% for the three months ended June 30, 2015, compared with 2.05% for the three months ended June 30, 2014.

  • Non-performing assets ("NPAs") were at 0.44 percent of total assets at June 30, 2015, compared to 0.82 percent at June 30, 2014 and 0.80 percent at September 30, 2014. The allowance for loan losses as a percentage of total non-performing loans was 337.1 percent at June 30, 2015 compared to 157.1 percent at June 30, 2014 and 191.9 percent at September 30, 2014.

  • The Company's ratio of shareholders' equity to total assets was 12.79 percent at June 30, 2015, compared to 13.26 percent at June 30, 2014, and 14.16 percent at September 30, 2014.

  • Book value per common share amounted to $12.17 at June 30, 2015, compared to $11.69 at June 30, 2014 and $11.71 at September 30, 2014.

  • The efficiency ratio, a non-GAAP measure, was 69.0 percent for the third quarter of fiscal 2015 on an annualized basis, compared to 92.6 percent in the third quarter of fiscal 2014 and 87.8 percent in the fourth quarter of fiscal 2014.

  • The Company's balance sheet reflected 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:6/30/153/31/1512/31/149/30/146/30/14
Return on average assets 0.77% 0.64% 0.22% 0.21% 0.27%
Return on average equity 6.01% 5.05% 1.65% 1.53% 2.05%
Net interest margin (tax equivalent basis) 2.61% 2.58% 2.61% 2.70% 2.76%
Loans / deposits ratio 84.54% 85.57% 87.61% 94.10% 88.61%
Shareholders' equity / total assets 12.79% 12.68% 12.91% 14.16% 13.26%
Efficiency ratio (1) 69.0% 76.6% 87.5% 87.8% 92.6%
Book value per common share$  12.17 $  12.20 $  11.88 $  11.71 $  11.69 
                

_____________

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

Net Interest Income

For the three months ended June 30, 2015, total interest income on a fully tax equivalent basis increased $97,000 or 1.9 percent, to $5.2 million, compared to the three months ended June 30, 2014. Interest income rose in the quarter ended June 30, 2015, compared to the comparable period in fiscal 2014 primarily due to a $64.1 million increase in the average balance of our investment securities. Total interest expense increased by $36,000, or 2.9 percent, to $1.3 million, for the three months ended June 30, 2015, compared to the comparable period in fiscal 2014.  

Net interest income on a fully tax equivalent basis was $3.9 million for the three months ended June 30, 2015, increasing $61,000, or 1.6 percent, from $3.8 million for the comparable three month period in fiscal 2014. The change for the three months ended June 30, 2015, primarily was the result of an increase in average interest earning assets, which increased $41.3 million.  The net interest spread on an annualized tax-equivalent basis was at 2.46 percent and 2.62 percent for the three months ended June 30, 2015 and June 30, 2014, respectively. For the quarter ended June 30, 2015, the Company's net interest margin on a tax equivalent basis decreased to 2.61 percent as compared to 2.76 percent for the same three month period in 2014. "We continue to carry excess liquidity in our cash pool. As we have discussed, this is a positive trend for the Company and positions the Company to fuel increased loan originations.  We anticipate an improvement in margin as the cash is deployed to earning-assets," commented Mr. Weagley. 

The 2.9 percent increase in interest expense for the quarter primarily reflects higher volumes of borrowings.  The average cost of funds was 1.02 percent for the quarter ended June 30, 2015 as compared to 1.05 percent for the same three month period in fiscal 2014 and on a linked sequential quarter decreased two basis points compared to the second quarter of fiscal 2015. 

For the nine months ended June 30, 2015, total interest income on a fully tax equivalent basis decreased $160,000 or 1.0 percent, to $15.2 million, compared to $15.4 million for the nine months ended June 30, 2014. Total interest expense increased by $27,000, or 0.7 percent, to $3.9 million, for the nine months ended June 30, 2015, compared to the comparable period in fiscal 2014.  Interest income declined for the nine months ended June 30, 2015, compared to the comparable period in fiscal 2014 primarily due to a $26.8 million decline in average loan balances. The decline in loan balances was primarily due to a 5.2 percent decrease in residential mortgage loans, a 3.2 percent decrease in construction and development loans, as well as a 8.8 percent decline in consumer loans. Even with the overall decline in the loan portfolio balance, there was a 6.2 percent growth in commercial loans.   Compared to the same period in fiscal 2014, for the nine months ended June 30, 2015, average interest earning assets increased $22.2 million while net interest spread and margin decreased on an annualized tax-equivalent basis by 17 basis points and 15 basis points, respectively.

Earnings Summary for the Period Ended June 30, 2015

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

 
Condensed Consolidated Statements of Operations (unaudited)
      
(dollars in thousands, except per share data)     
For the quarter ended:6/30/153/31/1512/31/149/30/146/30/14
Net interest income$  3,838 $  3,836 $  3,561 $  3,617 $  3,826 
Provision for loan losses 90  183 
Net interest income after  provision for loan losses 3,838  3,836  3,471  3,434  3,826 
Other income 640  745  511  446  744 
Other expense 3,273  3,573  3,661  3,569  4,179 
Income before income tax expense 1,205  1,008  321  311  391 
Income tax expense -  -  -  17  - 
Net income$  1,205 $  1,008 $  321 $  294 $  391 
Earnings per common share:     
Basic$  0.19 $   0.16 $  0.05 $  0.05 $  0.06 
Weighted average common shares outstanding:  
Basic 6,395,126  6,391,521  6,387,932  6,384,319  6,380,726 
                

Other Income

Other income decreased $104,000 for the third quarter of fiscal 2015 compared with the same period in fiscal 2014.  During the third quarter of fiscal 2015, the Company recorded $145,000 in net gains on sales of investment securities compared to $69,000 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 $495,000 for the three months ended June 30, 2015 compared to other income of $675,000 for the three months ended June 30, 2014 and $446,000 for the three months ended September 30, 2014.  Decreases in other income in the third quarter of fiscal 2015 when compared to the third quarter of fiscal 2014 (excluding securities gains) were primarily from a decrease of $267,000 in net gain on sale of loans, a decrease in bank owned life insurance income of $8,000 and a decrease in rental income of $2,000, partially offset by an increase of $56,000 in service charges on deposit accounts and a decrease of $41,000 in loss on disposal of fixed assets.

For the nine months ended June 30, 2015, total other income increased $187,000 compared to the same period in fiscal 2014, primarily as a result of $354,000 related to an increase in net gains on sales of investment securities, partially offset by decreased income on bank owned life insurance 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:6/30/153/31/1512/31/149/30/146/30/14
Service charges on deposit accounts$  286 $  264 $  270 $  235 $  230 
Rental income – other 61  64  64  64  63 
Net gains on sales of investments, net 145  266  26  -  69 
Loss on disposal of fixed assets -  -  -  -  (41)
Gain on sale of loans, net 16  20  19  13  283 
Bank-owned life insurance 132  131  132  134  140 
  Total other income$  640 $  745 $  511 $  446 $  744 
                

Other Expense

Total other expense for the third quarter of fiscal 2015 amounted to $3.3 million, which was approximately $300,000 or 8.4 percent lower than other expense for the three months ended March 31, 2015.  The reduction in other expense in the third quarter of fiscal 2015 was primarily related to a decrease in employee salaries and benefits, which decreased $217,000 from the quarter ended March 31, 2015, as well as, a $70,000 decrease in professional fees, a $58,000 decrease in occupancy expense, a $70,000 decrease in other operating expenses and a $6,000 decrease in advertising. These reductions were partially offset by increases in federal deposit insurance premium of $19,000, data processing expense of $11,000 and other real estate owned expense of $91,000.

The decrease in other expense for the three months ended June 30, 2015, when compared to the quarter ended June 30, 2014, was approximately $906,000, or 21.7 percent. Decreases primarily reflected reductions in salaries and employee benefits of $662,000, primarily due to workforce reductions, professional fees of $99,000, primarily reflecting lower expenses related to loan workouts, occupancy expense of $164,000, primarily attributable to a decrease in rent expense of $69,000 and building and equipment expenses of $80,000 primarily due to elimination of expenses related to a branch closure in fiscal 2014 as well as a reduction in expenses associated with janitorial, snow removal and related activities, advertising expense of $47,000 and a $42,000 improvement in other real estate owned expense, net.  These decreases were partially offset by increases of $72,000 in other operating expense, $19,000 in federal deposit insurance premium and $17,000 in data processing expense. The increase in other operating expense was primarily due to an increase of $70,000 in director compensation, a $45,000 increase in insurance and bond expense, a $57,000 increase in other operating expense and a $56,000 increase in amortization of mortgage servicing rights.

For the nine months ended June 30, 2015, total other expense was reduced by $2.6 million, or 19.6 percent, compared to the same fiscal period in 2014. Decreases primarily included $1.5 million in salaries and employee benefits primarily due to workforce reductions, $380,000 in occupancy expense, $276,000 in advertising costs, $497,000 in professional fees, $234,000 in other real estate owned expense and $18,000 in data processing. These decreases were partially offset by an increase in other operating expenses of $358,000 and a slight increase in federal deposit insurance premium of $2,000.

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

      
(in thousands, unaudited)     
For the quarter ended:6/30/153/31/1512/31/149/30/146/30/14
Salaries and employee benefits$  1,333 $  1,550 $  1,728 $  1,636 $  1,995 
Occupancy expense 407  465  424  415  571 
Federal deposit insurance premium 203  184  167  183  184 
Advertising 54  60  85  86  101 
Data processing 312  301  302  312  295 
Professional fees 364  434  343  567  463 
Other real estate owned expense (income), net 32  (59) (36) (470) 74 
Other operating expenses 568  638  648  840  496 
 Total other expense$  3,273 $  3,573 $  3,661 $   3,569 $  4,179 
                 

Statement of Condition Highlights at June 30, 2015

Commenting on the balance sheet, Mr. Weagley indicated: "Our efforts to change the balance sheet continued during the third quarter.  We continue to execute on our business plans and are positioning the Company to take advantage of the signs for growth we see in our markets and transition to a commercial bank balance sheet. The new Malvern brand has been successfully launched." Highlights as of June 30, 2015 included:

  • Balance sheet strength, with total assets amounting to $624.2 million at June 30, 2015, increasing $82.0 million, or 15.1 percent compared to September 30, 2014 and increasing $46.2 million, or 8.0 percent compared to June 30, 2014.
  • Net loans were $371.9 million at June 30, 2015, decreasing $14.2 million, or 3.7 percent and $20.7 million, or 5.3 percent, from September 30, 2014 and June 30, 2014, respectively. 
  • Deposits totaled $443.2 million at June 30, 2015, an increase of $30.3 million or 7.3 percent compared to September 30, 2014 and a decrease of $2.8 million, or 0.6 percent, since June 30, 2014.  Total demand, savings, money market, and certificates of deposit less than $100,000, increased $16.7 million or 5.4 percent from September 30, 2014 and decreased $3.7 million or 1.1 percent from June 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 $93.0 million, $48.0 million and $48.0 million at June 30, 2015, September 30, 2014 and June 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:6/30/153/31/1512/31/149/30/146/30/14
Cash and due from depository institutions$  3,460 $  1,056 $  1,404 $  1,203 $  1,155 
Interest bearing deposits in depository institutions 20,833  50,587  46,648  17,984  41,300 
Investment securities, available for sale, at fair value 130,509  113,557  135,786  100,943  104,985 
Investment securities held to maturity 59,243  50,697 
Restricted stock, at cost 4,369  4,602  3,805  3,503  3,495 
Loans held for sale 657 
Loans receivable, net of allowance for loan losses 371,897  377,340  383,389  386,074  392,582 
Other real estate owned 1,366  1,430  1,494  1,964  1,645 
Accrued interest receivable 2,404  2,168  1,623  1,322  1,300 
Property and equipment, net 6,502  6,592  6,718  6,823  6,897 
Deferred income taxes 2,816  2,940  2,419  2,376  2,575 
Bank-owned life insurance 18,659  18,527  18,397  18,264  21,003 
Other assets 1,529  1,610  1,487  1,808  1,151 
Total assets$  624,244 $  631,106 $  603,170 $  542,264 $  578,088 
Deposits$  443,218 $  444,146 $  440,625 $  412,953 $  446,036 
Borrowings 93,000  98,000  78,000  48,000  48,000 
Other liabilities 8,214  8,934  6,660  4,539  7,385 
Shareholders' equity 79,812  80,026  77,885  76,772  76,667 
Total liabilities and shareholders' equity$  624,244 $  631,106 $  603,170 $  542,264 $  578,088 
                

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

      
Deposits (unaudited)       
(in thousands)     
At quarter ended:6/30/153/31/1512/31/149/30/146/30/14
Demand:     
  Non-interest bearing$  26,877 $  25,111 $  22,242 $  23,059 $  22,782 
  Interest-bearing 85,085  87,921  86,948  81,921  88,072 
Savings 44,949  44,848  44,747  44,917  46,645 
Money market 78,963  70,066  69,553  59,529  61,291 
Time 207,344  216,200  217,135  203,527  227,246 
  Total deposits$  443,218 $  444,146 $  440,625 $  412,953 $  446,036 
                

Loans

Total loans were $374.7 million at June 30, 2015.  Mr. Weagley commented:  "Outstanding loan balances remained relatively stable with a continued decrease in the residential components of our portfolios. Our focus will continue to be the commercial sectors of the loan portfolios for asset growth and new loan generation continues to grow underscoring the ability of the Company to gain traction and scale the Malvern balance sheet."  The Company had approximately $19.8 million in new loan originations and advances during the third quarter of fiscal 2015.  This new loan activity and advances were offset by prepayments, scheduled payments, maturities and payoffs of $25.2 million. Average loans during the third quarter of fiscal 2015 totaled $379.0 million as compared to $412.5 million during the third quarter of fiscal 2014, representing an 8.1 percent decrease.

The Company's total loans in the third quarter of 2015 decreased $5.4 million, to $374.7 million at June 30, 2015, from $380.1 million at March 31, 2015.  The allowance for loan losses amounted to $4.6 million at both June 30, 2015 and March 31, 2015. 

At the end of the third quarter of fiscal 2015, the loan portfolio remained weighted toward the core residential portfolio, with single-family residential real estate accounting for 58.5 percent of the loan portfolio, commercial loans accounting for 22.1 percent, and consumer loans representing 17.6 percent of the loan portfolio at such date. Total loans decreased $13.9 million, to $374.7 million at June 30, 2015 compared to $388.6 million at September 30, 2014.  The $13.9 million reduction in the loan portfolio at June 30, 2015 compared to September 30, 2014, primarily reflected reductions of $12.1 million in residential mortgage loans and $6.3 million in consumer loans.  These decreases were partially offset by a $4.8 million increase in commercial loans at June 30, 2015 as compared to September 30, 2014.  At June 30, 2014, total loans were $395.2 million. The decreased loan balance in the loan portfolio at June 30, 2015 compared to June 30, 2014, primarily reflected reductions of $15.9 million in residential mortgage loans, $2.2 million in construction and development loans and $8.0 million in consumer loans, which were partially offset by a $5.5 million increase in commercial loans.

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

      
Loans (unaudited)      
(in thousands)     
At quarter ended:6/30/153/31/1512/31/149/30/146/30/14
Residential mortgage$219,197 $225,232 $229,507 $231,324 $235,050 
Construction and Development:     
  Residential and commercial 6,751  5,922  6,039  5,964  7,484 
  Land 25  344  -  1,033  1,537 
Total construction and development 6,776  6,266  6,039  6,997  9,021 
Commercial:     
  Commercial real estate 67,617  68,858  67,274  71,579  69,788 
  Multi-family 5,451  5,508  5,450  1,032  2,086 
  Other 9,839  5,506  5,603  5,480  5,492 
Total commercial 82,907  79,872  78,327  78,091  77,366 
Consumer:     
  Home equity lines of credit 23,173  23,073  24,430  22,292  21,914 
  Second mortgages 40,121  43,013  45,051  47,034  48,866 
  Other 2,523  2,610  2,675  2,839  3,011 
Total consumer 65,817  68,696  72,156  72,165  73,791 
Total loans 374,697  380,066  386,029  388,577  395,228 
Deferred loan costs, net 1,774  1,886  1,960  2,086  2,212 
Allowance for loan losses (4,574) (4,612) (4,600) (4,589) (4,858)
  Loans Receivable, net$371,897 $377,340 $383,389 $386,074 $392,582 
                

At June 30, 2015, the Company had $41.8 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 $7.4 million in construction and $20.6 million in commercial real estate loans and $2.0 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 $48.6 million," said Mr. Weagley.  

Asset Quality

Non-accrual loans were $1.4 million at June 30, 2015, as compared to $2.4 million at September 30, 2014 and $3.1 million at June 30, 2014.  Other real estate owned, ("OREO") was $1.4 million at June 30, 2015, as compared with $2.0 million at September 30, 2014 and $1.6 million at June 30, 2014, respectively.  At July 1, 2015 the Company disposed of a residential property for $200,000, further reducing OREO to $1.2 million. Total performing troubled debt restructured loans were $109,000 at June 30, 2015, $1.0 million at September 30, 2014 and $1.2 million at June 30, 2014, respectively.  The $900,000 decrease in troubled debt restructured loans at June 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.

At June 30, 2015, non-performing assets totaled $2.7 million, or 0.44 percent of total assets, as compared with $4.4 million, or 0.80 percent, at September 30, 2014 and $4.7 million, or 0.82 percent, at June 30, 2014.  The decrease from June 30, 2014 reflects the Company's continued diligence to satisfactorily work out certain problem assets.  The portfolio of remaining non-accrual loans at June 30, 2015 comprised five residential real estate loans with an aggregate outstanding balance of approximately $566,000, four consumer loans with an aggregate outstanding balance of approximately $182,000, one construction and development loan with an outstanding balance of $12,000 and four commercial loans with an aggregate outstanding balance of $597,000 that were on non-accrual status at June 30, 2015. Of the non-accrual loans, two commercial loans to one borrower, with an aggregate balance of $499,000 were restructured during the quarter ended June 30, 2015.  These loans are classified as troubled debt restructured loans at June 30, 2015. The borrower is currently making payments as agreed under the terms of the restructuring of principal and interest payments. 

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:6/30/153/31/1512/31/149/30/146/30/14
Non-accrual loans(1)$  1,357 $  1,826 $  2,334 $  2,391 $  3,092 
Loans 90 days or more past due and still accruing
  Total non-performing loans 1,357  1,826  2,334  2,391  3,092 
Other real estate owned 1,366  1,430  1,494  1,964  1,645 
  Total non-performing assets$  2,723 $  3,256 $  3,828 $  4,355 $  4,737 
Performing troubled debt restructured loans$  109 $  109 $  1,007 $  1,009 $  1,246 
      
Non-performing assets / total assets 0.44% 0.52% 0.63% 0.80% 0.82%
Non-performing loans / total loans 0.36% 0.48% 0.60% 0.62% 0.78%
Net charge-offs (recoveries)$   38 $  (12)$  79 $  452 $  (11)
Net charge-offs (recoveries) / average loans(2) 0.04% 0.01% 0.08% 0.19% 0.11%
Allowance for loan losses / total loans 1.22% 1.21% 1.19% 1.18% 1.23%
Allowance for loan losses / non-performing loans 337.07% 252.57% 197.09% 191.93% 157.1%
      
Total assets$624,244 $631,106 $603,170 $542,264 $578,088 
Total loans 374,697  380,066  386,029  388,577  395,228 
Average loans 378,953  384,915  389,544  395,067  412,457 
Allowance for loan losses 4,574  4,612  4,600  4,589  4,858 
                

_________________

(1) Eleven loans totaling approximately $1.2 million or (86.3%) of the total non-accrual loan balance were making payments at June 30, 2015.

(2) Annualized.

The allowance for loan losses at June 30, 2015 amounted to approximately $4.6 million, or 1.22 percent of total loans, compared to 1.18 percent and 1.23 percent of total loans at September 30, 2014 and June 30, 2014, respectively. The Company had no provision for loan losses during the quarter ended June 30, 2015 compared to $183,000 and zero, respectively, during the quarters ended September 30, 2014 and June 30, 2014.  Provision expense was lower during the quarter ended June 30, 2015 due to a decline in charge-offs history, generally, and lower charge-offs during the quarter ended June 30, 2015.

Capital

At June 30, 2015, our total shareholders' equity amounted to $79.8 million, or 12.79 percent of total assets compared to $76.8 million at September 30, 2014 and $76.7 million at June 30, 2014.  The Company's book value per common share was $12.17 at June 30, 2015, compared to $11.71 at September 30, 2014 and $11.69 at June 30, 2014.

At June 30, 2015, the Bank's ratio of tier 1 risk-based capital to risk-weighted assets was 17.32 percent and its ratio of tier 1 capital to adjusted total assets was 16.22 percent, compared to 20.75 percent and 19.50 percent, respectively, at September 30, 2014 and 19.96 percent and 18.71 percent, respectively, at June 30, 2014.  At June 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:6/30/153/31/1512/31/149/30/146/30/14
Other income$  640 $  745 $  511 $  446 $  744 
Less: Net investment securities gains 145  266  26  -  69 
Other income, excluding net investment securities gains$  495 $  479 $  485 $  446 $  675 
                

"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:6/30/153/31/1512/31/149/30/146/30/14
Other expense$  3,273 $  3,573 $  3,661 $  3,569 $  4,179 
Less: non-core items(1) 244  242  110 
Other expense, excluding non-core items

$
 

  3,029
 

$
 

  3,331
 

$
 

  3,551
 

$
 

  3,569
 $  4,179 
      
Net interest income (tax equivalent basis)$  3,898 $  3,871 $  3,575 $  3,621 $  3,837 
Other income, excluding net investment securities gains 495  479  485  446  675 
  Total$  4,393 $  4,350 $  4,060 $  4,067 $  4,512 
      
Efficiency ratio 69.0% 76.6% 87.5% 87.8% 92.6%
      
(1) Included in non-core items are professional fees of approximately $52,000, advertising expense of $12,000 and other operating expense of $180,000 for the quarter ended June 30, 2015. For the quarter ended March 31, 2015, included in non-core items were professional fees of approximately $97,000, advertising expense of $11,000 and other operating expense of $134,000.
 

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:6/30/153/31/1512/31/149/30/146/30/14
Efficiency ratio on a GAAP basis 67.6% 72.7% 87.2% 87.8% 91.4%
      

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:6/30/153/31/1512/31/149/30/146/30/14
Net interest income (GAAP)$  3,838 $  3,836 $  3,561 $  3,617 $  3,826 
Tax-equivalent adjustment(1)  60  35  14  4  11 
TE net interest income$  3,898 $  3,871 $  3,575 $  3,621 $  3,837 
      
Net interest income margin (GAAP) 2.57% 2.56% 2.60% 2.70% 2.75%
Tax-equivalent effect   0.04    0.02    0.01    0.01 
Net interest margin (TE) 2.61% 2.58% 2.61% 2.70% 2.76%
____________________     
(1) Reflects adjustment to GAAP interest income.
      

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:6/30/153/31/1512/31/149/30/146/30/14
Investment securities$  178,713 $  151,746 $  114,129 $  103,458 $  114,631 
Loans 378,953  384,915  389,544  395,067  412,457 
Allowance for loan losses (4,649) (4,614) (4,600) (4,851) (4,829)
All other assets 76,915  95,921  77,776  71,930  65,131 
  Total assets$  629,932 $  627,968 $  576,849 $  565,604 $  587,390 
Non-interest bearing deposits$  28,943 $  27,002 $  26,770 $  26,057 $  24,834 
Interest-bearing deposits 415,646  419,367  393,225  408,937  430,780 
Borrowings 96,462  94,556  72,945  47,998  49,014 
Other liabilities 8,674  7,272  6,151  5,549  6,551 
Shareholders' equity 80,207  79,771  77,758  77,063  76,211 
  Total liabilities and shareholders' equity$  629,932 $   627,968 $  576,849 $  565,604 $  587,390 
      

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://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) June
30,
2015
  September
30,
2014
  (Unaudited)    
ASSETS       
Cash and due from depository institutions $ 3,460  $ 1,203  
Interest bearing deposits in depository institutions   20,833    17,984  
  Total cash and cash equivalents   24,293    19,187  
Investment securities available for sale, at fair value   130,509    100,943  
Investment securities held to maturity (fair value of $58,181 and $0)   59,243    
Restricted stock, at cost   4,369    3,503  
Loans held for sale   657    
Loans receivable, net of allowance for loan losses   371,897    386,074  
Other Real estate owned   1,366    1,964  
Accrued interest receivable   2,404    1,322  
Property and equipment, net   6,502    6,823  
Deferred income taxes, net   2,816    2,376  
Bank-owned life insurance   18,659    18,264  
Other assets   1,529    1,808  
  Total assets $ 624,244  $ 542,264  
LIABILITIES       
Deposits:       
  Non-interest bearing $ 26,877  $ 23,059  
  Interest-bearing:   416,341    389,894  
Total deposits   443,218    412,953  
FHLB Advances   93,000    48,000  
Advances from borrowers for taxes and insurance   4,245    1,786  
Accrued interest payable   346    149  
Other liabilities   3,623    2,604  
  Total liabilities   544,432    465,492  
SHAREHOLDERS' EQUITY       
Preferred stock, $0.01 par value, 10,000,000 shares, authorized, no issued     
Common stock, $0.01 par value, authorized 40,000,000 shares authorized, issued and outstanding: 6,558,473 shares at June 30, 2015 and September 30, 2014     66      66  
Additional paid in capital   60,346    60,317  
Retained earnings   22,650    20,116  
Unearned Employee Stock Ownership Plan (ESOP) shares   (1,811)   (1,922) 
Accumulated other comprehensive loss   (1,439)   (1,805) 
  Total shareholders' equity   79,812    76,772  
  Total liabilities and shareholders' equity $ 624,244  $ 542,264  




 
MALVERN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
  Three Months Ended June 30, Nine Months Ended June 30,
(in thousands, except for share data)  2015   2014    2015    2014 
(unaudited)            
Interest and Dividend Income            
Loans, including fees $4,028 $ 4,476  $ 12,356  $ 13,448 
Investment securities, taxable  859   519    2,151    1,623 
Investment securities, tax-exempt  172   29    305    137 
Dividends, restricted stock  65   54    244    87 
Interest-bearing cash accounts  15   13    62    40 
  Total Interest and Dividend Income  5,139   5,091    15,118    15,335 
Interest Expense            
Deposits  843   980    2,561    3,046 
Borrowings  458   285    1,322    810 
Total Interest Expense  1,301   1,265    3,883    3,856 
Net interest income  3,838   3,826    11,235    11,479 
Provision for Loan Losses       90    80 
Net Interest Income after Provision for Loan Losses  3,838   3,826    11,145    11,399 
Other Income            
Service charges and other fees  286   230    820    712 
Rental income-other  61   63    189    191 
Net gains on sales of investments, net  145   69    437    83 
Loss on disposal of fixed assets     (41)     (41)
Net gains on sale of loans, net  16   283    55    339 
Earnings on bank-owned life insurance  132   140    395    425 
Total Other Income  640   744    1,896    1,709 
Other Expense            
Salaries and employee benefits  1,333   1,995    4,611    6,134 
Occupancy expense  407   571    1,296    1,676 
Federal deposit insurance premium  203   184    554    552 
Advertising  54   101    199    475 
Data processing  312   295    915    933 
Professional fees  364   463    1,141    1,638 
Other real estate owned (income) expense, net  32   74    (63)   171 
Other operating expenses  568   496    1,854    1,496 
Total Other Expense  3,273   4,179    10,507    13,075 
Income before income tax expense  1,205   391    2,534    33 
Income tax expense         4 
Net Income  $1,205 $ 391  $ 2,534  $ 29 
             
Earnings per common share            
Basic $0.19 $ 0.06  $ 0.40  $ 0.00 
Weighted Average Common Shares Outstanding            
Basic  6,395,126   6,380,726    6,391,514    6,377,114 



 
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) 6/30/20153/31/20156/30/2014
(unaudited)     
Statements of Operations Data   
    
  Interest income$  5,139 $  5,166 $  5,091 
  Interest expense 1,301  1,330  1,265 
Net interest income 3,838  3,836  3,826 
  Provision for loan losses
Net interest income after provision for loan losses 3,838  3,836  3,826 
  Other income 640  745  744 
  Other expense 3,273  3,573  4,179 
  Income before income tax expense 1,205  1,008  391 
Income tax expense
  Net income$  1,205 $  1,008 $     391 
Earnings (per Common Share)   
  Basic$  0.19 $  0.16 $   0.06 
Statements of Condition Data (Period-End)   
  Investment securities available for sale, at fair value$  130,509 $  113,557 $  104,985 
  Investment securities held to maturity (fair value of $58,181, $50,312 and $0) 59,243  50,697 
  Loans, net of allowance for loan losses 371,897  377,340  392,582 
  Total assets 624,244  631,106  578,088 
  Deposits 443,218  444,146  446,036 
  Borrowings 93,000  98,000  48,000 
  Shareholders' equity 79,812  80,026  76,667 
Common Shares Dividend Data    
  Cash dividends$$$
Weighted Average Common Shares Outstanding   
  Basic 6,395,126  6,391,521  6,380,726 
Operating Ratios   
  Return on average assets 0.77% 0.64% 0.27%
  Return on average equity 6.01% 5.05% 2.05%
  Average equity / average assets 12.73% 12.70% 12.97%
  Book value per common share (period-end)$  12.17 $  12.20 $  11.69 
Non-Financial Information (Period-End)   
  Common shareholders of record 488  494    461 
  Full-time equivalent staff 71  76    95 
          

 

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

Primary Logo

View Comments and Join the Discussion!