Toggle SGML Header (+)


Section 1: 8-K (FORM 8-K)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported) November 1, 2018
 
Malvern Bancorp, Inc.
(Exact name of registrant as specified in its charter)
 
Pennsylvania 000-54835 45-5307782

(State or other jurisdiction 

of incorporation)

(Commission File Number)

(IRS Employer 

Identification No.)

 

 
42 E. Lancaster Avenue, Paoli, Pennsylvania 19301
(Address of principal executive offices) (Zip Code)
 
Registrant’s telephone number, including area code (610) 644-9400
 
Not Applicable
(Former name or former address, if changed since last report)
 
   
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):  
   
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))  
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))  
           

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 2.02Results of Operations and Financial Condition

 

On November 1, 2018, Malvern Bancorp, Inc. (the “Company”), the holding company for Malvern Bank, National Association (the “Bank”), reported its results of operations for the fourth fiscal quarter and fiscal year ended September 30, 2018.

 

For additional information, reference is made to the Company’s press release dated November 1, 2018, which is included as Exhibit 99.1 hereto and is incorporated herein by reference thereto. The press release attached hereto as Exhibit 99.1 is being furnished to the Securities and Exchange Commission (the “SEC”) and shall not be deemed to be “filed” for any purpose except as otherwise provided herein.

 

Item 9.01Financial Statements and Exhibits

 

  (a) Not applicable.
  (b) Not applicable.
  (c) Not applicable.
  (d) Exhibits

 

The following exhibit is included herewith.

 

Exhibit Number Description
99.1 (furnished, not filed) Press release dated November 1, 2018

 

-2

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

  MALVERN BANCORP, INC.
   
Date: November 2, 2018 By: /s/ Joseph D. Gangemi
    Joseph D. Gangemi
    Senior Vice President and Chief Financial Officer

 

 3

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

 

 

 

Investor Relations:

Joseph D. Gangemi

SVP & CFO

(610) 695-3676

 

Investor Contact:

Ronald Morales

(610) 695-3646

 

Malvern Bancorp, Inc. Reports Fourth Fiscal Quarter and Fiscal 2018 Results

 

PAOLI, PA., November 1, 2018 -- Malvern Bancorp, Inc. (NASDAQ: MLVF) (the “Company”), parent company of Malvern Bank, National Association (“Malvern” or the “Bank”), today reported operating results for the fourth fiscal quarter ended September 30, 2018. Net income amounted to $2.6 million, or $0.41 per fully diluted common share, for the quarter ended September 30, 2018, compared with net income of $2.0 million, or $0.30 per fully diluted common share, for the quarter ended September 30, 2017.

 

For the twelve months ended September 30, 2018, net income amounted to $7.3 million, or $1.13 per fully diluted common share, compared with net income of $5.8 million, or $0.90 per fully diluted common share, for the twelve months ended September 30, 2017.

 

Anthony C. Weagley, President and CEO, commented on the financial results: “We continued to see top line revenue climb this quarter, with consistency in the quarterly results. We continue to improve the balance sheet at measured pace with emphasis on maintaining credit quality and controlling operating overhead. I am also very pleased that on October 9, 2018, we closed an underwritten public offering of shares of our common stock for gross proceeds of $25.0 million and net proceeds of approximately $23.5 million (after deducting the underwriting discount and other estimated offering expenses). As previously stated, we intend to use the net proceeds of the offering to increase our capital structure, to fund future organic growth and for working capital and other general corporate purposes. We may also use a portion of the net proceeds for future acquisitions, although we have no present commitments or agreements to do so.”

 

 

 

 

Highlights for the quarter include:

 

The annualized return on average assets (“ROAA”) was 1.02 percent for the three months ended September 30, 2018, compared to 0.77 percent for the three months ended September 30, 2017, and annualized return on average equity (“ROAE”) was 9.63 percent for the three months ended September 30, 2018, compared with 7.70 percent for the three months ended September 30, 2017.

 

The Company originated $41.0 million in new loans in the fourth quarter of fiscal 2018, which was offset in part by $32.2 million in participations, payoffs, prepayments and maturities from its portfolio, resulting in net portfolio growth of $8.8 million over the third quarter of fiscal 2018; new loan originations in the fourth quarter of fiscal 2018 consisted of $9.5 million in residential mortgage loans, $21.5 million in commercial loans, $7.7 million in construction and development loans and $2.3 million in consumer loans.

 

Non-performing assets (“NPAs”) were 0.30 percent of total assets at September 30, 2018, compared to 0.32 percent at June 30, 2018 and 0.12 percent at September 30, 2017. The allowance for loan losses as a percentage of total non-performing loans was 293.7 percent at September 30, 2018, compared to 268.5 percent at June 30, 2018 and 694.1 percent at September 30, 2017.

 

The Company’s ratio of shareholders’ equity to total assets was 10.72 percent at September 30, 2018, compared to 10.25 percent at June 30, 2018, and 9.80 percent at September 30, 2017.

 

Book value per common share amounted to $16.84 at September 30, 2018, compared to $16.42 at June 30, 2018 and $15.60 at September 30, 2017. The efficiency ratio, a non-GAAP measure, was 58.2 percent for the fourth quarter of fiscal 2018, compared to 52.7 percent in the third quarter of fiscal 2018 and 52.3 percent in the fourth quarter of fiscal 2017.

 

The Company’s total assets decreased by $12.1 million at September 30, 2018, compared to September 30, 2017 and is reflective of an investment of our excess cash holdings into loans and allowing higher costing funding to roll off.

 

Selected Financial Ratios
(unaudited; annualized where applicable)
                         
                          
As of or for the quarter ended :   9/30/18    6/30/18    3/31/18    12/31/17    9/30/17 
Return on average assets (1)   1.02%   0.85%   0.77%   0.15%   0.77%
Return on average equity (1)   9.63%   8.40%   7.71%   1.55%   7.70%
Net interest margin (tax equivalent basis) (2)   2.85%   2.75%   2.58%   2.47%   2.76%
Loans / deposits ratio   117.62%   114.46%   102.38%   102.19%   106.55%
Shareholders’ equity / total assets   10.72%   10.25%   9.73%   9.76%   9.80%
Efficiency ratio (1)   58.2%   52.7%   57.7%   63.6%   52.3%
Book value per common share  $16.84   $16.42   $16.03   $15.70   $15.60 

 

 

(1)Annualized.

 

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

 

-2-

 

 

Net Interest Income

 

Net interest income on a fully tax-equivalent basis, a non-GAAP measure, was $7.2 million for the three months ended September 30, 2018, increasing $443,000, or 6.6 percent, from $6.7 million for the comparable three-month period in fiscal 2017. The change for the three months ended September 30, 2018 primarily was the result of an increase in the average balance of interest earning assets, which increased $31.0 million. The net interest spread on an annualized tax-equivalent basis was at 2.64 percent and 2.59 percent for the three months ended September 30, 2018 and 2017, respectively. For the quarter ended September 30, 2018, the Company’s net interest margin on a tax-equivalent basis increased to 2.85 percent as compared to 2.76 percent for the same three-month period in fiscal 2017.

 

For the three months ended September 30, 2018, total interest income on a fully tax-equivalent basis, a non-GAAP measure, increased $1.1 million, or 11.8 percent, to $10.7 million, compared to the three months ended September 30, 2017. Interest income rose in the quarter ended September 30, 2018, compared to the comparable period in fiscal 2017, primarily due to a $76.8 million increase in the average balance of our loans. Total interest expense increased by $685,000, or 24.3 percent, to $3.5 million, for the three months ended September 30, 2018, compared to the same period in fiscal 2017 primarily due to the increase in average rates.

 

The average cost of funds was 1.60 percent for the quarter ended September 30, 2018 compared to 1.32 percent for the same three-month period in fiscal 2017 and, on a linked sequential quarter basis, increased 15 basis points compared to the third quarter of fiscal 2018.

 

For the twelve months ended September 30, 2018, total interest income on a fully tax equivalent basis increased $6.2 million, or 18.4 percent, to $40.2 million, compared to $33.9 million for the twelve months ended September 30, 2017. Total interest expense increased by $3.5 million, or 37.6 percent, to $13.0 million, for the twelve months ended September 30, 2018, compared to the comparable period in fiscal 2017. Interest income rose for the twelve months ended September 30, 2018, compared to the comparable period in fiscal 2017 primarily due to a $117.6 million increase in average loan balances. Compared to the same period in fiscal 2017, for the twelve months ended September 30, 2018, average interest earning assets increased $121.5 million, the net interest spread decreased on an annualized tax-equivalent basis by 9 basis points and the net interest margin decreased on an annualized tax-equivalent basis by 6 basis points.

 

Earnings Summary for the Period Ended September 30, 2018

 

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

     
(dollars in thousands, except per share data)                    
                     
For the quarter ended:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Net interest income  $7,109   $6,976   $6,568   $6,382   $6,707 
Provision for loan losses   125    589    240        489 
Net interest income after provision for loan losses   6,984    6,387    6,328    6,382    6,218 
Other income   429    715    449    1,711    532 
Other expense   4,437    4,790    4,105    4,471    3,813 
Income before income tax expense   2,976    2,312    2,672    3,622    2,937 
Income tax expense   334    69    654    3,219    982 
Net income  $2,642   $2,243   $2,018   $403   $1,955 
Earnings per common share                         
Basic  $0.41   $0.35   $0.31   $0.06   $0.30 
Diluted  $0.41   $0.35   $0.31   $0.06   $0.30 
Weighted average common shares outstanding:                         
Basic   6,464,326    6,453,031    6,448,691    6,445,264    6,441,731 
Diluted   6,467,628    6,456,048    6,452,246    6,450,513    6,445,151 

 

-3-

 

 

Other Income

 

Other income decreased $103,000, or 19.4 percent, for the fourth quarter of fiscal 2018 compared with the same period in fiscal 2017. The decrease in total other income was due to a $42,000 decrease in net gains on sale of loans, a decrease of $32,000 in other fees and service charges, a $31,000 decrease in net gains on sales of investment securities, and a $4,000 decrease in earnings on bank-owned insurance partially offset by a $6,000 increase in rental income.

 

For the twelve months ended September 30, 2018, total other income increased $963,000 compared to the same period in fiscal 2017, primarily a result of a $1.2 million net gain on the sale of real estate, an increase of $276,000 in other fees and service charges and a $41,000 increase in rental income partially offset by a $463,000 decrease in net gains on sales of investment securities, a $52,000 decrease in net gains on sale of loans, and a $25,000 decrease in earnings on bank-owned insurance.

 

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

 

(in thousands, unaudited)                    
For the quarter ended:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Service charges and other fees  $230   $530   $237   $271   $262 
Rental income – other   72    63    67    66    66 
Net gains on sales of investments                   31 
Net gains on sale of real estate               1,186     
Net gains on sale of loans   6    3    26    67    48 
Bank-owned life insurance   121    119    119    121    125 
Total other income  $429   $715   $449   $1,711   $532 

 

Other Expense

 

Total other expense for the three months ended September 30, 2018, increased $624,000, or 16.4 percent, when compared to the quarter ended September 30, 2017. The increase primarily reflected increases in salaries and employee benefits of $453,000, a $53,000 increase in other operating expense, a $92,000 increase in professional fees, a $27,000 increase in occupancy expense, and a $5,000 increase in advertising expense. The increase was partially offset by a $6,000 decrease in data processing expense. The increase in salaries and employee benefits primarily reflects higher compensation to officers and employees to support overall franchise growth. The increase in occupancy expense was mainly due to increased rental expense at branch locations.

 

For the twelve months ended September 30, 2018, total other expense increased $2.7 million, or 17.5 percent, compared to the same period in fiscal 2017. The increase primarily reflected increases in salaries and employee benefits of $1.1 million, a $997,000 increase in professional fees, a $476,000 increase in other operating expense, a $211,000 increase in occupancy expense, and a $54,000 increase in the federal deposit insurance premium. The increase was partially offset by a $97,000 decrease in data processing expense and a $64,000 decrease in advertising expense. Professional fees reflect increased legal and accounting fees for the period related to prior period restatements, which the Company does not expect to continue into future periods. The increase in occupancy expense was mainly due to increased rental expense at branch locations.

 

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

 

(in thousands, unaudited)                    
For the quarter ended:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Salaries and employee benefits  $2,178   $2,024   $2,001   $1,990   $1,725 
Occupancy expense   570    577    586    562    543 
Federal deposit insurance premium   71    76    75    76    71 
Advertising   30    30    38    54    25 
Data processing   279    274    267    278    285 
Professional fees   565    1,088    450    788    473 
Other operating expenses   744    721    688    723    691 
Total other expense  $4,437   $4,790   $4,105   $4,471   $3,813 

 

-4-

 

 

Income Taxes

 

The Company recorded $334,000 in income tax expense during the three months ended September 30, 2018 compared to $982,000 in income tax expense during the three months ended September 30, 2017. The effective tax rates for the Company for the three months ended September 30, 2018 and 2017 were 11.2 percent and 33.4 percent, respectively.

 

The Company recorded $4.3 million in income tax expense in fiscal 2018 compared to $2.9 million in income tax expense in fiscal 2017. The effective tax rates for the Company for the years ended September 30, 2018 and 2017 were 36.9 percent and 33.4 percent, respectively.

 

In the first quarter of fiscal 2018, the Company revised its estimated annual effective rate to reflect a change in the federal statutory rate from 35% to 21%, resulting from the Tax Cuts and Jobs Act that was enacted on December 22, 2017. The rate change was administratively effective at the beginning of our fiscal year, using a blended rate for the annual period. As a result, the blended statutory tax rate for the fiscal year is 24.5%. Net deferred income taxes decreased $3.5 million to $3.2 million at September 30, 2018 compared to $6.7 million at September 30, 2017.

 

In addition, we recognized a tax expense in our tax provision for the quarter ended December 31, 2017 related to adjusting our deferred tax balance to reflect the new corporate tax rate. As a result, income tax expense reported for the first three months was adjusted to reflect the effects of the change in the tax law and resulted in an increase in income tax expense of $2.0 million during the quarter ended December 31, 2017. This amount is the result of a reduction of $323,000 in income tax expense for the three-month period ended December 31, 2017 related to the lower corporate rate and a $2.3 million increase from the application of the newly enacted rates to existing deferred tax assets balances.

 

Statement of Condition Highlights at September 30, 2018

 

Highlights as of September 30, 2018, included:

 

Balance sheet strength, with total assets amounting to $1.0 billion at September 30, 2018, decreasing $12.1 million, or 1.0 percent, compared to September 30, 2017 is reflective of an investment of our excess cash holdings into loans and allowing higher costing funding to roll off.

 

The Company’s gross loans were $910.6 million at September 30, 2018, increasing $68.4 million, or 8.1 percent, from September 30, 2017.

 

Total investments were $54.4 million at September 30, 2018, an increase of $4.9 million, or 9.9 percent, compared to September 30, 2017.

 

Deposits totaled $774.2 million at September 30, 2018, a decrease of $16.2 million, or 2.1 percent, compared to September 30, 2017.

 

Federal Home Loan Bank (FHLB) advances totaled $118.0 million at September 30, 2018 and September 30, 2017.

 

Subordinated debt totaled $24.5 million at September 30, 2018 and $24.3 million at September 30, 2017, respectively.

 

-5-

 

 

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:   9/30/18    6/30/18    3/31/18    12/31/17    9/30/17 
Cash and due from depository institutions  $1,563   $1,447   $1,566   $1,636   $1,615 
Interest bearing deposits in depository institutions   29,271    45,934    120,144    127,006    115,521 
Investment securities, available for sale, at fair value   24,298    34,348    44,341    44,503    14,587 
Investment securities held to maturity   30,092    31,004    33,052    33,893    34,915 
Restricted stock, at cost   8,537    8,781    8,583    5,930    5,559 
Loans receivable, net of allowance for loan losses   902,136    893,355    837,314    806,764    834,331 
Accrued interest receivable   3,800    3,571    3,583    3,344    3,139 
Property and equipment, net   7,181    7,240    7,357    7,374    7,507 
Deferred income taxes, net   3,195    3,920    3,713    3,791    6,671 
Bank-owned life insurance   19,403    19,282    19,163    19,045    18,923 
Other assets   4,475    4,693    4,500    3,872    3,244 
Total assets  $1,033,951   $1,053,575   $1,083,316   $1,057,158   $1,046,012 
Deposits  $774,163   $787,932   $825,569   $797,099   $790,396 
FHLB advances   118,000    123,000    118,000    118,000    118,000 
Other short-term borrowings   2,500    2,500    2,500    5,000    5,000 
Subordinated debt   24,461    24,421    24,382    24,342    24,303 
Other liabilities   4,004    7,749    7,503    9,521    5,793 
Shareholders’ equity   110,823    107,973    105,362    103,196    102,520 
Total liabilities and shareholders’ equity  $1,033,951   $1,053,575   $1,083,316   $1,057,158   $1,046,012 

 

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

 

Deposits (unaudited)

                    
                     
(in thousands)                    
At quarter ended:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Demand:                    
Non-interest bearing  $41,677   $48,296   $38,444   $45,756   $42,121 
Interest-bearing   184,073    198,410    190,602    161,278    155,579 
Savings   44,642    44,629    44,716    41,631    44,526 
Money market   270,834    276,807    293,813    293,674    276,404 
Time   232,937    219,790    257,994    254,760    271,766 
Total deposits  $774,163   $787,932   $825,569   $797,099   $790,396 

 

-6-

 

 

Loans

 

Total net loans amounted to $902.1 million at September 30, 2018 compared to $834.3 million at September 30, 2017, for a net increase of $67.8 million or 8.1 percent for the period. The allowance for loan losses amounted to $9.0 million and $8.4 million at September 30, 2018 and September 30, 2017, respectively. Average loans during the fourth quarter of fiscal 2018 totaled $909.0 million as compared to $832.2 million during the fourth quarter of fiscal 2017, representing a 9.2 percent increase.

 

At the end of the fourth quarter of fiscal 2018, the loan portfolio remained weighted toward two primary components: commercial and the core residential portfolio, with commercial real estate accounting for 69.3 percent and single-family residential real estate loans accounting for 21.7 percent of the loan portfolio. Construction and development loans amounted to 5.1 percent and consumer loans represented 3.9 percent of the loan portfolio at such date. Total gross loans increased $68.4 million, to $910.6 million at September 30, 2018 compared to $842.1 million at September 30, 2017. The increase in the loan portfolio at September 30, 2018 compared to September 30, 2017, primarily reflected an increase of $77.0 million in commercial loans and a $4.7 million increase in residential mortgage loans. These increases were partially offset by a $7.3 million decrease in construction and development loans and a $6.0 million reduction in consumer loans at September 30, 2018 as compared to September 30, 2017.

 

For the quarter ended September 30, 2018, the Company originated total new loan volume of $41.0 million, which was offset by loan payoffs of $17.3 million, prepayments totaling $8.7 million, and amortization of $6.2 million.

 

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

 

Loans (unaudited)                    
(in thousands)                    
At quarter ended:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Residential mortgage  $197,219   $192,901   $184,318   $186,831   $192,500 
Construction and Development:                         
   Residential and commercial   37,433    39,845    35,213    34,627    35,622 
   Land   9,221    15,565    21,727    18,599    18,377 
Total construction and development   46,654    55,410    56,940    53,226    53,999 
Commercial:                         
   Commercial real estate   493,929    477,584    445,995    427,610    437,760 
   Farmland   12,066    12,058    12,069    1,711    1,723 
   Multi-family   45,102    45,204    32,608    32,716    39,768 
   Other   80,059    82,856    75,368    71,933    74,837 
Total commercial   631,156    617,702    566,040    533,970    554,088 
Consumer:                         
   Home equity lines of credit   14,884    14,446    15,538    16,811    16,509 
   Second mortgages   18,363    19,063    19,960    21,304    22,480 
   Other   2,315    2,311    2,404    2,435    2,570 
Total consumer   35,562    35,820    37,902    40,550    41,559 
Total loans   910,591    901,833    845,200    814,577    842,146 
Deferred loan costs, net   566    546    579    624    590 
Allowance for loan losses   (9,021)   (9,024)   (8,465)   (8,437)   (8,405)
   Loans Receivable, net  $902,136   $893,355   $837,314   $806,764   $834,331 

 

At September 30, 2018, the Company had $124.3 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. The Company’s current “Approved, Accepted but Unfunded” pipeline, includes approximately $49.9 million in commercial and construction loans and $2.5 million in residential mortgage loans expected to fund over the next 90 days.

 

 -7-

 

Asset Quality

 

Non-accrual loans were $2.7 million at September 30, 2018 an increase of $1.6 million or 158.9 percent, as compared to $1.0 million at September 30, 2017. Other real estate owned (“OREO”) remained at zero at both September 30, 2018 and September 30, 2017. The increase in non-accrual loans at September 30, 2018 compared to September 30, 2017 was primarily due to eight residential mortgage loans with an aggregate outstanding balance of approximately $1.3 million, ten consumer loans with an aggregate outstanding balance of approximately $306,000, and one legacy commercial loan, with an aggregate outstanding balance of approximately $520,000 moving to non-accrual status during fiscal 2018. Total performing troubled debt restructured(‘TDR’) loans were $18.6 million at September 30, 2018 and $2.2 million at September 30, 2017. The increase in TDR loans at September 30, 2018 compared to September 30, 2017 was primarily due to two commercial loans with an aggregate outstanding balance of approximately $16.4 million moving to performing TDR status in the second fiscal quarter of 2018.

 

At September 30, 2018, non-performing assets totaled $3.1 million, or 0.30 percent of total assets, as compared with $1.2 million, or 0.12 percent of total assets, at September 30, 2017. The increase in non-performing assets at September 30, 2018 compared to September 30, 2017 was primarily due to the addition of eight residential mortgage loans with an aggregate outstanding balance of approximately $1.3 million, one commercial loan with an outstanding balance of approximately $520,000 and ten consumer loans with an aggregate outstanding balance of approximately $306,000 moving into non-accrual status and a $308,000 increase in residential mortgage loans receivable greater than 90 days and accruing. The portfolio of non-accrual loans at September 30, 2018 was comprised of fifteen residential real estate loans with an aggregate outstanding balance of approximately $1.8 million, one commercial real estate loan with an outstanding balance of $520,000, and twelve consumer loans with an aggregate outstanding balance of approximately $350,000.

 

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:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Non-accrual loans(1)  $2,687   $2,023   $2,129   $2,242   $1,038 
Loans 90 days or more past due and still accruing   385    1,338    475    345    173 
   Total non-performing loans   3,072    3,361    2,604    2,587    1,211 
Other real estate owned                    
   Total non-performing assets  $3,072   $3,361   $2,604   $2,587   $1,211 
Performing troubled debt restructured loans  $18,640   $18,693   $18,666   $2,222   $2,238 
                          
Non-performing assets / total assets   0.30%   0.32%   0.24%   0.24%   0.12%
Non-performing loans / total loans   0.34%   0.37%   0.31%   0.32%   0.14%
Net charge-offs (recoveries)  $128   $30   $212   $(32)  $1 
Net charge-offs (recoveries) / average loans(2)   0.06%   0.01%   0.10%   (0.02)%   0.00%
Allowance for loan losses / total loans   0.99%   1.00%   1.00%   1.04%   1.00%
Allowance for loan losses / non-performing loans   293.7%   268.5%   325.1%   326.1%   694.1%
                          
Total assets  $1,033,951   $1,053,575   $1,083,316   $1,057,158   $1,046,012 
Total gross loans   910,591    901,833    845,200    814,577    842,146 
Average loans   908,962    864,348    827,483    822,941    832,205 
Allowance for loan losses   9,021    9,024    8,465    8,437    8,405 

 

 

(1)22 loans totaling approximately $1.8 million, or 67.1% of the total non-accrual loan balance, were making payments at September 30, 2018.

(2)Annualized.

 

 -8-

 

The allowance for loan losses at September 30, 2018 amounted to approximately $9.0 million, or 0.99 percent of total loans, compared to $8.4 million, or 1.00 percent of total loans, at September 30, 2017. The Company had a $125,000 provision for loan losses during the quarter ended September 30, 2018 compared to $489,000 for the quarter ended September 30, 2017. For the twelve months ended September 30, 2018 and 2017, the Company had a $954,000 and $2.8 million, respectively, provision for loan losses. Provision expense was lower during fiscal 2018 due to a decrease in loan footings from extraordinary payoffs and paydowns during the first fiscal quarter of 2018.

 

Capital

 

At September 30, 2018, our total shareholders’ equity amounted to $110.8 million, or 10.72 percent of total assets, compared to $102.5 million at September 30, 2017. The Company’s book value per common share was $16.84 at September 30, 2018, compared to $15.60 at September 30, 2017. At September 30, 2018, the Bank’s common equity tier 1 ratio was 15.09 percent, tier 1 leverage ratio was 12.71 percent, tier 1 risk-based capital ratio was 15.09 percent and the total risk-based capital ratio was 16.13 percent. At September 30, 2017, the Bank’s common equity tier 1 ratio was 14.75 percent, tier 1 leverage ratio was 12.02 percent, tier 1 risk-based capital ratio was 14.75 percent and the total risk-based capital ratio was 15.78 percent. At September 30, 2018, 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 to such gains.

 

(in thousands)                    
For the quarter ended:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Other income as reported under GAAP  $429   $715   $449   $1,711   $532 
Less: Net investment securities gains and gains on sale of real estate               1,186    31 
Other income, excluding net investment securities gains and gains on sale of real estate, non-GAAP  $429   $715   $449   $525   $501 

 

 -9-

 

“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:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Other expense as reported under GAAP  $4,437   $4,790   $4,105   $4,471   $3,813 
Less: non-core items(1)    16    713    43    72    29 
Other expense, excluding non-core items, non-GAAP  $4,421   $4,077   $4,062   $4,399   $3,784 
Net interest income (tax equivalent basis), non-GAAP  $7,172   $7,021   $6,597   $6,393   $6,729 
Other income, excluding net investment securities gains and gains on sale of real estate, non-GAAP   429    715    449    525    501 
   Total  $7,601   $7,736   $7,046   $6,918   $7,230 
                          
Efficiency ratio, non-GAAP   58.2%   52.7%   57.7%   63.6%   52.3%

 

 

(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, and external payroll development costs related to such restructuring initiatives. Non-core items for the quarter ended June 30, 2018 consisted of additional legal and accounting fees arising out of matters pertaining to prior period restatements. 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:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Efficiency ratio on a GAAP basis   58.9%   62.3%   58.5%   55.2%   52.7%

 

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 Company revised its estimated annual effective rate to reflect a change in the federal statutory rate from 35% to 21%, resulting from the enactment of the Tax Cuts and Jobs Act of 2017. The TE basis adjusts GAAP interest income and yields for the tax benefit of income on certain tax-exempt investments using the blended statutory rate of 24.5% for the current period and 34% for each of the prior periods 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:  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17 
Net interest income (GAAP)  $7,109   $6,976   $6,568   $6,382   $6,707 
Tax-equivalent adjustment(1)     63    45    29    11    22 
TE net interest income, non-GAAP  $7,172   $7,021   $6,597   $6,393   $6,729 
                          
Net interest income margin (GAAP)   2.82%   2.73%   2.57%   2.46%   2.75%
Tax-equivalent effect   0.03    0.02    0.01    0.01    0.01 
Net interest margin (TE), non-GAAP   2.85%   2.75%   2.58%   2.47%   2.76%

 

 

(1) Reflects tax-equivalent adjustment for tax exempt loans and investments.

 

 -10-

 

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:   9/30/18    6/30/18    3/31/18    12/31/17    9/30/17 
Investment securities  $64,848   $75,932   $77,961   $59,453   $50,899 
Loans   908,962    864,348    827,483    822,941    832,205 
Allowance for loan losses   (9,077)   (8,589)   (8,426)   (8,419)   (8,120)
All other assets   72,535    120,730    157,126    194,017    134,501 
   Total assets   1,037,268    1,052,421    1,054,144    1,067,992    1,009,485 
Non-interest bearing deposits  $43,330   $45,124   $40,034   $42,760   $45,969 
Interest-bearing deposits   732,489    746,341    754,820    766,105    705,841 
FHLB advances   118,326    118,121    118,000    118,000    118,000 
Other short-term borrowings   2,522    2,555    4,945    5,000    6,033 
Subordinated debt   24,440    24,399    24,360    24,322    24,282 
Other liabilities   6,457    9,072    7,283    8,086    7,748 
Shareholders’ equity   109,704    106,809    104,702    103,719    101,612 
   Total liabilities and shareholders’ equity  $1,037,268   $1,052,421   $1,054,144   $1,067,992   $1,009,485 

 

About Malvern Bancorp, Inc.

 

Malvern Bancorp, Inc. is the holding company for Malvern Bank, National Association, a national bank that was originally organized in 1887 as a federally-chartered savings bank. Malvern Bank, National Association 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 eight other banking locations in Chester, Delaware and Bucks counties, Pennsylvania and Morristown, New Jersey, its New Jersey regional headquarters. The Bank also operates representative offices in Palm Beach, Florida and Montchanin, Delaware. Its primary market niche is providing personalized service to its client base.  

 

Malvern Bank, through its Private Banking division and strategic partnership with Bell Rock Capital in Rehoboth Beach, Delaware, provides personalized wealth management and advisory services to high net worth individuals and families. 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, National Association, please visit our web site at http://www.mymalvernbank.com.

 

 -11-

 

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.

 

 -12-

 

MALVERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION

 

         
(in thousands, except for share and per share data)  September 30, 2018   September 30, 2017 
(unaudited)          
ASSETS          
Cash and due from depository institutions  $1,563   $1,615 
Interest bearing deposits in depository institutions   29,271    115,521 
    Total cash and cash equivalents   30,834    117,136 
Investment securities available for sale, at fair value (amortized cost of $24.8 million and $14.9 million at September 30, 2018 and September 30, 2017, respectively)   24,298    14,587 
Investment securities held to maturity (fair value of $29.0 million and $34.6 million at September 30, 2018 and September 30, 2017, respectively)   30,092    34,915 
Restricted stock, at cost   8,537    5,559 
Loans receivable, net of allowance for loan losses   902,136    834,331 
Accrued interest receivable   3,800    3,139 
Property and equipment, net   7,181    7,507 
Deferred income taxes, net   3,195    6,671 
Bank-owned life insurance   19,403    18,923 
Other assets   4,475    3,244 
   Total assets  $1,033,951   $1,046,012 
LIABILITIES          
Deposits:          
   Non-interest bearing  $41,677   $42,121 
   Interest-bearing   732,486    748,275 
Total deposits   774,163    790,396 
FHLB advances   118,000    118,000 
Other short-term borrowings   2,500    5,000 
Subordinated debt   24,461    24,303 
Advances from borrowers for taxes and insurance   1,305    1,553 
Accrued interest payable   784    694 
Other liabilities   1,915    3,546 
   Total liabilities   923,128    943,492 
SHAREHOLDERS’ EQUITY          
Preferred stock, $0.01 par value, 10,000,000 shares, authorized, none issued        
Common stock, $0.01 par value, 50,000,000 shares authorized, issued and outstanding: 6,580,879 shares at September 30, 2018 and 6,572,684 shares at September 30, 2017   66    66 
Additional paid in capital   61,099    60,736 
Retained earnings   50,412    43,139 
Unearned Employee Stock Ownership Plan (ESOP) shares   (1,338)   (1,483)
Accumulated other comprehensive income (loss)   584    62 
   Total shareholders’ equity   110,823    102,520 
   Total liabilities and shareholders’ equity  $1,033,951   $1,046,012 

 

 -13-

 

MALVERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

   Three Months Ended September 30,   Twelve Months Ended September 30, 
(in thousands, except for share and per share data)  2018   2017   2018   2017 
(unaudited)                
Interest and Dividend Income                    
Loans, including fees  $10,041   $8,915   $36,862   $30,841 
Investment securities, taxable   262    197    1,094    1,561 
Investment securities, tax-exempt   60    70    251    492 
Dividends, restricted stock   134    65    467    257 
Interest-bearing cash accounts   120    282    1,356    631 
       Total Interest and Dividend Income   10,617    9,529    40,030    33,782 
Interest Expense                    
Deposits   2,559    1,843    9,200    6,236 
Short-term borrowings   14    22    68    34 
Long-term borrowings   552    561    2,200    2,176 
Subordinated debt   383    396    1,527    1,000 
Total Interest Expense   3,508    2,822    12,995    9,446 
Net interest income   7,109    6,707    27,035    24,336 
Provision for Loan Losses   125    489    954    2,791 
Net Interest Income after Provision for Loan Losses   6,984    6,218    26,081    21,545 
Other Income                    
Service charges and other fees   230    262    1,268    992 
Rental income-other   72    66    268    227 
Net gains on sales of investments       31        463 
Net gains on sale of real estate           1,186     
Net gains on sale of loans   6    48    102    154 
Earnings on bank-owned life insurance   121    125    480    505 
Total Other Income   429    532    3,304    2,341 
Other Expense                    
Salaries and employee benefits   2,178    1,725    8,193    7,114 
Occupancy expense   570    543    2,295    2,084 
Federal deposit insurance premium   71    71    298    244 
Advertising   30    25    152    216 
Data processing   279    285    1,098    1,195 
Professional fees   565    473    2,891    1,894 
Other operating expenses   744    691    2,876    2,400 
Total Other Expense   4,437    3,813    17,803    15,147 
Income before income tax expense   2,976    2,937    11,582    8,739 
Income tax expense   334    982    4,276    2,922 
Net Income  $2,642   $1,955   $7,306   $5,817 
                     
Earnings per common share                    
Basic  $0.41   $0.30   $1.13   $0.90 
Diluted  $0.41   $0.30   $1.13   $0.90 
Weighted Average Common Shares Outstanding                    
Basic   6,464,326    6,441,731    6,456,154    6,431,445 
Diluted   6,467,628    6,445,151    6,459,510    6,432,137 

 

 -14-

 

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)

  9/30/2018   6/30/2018   9/30/2017 
(unaudited)            
Statements of Operations Data            
             
   Interest income  $10,617   $10,198   $9,529 
   Interest expense   3,508    3,222    2,822 
      Net interest income   7,109    6,976    6,707 
   Provision for loan losses   125    589    489 
      Net interest income after provision for loan losses   6,984    6,387    6,218 
   Other income   429    715    532 
   Other expense   4,437    4,790    3,813 
   Income before income tax expense   2,976    2,312    2,937 
      Income tax expense   334    69    982 
   Net income  $2,642   $2,243   $1,955 
Earnings (per Common Share)               
   Basic  $0.41   $0.35   $0.30 
   Diluted  $0.41   $0.35   $0.30 
Statements of Condition Data (Period-End)               
   Investment securities available for sale, at fair value  $24,298   $34,348   $14,587 
   Investment securities held to maturity (fair value of $29.0 million, $30.0 million and $34.6 million)   30,092    31,004    34,915 
   Loans, net of allowance for loan losses   902,136    893,355    834,331 
   Total assets   1,033,951    1,053,575    1,046,012 
   Deposits   774,163    787,932    790,396 
   FHLB advances   118,000    123,000    118,000 
   Short-term borrowings   2,500    2,500    5,000 
   Subordinated debt   24,461    24,421    24,303 
   Shareholders’ equity   110,823    107,973    102,520 
Common Shares Dividend Data               
   Cash dividends  $   $   $ 
Weighted Average Common Shares Outstanding               
   Basic   6,464,326    6,453,031    6,441,731 
   Diluted   6,467,628    6,456,048    6,445,151 
Operating Ratios               
   Return on average assets   1.02%   0.85%   0.77%
   Return on average equity   9.63%   8.40%   7.70%
   Average equity / average assets   10.58%   10.15%   10.07%
   Book value per common share (period-end)  $16.84   $16.42   $15.60 
Non-Financial Information (Period-End)               
   Common shareholders of record   405    406    427 
   Full-time equivalent staff   85    87    81 
                

 

 -15-

(Back To Top)