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Malvern Bancorp, Inc. Reports Net Income of $1.3 Million or $0.21 per Share for the First Quarter of Fiscal 2016, Representing a 318.7% Increase Over the First Quarter of Fiscal 2015

PAOLI, Pa., Jan. 27, 2016 (GLOBE NEWSWIRE) -- Malvern Bancorp, Inc. (NASDAQ:MLVF) (the "Company"), parent company of Malvern Federal Savings Bank (“Malvern” or the “Bank”), today reported operating results for the first fiscal quarter ended December 31, 2015. Net income amounted to $1.3 million, or $0.21 per share, for the quarter ended December 31, 2015, an increase of $1.0 million or 318.7 percent as compared with the net income of $321,000, or $0.05 per share, for the quarter ended December 31, 2014.

“The Company continued to maintain pace with our business strategies and creating core strength. We are pleased with the first quarter results as they reflect positive trends in income, asset quality, and efficiency," said Anthony C. Weagley, Chief Executive Officer & President of Malvern Bancorp, Inc.

Highlights for the quarter include:

  • Return on average assets (“ROAA”) was 0.79 percent for the three months ended December 31, 2015, compared to 0.22 percent a year earlier, and return on average equity (“ROAE”) rose to 6.55 percent for the three months ended December 31, 2015, compared with 1.65 percent for the three months ended December 31, 2014.

  • The Company originated $115.5 million in new loans in the first quarter which was offset in part with $45.0 million in payoffs, prepayments and maturities from its portfolio; new loan originations consisted of $3.1 million in residential mortgage loans, $100.9 million in commercial loans, $8.3 million in construction and development loans and $3.2 million in consumer loans.

  • Non-performing assets (“NPAs”) were at 0.27 percent of total assets at December 31, 2015, compared to 0.63 percent at December 31, 2014 and 0.39 percent at September 30, 2015. The allowance for loan losses as a percentage of total non-performing loans was 575.6 percent at December 31, 2015 compared to 197.1 percent at December 31, 2014 and 333.6 percent at September 30, 2015.

  • The Company’s ratio of shareholders’ equity to total assets was 11.37 percent at December 31, 2015, compared to 12.91 percent at December 31, 2014, and 12.41 percent at September 30, 2015.

  • Book value per common share amounted to $12.60 at December 31, 2015, compared to $11.88 at December 31, 2014 and $12.41 at September 30, 2015.

  • The efficiency ratio, a non-GAAP measure, was 71.3 percent for the first quarter of fiscal 2016 on an annualized basis, compared to 87.5 percent in the first quarter of fiscal 2015 and 73.9 percent in the fourth quarter of fiscal 2015.

  • The Company’s balance sheet reflected growth of $71.4 million at December 31, 2015 compared to September 30, 2015, 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:12/31/159/30/156/30/153/31/1512/31/14
Return on average assets 0.79% 0.72% 0.77% 0.64% 0.22%
Return on average equity 6.55% 5.77% 6.01% 5.05% 1.65%
Net interest margin (tax equivalent basis) (1) 2.72% 2.71% 2.61% 2.58% 2.61%
Loans / deposits ratio 86.90% 84.68% 84.54% 85.57% 87.61%
Shareholders’ equity / total assets 11.37% 12.41% 12.79% 12.68% 12.91%
Efficiency ratio (1) 71.3% 73.9% 69.0% 76.6% 87.5%
Book value per common share$ 12.60 $ 12.41 $ 12.17 $ 12.20 $ 11.88
(1) Information reconciling non-GAAP measures to GAAP measures is presented elsewhere in this press release.


Net Interest Income

For the three months ended December 31, 2015, total interest income on a fully tax equivalent basis increased $934,000 or 19.4 percent, to $5.8 million, compared to the three months ended December 31, 2014. Interest income rose in the quarter ended December 31, 2015, compared to the comparable period in fiscal 2015 primarily due to a $31.1 million increase in the average balance of our loans and a $65.9 million increase in the average balance of our investment securities. Total interest expense increased by $224,000, or 17.9 percent, to $1.5 million, for the three months ended December 31, 2015, compared to the comparable period in fiscal 2015.

Net interest income on a fully tax equivalent basis was $4.3 million for the three months ended December 31, 2015, increasing $710,000, or 19.9 percent, from $3.6 million for the comparable three month period in fiscal 2015. The change for the three months ended December 31, 2015 primarily was the result of an increase in average balance of interest earning assets, which increased $80.9 million. The net interest spread on an annualized tax-equivalent basis was at 2.61 percent and 2.45 percent for the three months ended December 31, 2015 and December 31, 2014, respectively. For the quarter ended December 31, 2015, the Company’s net interest margin on a tax equivalent basis increased to 2.72 percent as compared to 2.61 percent for the same three month period in fiscal 2015. “We continued to carry healthy levels of cash, which is a positive trend as we generate funding for the Company designed to position the Company to fuel increased loan originations. During the first quarter we were able to add $115.5 million in gross loan originations to the balance sheet keeping pace with funding," commented Mr. Weagley.

The 17.9 percent increase in interest expense for the first quarter of fiscal 2016 compared to the first fiscal quarter in 2015, 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 1.05 percent for the quarter ended December 31, 2015 compared to 1.07 percent for the same three month period in fiscal 2015 and, on a linked sequential quarter basis, increased two basis points compared to the fourth quarter of fiscal 2015.

Earnings Summary for the Period Ended December 31, 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:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Net interest income$ 4,211 $ 3,979 $ 3,838 $ 3,836 $ 3,561
Provision for loan losses 90
Net interest income after provision for loan losses 4,211 3,979 3,838 3,836 3,471
Other income 558 639 640 745 511
Other expense 3,425 3,454 3,273 3,573 3,661
Income before income tax expense 1,344 1,164 1,205 1,008 321
Income tax expense - - - - -
Net income$ 1,344 $ 1,164 $ 1,205 $ 1,008 $ 321
Earnings per common share:
Basic$ 0.21 $ 0.18 $ 0.19 $ 0.16 $ 0.05
Weighted average common shares outstanding:
Basic 6,402,332 6,398,720 6,395,126 6,391,521 6,387,932

Other Income

Other income increased $47,000 for the first quarter of fiscal 2016 compared with the same period in fiscal 2015. During the first quarter of fiscal 2016, the Company recorded $131,000 in net gains on sales of investment securities compared to $26,000 in net gains on sales of investment securities for the same period in fiscal 2015. Excluding net securities gains and losses, a non-GAAP measure, the Company recorded other income of $427,000 for the three months ended December 31, 2015 compared to $485,000 for the three months ended December 31, 2014 and $561,000 for the three months ended September 30, 2015. Increase in other income in the first quarter of fiscal 2016 when compared to the first quarter of fiscal 2015 (excluding securities gains) was primarily from an increase of $15,000 in net gain on sale of loans, which was partially offset by a decrease in service charges of $59,000 and a decrease in rental income of $14,000.

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

(in thousands, unaudited)
For the quarter ended:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Service charges on deposit accounts$ 211 $ 169 $ 286 $ 264 $ 270
Rental income – other 50 60 61 64 64
Net gains on sales of investments, net 131 78 145 266 26
Gain on sale of loans, net 34 47 16 20 19
Bank-owned life insurance 132 285 132 131 132
Total other income$ 558 $ 639 $ 640 $ 745 $ 511

Other Expense

Total other expense for the first quarter of fiscal 2015 amounted to $3.4 million, which was approximately $29,000 or 0.8 percent lower than other expense for the three months ended September 30, 2015. The decrease in other expense in the first quarter of fiscal 2016 was primarily related to a decrease in federal deposit insurance premium of $30,000 from the quarter ended September 30, 2015, as well as a $10,000 decrease in advertising, a $24,000 decrease in data processing expense, a $30,000 decrease in professional fees and a $33,000 decrease in other operating expense and a $18,000 change in other real estate owned expense. These decreases were partially offset by increases in employee salaries and benefits of $112,000 and occupancy expense of $4,000.

The decrease in other expense for the three months ended December 31, 2015, when compared to the quarter ended December 31, 2014, was $236,000, or 6.5 percent. Decreases primarily reflected reductions in salaries and employee benefits of $229,000, a $1,000 decrease in occupancy expense, a $55,000 decrease in advertising expense, a $5,000 decrease in data processing expense and a $71,000 decrease in other operating expense. These decreases were partially offset by increases of $33,000 in federal deposit insurance premium, $57,000 in professional fees and a $35,000 change in other real estate owned income/expense, net.

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

(in thousands, unaudited)
For the quarter ended:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Salaries and employee benefits$ 1,499 $ 1,387 $ 1,333 $ 1,550 $ 1,728
Occupancy expense 423 419 407 465 424
Federal deposit insurance premium 200 230 203 184 167
Advertising 30 40 54 60 85
Data processing 297 321 312 301 302
Professional fees 400 430 364 434 343
Other real estate owned (recovery) expense, net (1) 17 32 (59) (36)
Other operating expenses 577 610 568 638 648
Total other expense$ 3,425 $ 3,454 $ 3,273 $ 3,573 $ 3,661


Statement of Condition Highlights at December 31, 2015

Commenting on the balance sheet, Mr. Weagley indicated: "Our efforts to change the balance sheet continued during the first quarter of fiscal 2016 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 two new private banking / loan production offices in Villanova, PA and Morristown, New Jersey. Our business plans call for us to transition our balance sheet to be commercial bank – like in nature. The new Malvern brand has been successfully launched.”

Highlights as of December 31, 2015 included:

  • Balance sheet strength, with total assets amounting to $727.1 million at December 31, 2015, increasing $71.5 million, or 10.9 percent compared to September 30, 2015.

  • On a linked sequential basis, the Company’s gross loans in the first quarter of fiscal 2016 increased $70.5 million, to $464.7 million at December 31, 2015, from $394.2 million at September 30, 2015.

  • Deposits totaled $534.7 million at December 31, 2015, an increase of $69.2 million or 14.9 percent compared to September 30, 2015 and an increase of $94.1 million, or 21.4 percent, since December 31, 2014. Total demand, savings, money market, and certificates of deposit less than $100,000 increased $28.5 million, or 8.1 percent, from September 30, 2015 and increased $62.1 million, or 19.5 percent, from December 31, 2014.

  • Borrowings totaled $103.0 million at December 31, 2015 and September 30, 2015.

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:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Cash and due from depository institutions$ 16,334 $ 16,026 $ 3,460 $ 1,056 $ 1,404
Interest bearing deposits in depository institutions 40,036 24,237 20,833 50,587 46,648
Investment securities, available for sale, at fair value 116,767 128,354 130,509 113,557 135,786
Investment securities held to maturity 54,914 57,221 59,243 50,697
Restricted stock, at cost 4,762 4,765 4,369 4,602 3,805
Loans held for sale 657
Loans receivable, net of allowance for loan losses 461,491 391,307 371,897 377,340 383,389
Other real estate owned 1,168 1,168 1,366 1,430 1,494
Accrued interest receivable 2,722 2,484 2,404 2,168 1,623
Property and equipment, net 6,486 6,535 6,502 6,592 6,718
Deferred income taxes 2,874 2,874 2,816 2,940 2,419
Bank-owned life insurance 18,033 17,905 18,659 18,527 18,397
Other assets 1,561 2,814 1,529 1,610 1,487
Total assets$ 727,148 $ 655,690 $ 624,244 $ 631,106 $ 603,170
Deposits$ 534,701 $ 465,522 $ 443,218 $ 444,146 $ 440,625
Borrowings 103,000 103,000 93,000 98,000 78,000
Other liabilities 6,789 5,777 8,214 8,934 6,660
Shareholders' equity 82,658 81,391 79,812 80,026 77,885
Total liabilities and shareholders’ equity$ 727,148 $ 655,690 $ 624,244 $ 631,106 $ 603,170


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

Deposits (unaudited)
(in thousands)
At quarter ended:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Demand:
Non-interest bearing$ 28,260 $ 27,010 $ 26,877 $ 25,111 $ 22,242
Interest-bearing 86,008 82,897 85,085 87,921 86,948
Savings 45,312 45,189 44,949 44,848 44,747
Money market 133,608 108,706 78,963 70,066 69,553
Time 241,513 201,720 207,344 216,200 217,135
Total deposits$ 534,701 $ 465,522 $ 443,218 $ 444,146 $ 440,625

Loans

Total net loans were $461.5 million at December 31, 2015 compared to $391.3 million at September 30, 2015 for a net increase of $70.2 million. The allowance for loan losses amounted to $4.6 million and $4.7 million at December 31, 2015 and September 30, 2015, respectively. Average loans during the first quarter of fiscal 2016 totaled $420.6 million as compared to $389.5 million during the first quarter of fiscal 2015, representing an 8.0 percent increase.

At the end of first quarter of fiscal 2016, the loan portfolio remained weighted toward the core residential portfolio, with single-family residential real estate loans accounting for 45.5 percent of the loan portfolio, construction and development loans for 2.8 percent, commercial loans accounting for 38.6 percent, and consumer loans represented 13.1 percent of the loan portfolio at such date. Total gross loans increased $70.5 million, to $464.7 million at December 31, 2015 compared to $394.2 million at September 30, 2015. The $70.5 million increase in the loan portfolio at December 31, 2015 compared to September 30, 2015, primarily reflected an increase of $71.0 million in commercial loans and a $5.0 million increase in construction and development loans. These increases were partially offset by a $3.6 million decrease in residential mortgage loans and a $1.9 million reduction in consumer loans at December 31, 2015 as compared to September 30, 2015.

For the quarter ended December 31, 2015, the Company originated total new loan volume of $115.5 million, which was offset in part with payoffs, prepayments and maturities totaling $45.1 million. The payoffs were primarily contained to the consumer and residential portfolios. “Our current pipeline of loans has remained strong buttressed with our continued business development activity and overall growth in the portfolio has gained traction supported by slowing payoff activity. We anticipate continued growth as we move forward in the 2016 fiscal year,” commented Anthony C. Weagley.

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

Loans (unaudited)
(in thousands)
At quarter ended:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Residential mortgage$211,302 $214,958 $219,197 $225,232 $229,507
Construction and Development:
Residential and commercial 6,007 5,677 6,751 5,922 6,039
Land 6,804 2,142 25 344 -
Total construction and development 12,811 7,819 6,776 6,266 6,039
Commercial:
Commercial real estate 142,981 87,686 67,617 68,858 67,274
Multi-family 10,549 7,444 5,451 5,508 5,450
Other 25,975 13,380 9,839 5,506 5,603
Total commercial 179,505 108,510 82,907 79,872 78,327
Consumer:
Home equity lines of credit 23,207 22,919 23,173 23,073 24,430
Second mortgages 35,533 37,633 40,121 43,013 45,051
Other 2,299 2,359 2,523 2,610 2,675
Total consumer 61,039 62,911 65,817 68,696 72,156
Total loans 464,657 394,198 374,697 380,066 386,029
Deferred loan costs, net 1,410 1,776 1,774 1,886 1,960
Allowance for loan losses (4,576) (4,667) (4,574) (4,612) (4,600)
Loans Receivable, net$461,491 $391,307 $371,897 $377,340 $383,389

At December 31, 2015, the Company had $85.2 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 $14.0 million in construction and $31.8 million in commercial real estate loans, $7.3 million in commercial term loans and lines of credit and $1.4 million in residential mortgage loans expected to fund over the next 90 days.

Asset Quality

Non-accrual loans were $795,000 at December 31, 2015, as compared to $1.4 million at September 30, 2015 and $2.3 million at December 31, 2014. Other real estate owned, (“OREO”) was $1.2 million at December 31, 2015 and September 30, 2015 and $1.5 million at December 31, 2014, respectively. Total performing troubled debt restructured loans were $1.6 million at December 31, 2015, $1.1 million at September 30, 2015 and $1.0 million at December 31, 2014, respectively. The $493,000 increase in performing troubled debt restructured loans at December 31, 2015 compared to September 30, 2015 was due to two commercial loans to one borrower, with an outstanding balance of approximately $493,000, being returned to accruing status during the first quarter of fiscal 2016.

At December 31, 2015, non-performing assets totaled $2.0 million, or 0.27 percent of total assets, as compared with $2.6 million, or 0.39 percent, at September 30, 2015 and $3.8 million, or 0.63 percent, at December 31, 2014. The decrease from December 31, 2014 reflects the Company’s continued diligence to satisfactorily work out certain problem assets. The portfolio of remaining non-accrual loans at December 31, 2015 was comprised of seven residential real estate loans with an aggregate outstanding balance of approximately $609,000, four consumer loans with an aggregate outstanding balance of approximately $174,000 and one construction and development loan with an outstanding balance of $12,000 that were on non-accrual status at December 31, 2015.

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:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Non-accrual loans(1)$ 795 $ 1,399 $ 1,357 $ 1,826 $ 2,334
Loans 90 days or more past due and still accruing
Total non-performing loans 795 1,399 1,357 1,826 2,334
Other real estate owned 1,168 1,168 1,366 1,430 1,494
Total non-performing assets$ 1,963 $ 2,567 $ 2,723 $ 3,256 $ 3,828
Performing troubled debt restructured loans$ 1,584 $ 1,091 $ 109 $ 109 $ 1,007
Non-performing assets / total assets 0.27% 0.39% 0.44% 0.52% 0.63%
Non-performing loans / total loans 0.17% 0.35% 0.36% 0.48% 0.60%
Net charge-offs (recoveries)$ 91 $ (93)$ 38 $ (12)$ 79
Net charge-offs (recoveries) / average loans(2) 0.08% (0.10)% 0.04% 0.01% 0.08%
Allowance for loan losses / total loans 0.98% 1.18% 1.22% 1.21% 1.19%
Allowance for loan losses / non-performing loans 575.60% 333.60% 337.07% 252.57% 197.09%
Total assets$727,148 $655,690 $624,244 $631,106 $603,170
Total loans 464,657 394,198 374,697 380,066 386,029
Average loans 420,601 383,092 378,953 384,915 389,544
Allowance for loan losses 4,576 4,667 4,574 4,612 4,600
(1) Five loans totaling approximately $422,000 or (53.1%) of the total non-accrual loan balance were making payments at December 31, 2015.
(2) Annualized.

The allowance for loan losses at December 31, 2015 amounted to approximately $4.6 million, or 0.98 percent of total loans, compared to $4.7 million, or 1.18 percent of total loans at September 30, 2015. The Company had no provision for loan losses during the quarter ended December 31, 2015 and September 30, 2015 and $90,000 for the quarter ended December 31, 2014. Provision expense was lower during the quarter ended December 31, 2015 due to a decline in charge-offs history during the quarter ended December 31, 2015 and the unallocated portion of the reserve. However, given the recent loan growth and anticipated loan growth in subsequent quarters, the Company expects to incur charges to provision expense in future periods to raise the allowance for loan losses commensurate with loan growth and other risk factors.

Capital

At December 31, 2015, our total shareholders' equity amounted to $82.7 million, or 11.37 percent of total assets compared to $81.4 million at September 30, 2015. The Company’s book value per common share was $12.60 at December 31, 2015, compared to $12.41 at September 30, 2015.

At December 31, 2015, the Bank’s common equity tier 1 ratio was 13.94 percent, tier 1 leverage ratio was 10.43 percent, tier 1 risk-based capital ratio was 13.94 percent and the total risk-based capital ratio was 14.85 percent. 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 December 31, 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:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Other income$ 558 $ 639 $ 640 $ 745 $ 511
Less: Net investment securities gains 131 78 145 266 26
Other income, excluding net investment securities gains$ 427 $ 561 $ 495 $ 479 $ 485

“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:12/31/15
930/15
6/30/15
3/31/15
12/31/14
Other expense$ 3,425 $ 3,454 $ 3,273 $ 3,573 $ 3,661
Less: non-core items(1) 67 42 244 242 110
Other expense, excluding non-core items$3,358 $3,412 $3,029 $3,331 $3,551
Net interest income (tax equivalent basis)$ 4,285 $ 4,056 $ 3,898 $ 3,871 $ 3,575
Other income, excluding net investment securities gains 427 561 495 479 485
Total$ 4,712 $ 4,617 $ 4,393 $ 4,350 $ 4,060
Efficiency ratio 71.3% 73.9% 69.0% 76.6% 87.5%
(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:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Efficiency ratio on a GAAP basis 70.4% 73.9% 67.6% 72.7% 87.2%

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:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Net interest income (GAAP)$ 4,211 $ 3,979 $ 3,838 $ 3,836 $ 3,561
Tax-equivalent adjustment(1) 74 77 60 35 14
TE net interest income$ 4,285 $ 4,056 $ 3,898 $ 3,871 $ 3,575
Net interest income margin (GAAP) 2.67% 2.66% 2.57% 2.56% 2.60%
Tax-equivalent effect 0.05 0.05 0.04 0.02
Net interest margin (TE) 2.72% 2.71% 2.61% 2.58% 2.61%
____________________
(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:12/31/15
9/30/15
6/30/15
3/31/15
12/31/14
Investment securities$ 179,979 $ 188,424 $ 178,713 $ 151,746 $ 114,129
Loans 420,601 383,092 378,953 384,915 389,544
Allowance for loan losses (4,662) (4,596) (4,649) (4,614) (4,600)
All other assets 85,450 82,892 76,915 95,921 77,776
Total assets$ 681,368 $ 649,812 $ 629,932 $ 627,968 $ 576,849
Non-interest bearing deposits$ 28,604 $ 32,477 $ 28,943 $ 27,002 $ 26,770
Interest-bearing deposits 460,999 428,205 415,646 419,367 393,225
Borrowings 102,998 101,802 96,462 94,556 72,945
Other liabilities 6,688 6,576 8,674 7,272 6,151
Shareholders’ equity 82,079 80,752 80,207 79,771 77,758
Total liabilities and shareholders’ equity$ 681,368 $ 649,812 $ 629,932 $ 627,968 $ 576,849

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 Mainline. 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, through its Private Banking division and strategic partnership with Bell Rock Capital, Rehoboth, Delaware, provides personalized wealth management and advisory services to high net worth individuals and families. Our services include banking, liquidity management, investment services, 401 accounts and planning, custody, tailored lending, wealth planning, trust and fiduciary services, insurance, family wealth advisory services and philanthropic advisory services

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 https://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) December 31,
2015
September 30,
2015
(unaudited)
ASSETS
Cash and due from depository institutions $ 16,334 $ 16,026
Interest bearing deposits in depository institutions 40,036 24,237
Total cash and cash equivalents 56,370 40,263
Investment securities available for sale, at fair value 116,767 128,354
Investment securities held to maturity (fair value of $53,931 and $56,825) 54,914 57,221
Restricted stock, at cost 4,762 4,765
Loans receivable, net of allowance for loan losses 461,491 391,307
Other real estate owned 1,168 1,168
Accrued interest receivable 2,722 2,484
Property and equipment, net 6,486 6,535
Deferred income taxes, net 2,874 2,874
Bank-owned life insurance 18,033 17,905
Other assets 1,561 2,814
Total assets $ 727,148 $ 655,690
LIABILITIES
Deposits:
Non-interest bearing $ 28,260 $ 27,010
Interest-bearing 506,441 438,512
Total deposits 534,701 465,522
FHLB Advances 103,000 103,000
Advances from borrowers for taxes and insurance 2,790 1,806
Accrued interest payable 398 396
Other liabilities 3,601 3,575
Total liabilities 644,490 574,299
SHAREHOLDERS’ EQUITY
Preferred stock, $0.01 par value, 10,000,000 shares, authorized, none issued
Common stock, $0.01 par value, authorized 40,000,000 shares authorized, issued and outstanding: 6,558,473 shares at December 31, 2015 and September 30, 2015 66 66
Additional paid in capital 60,387 60,365
Retained earnings 25,158 23,814
Unearned Employee Stock Ownership Plan (ESOP) shares (1,739) (1,775)
Accumulated other comprehensive loss (1,214) (1,079)
Total shareholders’ equity 82,658 81,391
Total liabilities and shareholders’ equity $ 727,148 $ 655,690


MALVERN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended December 31,
(in thousands, except for share data) 2015 2014
(unaudited)
Interest and Dividend Income
Loans, including fees $ 4,545 $ 4,202
Investment securities, taxable 875 514
Investment securities, tax-exempt 195 37
Dividends, restricted stock 54 37
Interest-bearing cash accounts 18 23
Total Interest and Dividend Income 5,687 4,813
Interest Expense
Deposits 964 859
Borrowings 512 393
Total Interest Expense 1,476 1,252
Net interest income 4,211 3,561
Provision for Loan Losses 90
Net Interest Income after Provision for Loan Losses 4,211 3,471
Other Income
Service charges and other fees 211 270
Rental income-other 50 64
Net gains on sales of investments 131 26
Net gains on sale of loans 34 19
Earnings on bank-owned life insurance 132 132
Total Other Income 558 511
Other Expense
Salaries and employee benefits 1,499 1,728
Occupancy expense 423 424
Federal deposit insurance premium 200 167
Advertising 30 85
Data processing 297 302
Professional fees 400 343
Other real estate owned recovery, net (1) (36)
Other operating expenses 577 648
Total Other Expense 3,425 3,661
Income before income tax expense 1,344 321
Income tax expense
Net Income $ 1,344 $ 321
Earnings per common share
Basic $ 0.21 $ 0.05
Weighted Average Common Shares Outstanding
Basic 6,402,332 6,387,932



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) 12/31/20159/30/201512/31/2014
(unaudited)
Statements of Operations Data
Interest income$ 5,687 $ 5,344 $ 4,813
Interest expense 1,476 1,365 1,252
Net interest income 4,211 3,979 3,561
Provision for loan losses 90
Net interest income after provision for loan losses 4,211 3,979 3,471
Other income 558 639 511
Other expense 3,425 3,454 3,661
Income before income tax expense 1,344 1,164 321
Income tax expense
Net income$ 1,344 $ 1,164 $ 321
Earnings (per Common Share)
Basic$ 0.21 $ 0.18 $ 0.05
Statements of Condition Data (Period-End)
Investment securities available for sale, at fair value$ 116,767 $ 128,354 $ 135,786
Investment securities held to maturity (fair value of $53,931, $56,825 and $0) 54,914 57,221
Loans, net of allowance for loan losses 461,491 391,307 383,389
Total assets 727,148 655,690 603,170
Deposits 534,701 465,522 440,625
Borrowings 103,000 103,000 78,000
Shareholders' equity 82,658 81,391 77,885
Common Shares Dividend Data
Cash dividends$ $ $
Weighted Average Common Shares Outstanding
Basic 6,402,332 6,398,720 6,387,932
Operating Ratios
Return on average assets 0.79% 0.72% 0.22%
Return on average equity 6.55% 5.77% 1.65%
Average equity / average assets 12.05% 12.43% 13.48%
Book value per common share (period-end)$ 12.60 $ 12.41 $ 11.88
Non-Financial Information (Period-End)
Common shareholders of record 482 483 487
Full-time equivalent staff 76 71 84


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

Source:Malvern Bancorp, Inc.