Exhibit 99.1
Investor Contact:
Joseph D. Gangemi
Corporate Investor Relations
(610) 695-3676
Media Contact:
David Culver, VP Public Relations
Boyd Tamney Cross
(610) 254-7426
Malvern Bancorp, Inc. Reports Net Income of $321,000 or $0.05 per Share for the First Quarter of Fiscal 2015, Representing a 401.6% Increase over the First Quarter of Fiscal 2014
PAOLI, PA., January 30, 2015 (-- Malvern Bancorp, Inc. (NASDAQ: MLVF) (the “Company”), parent company of Malvern Federal Savings Bank (“MFSB” or the “Bank”), today reported operating results for the first quarter ended December 31, 2014. Net income amounted to $321,000, or $0.05 per share, for the quarter ended December 31, 2014, an increase of $257,000 or approximately 401.6 percent as compared with the net income of $64,000, or $0.01 per share, for the quarter ended December 31, 2013.
“Our first quarter earnings improved as a result of improved fundamentals with reductions in operating overhead and stable asset quality. We continued to see positive trends in our business during the first quarter despite the volatility in the broader markets. Actions taken at right sizing our infrastructure have started to yield results,” said Anthony C. Weagley, Chief Executive Officer & President of Malvern Bancorp, Inc.
Highlights for the quarter include:
● | Non-performing assets (NPS’s) were at 0.63 percent of total assets at December 31, 2014, compared to 0.91 percent at December 31, 2013 and 0.80 percent at September 30, 2014. The allowance for loan losses as a percentage of total non-performing loans was 197.1 percent at December 31, 2014 compared to 166.6 percent at December 31, 2013 and 191.9 percent at September 30, 2014. |
● | The Company’s ratio of shareholders’ equity to total assets was 12.91 percent at December 31, 2014, compared to 12.56 percent at December, 2013, and 14.16 percent at September 30, 2014. |
● | Book value per common share rose to $11.88 at December 31, 2014, compared to $11.38 at December 31, 2013 and $11.71 at September 30, 2014. |
● | The efficiency ratio, a non-GAAP measure, was 87.5 percent for the first quarter of fiscal 2015 on an annualized basis, compared to 96.5 percent in the first quarter of fiscal 2014 and 87.8 percent in the fourth quarter of fiscal 2014. |
Selected Financial Ratios (unaudited; annualized where applicable) | ||||||||||||||||||||
| As of or for the quarter ended: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/30/13 | |||||||||||||||
| Return on average assets | 0.22 | % | 0.21 | % | 0.27 | % | -0.29 | % | 0.04 | % | ||||||||||
| Return on average equity | 1.65 | % | 1.53 | % | 2.05 | % | -2.26 | % | 0.34 | % | ||||||||||
| Net interest margin (tax equivalent basis) | 2.61 | % | 2.70 | % | 2.76 | % | 2.74 | % | 2.75 | % | ||||||||||
| Loans / deposits ratio | 87.61 | % | 94.10 | % | 88.61 | % | 89.74 | % | 87.04 | % | ||||||||||
| Shareholders’ equity / total assets | 12.91 | % | 14.16 | % | 13.26 | % | 12.88 | % | 12.56 | % | ||||||||||
Efficiency ratio (1) | 87.5 | % | 87.8 | % | 92.6 | % | 109.4 | % | 96.5 | % | ||||||||||
| Book value per common share | $ | 11.88 | $ | 11.71 | $ | 11.69 | $ | 11.48 | $ | 11.38 | ||||||||||
| (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, 2014, total interest income on a fully tax equivalent basis decreased $358,000 or 6.9 percent, to $4.8 million, compared to the three months ended December 31, 2013. Total interest expense decreased by $78,000, or 5.9 percent, to $1.3 million, for the three months ended December 31, 2014, compared to the comparable period in 2014. Interest income declined in the quarter ended December 31, 2014, compared to the comparable period in 2014 primarily due to a $19.3 million decline in average loan balance and a $12.5 million decline in the average balance of our investment securities due to maturities and sales of investment securities.
Net interest income on a fully tax equivalent basis was $3.6 million for the three months ended December 31, 2014, decreasing $280,000, or 7.3 percent, from $3.9 million for the comparable three month period in fiscal 2014. The change for the three months ended December 31, 2014, was a result of the decline in average interest earning assets which decreased $12.3 million. The net interest spread was at 2.45 percent and 2.61 percent for the three months ended December 31, 2014 and December 31, 2013, respectively. For the quarter ended December 31, 2014, the Company’s net interest margin decreased to 2.61 percent as compared to 2.75 percent for the same three month period in 2014. “The increase in our cash position dampened improvement in net interest margin in the quarter, “ commented Anthony C. Weagley
The 5.9 percent decrease in interest expense for the quarter reflects a favorable shift in the deposit mix and the impact of the sustained low levels in short-term interest rates, offsetting higher volumes of borrowings. The average cost of funds declined two basis points to 1.07 percent for the quarter ended December 31, 2014 from 1.09 percent for the quarter ended December 31, 2013 and on a linked sequential quarter increased one basis point compared to the fourth quarter of fiscal 2014.
Earnings Summary for the Period Ended December 31, 2014
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: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Net interest income | $ | 3,561 | $ | 3,617 | $ | 3,826 | $ | 3,818 | $ | 3,835 | ||||||||||
| Provision for loan losses | 90 | 183 | — | — | 80 | |||||||||||||||
| Net interest income after provision for loan losses | 3,471 | 3,434 | 3,826 | 3,818 | 3,755 | |||||||||||||||
| Other income | 511 | 446 | 744 | 457 | 508 | |||||||||||||||
| Other expense | 3,661 | 3,569 | 4,179 | 4,700 | 4,196 | |||||||||||||||
| Income (loss) before income tax expense | 321 | 311 | 391 | (425 | ) | 67 | ||||||||||||||
| Income tax expense | - | 17 | - | 1 | 3 | |||||||||||||||
| Net income (loss) | $ | 321 | $ | 294 | $ | 391 | $ | (426 | ) | $ | 64 | |||||||||
| Earnings (loss) per common share: | ||||||||||||||||||||
| Basic | $ | 0.05 | $ | 0.05 | $ | 0.06 | $ | (0.07 | ) | $ | 0.01 | |||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||
| Basic | 6,387,932 | 6,384,319 | 6,380,726 | 6,377,121 | 6,373,532 | |||||||||||||||
Other Income
Other income increased $3,000 for the first quarter of fiscal 2015 compared with the same period in fiscal 2014. During the first quarter of fiscal 2015, the Company recorded $26,000 in net gains on sales of investment securities compared to net gains on sales of investment securities of $14,000 for the same period in fiscal 2014. Excluding net securities gains and losses, a non-GAAP measure, the Company recorded other income of $485,000 for the three months ended December 31, 2014 compared to other income of $494,000 for the three months ended December 31, 2013 and $446,000 for the three months ended September 30, 2014. Decreases in other income in the first quarter of fiscal 2015 when compared to the first quarter of fiscal 2014 (excluding securities gains) were primarily from an increase of $12,000 in service charges on deposit accounts, partially offset by a decrease in bank owned life insurance income of $13,000, and a decrease of $8,000 in 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: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Service charges on deposit accounts | $ | 270 | $ | 235 | $ | 230 | $ | 224 | $ | 258 | ||||||||||
| Rental income – other | 64 | 64 | 63 | 64 | 64 | |||||||||||||||
| Net gains on sales of investments, net | 26 | - | 69 | - | 14 | |||||||||||||||
| Loss on disposal of fixed assets | - | - | (41 | ) | - | - | ||||||||||||||
| Gain on sale of loans, net | 19 | 13 | 283 | 29 | 27 | |||||||||||||||
| Bank-owned life insurance | 132 | 134 | 140 | 140 | 145 | |||||||||||||||
| Total other income | $ | 511 | $ | 446 | $ | 744 | $ | 457 | $ | 508 | ||||||||||
Other Expense
Total other expense for the first quarter of fiscal 2015 amounted to $3.7 million, which was approximately $92,000 or 2.6 percent higher than other expense for the three months ended September 30, 2014, primarily related to an increase in salaries and employee benefits expenses, which increased $92,000, and a $434,000 reduction in other real estate owned expense, net. Other real estate owned expense, net during the quarter ended December 31, 2014 had a lower credit balance compared to the quarter ended September 30, 2014 due to a $500,000 insurance reimbursement of a fire claim for a property located in Melrose Park, Pennsylvania received during the quarter ended September 30, 2014. This property was sold in October 2014 resulting in a gain of $13,000. The quarter ended December 31, 2014 compared to the quarter ended September 30, 2014 also reflected reductions in professional fees of $224,000, other operating expenses of $192,000 and federal deposit insurance premium of $16,000.
The decrease in other expense for the three months ended December 31, 2014, when compared to the quarter ended December 31, 2013, was approximately $535,000. Decreases primarily reflected reductions in salaries and employee benefits of $339,000 primarily due to workforce reductions, professional fees of $142,000 reflecting lower expenses related to loan workout, occupancy expense of $92,000 primarily attributable to a decrease in rent expense of $21,000 and building and equipment expenses of $66, 000, advertising expense of $73,000, data processing of $28,000 and federal deposit insurance premium of $24,000 as well as a $49,000 improvement in other real estate owned expense, net. These decreases were partially offset by an increase of $212,000 in other operating expense. The increase in operating expense was primarily due to an increase of $85,000 in director compensation, a $76,000 increase in other operating expense and a $41,000 increase in insurance and bond expense.
The following table presents the components of other expense for the periods indicated.
| (in thousands, unaudited) | ||||||||||||||||||||
| For the quarter ended: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Salaries and employee benefits | $ | 1,728 | $ | 1,636 | $ | 1,995 | $ | 2,072 | $ | 2,067 | ||||||||||
| Occupancy expense | 424 | 415 | 571 | 589 | 516 | |||||||||||||||
| Federal deposit insurance premium | 167 | 183 | 184 | 177 | 191 | |||||||||||||||
| Advertising | 85 | 86 | 101 | 216 | 158 | |||||||||||||||
| Data processing | 302 | 312 | 295 | 308 | 330 | |||||||||||||||
| Professional fees | 343 | 567 | 463 | 690 | 485 | |||||||||||||||
| Other real estate owned (income)/expense, net | (36 | ) | (470 | ) | 74 | 84 | 13 | |||||||||||||
| Other operating expenses | 648 | 840 | 496 | 564 | 436 | |||||||||||||||
| Total other expense | $ | 3,661 | $ | 3,569 | $ | 4,179 | $ | 4,700 | $ | 4,196 | ||||||||||
Statement of Condition Highlights at December 31, 2014
Commenting on the balance sheet, Mr. Weagley indicated: “Our balance sheet stabilization efforts continued during the first quarter. We believe that we are now well positioned to implement our business strategy. We have stabilized asset quality, continue to right-size our operations, and are poised to take advantage of the signs for growth we see in our markets coupled with sustained asset quality.” Highlights as of December 31, 2014 included:
● | Balance sheet strength, with total assets amounting to $603.2 million at December 31, 2014, increasing $60.9 million, or 11.2 percent compared to September 30, 2014 and increased $9.1 million, or 1.5 percent compared to December 31, 2013. |
● | Net loans were $383.4 million at December 31, 2014, decreasing $2.7 million, or 0.7 percent and $23.9 million, or 5.9 percent, from September 30, 2014 and December 31, 2013, respectively. Total residential mortgage loans decreased $1.8 million, or 0.8 percent, from September 30, 2014. Total construction and development loans decreased $958,000, or 13.7 percent compared to September 30, 2014. Consumer loans decreased by $9,000, or 0.01 percent and commercial loans had a slight increase of $236,000 compared to September 30, 2014. Total residential mortgage loans decreased $16.6 million, or 6.8 percent, from December 31, 2013. Total construction and development loans decreased $3.3 million, or 35.5 percent compared to December 31, 2013. Consumer loans decreased by $3.8 million, or 5.0 percent and commercial loans had a slight decrease of $148,000 compared to December 31, 2013. |
● | Deposits totaled $440.6 million at December 31, 2014, an increase of $27.7 million or 6.7 percent compared to September 30, 2014 and a decrease of $30.4 million, or 6.4 percent, since December 31, 2013. Total demand, savings, money market, and certificates of deposit less than $100,000 increased $9.5 million or 3.1 percent from September 30, 2014 and decreased $25.0 million or 7.3 percent from December 31, 2013. During fiscal 2015, we have focused on allowing our non-household relatively higher costing 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 $78.0 million, $48.0 million and $38.0 million at December 31, 2014, September 30, 2014 and December 31, 2013, respectively. |
Condensed Statements of Condition
The following table presents condensed statements of condition data as of the dates indicated.
Condensed Consolidated Statements of Condition (unaudited) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| At quarter ended: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Cash and due from depository institutions | $ | 1,404 | $ | 1,203 | $ | 1,155 | $ | 1,136 | $ | 1,126 | ||||||||||
| Interest bearing deposits in depository institutions | 46,648 | 17,984 | 41,300 | 12,909 | 21,544 | |||||||||||||||
| Investment securities, available for sale | 135,786 | 100,943 | 104,985 | 122,208 | 123,826 | |||||||||||||||
| Restricted stock, at cost | 3,805 | 3,503 | 3,495 | 3,376 | 3,236 | |||||||||||||||
| Loans receivable, net of allowance for loan losses | 383,389 | 386,074 | 392,582 | 409,058 | 407,306 | |||||||||||||||
| Other real estate owned | 1,494 | 1,964 | 1,645 | 2,358 | 2,472 | |||||||||||||||
| Accrued interest receivable | 1,623 | 1,322 | 1,300 | 1,380 | 1,438 | |||||||||||||||
| Property and equipment, net | 6,718 | 6,823 | 6,897 | 7,031 | 7,140 | |||||||||||||||
| Deferred income taxes | 2,419 | 2,376 | 2,575 | 2,532 | 2,510 | |||||||||||||||
| Bank-owned life insurance | 18,397 | 18,264 | 21,003 | 20,863 | 21,486 | |||||||||||||||
| Other assets | 1,487 | 1,808 | 1,151 | 1,503 | 1,957 | |||||||||||||||
| Total assets | $ | 603,170 | $ | 542,264 | $ | 578,088 | $ | 584,554 | $ | 594,041 | ||||||||||
| Deposits | $ | 440,625 | $ | 412,953 | $ | 446,036 | $ | 458,723 | $ | 471,001 | ||||||||||
| Borrowings | 78,000 | 48,000 | 48,000 | 45,000 | 43,000 | |||||||||||||||
| Other liabilities | 6,660 | 4,539 | 7,385 | 5,562 | 5,427 | |||||||||||||||
Shareholders’ equity | 77,885 | 76,772 | 76,667 | 75,269 | 74,613 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 603,170 | $ | 542,264 | $ | 578,088 | $ | 584,554 | $ | 594,041 | ||||||||||
The following table reflects the composition of the Company’s deposits as of the dates indicated.
Deposits (unaudited) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| At quarter ended: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Demand: | ||||||||||||||||||||
| Non-interest bearing | $ | 22,242 | $ | 23,059 | $ | 22,782 | $ | 24,756 | $ | 24,638 | ||||||||||
| Interest-bearing | 86,948 | 81,921 | 88,072 | 89,610 | 88,797 | |||||||||||||||
| Savings | 44,747 | 44,917 | 46,645 | 44,601 | 43,050 | |||||||||||||||
| Money market | 69,553 | 59,529 | 61,291 | 63,542 | 66,718 | |||||||||||||||
| Time | 217,135 | 203,527 | 227,246 | 236,214 | 247,798 | |||||||||||||||
| Total deposits | $ | 440,625 | $ | 412,953 | $ | 446,037 | $ | 458,723 | $ | 471,001 | ||||||||||
Loans
Total loans were $386.0 million at December 31, 2014. Mr. Weagley commented: “Outstanding loan balances decreased during the first quarter driven by higher loan pay downs and maturities during the quarter which dampened the effects of gross new loan origination volume.” The Company’s total loans in the first quarter of 2015 decreased $2.5 million, to $386.0 million at December 31, 2014, from $388.6 million at September 30, 2014. The allowance for loan losses amounted to $4.6 million and $4.6 million at December 31, 2014 and September 30, 2014, respectively. The Company had approximately $16.4 million in new loan originations and advances during the first quarter. This new loan activity and advances were offset by prepayments, scheduled payments, maturities and payoffs of $19.0 million. Average loans during the first quarter of fiscal 2015 totaled $389.5 million as compared to $408.8 million during the first quarter of fiscal 2014, representing a 4.7 percent decrease.
At the end of the first quarter of fiscal 2015, the loan portfolio remained well weighted toward the core residential portfolio, with single-family residential real estate accounting for 59.5 percent of the loan portfolio. At December 31, 2014, commercial loans accounted for 20.3 percent of the loan portfolio, of which commercial real estate loans represented 17.4 percent and consumer and other loans represented 18.7 percent of the loan portfolio at such date. Construction and development loans accounted for only 1.5 percent of the loan portfolio at December 31, 2014. At December 31, 2013, total loans were $410.0 million. The decreased loan balance in the loan portfolio at December 31, 2014 compared to December 31, 2013, primarily reflected reductions of $16.6 million in residential mortgage loans, $3.3 million in construction loans and $3.8 million in consumer and other loans.
The following reflects the composition of the Company’s loan portfolio as of the dates indicated.
| Loans (unaudited) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| At quarter ended: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Residential mortgage | $ | 229,507 | $ | 231,324 | $ | 235,050 | $ | 250,280 | $ | 246,139 | ||||||||||
| Construction and Development: | ||||||||||||||||||||
| Residential and commercial | 6,039 | 5,964 | 7,484 | 8,500 | 7,213 | |||||||||||||||
| Land | - | 1,033 | 1,537 | 1,908 | 2,148 | |||||||||||||||
| Total construction and development | 6,039 | 6,997 | 9,021 | 10,408 | 9,361 | |||||||||||||||
| Commercial: | ||||||||||||||||||||
| Commercial real estate | 67,274 | 71,579 | 69,788 | 69,992 | 70,511 | |||||||||||||||
| Multi-family | 5,450 | 1,032 | 2,086 | 2,065 | 2,051 | |||||||||||||||
| Other | 5,603 | 5,480 | 5,492 | 5,510 | 5,913 | |||||||||||||||
| Total commercial | 78,327 | 78,091 | 77,366 | 77,567 | 78,475 | |||||||||||||||
| Consumer: | ||||||||||||||||||||
| Home equity lines of credit | 24,430 | 22,292 | 21,914 | 20,147 | 20,649 | |||||||||||||||
| Second mortgages | 45,051 | 47,034 | 48,866 | 50,170 | 52,532 | |||||||||||||||
| Other | 2,675 | 2,839 | 3,011 | 3,074 | 2,809 | |||||||||||||||
| Total consumer | 72,156 | 72,165 | 73,791 | 73,391 | 75,990 | |||||||||||||||
| Total loans | 386,029 | 388,577 | 395,228 | 411,646 | 409,965 | |||||||||||||||
| Deferred loan costs, net | 1,960 | 2,086 | 2,212 | 2,259 | 2,186 | |||||||||||||||
| Allowance for loan losses | (4,600 | ) | (4,589 | ) | (4,858 | ) | (4,847 | ) | (4,845 | ) | ||||||||||
| Loans Receivable, net | $ | 383,389 | $ | 386,074 | $ | 392,582 | $ | 409,058 | $ | 407,306 | ||||||||||
At December 31, 2014, the Company had $34.8 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 $1.3 million in construction and $5.1 million in commercial real estate loans and $3.0 million in residential mortgage loans expected to fund over the next 90 days.
Asset Quality
Non-accrual loans were $2.3 million at December 31, 2014, as compared to $2.4 million at September 30, 2014 and $2.9 million at December 31, 2013. Other real estate owned was $1.5 million at December 31, 2014, as compared with $2.0 million at September 30, 2014 and $2.5 million at December 31, 2013, respectively. Troubled debt restructured loans, which are performing loans, were $1.0 million at December 31, 2014 and September 30, 2014 and $1.6 million at December 31, 2013, respectively.
At December 31, 2014, non-performing assets totaled $3.8 million, or 0.63 percent of total assets, as compared with $4.4 million, or 0.80 percent, at September 30, 2014 and $5.4 million, or 0.91 percent, at December 31, 2013. The decrease from December 31, 2013 reflects the Company’s continued diligence to satisfactorily work out certain problem assets. The portfolio of remaining non-accrual loans at December 31, 2014 was comprised of nine residential real estate loans with an aggregate outstanding balance of approximately $962,000, eight consumer loans with an aggregate outstanding balance of approximately $728,000, and two construction and development loan relationships with an outstanding balance of $35,000, which had originally been included in our October 2013 bulk loan sale. The Company had been required to repurchase these loans in November 2013, and one loan was placed on non-accrual status during the quarter ended December 31, 2013. Additionally, there were four commercial loans with an aggregate outstanding balance of $609,000 that were on non-accrual status at December 31, 2014.
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: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Non-accrual loans (1) | $ | 2,334 | $ | 2,391 | $ | 3,092 | $ | 3,292 | $ | 2,908 | ||||||||||
| Loans 90 days or more past due and still accruing | — | — | — | — | — | |||||||||||||||
| Total non-performing loans | 2,334 | 2,391 | 3,092 | 3,292 | 2,908 | |||||||||||||||
| Other real estate owned | 1,494 | 1,964 | 1,645 | 2,358 | 2,472 | |||||||||||||||
| Total non-performing assets | $ | 3,828 | $ | 4,355 | $ | 4,737 | $ | 5,650 | $ | 5,380 | ||||||||||
| Performing troubled debt restructured loans | $ | 1,007 | $ | 1,009 | $ | 1,246 | $ | 1,546 | $ | 1,646 | ||||||||||
| Non-performing assets / total assets | 0.63 | % | 0.80 | % | 0.82 | % | 0.97 | % | 0.91 | % | ||||||||||
| Non-performing loans / total loans | 0.60 | % | 0.62 | % | 0.78 | % | 0.80 | % | 0.71 | % | ||||||||||
| Net charge-offs (recoveries) | $ | 79 | $ | 452 | $ | (11 | ) | $ | (2 | ) | $ | 325 | ||||||||
Net charge-offs (recoveries) / average loans (2) | 0.08 | % | 0.19 | % | 0.11 | % | 0.16 | % | 0.32 | % | ||||||||||
| Allowance for loan losses / total loans | 1.19 | % | 1.18 | % | 1.23 | % | 1.18 | % | 1.18 | % | ||||||||||
| Allowance for loan losses / non-performing loans | 197.09 | % | 191.93 | % | 157.1 | % | 147.2 | % | 166.6 | % | ||||||||||
| Total assets | $ | 603,170 | $ | 542,264 | $ | 578,088 | $ | 584,544 | $ | 594,041 | ||||||||||
| Total loans | 386,029 | 388,577 | 395,228 | 411,646 | 409,965 | |||||||||||||||
| Average loans | 389,544 | 395,067 | 412,457 | 412,522 | 408,802 | |||||||||||||||
| Allowance for loan losses | 4,600 | 4,589 | 4,858 | 4,847 | 4,845 | |||||||||||||||
| (1) | 5 loans totaling approximately $451,000 or (19.3%) of the total non-accrual loan balance are making payments at December 31, 2014. |
| (2) | Annualized. |
The allowance for loan losses at December 31, 2014 amounted to approximately $4.6 million, or 1.19 percent of total loans, compared to 1.18 percent of total loans at September 30, 2014 and December 31, 2013. Our provision for loan losses was $90,000 during the quarter ended December 31, 2014 compared to $183,000 and $80,000, respectively, during the quarters ended September 30, 2014 and December 31, 2013. Provision expense was lower during the quarter ended December 31, 2014 due to a decline in charge-offs history, generally, and lower charge-offs during the quarter ended December 31, 2014.
Capital
At December 31, 2014, our total shareholders’ equity amounted to $77.9 million, or 12.91 percent of total assets compared to 76.8 million at September 30, 2014 and $74.6 million at December 31, 2013. The Company’s book value per common share was $11.88 at December 31, 2014, compared to $11.71 at September 30, 2014 and $11.38 at December 31, 2013.
At December 31, 2014, the Bank’s ratio of tier 1 risk-based capital to risk-weighted assets was 19.78 percent and its ratio of tier 1 capital to adjusted total assets was 18.53 percent, compared to 20.75 percent and 19.50 percent, respectively, at September 30, 2014 and 18.98 percent and 17.73 percent, respectively, at December 31, 2013. At December 31, 2014, 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. We believe that many investors desire to evaluate other income without regard for such gains.
| (in thousands) | ||||||||||||||||||||
| For the quarter ended: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Other income | $ | 511 | $ | 446 | $ | 744 | $ | 457 | $ | 508 | ||||||||||
| Less: Net investment securities gains | 26 | - | 69 | - | 14 | |||||||||||||||
| Other income, excluding net investment securities gains | $ | 485 | $ | 446 | $ | 675 | $ | 457 | $ | 494 | ||||||||||
“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: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Other expense | $ | 3,661 | $ | 3,569 | $ | 4,179 | $ | 4,700 | $ | 4,196 | ||||||||||
Less: non-core items(1) | 110 | — | — | — | — | |||||||||||||||
| Other expense, excluding non-core items | $ | 3,551 | $ | 3,569 | $ | 4,179 | $ | 4,700 | $ | 4,196 | ||||||||||
| Net interest income (tax equivalent basis) | $ | 3,575 | $ | 3,621 | $ | 3,836 | $ | 3,839 | $ | 3,855 | ||||||||||
| Other income, excluding net investment securities gains | 485 | 446 | 675 | 457 | 494 | |||||||||||||||
| Total | $ | 4,060 | $ | 4,067 | $ | 4,511 | $ | 4,296 | $ | 4,349 | ||||||||||
| Efficiency ratio | 87.5 | % | 87.8 | % | 92.6 | % | 109.4 | % | 96.5 | % | ||||||||||
(1) Included in non-core items are professional fees of approximately $38,000, advertising expense of $16,000 and other operating expense of $56,000. | ||||||||||||||||||||
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: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Efficiency ratio on a GAAP basis | 87.2 | % | 87.8 | % | 91.4 | % | 109.9 | % | 96.6 | % | ||||||||||
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: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Net interest income (GAAP) | $ | 3,561 | $ | 3,617 | $ | 3,826 | $ | 3,818 | $ | 3,835 | ||||||||||
| Tax-equivalent adjustment | 14 | 4 | 11 | 21 | 20 | |||||||||||||||
| TE net interest income | $ | 3,575 | $ | 3,621 | $ | 3,837 | $ | 3,839 | $ | 3,855 | ||||||||||
| Net interest income margin (GAAP) | 2.60 | % | 2.70 | % | 2.75 | % | 2.72 | % | 2.73 | % | ||||||||||
| Tax-equivalent effect | 0.01 | — | 0.01 | 0.02 | 0.02 | |||||||||||||||
| Net interest margin (TE) | 2.61 | % | 2.70 | % | 2.76 | % | 2.74 | % | 2.75 | % | ||||||||||
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: | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 | 12/31/13 | |||||||||||||||
| Investment securities | ||||||||||||||||||||
| Available for sale | $ | 114,129 | $ | 103,458 | $ | 114,631 | $ | 124,888 | $ | 126,600 | ||||||||||
| Loans | 389,544 | 395,067 | 412,457 | 412,522 | 408,802 | |||||||||||||||
| Allowance for loan losses | (4,600 | ) | (4,851 | ) | (4,829 | ) | (4,869 | ) | (5,021 | ) | ||||||||||
| All other assets | 77,776 | 71,930 | 65,131 | 60,187 | 65,141 | |||||||||||||||
| Total assets | $ | 576,849 | $ | 565,604 | $ | 587,390 | $ | 592,728 | $ | 595,522 | ||||||||||
| Non-interest bearing deposits | $ | 26,770 | $ | 26,057 | $ | 24,834 | $ | 25,660 | $ | 25,441 | ||||||||||
| Interest-bearing deposits | 393,225 | 408,937 | 430,780 | 442,481 | 450,978 | |||||||||||||||
| Borrowings | 72,945 | 47,998 | 49,014 | 43,342 | 38,841 | |||||||||||||||
| Other liabilities | 6,151 | 5,549 | 6,551 | 5,829 | 4,935 | |||||||||||||||
| Shareholders’ equity | 77,758 | 77,063 | 76,211 | 75,416 | 75,327 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 576,849 | $ | 565,604 | $ | 587,390 | $ | 592,728 | $ | 595,522 | ||||||||||
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 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) | December 31, 2014 | September 30, 2014 | ||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and due from depository institutions | $ | 1,404 | $ | 1,203 | ||||
| Interest bearing deposits in depository institutions | 46,648 | 17,984 | ||||||
| Total cash and cash equivalents | 48,052 | 19,187 | ||||||
| Investment securities available for sale, at fair value | 135,786 | 100,943 | ||||||
| Restricted stock, at cost | 3,805 | 3,503 | ||||||
| Loans receivable, net of allowance for loan losses | 383,389 | 386,074 | ||||||
| Other Real estate owned | 1,494 | 1,964 | ||||||
| Accrued interest receivable | 1,623 | 1,322 | ||||||
| Property and equipment, net | 6,718 | 6,823 | ||||||
| Deferred income taxes, net | 2,419 | 2,376 | ||||||
| Bank-owned life insurance | 18,397 | 18,264 | ||||||
| Other assets | 1,487 | 1,808 | ||||||
| Total assets | $ | 603,170 | $ | 542,264 | ||||
| LIABILITIES | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 22,342 | $ | 23,059 | ||||
| Interest-bearing: | 418,283 | 389,894 | ||||||
| Total deposits | 440,625 | 412,953 | ||||||
| FHLB Advances | 78,000 | 48,000 | ||||||
| Advances from borrowers for taxes and insurance | 3,134 | 1,786 | ||||||
| Accrued interest payable | 251 | 149 | ||||||
| Other liabilities | 3,275 | 2,604 | ||||||
| Total liabilities | 525,285 | 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 December 31, 2014 and September 30, 2014 | 66 | 66 | ||||||
| Additional paid in capital | 60,322 | 60,317 | ||||||
| Retained earnings | 20,437 | 20,116 | ||||||
| Unearned Employee Stock Ownership Plan (ESOP) shares | (1,885 | ) | (1,922 | ) | ||||
| Accumulated other comprehensive loss | (1,055 | ) | (1,805 | ) | ||||
| Total shareholders’ equity | 77,885 | 76,772 | ||||||
| Total liabilities and shareholders’ equity | $ | 603,170 | $ | 542,264 | ||||
MALVERN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended December 31, | ||||||||
| (in thousands, except for share and per share data) | 2014 | 2013 | ||||||
| (unaudited) | ||||||||
| Interest income | ||||||||
| Loans, including fees | $ | 4,202 | $ | 4,527 | ||||
| Interest and dividends on investment securities: | ||||||||
| Taxable | 514 | 555 | ||||||
| Tax-exempt | 37 | 54 | ||||||
| Dividends, restricted stock | 37 | 14 | ||||||
| Interest-bearing cash accounts | 23 | 15 | ||||||
| Total interest income | 4,813 | 5,165 | ||||||
| Interest expense | ||||||||
| Deposits | 859 | 1,067 | ||||||
| Long-term borrowings | 393 | 263 | ||||||
| Total interest expense | 1,252 | 1,330 | ||||||
| Net interest income | 3,561 | 3,835 | ||||||
| Provision for loan losses | 90 | 80 | ||||||
Net interest income after provision for loan losses | 3,471 | 3,755 | ||||||
| Other income | ||||||||
| Service charges and other fees | 270 | 258 | ||||||
| Rental income - other | 64 | 64 | ||||||
| Gain on sale of investments, net | 26 | 14 | ||||||
| Gain on sale of loans, net | 19 | 27 | ||||||
| Earnings on bank-owned life insurance | 132 | 145 | ||||||
| Total other income | 511 | 508 | ||||||
| Other expense | ||||||||
| Salaries and employee benefits | 1,728 | 2,067 | ||||||
| Occupancy expense | 424 | 516 | ||||||
| Federal deposit insurance premium | 167 | 191 | ||||||
| Advertising | 85 | 158 | ||||||
| Data processing | 302 | 330 | ||||||
| Professional fees | 343 | 485 | ||||||
| Other real estate owned, net | (36 | ) | 13 | |||||
| Other operating expense | 648 | 436 | ||||||
| Total other expense | 3,661 | 4,196 | ||||||
| Income before income tax expense | 321 | 67 | ||||||
| Income tax expense | — | 3 | ||||||
| Net Income | $ | 321 | $ | 64 | ||||
| Earnings per common share | ||||||||
| Basic | $ | 0.05 | $ | 0.01 | ||||
| Weighted Average Common Shares Outstanding | ||||||||
| Basic | 6,387,932 | 6,373,532 | ||||||
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) (unaudited) | 12/31/2014 | 9/30/2014 | 12/31/2013 | |||||||||
| Statements of Operations Data | ||||||||||||
| Interest income | $ | 4,813 | $ | 4,832 | $ | 5,165 | ||||||
| Interest expense | 1,252 | 1,215 | 1,330 | |||||||||
| Net interest income | 3,561 | 3,617 | 3,835 | |||||||||
| Provision for loan losses | 90 | 183 | 80 | |||||||||
| Net interest income after provision for loan losses | 3,471 | 3,434 | 3,755 | |||||||||
| Other income | 511 | 446 | 508 | |||||||||
| Other expense | 3,661 | 3,569 | 4,196 | |||||||||
| Income before income tax expense | 321 | 311 | 67 | |||||||||
| Income tax expense | - | 17 | 3 | |||||||||
| Net income | $ | 321 | $ | 294 | $ | 64 | ||||||
| Earnings per Common Share | ||||||||||||
| Basic | $ | 0.05 | $ | 0.05 | $ | 0.01 | ||||||
| Statements of Condition Data (Period-End) | ||||||||||||
| Investment securities available for sale, at fair value | $ | 135,786 | $ | 100,943 | $ | 123,826 | ||||||
| Loans, net of allowance for loan losses | 383,389 | 386,074 | 407,306 | |||||||||
| Total assets | 603,170 | 542,264 | 594,041 | |||||||||
| Deposits | 440,625 | 412,953 | 471,001 | |||||||||
| Borrowings | 78,000 | 48,000 | 43,000 | |||||||||
Shareholders’ equity | 77,885 | 76,772 | 74,613 | |||||||||
| Common Shares Dividend Data | ||||||||||||
| Cash dividends | $ | — | $ | — | $ | — | ||||||
| Weighted Average Common Shares Outstanding | ||||||||||||
| Basic | 6,387,932 | 6,384,319 | 6,373,532 | |||||||||
| Operating Ratios | ||||||||||||
| Return on average assets | 0.22 | % | 0.21 | % | 0.04 | % | ||||||
| Return on average equity | 1.65 | % | 1.53 | % | 0.34 | % | ||||||
| Average equity / average assets | 13.48 | % | 13.62 | % | 12.65 | % | ||||||
| Book value per common share (period-end) | $ | 11.88 | $ | 11.71 | $ | 11.38 | ||||||
| Non-Financial Information (Period-End) | ||||||||||||
| Common shareholders of record | 487 | 485 | 471 | |||||||||
| Full-time equivalent staff | 84 | 93 | 111 | |||||||||