MLVF Malvern Bancorp Inc

Malvern Bancorp, Inc. (NASDAQ: MLVF) (the “Company”), the parent company of Malvern Bank, National Association (the “Bank”), today reported operating results for the second fiscal quarter ended March 31, 2021. Net income amounted to $2.2 million, or $0.30 per fully diluted common share, compared with net income of $1.9 million, or $0.25 per fully diluted common share, for the quarter ended March 31, 2020. The increases in net income and diluted earnings per share from the second quarter of 2020 were primarily due to a decrease in provision for loan losses. Annualized return on average assets (“ROAA”) was 0.73 percent for the quarter ended March 31, 2021, compared to 0.61 percent for the quarter ended March 31, 2020, and annualized return on average equity (“ROAE”) was 6.14 percent for the quarter ended March 31, 2021, compared with 5.29 percent for the quarter ended March 31, 2020.

For the six months ended March 31, 2021, net income amounted to $4.5 million, or $0.60 per fully diluted common share, compared with net income of $2.7 million, or $0.35 per fully diluted common share, for the six months ended March 31, 2020. The annualized ROAA was 0.73 percent for the six months ended March 31, 2021, compared to 0.43 percent for the six months ended March 31, 2020, and the annualized ROAE was 6.26 percent for the six months ended March 31, 2021, compared with 3.74 percent for the six months ended March 31, 2020.

“I am pleased to report improved business results for the second quarter, including increased net income, net interest margin, and other key metrics, which indicate a recent economic momentum in our markets. With continued momentum, we also anticipate a marked improvement in business opportunities and an environment in which businesses can rebound further. These trends should lead to improved credit quality and strong operating results for the balance of 2021,” commented Anthony C. Weagley, President and Chief Executive Officer.

Statement of Income Highlights at March 31, 2021

• Net interest margin (“NIM”) increased to 2.54 percent for the quarter ended March 31, 2021, compared to 2.24 percent for the prior year’s quarter ended March 31, 2020. The increase was driven by the reduction in interest expense, partially offset by a decrease in interest-earning assets. On a linked quarter basis, NIM compressed 0.08 percent to 2.62 percent; the linked quarter compression was driven by adjustments to loan interest income as a result of non-accrual interest and related COVID deferred interest.
• Net interest income increased $425,000, or 3.1 percent, for the six months ended March 31, 2021 compared to the six months ended March 31, 2020. The increase in net interest income was due primarily to a reduction in cost of interest-bearing deposits. Net interest income decreased $502,000 compared to the sequential quarter ended December 31, 2020.
• The Company did not record a provision for loan losses during the three-month period ended March 31, 2021. The Company’s provision for loan losses in the sequential quarter ended December 31, 2020 was $550,000. For the six months ended March 31, 2021, provision for loan losses was $550,000, or $2.2 million less than the $2.8 million provision recorded for the six months ended March 31, 2020.

Linked Quarter Financial Ratios (unaudited)
As of or for the quarter ended:	3/31/21				12/31/20				9/30/20				6/30/20				3/31/20
Return on average assets (1)		0.73	%			0.74	%			(1.15	%)			0.47	%			0.61	%
Return on average equity (1)		6.14	%			6.38	%			(9.54	%)			4.06	%			5.29	%
Net interest margin (1)		2.54	%			2.62	%			2.38	%			2.28	%			2.24	%
Loans / deposits ratio		108.14	%			111.33	%			116.62	%			117.93	%			111.02	%
Shareholders’ equity / total assets		12.09	%			11.73	%			11.64	%			11.92	%			11.58	%
Efficiency ratio		63.5	%			58.3	%			61.5	%			66.7	%			59.8	%
Book value per common share	$	19.17			$	18.83			$	18.47			$	18.86			$	18.67

(1)   Annualized.

Linked Quarter Income Statement Data

(unaudited)
(in thousands, except share and per share data)
For the quarter ended:		3/31/21				12/31/20				9/30/20				6/30/20				3/31/20
Net interest income	$	6,802			$	7,304			$	6,720			$	6,631			$	6,793
Provision for loan losses		-				550				7,400				435				625
Net interest income after provision for loan losses		6,802				6,754				(680	)			6,196				6,168
Other income		1,167				1,224				692				389				964
Other expense		5,063				4,972				4,558				4,684				4,638
Income (loss) before income tax expense		2,906				3,006				(4,546	)			1,901				2,494
Income tax expense (benefit)		682				733				(1,043	)			447				586
Net income (loss)	$	2,224			$	2,273			$	(3,503	)		$	1,454			$	1,908
Earnings (loss) per common share
Basic	$	0.30			$	0.30			$	(0.46	)		$	0.19			$	0.25
Diluted	$	0.30			$	0.30			$	(0.46	)		$	0.19			$	0.25
Weighted average common shares outstanding
Basic		7,529,408				7,525,808				7,522,199				7,538,375				7,663,771
Diluted		7,530,151				7,526,376				7,522,360				7,538,375				7,663,771

Net Interest Income

Net interest income was $6.8 million for the quarters ended March 31, 2021 and 2020. For the quarter ended March 31, 2021, NIM increased by 30 basis points to 2.54 percent, as compared to 2.24 percent for the quarter ended March 31, 2020. This increase was primarily driven by a reduction in interest expenses as the cost of interest-bearing deposits decreased by 79 basis points compared to the second fiscal quarter of 2020, offset in part by the impact of adjustments to loan interest income as a result of non-accrual interest and related COVID deferred interest. The cost of borrowings decreased by 42 basis points compared to the second fiscal quarter of 2020.

Net interest income was $14.1 million for the six months ended March 31, 2021, an increase of $425,000, or 3.1 percent, from $13.7 million for the six months ended March 31, 2020. For the six months ended March 31, 2021, NIM increased by 30 basis points to 2.58 percent, as compared to 2.28 percent for the six months ended March 31, 2020. Consistent with the current quarter, this increase was primarily driven by the 74 basis point decrease in cost of interest-bearing deposits compared to the six months ended March 31, 2020. The cost of borrowings decreased by 43 basis points compared to the six months ended March 31, 2020.

Total Interest Income

For the quarters ended March 31, 2021 and March 31, 2020, total interest income was $9.5 million and $11.6 million, respectively. The average yield on interest-earning assets declined 27 basis points when compared to the same period in 2020. Total interest income fell for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to a 53 basis point decrease on the average yield on loans.

For the six months ended March 31, 2021, total interest income was $20.1 million, a decrease of $3.3 million or 14.2 percent, from $23.5 million for the six months ended March 31, 2020. The average yield on interest-earning assets declined 22 basis points when compared to the same period in 2020. Total interest income fell for the six months ended March 31, 2021, compared to the six months ended March 31, 2020, primarily due to a 48 basis point decrease on the average yield on loans.

Interest Expense

For the quarter ended March 31, 2021, interest expense decreased by $2.1 million, or 43.4 percent, to $2.7 million, compared to $4.8 million for the quarter ended March 31, 2020. The decrease in interest expense is primarily attributable to rate related factors, as the average rate on interest-bearing liabilities fell 75 basis points. This decline is reflected in a 79 basis point decrease in the rate on interest-bearing deposits.

On a linked quarter basis, the annualized average rate paid on total interest-bearing liabilities decreased 22 basis points to 1.08 percent for the quarter ended March 31, 2021, compared to 1.30 percent for the quarter ended December 31, 2020. The decrease is reflected in a 23 basis point decrease in the rate on interest-bearing deposits.

Total interest expense decreased by $3.8 million, or 38.4 percent, to $6.0 million for the six months ended March 31, 2021, compared to $9.8 million for the six months ended March 31, 2020. The decrease in interest expense on deposits is primarily attributable to rate related factors. The annualized average rate on total interest-bearing liabilities decreased to 1.19 percent for the six months ended March 31, 2021, from 1.88 percent for the six months ended March 31, 2020. This decrease primarily reflects a decrease in the average rate of interest-bearing deposits of 0.74 percent and a decrease in the average rate of borrowings of 0.43 percent. The decrease in the average rate of interest-bearing deposits consisted of a 0.77 percent decrease in average rate of other interest-bearing deposit accounts, a 0.72 percent decrease in the average rate of certificates of deposit, and a 0.70 percent decrease in the average rate of money market accounts.

Other Income

Other income increased $203,000, or 21.1 percent, during the quarter ended March 31, 2021 compared to the quarter ended March 31, 2020. The increase in other income was primarily due to increases of $274,000 in net gains on sale of loans and $79,000 in net gains on sale of investments, partially offset by a decrease of $185,000 in service charges and other fees.   The gain on sale of loans was a result of a strategic effort to originate and sell residential loans in this low interest rate environment. The net gain on sale of investments resulted from managing and optimizing portfolio activity in the ordinary course of business. The decrease in service charges and other fees was primarily due to the recognition of approximately $371,000 of net swap fees through the Bank’s commercial loan hedging program realized during the quarter ended March 31, 2020, offset by approximately $131,000 in prepayment penalties and $44,000 of PPP loan referral income recognized during the quarter ended March 31, 2021.

For the six months ended March 31, 2021, total other income increased $984,000 compared to the same period in 2020. This increase was primarily a result of a $675,000 increase in net gains on sale of loans and a $434,000 increase in net gains on sale of investments, offset by a decrease of $197,000 in service charges and other fees. The decrease in service charges and other fees is primarily due to the recognition of approximately $371,000 less of net swap fees through the Bank’s commercial loan hedging program during the six months ended March 31, 2020.

Other Expense

Other expense for the quarter ended March 31, 2021 increased $425,000, or 9.2 percent, when compared to the quarter ended March 31, 2020. The increase was primarily due to increases of $382,000 in professional fees associated with legal, accounting, and audit expenses related to the Company’s periodic and annual filings. Other increases included $80,000 in federal deposit insurance premium expense due to expiration of credits generated from Deposit Insurance Fund reserve ratio exceeding the official required reserve ratio in the prior period.

Other expense for the six months ended March 31, 2021 increased $975,000, or 10.8 percent, when compared to the six months ended March 31, 2020. The increase was primarily due to increases of $604,000 in professional fees associated with legal, accounting, and audit expenses related to the Company’s periodic and annual filings. Other increases included $159,000 in federal deposit insurance premium expense as addressed above and $151,000 in salaries and employee benefits due to normal increases to salary and benefits to support overall franchise growth.

Income Taxes

The Company recorded $682,000 in income tax expense during the quarter ended March 31, 2021 compared to $586,000 in income tax expense during the quarter ended March 31, 2020. The effective tax rate for the Company for the quarters ended March 31, 2021 and 2020 was 23.5 percent.

For the six months ended March 31, 2021, income tax expense increased by $855,000 or 152.7 percent, to $1.4 million from $560,000 for the six months ended March 31, 2020. The effective tax rates for the Company for the six months ended March 31, 2021 and 2020 were 23.9 percent and 17.2 percent, respectively. Tax expense for the six months ended March 31, 2020 was impacted due to discrete tax items in the first fiscal quarter of 2020.

Statement of Condition Highlights at March 31, 2021

• Total assets stood at $1.206 billion at March 31, 2021, a decrease of $1.9 million, or 0.2 percent, compared to September 30, 2020.
• Deposits totaled $912.2 million at March 31, 2021, an increase of $21.3 million, or 2.4 percent, compared to September 30, 2020.
• Non-performing assets (“NPAs”) were 2.39 percent and 1.87 percent of total assets at March 31, 2021 and September 30, 2020, respectively. Excluding one OREO property of $5.8 million, NPAs were 1.91 percent and 1.39 percent of total assets at March 31, 2021 and September 30, 2020, respectively. The allowance for loan losses as a percentage of total non-performing loans was 54.7 percent at March 31, 2021, compared to 74.1 percent at September 30, 2020.
• The Company’s ratio of shareholders’ equity to total assets was 12.09 percent at March 31, 2021, compared to 11.64 percent at September 30, 2020.
• Book value per common share amounted to $19.17 at March 31, 2021, compared to $18.47 at September 30, 2020.

Linked Quarter Statement of Condition Data

(in thousands, unaudited)
At quarter ended:		3/31/21			12/31/20			9/30/20			6/30/20			3/31/20
Cash and due from depository institutions	$	99,358		$	83,764		$	16,386		$	30,653		$	1,829
Interest-bearing deposits in depository institutions		9,556			25,458			45,053			28,291			124,239
Investment securities, available for sale, at fair value		28,899			35,224			31,541			33,245			21,839
Investment securities held to maturity		25,834			14,161			14,970			15,921			18,046
Restricted stock, at cost		8,891			9,327			9,622			9,766			10,913
Loans receivable, net of allowance for loan losses		974,596			990,346			1,026,894			1,032,318			1,007,132
OREO		5,796			5,796			5,796			5,796			5,796
Accrued interest receivable		3,598			4,051			3,677			5,680			4,121
Operating lease right-of-use-assets		2,322			2,479			2,638			2,799			2,959
Property and equipment, net		6,040			6,154			6,274			6,355			6,476
Deferred income taxes, net		3,535			3,601			3,680			3,103			2,974
Bank-owned life insurance		25,725			25,564			25,400			20,270			20,144
Other assets		12,269			14,999			16,344			13,873			13,869
Total assets	$	1,206,419		$	1,220,924		$	1,208,275		$	1,208,070		$	1,240,337
Deposits	$	912,213		$	900,465		$	890,906		$	884,444		$	915,900
FHLB advances		110,000			130,000			130,000			130,000			133,000
Secured borrowings		—			—			4,225			4,225			4,225
Other borrowings		—			5,000			—			—			—
Subordinated debt		24,855			24,816			24,776			24,737			24,697
Operating lease liabilities		2,357			2,512			2,671			2,824			2,976
Other liabilities		11,143			14,865			15,104			18,309			16,389
Shareholders’ equity		145,851			143,266			140,593			143,531			143,150
Total liabilities and shareholders’ equity	$	1,206,419		$	1,220,924		$	1,208,275		$	1,208,070		$	1,240,337

The following table sets forth the Company’s consolidated average statement of condition for the quarters presented.

Condensed Consolidated Average Statement of Condition
(in thousands, unaudited)
For the quarter ended:		3/31/21				12/31/20				9/30/20				6/30/20				3/31/20
Investment securities	$	58,559			$	59,135			$	48,549			$	43,349			$	40,165
Interest-bearing cash accounts		21,506				21,690				27,996				76,828				148,580
Loans		990,913				1,032,483				1,045,595				1,033,246				1,015,017
Allowance for loan losses		(13,037	)			(12,462	)			(11,071	)			(10,618	)			(9,756	)
All other assets		165,942				123,919				107,512				85,169				63,434
Total assets	$	1,223,883			$	1,224,765			$	1,218,581			$	1,227,974			$	1,257,440
Non-interest-bearing deposits	$	50,327			$	48,152			$	49,139			$	46,450			$	41,916
Interest-bearing deposits		866,153				854,649				842,727				852,330				892,583
FHLB advances		116,889				130,000				130,000				136,121				133,000
Other short-term borrowings		3,111				5,918				4,250				4,526				4,525
Subordinated debt		24,835				24,794				24,760				24,719				24,680
Other liabilities		17,751				18,689				20,853				20,509				16,440
Shareholders’ equity		144,817				142,563				146,852				143,319				144,296
Total liabilities and shareholders’ equity	$	1,223,883			$	1,224,765			$	1,218,581			$	1,227,974			$	1,257,440

Deposits

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

(in thousands, unaudited)
At quarter ended:		3/31/21			12/31/20			9/30/20			6/30/20			3/31/20
Demand:
Non-interest-bearing	$	54,210		$	49,264		$	50,422		$	47,443		$	42,874
Interest-bearing		313,865			303,535			303,682			277,238			291,191
Savings		49,601			46,531			45,072			43,702			43,550
Money market		338,100			303,796			277,711			281,419			280,173
Time		156,437			197,339			214,019			234,642			258,112
Total deposits	$	912,213		$	900,465		$	890,906		$	884,444		$	915,900

Loans

Total net loans amounted to $974.6 million at March 31, 2021 compared to $1.027 billion at September 30, 2020, for a net decrease of $52.3 million or 5.09 percent for the period. The allowance for loan losses amounted to $12.6 million, or 1.28 percent of total loans, at March 31, 2020 and $12.4 million, or 1.22 percent of total loans excluding PPP loans, at September 30, 2020.   Average loan balances for the quarter ended March 31, 2021 totaled $990.9 million as compared to $1.046 billion for the quarter ended September 30, 2020, representing a 5.23 percent decrease.

At the end of the second fiscal quarter of 2021, the gross loan portfolio remained weighted toward two primary components: commercial and the core residential portfolio, with commercial loans accounting for 67.1 percent and single-family residential real estate loans accounting for 22.1 percent. Construction and development loans amounted to 8.1 percent and consumer loans represented 2.7 percent of the gross loan portfolio at such date. The decrease in the gross loan portfolio at March 31, 2020 compared to September 30, 2020 primarily reflected decreases of $16.0 million in commercial loans net of the sale of $19.7 million of PPP loans, $23.9 million in residential mortgage loans, and $4.0 million in consumer loans, which were partially offset by an increase of $11.0 million in construction and development loans.

The following table reflects the Company’s loan portfolio composition (excluding loans held for sale) as of the dates indicated.

(in thousands, unaudited)
At quarter ended:		3/31/21				12/31/20				9/30/20				6/30/20				3/31/20
Residential Mortgage	$	218,165			$	232,481			$	242,090			$	246,215			$	240,633
Construction and Development:
Residential and commercial		76,257				73,000				65,703				56,999				52,313
Land		3,596				3,648				3,110				3,535				3,579
Total construction and development		79,853				76,648				68,813				60,534				55,892
Commercial:
Commercial real estate		482,611				478,808				495,398				506,180				515,692
Farmland		7,344				7,378				7,517				7,531				7,537
Multi-family		67,122				67,457				67,767				66,416				59,978
Commercial and industrial		94,706				101,852				116,584				115,899				96,574
Other		9,927				10,010				10,142				8,397				7,604
Total commercial		661,710				665,505				697,408				704,423				687,385
Consumer:
Home equity lines of credit		15,936				16,389				17,128				18,097				18,441
Second mortgages		8,114				9,097				10,711				11,704				12,393
Other		2,650				2,388				2,851				2,074				2,112
Total consumer		26,700				27,874				30,690				31,875				32,946
Total loans		986,428				1,002,508				1,039,001				1,043,047				1,016,856
Deferred loan costs, net		769				873				326				338				832
Allowance for loan losses		(12,601	)			(13,035	)			(12,433	)			(11,067	)			(10,556	)
Loans Receivable, net	$	974,596			$	990,346			$	1,026,894			$	1,032,318			$	1,007,132

At March 31, 2021, the Company had $130.8 million in overall undisbursed loan commitments, which consisted primarily of available usage from active construction facilities, unused commercial lines of credit, and home equity lines of credit.

Asset Quality

Non-accrual loans totaled $22.3 million at March 31, 2021 and $16.7 million at September 30, 2020. The increase in non-accrual loans was primarily due to one $12.9 million commercial real estate loan classified as substandard and non-accruing as of March 31, 2021. This loan was placed on non-accrual during the quarter, and is currently making payments in accordance with the loan’s contractual terms, which are being applied 100 percent to reduce the principal balance of the loan.

This increase in non-accrual loans was partially offset by a $6.5 million commercial real estate, TDR loan that was returned to accrual status. The total portfolio of non-accrual loans at March 31, 2021 was comprised of two commercial real estate loans with an aggregate outstanding balance of approximately $20.3 million, twelve residential mortgage loans with an aggregate outstanding balance of approximately $1.6 million, and eleven consumer loans with an aggregate outstanding balance of approximately $323,000.

At March 31, 2021, NPAs totaled $28.8 million, or 2.39 percent of total assets, as compared with $22.6 million, or 1.87 percent of total assets, at September 30, 2020. The increase in NPAs is due to the increase in non-accrual loans as described above.

OREO totaled $5.8 million at both March 31, 2021 and September 30, 2020. Excluding the $5.8 million of OREO, NPAs totaled $23.0 million, or 1.91 percent of total assets at March 31, 2021, and $16.8 million, or 1.39 percent of total assets at September 30, 2020.

Performing TDR loans were $22.7 million at March 31, 2021 and $13.4 million at September 30, 2020. As noted above, one commercial real estate loan in the amount of $6.5 million was returned to accruing status and as such is now classified as a performing TDR as of the second fiscal quarter of 2021.

Non-Performing Asset and Other Asset Quality Data:

(dollars in thousands, unaudited)
As of or for the quarter ended:		3/31/21				12/31/20				9/30/20				6/30/20				3/31/20
Non-accrual loans(1)	$	22,281			$	16,240			$	16,730			$	8,871			$	8,655
Loans 90 days or more past due and still accruing		765				775				58				265				168
Total non-performing loans		23,046				17,015				16,788				9,136				8,823
OREO		5,796				5,796				5,796				5,796				5,796
Total NPAs	$	28,842			$	22,811			$	22,584			$	14,932			$	14,619
Performing TDR loans	$	22,697			$	16,229			$	13,418			$	13,640			$	3,243
NPAs / total assets		2.39	%			1.87	%			1.87	%			1.24	%			1.18	%
Non-performing loans / total loans		2.34	%			1.70	%			1.62	%			0.88	%			0.87	%
Net (recoveries) charge-offs	$	434			$	(52	)		$	6,034			$	(76	)		$	31
Net (recoveries) charge-offs /average loans(2)		0.18	%			(0.02	%)			2.31	%			(0.03	%)			0.01	%
Allowance for loan losses / total loans		1.28	%			1.30	%			1.22	%			1.08	%			1.04	%
Allowance for loan losses / non-performing loans		54.7	%			76.6	%			74.1	%			121.1	%			119.6	%
Total assets	$	1,206,419			$	1,220,924			$	1,208,275			$	1,208,070			$	1,240,337
Total gross loans		986,428				1,002,508				1,039,001				1,043,047				1,016,856
Average loans		990,913				1,032,483				1,045,595				1,033,246				1,015,017
Allowance for loan losses		12,601				13,035				12,433				11,067				10,556

(1)   Fourteen loans totaling approximately $14.2 million, or 63.7 percent of the total non-accrual loan balance, were making payments as of March 31, 2021. (2)   Annualized.

The allowance for loan losses at March 31, 2021 amounted to approximately $12.6 million, or 1.28 percent of total loans compared to $12.4 million, or 1.22 percent of total loans excluding PPP loans, a non-GAAP measure, at September 30, 2020. The Company did not record a provision for loan losses during the fiscal quarter ended March 31, 2021.

Loan Deferrals

At March 31, 2021, the Company had six COVID-19-related modified loan deferrals totaling approximately $1.8 million or 0.18 percent of total loans, down approximately $67.1 million or 97% from 16 COVID-19-related modified loan deferrals totaling approximately $68.9 million or 6.87 percent of total loans at December 31, 2020. At May 7, 2021 the Company had two COVID-19-related modified loan deferrals totaling approximately $222,000 or 0.02 percent of total loans.

Capital

At March 31, 2021, total shareholders’ equity amounted to $145.9 million, or 12.09 percent of total assets, compared to $140.6 million, or 11.64 percent of total assets at September 30, 2020. The Company’s capital position continues to significantly exceed all regulatory capital guidelines. At March 31, 2021, the Bank’s common equity Tier 1 capital ratio was 16.20 percent, Tier 1 leverage ratio was 13.18 percent, Tier 1 risk-based capital ratio was 16.20 percent and the total risk-based capital ratio was 17.45 percent. At September 30, 2020, the Bank’s common equity Tier 1 capital ratio was 15.40 percent, Tier 1 leverage ratio was 12.78 percent, Tier 1 risk-based capital ratio was 15.40 percent and the total risk-based capital ratio was 16.64 percent.

About Malvern Bancorp, Inc.

Malvern Bancorp, Inc. is the holding company for Malvern Bank, National Association, an institution 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 nine other banking locations in Chester and Delaware counties, Pennsylvania, Morristown, New Jersey, its New Jersey regional headquarters and Palm Beach Florida. The Bank also maintains representative offices in Wellington, Florida, and Allentown, Pennsylvania.  The Bank’s primary market niche is providing personalized service to its client base. 

Malvern Bank, through its Private Banking division and a strategic partnership with Bell Rock Capital in Rehoboth Beach, Delaware, provides personalized investment advisory services to individuals, families, businesses and non-profits. 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.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company, including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, and shareholder value creation.

Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the effects of, and changes in, trade, monetary and fiscal policies and laws, including recent changes in interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the impact of competition and the acceptance of the Company’s products and services by new and existing customers; the impact of changes in financial services policies, laws and regulations; technological changes; any oversupply of inventory and deterioration in values of real estate in the markets in which the Company operates, both residential and commercial; the effect of changes in accounting policies and practices, as may be adopted from time-to-time by bank regulatory agencies, the Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; possible other-than-temporary impairment of securities held by us; the effects of the Company’s lack of a widely-diversified loan portfolio, including the risks of geographic and industry concentrations; ability to attract deposits and other sources of liquidity; changes in the competitive environment among financial and bank holding companies and other financial service providers; unanticipated regulatory or judicial proceedings; and the Company’s ability to manage the risk involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s 2020 Annual Report on Form 10-K/A and Quarterly Reports on Form 10-Q filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be fully reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we are subject to any of the following risks, any of which could continue to have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to continue to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may continue to decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0 percent, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our NIM and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experiences additional resolution costs.

The Company undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, unless required by law.

MALVERN BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

			March 31, 2021				September 30, 2020
(in thousands, except for share and per share data)			(unaudited)
ASSETS
Cash and due from depository institutions			$	99,358			$	16,386
Interest-bearing deposits in depository institutions				9,556				45,053
Total cash and cash equivalents				108,914				61,439
Investment securities available for sale, at fair value (amortized cost of $29,165 and $31,658 at March 31, 2021 and September 30, 2020, respectively)				28,899				31,541
Investment securities held to maturity (fair value of $26,367 and $15,608 at March 31, 2021 and September 30, 2020, respectively)				25,834				14,970
Restricted stock, at cost				8,891				9,622
Loans receivable, net of allowance for loan losses				974,596				1,026,894
Other real estate owned				5,796				5,796
Accrued interest receivable				3,598				3,677
Operating lease right-of-use-assets				2,322				2,638
Property and equipment, net				6,040				6,274
Deferred income taxes, net				3,535				3,680
Bank-owned life insurance				25,725				25,400
Other assets				12,269				16,344
Total assets			$	1,206,419			$	1,208,275
LIABILITIES
Deposits:
Non-interest bearing			$	54,210			$	50,422
Interest-bearing				858,003				840,484
Total deposits				912,213				890,906
FHLB advances				110,000				130,000
Secured borrowings				—				4,225
Subordinated debt				24,855				24,776
Advances from borrowers for taxes and insurance				2,038				1,741
Accrued interest payable				648				728
Operating lease liabilities				2,357				2,671
Other liabilities				8,457				12,635
Total liabilities				1,060,568				1,067,682
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; 7,804,469 and 7,609,953 issued and outstanding, respectively, at March 31, 2021, and 7,804,469 and 7,609,953 shares issued and outstanding, at September 30, 2020				76				76
Additional paid in capital				85,271				85,127
Retained earnings				64,885				60,388
Unearned Employee Stock Ownership Plan (ESOP) shares				(974	)			(1,047	)
Accumulated other comprehensive loss				(544	)			(1,088	)
Treasury stock, at cost: 194,516 shares at March 31, 2021 and September 30, 2020, respectively				(2,863	)			(2,863	)
Total shareholders’ equity				145,851				140,593
Total liabilities and shareholders’ equity			$	1,206,419			$	1,208,275

MALVERN BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME

		Three Months Ended March 31,							Six Months Ended March 31,
(in thousands, except for share data)			2021			2020				2021			2020
(unaudited)
Interest and Dividend Income
Loans, including fees		$	9,069		$	10,632			$	19,145		$	21,558
Investment securities, taxable			321			231				668			446
Investment securities, tax-exempt			23			34				47			73
Dividends, restricted stock			119			182				260			370
Interest-bearing cash accounts			7			550				15			1,022
Total Interest and Dividend Income			9,539			11,629				20,135			23,469
Interest Expense
Deposits			1,805			3,623				4,062			7,360
Short-term borrowings			3			—				48			—
Long-term borrowings			546			830				1,153			1,662
Subordinated debt			383			383				766			766
Total Interest Expense			2,737			4,836				6,029			9,788
Net interest income			6,802			6,793				14,106			13,681
Provision for Loan Losses			—			625				550			2,775
Net Interest Income after Provision for Loan Losses			6,802			6,168				13,556			10,906
Other Income
Service charges and other fees			419			604				666			863
Rental income-other			54			55				108			109
Net gains on sale of investments			259			180				614			180
Net gains on sale of loans			274			—				678			3
Earnings on bank-owned life insurance			161			125				325			252
Total Other Income			1,167			964				2,391			1,407
Other Expense
Salaries and employee benefits			2,275			2,271				4,547			4,396
Occupancy expense			568			591				1,110			1,173
Federal deposit insurance premium			83			3				159			—
Advertising			32			32				64			54
Data processing			306			272				634			550
Professional fees			884			502				1,547			943
Net other real estate owned expense			3			(1	)			31			70
Pennsylvania shares tax			169			170				339			340
Other operating expenses			743			798				1,604			1,534
Total Other Expense			5,063			4,638				10,035			9,060
Income before income tax expense			2,906			2,494				5,912			3,253
Income tax expense			682			586				1,415			560
Net Income		$	2,224		$	1,908			$	4,497		$	2,693
Earnings per common share
Basic		$	0.30		$	0.25			$	0.60		$	0.35
Diluted		$	0.30		$	0.25			$	0.60		$	0.35
Weighted Average Common Shares Outstanding
Basic			7,529,408			7,663,771				7,525,808			7,664,813
Diluted			7,530,151			7,663,771				7,526,376			7,664,813

MALVERN BANCORP, INC. AND SUBSIDIARIESSELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

		Three Months Ended					Three Months Ended					Three Months Ended
(in thousands, except for share and per share data) (annualized where applicable)		3/31/2021					12/31/2020					3/31/2020
(unaudited)
Statements of Operations Data
Interest income	$		9,539			$		10,596			$		11,629
Interest expense			2,737					3,292					4,836
Net interest income			6,802					7,304					6,793
Provision for loan losses			-					550					625
Net interest income after provision for loan losses			6,802					6,754					6,168
Other income			1,167					1,224					964
Other expense			5,063					4,972					4,638
Income before income tax expense			2,906					3,006					2,494
Income tax expense			682					733					586
Net income	$		2,224			$		2,273			$		1,908
Earnings (per Common Share)
Basic	$		0.30			$		0.30			$		0.25
Diluted	$		0.30			$		0.30			$		0.25
Statements of Condition Data (Period-End)
Investment securities available for sale, at fair value	$		28,899			$		35,224			$		21,839
Investment securities held to maturity (fair value of $26,367, $14,745, and $18,434, respectively)			25,834					14,161					18,046
Loans, net of allowance for loan losses			974,596					990,346					1,007,132
Total assets			1,206,419					1,220,924					1,240,337
Deposits			912,213					900,465					915,900
FHLB advances			110,000					130,000					133,000
Subordinated debt			24,855					24,816					24,697
Shareholders' equity			145,851					143,266					143,150
Common Shares Dividend Data
Cash dividends	$		-			$		-			$		-
Weighted Average Common Shares Outstanding
Basic			7,529,408					7,525,808					7,663,771
Diluted			7,530,151					7,526,376					7,663,771
Operating Ratios
Return on average assets			0.73	%				0.74	%				0.61	%
Return on average equity			6.14	%				6.38	%				5.29	%
Average equity / average assets			11.83	%				11.64	%				11.48	%
Book value per common share (period-end)		$	19.17				$	18.83				$	18.67
Non-Financial Information (Period-End)
Common shareholders of record			381					388					383
Full-time equivalent staff			81					80					89

Investor Contacts: Joseph D. GangemiCorporate Investor Relations610-695-3676

Investor Relations Contact:Ronald Morales610-695-364