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Malvern Federal Bancorp, Inc. Announces Results for the Third Quarter PAOLI, Pa., July 31, 2008 (PRIME NEWSWIRE) -- Malvern Federal
Bancorp, Inc. (the ``Company'') (NasdaqGM:MLVF - News), the recently
formed ``mid-tier'' holding company for Malvern Federal Savings
Bank (the ``Bank''), today announced that the Company is reporting
a net loss for the three months ended June 30, 2008 of $63,000
compared to net income of $805,000 for the three months
ended June 30, 2007. For the nine months ended June 30,
2008, the Company's net income was $874,000, compared to
$2.3 million for the comparable nine month period in fiscal
2007. The loss for the three months was primarily a result
of a non-recurring pretax charge of $1.2 million for the
contribution made to the Malvern Federal Charitable Foundation
and a $406,000 increase in the provision for loan losses,
offset by a $274,000 increase in net interest income. Ronald Anderson, President and Chief Executive Officer, commented that, ``We have a dedicated team at Malvern Federal committed to implementing a growth strategy focused on building profitable deposit and lending relationships. We are excited to be able to move forward in our new mutual holding company structure for the benefit of the Bank and our new shareholders. We remain committed to serving our communities with the highest level of customer service. Our local charities and neighborhoods will benefit from our support through the $1.2 million donation to the Malvern Federal Charitable Foundation. The support we received from our depositors and other members of the community in the Company's public offering was greatly appreciated, and we will work hard to enhance shareholder value as we move forward.'' The Company's net interest income for the three months ended June 30, 2008 was $3.7 million, an increase of $274,000 from the three months ended June 30, 2007. For the three months ended June 30, 2008, the Company's average interest rate spread and net interest margin were 2.19% and 2.65%, respectively, compared to 2.29% and 2.71%, respectively, for the third quarter of fiscal 2007. For the nine months ended June 30, 2008, net interest income was $10.3 million, an increase of $135,000 from the nine month period ended June 30, 2007. Interest and dividend income increased by $12,000 in the three month period ended June 30, 2008 compared to the three month period ended June 30, 2007. Interest income earned on loans increased in both the three months and nine months ended June 30, 2008, over the prior comparable periods in fiscal 2007 due primarily to growth in the loan portfolio. During the third quarter of fiscal 2008 compared to the third quarter of fiscal 2007, the average balance of loans receivable increased by $64.6 million. Similarly, during the nine month period ended June 30, 2008 compared to the nine months ended June 30, 2007, the average balance of loans receivable increased $80.2 million. The increases in average total loans during the fiscal 2008 periods were due primarily to growth in the Company's single-family residential mortgage loans, commercial and real estate loans and second mortgage loans. The increases in interest income in the fiscal 2008 periods from our loan portfolio were partially offset by lower income amounts earned on our investment securities portfolio primarily due to lower average balances in the fiscal 2008 periods. The average balances of investment securities decreased by $13.2 million and $9.5 million, respectively, during the three month and nine month periods ended June 30, 2008 compared to the respective comparable periods in fiscal 2007. Excess cash flows from the investment securities portfolio were reinvested during fiscal 2008 primarily in new loan originations. The Company's interest expense for the three month period ended June 30, 2008 was $4.6 million, a decrease of $262,000 from the three month period ended June 30, 2007. For the nine months ended June 30, 2008 compared to the nine months ended June 30, 2007, the Company's total interest expense increased by $278,000. The increase in interest expense in the first nine months of fiscal 2008 reflects the Company's increased use of FHLB borrowings as a source of funds for new loan originations and purchases as well as an increase in the average balance of deposits due in part to the Company's increased promotional efforts to attract additional money market accounts. The provision for loan losses was $405,000 for the three months ended June 30, 2008 compared to no provision for the quarter ended June 30, 2007. The Company had approximately $270,000 of net charge-offs to the allowance for loan losses in the three months ended June 30, 2008 compared to $61,000 of net charge-offs for the quarter ended June 30, 2007. During the three months ended June 30, 2008, our charge-offs included three commercial real estate loans with an aggregate carrying value of $94,000 and two residential second mortgages of $176,000 in the aggregate. While we have no sub-prime mortgage loans in our portfolio, the charge-offs during the three months ended June 30, 2008 reflect, in part, the softening of the economy. For the nine months ended June 30, 2008, the Company's provision for loan losses amounted to $869,000 compared to $168,000 for the nine months ended June 30, 2007. Net charge-offs amounted to $642,000 for the nine months ended June 30, 2008 compared to $149,000 for the nine months ended June 30, 2007. The Company's other, or non-interest, income increased by $135,000 and $286,000 in the quarter and nine months ended June 30, 2008 over the comparable periods in fiscal 2007. The increases in the fiscal 2008 periods also reflect increases in deposit account service charges and other fees, as well as an increase in income from bank owned life insurance. Other, or non-interest, expenses of the Company increased by $1.4 million and $2.2 million in the quarter and nine months ended June 30, 2008 over the comparable periods in fiscal 2007. As previously indicated, the Company made a $1.2 million contribution to the Malvern Federal Charitable Foundation which is included in other expenses. The increases in the fiscal 2008 periods also reflect increased salary and benefit expense and increases in other operating expenses and professional fees. Income tax benefit for the third quarter of fiscal 2008 was $101,000 compared to income tax expense of $462,000 for the third quarter of fiscal 2007. Income tax expense for the nine-months ended June 30, 2008 amounted to $335,000 compared to $1.3 million for the nine months ended June 30, 2007. The decrease in income tax expense was due to the decrease in our pre-tax income for the respective periods. The Company's total assets amounted to $605.5 million at June 30, 2008 compared to $551.9 million at September 30, 2007. The primary reason for the increase in assets during the first nine months of fiscal 2008 was an increase in net loans receivable of $75.0 million, or 16.1%, which was partially offset by an aggregate $4.8 million reduction in the Company's investment securities portfolio. Cash and cash equivalents decreased by $8.2 million at June 30, 2008 compared to September 30, 2007 due primarily to the use of cash to fund loan demand and deposit out-flows. Stockholders' equity increased by $25.8 million to $69.9 million at June 30, 2008 compared to $44.0 million at September 30, 2007 primarily due to the $26.0 million in net proceeds raised in the Company's recently completed stock offering. The Company issued 2,645,575 shares of common stock, representing 45% of the total outstanding shares of the Company, to subscribers in the stock offering and to the foundation. The remaining 55% or 3,383,875 shares were issued to Malvern Federal Mutual Holding Company, the Company's parent mutual holding company. Retained earnings increased by $874,000 to $45.2 million as a result of net income for the first nine months of the fiscal 2008. At June 30, 2008 the Company's total non-performing assets amounted to $6.8 million, or 1.12% of total assets, compared to $1.2 million in non-performing assets at June 30, 2007, constituting 0.25% of total assets at such date, and $2.6 million, or 0.47% of total assets, at September 30, 2007. The $4.2 million increase in non-performing assets during the first nine months of fiscal 2008 was due primarily to one $3.5 million mixed-use commercial real estate loan becoming non-accrual/non-performing during the first quarter of fiscal 2008. The Company has commenced foreclosure proceedings on the property securing this loan and anticipates no additional losses with respect to this loan. At June 30, 2008, the Company's allowance for loan losses was 70.35% of non-performing loans and 0.87% of total loans. Malvern Federal Bancorp, Inc., of Pennsylvania is the ``mid-tier'' holding company for Malvern Federal Savings Bank. Malvern Federal Savings Bank is a Pennsylvania-chartered, FDIC-insured savings bank that was originally organized in 1887. The Bank conducts business from its headquarters and main office in Paoli, Pennsylvania, a suburb of Philadelphia. 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 Federal Bancorp, 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 belief, expectations or events.
SELECTED FINANCIAL AND OTHER DATA (Unaudited)
At June 30, At Sept. 30,
2008 2007
-------- --------
(Dollars in Thousands)
Selected Financial Condition Data:
Total assets $605,541 $551,932
Loans receivable, net 541,204 466,192
Loans held for sale -- 9,258
Securities held to maturity 2,906 1,479
Securities available for sale 22,904 29,098
FHLB borrowings 91,882 71,387
Deposits 438,217 433,488
Shareholder's Equity 69,855 44,039
Total liabilities 535,686 507,893
Allowance for loan losses 4,768 4,541
Non-performing loans 6,778 2,388
Non-performing assets 6,778 2,615
Three Months Nine Months
Ended June 30, Ended June 30,
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
(Dollars in (Dollars in
Thousands) Thousands)
Selected Operating Data:
Total interest and dividend
income $8,346 $8,334 $24,773 $24,360
Total interest expense 4,596 4,858 14,469 14,191
------- ------- ------- -------
Net interest income 3,750 3,476 10,304 10,169
Provision for loan losses 405 0 869 168
------- ------- ------- -------
Net interest income after
provision for loan losses 3,345 3,476 9,435 10,001
Total other income 469 334 1,387 1,101
Total other expenses(1) 3,978 2,543 9,613 7,441
Income tax expense (benefit) (101) 462 335 1,319
------- ------- ------- -------
Net income (loss) $(63) $805 $874 $2,342
======= ======= ======= =======
Three Months Nine Months
Ended June 30, Ended June 30,
--------------- ---------------
2008 2007 2008 2007
------- ------- ------- -------
Selected Financial Ratios
and Other Data(2):
-------------------------
Performance Ratios:
Return on assets (ratio of
net income to average total
assets) -0.04% 0.61% 0.11% 0.34%
Return on average equity
(ratio of net income to
average equity) -0.45 7.61 1.37 4.20
Interest rate spread(3) 2.19 2.29 2.12 2.27
Net interest margin(4) 2.65 2.71 2.54 2.68
Non-interest expenses to
average total assets 2.71 1.92 1.21 1.07
Efficiency ratio(5) 94.28 66.76 82.23 66.03
Asset Quality Ratios(6):
Non-performing loans as a
percent of gross loans 1.25 0.25 1.25 0.25
Non-performing assets as a
percent of total assets 1.12 0.25 1.12 0.25
Allowance for loan losses as
a percent of gross loans 0.87 0.73 0.87 0.73
Allowance for loan losses as
a percent of non-performing
loans 70.35 290.63 70.35 290.63
Capital Ratios(6):
Total risk-based capital to
risk weighted assets 15.77 11.50 15.77 11.50
Tier 1 risk-based capital to
risk weighted assets 14.94 10.68 14.94 10.68
Tangible capital to tangible
assets 11.58 8.23 11.58 8.23
Tier 1 leverage (core)
capital to adjustable
tangible assets 11.58 8.23 11.58 8.23
Equity to total assets 11.54 7.98 11.54 7.98
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(1) Includes $1.2 million expense during the quarter and nine months
ended June 30, 2008 for the Company's contribution to the
Malvern Federal Charitable Foundation in connection with the
reorganization and stock issuance.
(2) Ratios have been annualized where appropriate.
(3) Represents the difference between the weighted average yield on
interest earning assets and the weighted average cost of
interest bearing liabilities.
(4) Net interest income divided by average interest earning
assets.
(5) Represents non-interest expense divided by net interest income
and total other income.
(6) Asset quality ratios and capital ratios are end of period
ratios.
Contact: Malvern Federal Bancorp, Inc.
Ronald Anderson, President and CEO
(610) 644-9400
Source: Malvern Federal Bancorp, Inc.
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