PAOLI, Pa., May 10, 2021 (GLOBE NEWSWIRE) -- 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 SUBSIDIARIES

CONSOLIDATED 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 SUBSIDIARIES

CONSOLIDATED 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 SUBSIDIARIES

SELECTED 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. Gangemi

Corporate Investor Relations

610-695-3676

Investor Relations Contact:

Ronald Morales

610-695-364

Malvern Bancorp, Inc. Reports Second Quarter 2021 Operating Results