 PAOLI, Pa., Aug. 05, 2020 GLOBE NEWSWIRE -- Malvern Bancorp, Inc. NASDAQ: MLVF the Company, the parent company of Malvern Bank, National Association Malvern or the Bank, today reported operating results for the third fiscal quarter ended June 30, 2020. Net income for the quarter ended June 30, 2020 amounted to 1.5 million, or 0.19 per fully diluted common share, compared with net income of 2.7 million, or 0.35 per fully diluted common share, for the quarter ended June 30, 2019. The decreases in net income and diluted earnings per share from the third quarter of 2019 were primarily due to an increase in the provision for loan losses and a decrease in net interest income. The Company recorded a provision for loan losses of 435,000 for the quarter ended June 30, 2020, an increase of 379,000 compared to the quarter ended June 30, 2019, substantially due to economic uncertainties caused by the coronavirus pandemic COVID-19. Net interest income for the quarter ended June 30, 2020 was 830,000 lower than in the quarter ended June 30, 2019. This decrease was mainly driven by the lower interest rate environment. Annualized return on average assets ROAA was 0.48 percent for the quarter ended June 30, 2020, compared to 0.88 percent for the quarter ended June 30, 2019, and annualized return on average equity ROAE was 4.06 percent for the quarter ended June 30, 2020, compared with 7.66 percent for the quarter ended June 30, 2019.For the nine months ended June 30, 2020, net income amounted to 4.1 million, or 0.54 per fully diluted common share, compared with net income of 6.6 million, or 0.87 per fully diluted common share, for the nine months ended June 30, 2019. The decreases in net income and diluted earnings per share were primarily due to higher provision expense and lower net interest income, as well as the partial charge-off of 2.3 million in the first fiscal quarter of 2020 related to one commercial loan relationship. Annualized ROAA was 0.45 percent for the nine months ended June 30, 2020, compared to 0.78 percent for the nine months ended June 30, 2019, and annualized ROAE was 3.85 percent for the nine months ended June 30, 2020, compared with 6.48 percent for the nine months ended June 30, 2019. Over the last several months, we have operated under what can only be described as unprecedented circumstances. While weve always tested and planned for emergencies, realizing one as significant as the COVID-19 pandemic, and activating our plan in March to work remotely and through drive-thru service only for almost three months, could not have been forecasted by anyone. As the COVID-19 pandemic continues to provide a drag on both our business and the broader economy amidst the backdrop of virus spikes in certain states and the uncertainty of a vaccine, the question of when the economy will return to a more normal environment creates heightened uncertainty and new challenges to adapt our business, commented Anthony C. Weagley, President and Chief Executive Officer. Our priority remains keeping our staff and clients safe and helping our clients while we implement strategies to navigate this crisis and continue to move forward, continued Mr. Weagley.Ongoing Impact of COVID-19The Company continues to take the following significant steps to protect the health and well-being of its employees and clients and to assist clients who have been impacted by the COVID-19 pandemic. Continuing limited lobby hours; prioritizing drive-thru and appointment banking. High-risk designated hours offered to assist our high-risk clients. Continuing to assist existing and new customers in the Small Business Associations Paycheck Protection Program PPP. As of June 30, 2020, the Company has obtained approval from the Small Business Administration SBA for 208 loans totaling 17.7 million for existing and new customers with an average loan size of approximately 85,000. As of August 1, 2020, the Company has originated 249 PPP loans totaling 20.7 million for both existing and new customers, with an average loan size of approximately 83,000. These loans are expected to generate fee income of approximately 763,000 in future quarters. Continuing to provide payment deferrals and forbearances to business customers and mortgage customers that are experiencing hardship because of the crisis. At June 30, 2020, the Company had 313.5 million in COVID-19 modified loan deferrals. As of August 1, 2020, 269.1 million, or 85.8 percent, of COVID-19 modified loans reached their initial 90-day forbearance expiration. Of this amount, 140.6 million, or 52.2 percent have returned to original contractual monthly payments and 128.5 million, or 47.8 percent have requested or been approved for a second forbearance period for a maximum of 90 additional days. Of the 128.5 million, 22.7 million, or 17.6 percent, started making interest-only payments during the second forbearance period.Statement of Income Highlights at June 30, 2020 The Company recorded a provision for loan losses of 435,000 and 3.2 million during the three months ended June 30, 2020 and the nine months ended June 30, 2020, respectively. The increase in the provision for loan losses in the recent quarter as compared with the prior quarter ended June 30, 2019 reflects an increase in qualitative factors as a result of COVID-19. The larger component of the year-to-date increase was attributable to a partial charge-off of 2.3 million in the first fiscal quarter of 2020 related to one commercial loan relationship. Due to the uncertainty created by COVID-19, the Company anticipates elevated provisioning until businesses have fully reopened and deferral periods have expired. Net interest income decreased 830,000, or 11.1 percent, for the three months ended June 30, 2020 when compared to the three months ended June 30, 2019. Lower rates were attributable to the Federal Open Market Committee FOMC lowering its target rate from 2.25-2.50 percent to 0-0.25 percent between July 2019 and March 2020. On a linked-quarter basis, the reported net interest margin and net interest margin on a tax-equivalent basis, a non-GAAP measure, increased 4 basis points to 2.29 percent. This increase was driven by the reduction in interest expense, partially offset by a decrease in interest earning assets. Information reconciling non-GAAP measures to GAAP measures is presented beginning on page 13 in this press release. Average loan yields declined 29 basis points and the total cost of funds decreased 31 basis points, as the cost of interest-bearing deposits decreased 27 basis points compared to the second fiscal quarter of 2020. Linked Quarter Financial Ratios unaudited As of or for the quarter ended:63020331201231199301963019 Return on average assets 10.480.610.260.860.88 Return on average equity 14.065.292.197.657.66 Net interest margin tax equivalent basis 22.292.252.342.452.54 Loans deposits ratio117.45110.56106.14106.64106.52 Shareholders equity total assets11.9211.5811.4011.2611.03 Efficiency ratio, non-GAAP 1 2 366.060.858.954.956.6 Book value per common share18.8618.6718.4818.3517.99 ___1Annualized. 2Information reconciling non-GAAP measures to GAAP measures is presented beginning on page 13 in this press release. 3Efficiency 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. Linked Quarter Income Statement Dataunaudited in thousands, except share and per share data For the quarter ended:63020331201231199301963019 Net interest income6,6316,7936,8887,4187,461 Provision for loan losses4356252,150-56 Net interest income after provision for loan losses6,1966,1684,7387,4187,405 Other income389964443551454 Other expense4,6844,6384,4224,4534,497 Income before income tax expense1,9012,4947593,5163,362 Income tax expense benefit44758626817706 Net income1,4541,908785 2,699 2,656 Earnings per common share Basic0.190.250.100.350.35 Diluted0.190.250.100.350.35 Weighted average common shares outstanding Basic7,538,3757,663,7717,665,8427,663,2427,669,851 Diluted7,538,3757,663,7717,665,8427,663,5937,670,106 Net Interest IncomeNet interest income was 6.6 million for the quarter ended June 30, 2020, a decrease of 830,000, or 11.1 percent, from 7.5 million for the quarter ended June 30, 2019. The decline was driven by the Federal Reserve Boards zero rate policy. The net interest spread on an annualized basis was 2.10 percent and 2.29 percent for the quarters ended June 30, 2020 and 2019, respectively. For the quarter ended June 30, 2020, the Companys reported net interest margin and net interest margin on a tax-equivalent basis, a non-GAAP measure, decreased by 25 basis points to 2.29 percent, as compared to the quarter ended June 30, 2019. This decrease was primarily driven by the low rate environment. Average loan yields declined 62 basis points and the total cost of funds decreased 44 basis points, as the cost of interest-bearing deposits decreased 43 basis points compared to third fiscal quarter of 2019. As of June 30, 2020, we had a total of 76.8 million of average interest-bearing cash balances. This excess liquidity diluted the net interest margin by approximately 25 basis points. In addition, we had 17.7 million of PPP loans that had a slight dilutive effect on our net interest margin. The PPP loans are at 1.00 percent plus the accretion of the origination fee.Net interest income was 20.3 million for the nine months ended June 30, 2020, a decrease of 1.3 million, or 6.2 percent, from 21. 