Malvern Bancorp, Inc. :MLVF-US: Earnings Analysis: Q1, 2017 By the Numbers : January 26, 2017

Malvern Bancorp, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Malvern Bancorp, Inc. – Northwest Bancshares, Inc. (NWBI-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 5.69 million, Net Earnings of USD 1.17 million.
  • Net interest income margins widened from 88.30% to 92.04% compared to the same period last year.
  • Net loan assets changed 44.84% compared to same period last year and 16.42% from previous period, total deposits changed 23.18% compared to same period last year and 9.40% from previous period.
  • Earnings decline from worsening in operating margins as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 5.69 5.64 5.44 5 4.77
Revenue Growth (%YOY) 19.35 22.02 21.46 9.17 5.44
Earnings (mil) 1.17 7.74 1.59 1.27 1.34
Earnings Growth (%YOY) -12.95 565.21 31.87 25.6 318.69
Net Margin (%) 20.56 137.41 29.21 25.31 28.18
EPS 0.18 1.21 0.25 0.2 0.21
Return on Equity (%) 4.92 34.18 7.42 6.05 6.55
Return on Assets (%) 0.55 3.83 0.81 0.68 0.78

Access our Ratings and Scores for Malvern Bancorp, Inc.

Market Share Versus Profits

Revenues History
Earnings History

MLVF-US‘s change in revenue this period compared to the same period last year of 19.35% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that MLVF-US is holding onto its market share. Also, for comparison purposes, revenues changed by 1.01% and earnings by -84.89% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

{arg3)’s earnings declined year-on-year because of the increases in loan loss provisions. Its net interest income after provisions margins went from 88.30% to 80.45%. The fall in earnings would have been worse were it not for the fact that the company’s net interest income margins improved, from 88.30% to 92.04%. For comparison, net interest income margins were 89.10% and net interest income after provisions margins 87.33% in the immediate last period.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

The firm’s improvement in net interest income margins was influenced by both the relative increase in the levels of net loan assets and the level of total deposits as a percentage of equity. On an absolute basis, net loan assets changed 44.84% compared to the same period last year and 16.42% from the previous period. Total deposits changed 23.18% compared to the same period last year and 9.40% from the previous period.

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Contraction of operating margins from 28.18% to 25.69% and (2) One-time items that contributed to a decrease in pretax margins from 28.18% to 25.69%

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Malvern Bancorp, Inc.

Company Profile

Malvern Bancorp, Inc. operates as a bank holding company for Malvern Federal Savings Bank, which engages in business of attracting deposits from the general public and originating residential and commercial mortgage loans, consumer loans and other loans. Its principal sources of funds are deposits, repayments of loans and investment securities, maturities of investments and interest bearing deposits. The company was founded on October 11, 2012 and is headquartered in Paoli, PA.

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