Malvern in Pennsylvania Facing Activist Pressure to Sell

Malvern Bancorp (MLVF) in Paoli, Pa., is facing activist pressure to sell itself.

PL Capital, which owns about 9.7% of Malvern's stock, urged the board of the $585 million-asset company to find a buyer. "We do not think Malvern has evidenced the ability to adequately address its challenges individually," the group said in a May 14 letter included in a recent regulatory filing.

The group noted that there are regulatory restraints to a sale. Notable, Malvern is prohibited from selling for a three-year period following its conversion from a mutual to a stock-owned company. That period will not end until October 2015.

PL Capital suggested that management go ahead engage legal and financial advisers to explore a sale that could close after the three-year period ends. "We do not know if the regulators will permit such a request, but we believe it is appropriate for the board and the company to pursue this option," the letter added.

Malvern reached a truce late last year with Joseph Stilwell, another dissident investor who had threatened to wage a proxy battle. Stilwell, who also owns nearly 10% of Malvern's stock, was allowed to nominate a company-endorsed candidate for the board. In return, the investor agreed to stop fighting management and the board through early 2017. The company also agreed to hire an investment bank to seek "reasonable alternatives" if it fails to produce above-average return on equity in 2015 and 2016.

Malvern lost $426,000 in the first quarter after losing $845,000 a year earlier. Ronald Anderson resigned as the company's president and chief executive in January.

PL Capital isn't the only group that believes a sale is best for Malvern. A group of Keefe, Bruyette & Woods analysts led by Travis Lan wrote in a Monday note to clients that a sale might be the best outcome.

"Exclusive of attracting a strong, accomplished CEO, a sale is the best bet," the research team said. "At the end of the day, Malvern remain directionless without a strong CEO at the helm."