A commercial real estate loan in New York is causing a bigger headache for Malvern Bancorp in Paoli, Pa.
The $1.3 billion-asset company said in a press release Tuesday that it will amend and restate its annual report with the Securities and Exchange Commission and delay its upcoming quarterly report after recording an additional impairment to the $13.5 million loan.
Malvern had placed the loan on nonaccrual status during its fiscal fourth quarter, which ended on Sept. 30. The company had also marked the balance down by $2.9 million and created a $581,000 specific reserve as it waited for the results of a third-party appraisal.
With the appraisal complete, Malvern determined that an additional $3.1 million impairment was needed. The company decided to record a new $4 million loan-loss provision for the fiscal fourth quarter to reflect the change.
As a result, Malvern’s net loss for the quarter deepened from $546,000 to $3.5 million. Its full-year earnings fell from $3.6 million to $644,000.
The appraisal determined that the property’s collateral value was “materially less” than Malvern’s original estimate, the company said. “The variance … is primarily due to the COVID-19 pandemic’s impact on, and dislocation within, the New York City real estate market.”
The loan, tied to a mixed-use property, represents “the majority” of Malvern’s roughly $20 million in exposure to Manhattan, Frank Schiraldi, an analyst at Piper Sandler, wrote in a note to clients.
