A commercial real estate loan in New York is causing a bigger headache for Malvern Bancorp in Paoli, Pennsylvania.
The company with $ 1.3 billion in assets said in a press release Tuesday that it would amend and restate its annual report with the Securities and Exchange Commission and delay its next quarterly report after recording further depreciation on the loan from $ 13.5 million.
Malvern had placed the loan under unrecorded status during its fiscal fourth quarter, which ended on September 30. The company had also reduced the balance by $ 2.9 million and created a specific reserve of $ 581,000 pending the results of a third-party assessment. .
Once the appraisal was complete, Malvern determined that additional depreciation of $ 3.1 million was required. The company has decided to record a new provision for loan losses of $ 4 million for the fiscal fourth quarter to reflect the change.
As a result, Malvern’s net loss for the quarter fell from $ 546,000 to $ 3.5 million. Its annual profits have increased from $ 3.6 million to $ 644,000.
The appraisal determined that the collateral value of the property was “significantly lower” than Malvern’s initial estimate, the company said. “The gap… is mainly due to the impact of the COVID-19 pandemic on the New York City real estate market and its dislocation. “
The loan, tied to a mixed-use property, represents “the majority” of Malvern’s approximately $ 20 million Manhattan exposure, Piper Sandler analyst Frank Schiraldi wrote in a note to clients.