CUSIP No. 561409103
|
Page 1 of 19 Pages
|
CUSIP No. 561409103
|
Page 2 of 19 Pages
|
1
|
NAME OF REPORTING PERSON
PL Capital, LLC
|
|||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) T
(b) £
|
||
3
|
SEC USE ONLY
|
|||
4
|
SOURCE OF FUNDS
|
|||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
£
|
||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
|||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
||
8
|
SHARED VOTING POWER
494,809
|
|||
9
|
SOLE DISPOSITIVE POWER
0
|
|||
10
|
SHARED DISPOSITIVE POWER
494,809
|
|||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
494,809
|
|||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
T
|
||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
|
|||
14
|
TYPE OF REPORTING PERSON
OO
|
CUSIP No. 561409103
|
Page 3 of 19 Pages
|
1
|
NAME OF REPORTING PERSON
Financial Edge Fund, L.P.
|
|||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) T
(b) £
|
||
3
|
SEC USE ONLY
|
|||
4
|
SOURCE OF FUNDS
WC, OO
|
|||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
£
|
||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
|||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
||
8
|
SHARED VOTING POWER
315,580
|
|||
9
|
SOLE DISPOSITIVE POWER
0
|
|||
10
|
SHARED DISPOSITIVE POWER
315,580
|
|||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
315,580
|
|||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
T
|
||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.8%
|
|||
14
|
TYPE OF REPORTING PERSON
PN
|
CUSIP No. 561409103
|
Page 4 of 19 Pages
|
1
|
NAME OF REPORTING PERSON
Financial Edge—Strategic Fund, L.P.
|
|||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) T
(b) £
|
||
3
|
SEC USE ONLY
|
|||
4
|
SOURCE OF FUNDS
WC, OO
|
|||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
£
|
||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
|||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
||
8
|
SHARED VOTING POWER
109,434
|
|||
9
|
SOLE DISPOSITIVE POWER
0
|
|||
10
|
SHARED DISPOSITIVE POWER
109,434
|
|||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
109,434
|
|||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
T
|
||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.7%
|
|||
14
|
TYPE OF REPORTING PERSON
PN
|
CUSIP No. 561409103
|
Page 5 of 19 Pages
|
1
|
NAME OF REPORTING PERSON
Goodbody/PL Capital, L.P.
|
|||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) T
(b) £
|
||
3
|
SEC USE ONLY
|
|||
4
|
SOURCE OF FUNDS
WC, OO
|
|||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
£
|
||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
|||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
||
8
|
SHARED VOTING POWER
122,501
|
|||
9
|
SOLE DISPOSITIVE POWER
0
|
|||
10
|
SHARED DISPOSITIVE POWER
122,501
|
|||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
122,501
|
|||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
T
|
||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.9%
|
|||
14
|
TYPE OF REPORTING PERSON
PN
|
CUSIP No. 561409103
|
Page 6 of 19 Pages
|
1
|
NAME OF REPORTING PERSON
Goodbody/PL Capital, LLC
|
|||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) T
(b) £
|
||
3
|
SEC USE ONLY
|
|||
4
|
SOURCE OF FUNDS
|
|||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
£
|
||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
|||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
||
8
|
SHARED VOTING POWER
122,501
|
|||
9
|
SOLE DISPOSITIVE POWER
0
|
|||
10
|
SHARED DISPOSITIVE POWER
122,501
|
|||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
122,501
|
|||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
T
|
||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.9%
|
|||
14
|
TYPE OF REPORTING PERSON
OO
|
CUSIP No. 561409103
|
Page 7 of 19 Pages
|
1
|
NAME OF REPORTING PERSON
PL Capital Advisors, LLC
|
|||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) T
(b) £
|
||
3
|
SEC USE ONLY
|
|||
4
|
SOURCE OF FUNDS
|
|||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
£
|
||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
|||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
||
8
|
SHARED VOTING POWER
617,310
|
|||
9
|
SOLE DISPOSITIVE POWER
0
|
|||
10
|
SHARED DISPOSITIVE POWER
617,310
|
|||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
617,310
|
|||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
T
|
||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.4%
|
|||
14
|
TYPE OF REPORTING PERSON
OO
|
CUSIP No. 561409103
|
Page 8 of 19 Pages
|
1
|
NAME OF REPORTING PERSON
John W. Palmer
|
|||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) T
(b) £
|
||
3
|
SEC USE ONLY
|
|||
4
|
SOURCE OF FUNDS
|
|||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
£
|
||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
USA
|
|||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
||
8
|
SHARED VOTING POWER
617,310
|
|||
9
|
SOLE DISPOSITIVE POWER
0
|
|||
10
|
SHARED DISPOSITIVE POWER
617,310
|
|||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
617,310
|
|||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
T
|
||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.4%
|
|||
14
|
TYPE OF REPORTING PERSON
IN
|
CUSIP No. 561409103
|
Page 9 of 19 Pages
|
1
|
NAME OF REPORTING PERSON
Richard J. Lashley
|
|||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) T
(b) £
|
||
3
|
SEC USE ONLY
|
|||
4
|
SOURCE OF FUNDS
|
|||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
£
|
||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
USA
|
|||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
||
8
|
SHARED VOTING POWER
617,310
|
|||
9
|
SOLE DISPOSITIVE POWER
0
|
|||
10
|
SHARED DISPOSITIVE POWER
617,310
|
|||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
617,310
|
|||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
T
|
||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.4%
|
|||
14
|
TYPE OF REPORTING PERSON
IN
|
CUSIP No. 561409103
|
Page 10 of 19 Pages
|
1
|
NAME OF REPORTING PERSON
PL Capital/Focused Fund, L.P.
|
|||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) T
(b) £
|
||
3
|
SEC USE ONLY
|
|||
4
|
SOURCE OF FUNDS
WC, OO
|
|||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
£
|
||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
|||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
||
8
|
SHARED VOTING POWER
69,795
|
|||
9
|
SOLE DISPOSITIVE POWER
0
|
|||
10
|
SHARED DISPOSITIVE POWER
69,795
|
|||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
69,795
|
|||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
T
|
||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.1%
|
|||
14
|
TYPE OF REPORTING PERSON
PN
|
CUSIP No. 561409103
|
Page 11 of 19 Pages
|
Item 1.
|
Security and Issuer
|
Item 2.
|
Identity and Background
|
●
|
Financial Edge Fund, L.P., a Delaware limited partnership (“Financial Edge Fund”);
|
●
|
Financial Edge-Strategic Fund, L.P., a Delaware limited partnership (“Financial Edge Strategic”);
|
●
|
PL Capital/Focused Fund, L.P., a Delaware limited partnership (“Focused Fund”);
|
●
|
PL Capital, LLC, a Delaware limited liability company (“PL Capital”) and General Partner of Financial Edge Fund, Financial Edge Strategic and Focused Fund;
|
●
|
PL Capital Advisors, LLC, a Delaware limited liability company (“PL Capital Advisors”), and the investment advisor to Financial Edge Fund, Financial Edge Strategic, Goodbody/PL Capital, L.P. and Focused Fund;
|
●
|
Goodbody/PL Capital, L.P., a Delaware limited partnership (“Goodbody/PL LP”);
|
●
|
Goodbody/PL Capital, LLC (“Goodbody/PL LLC”), a Delaware limited liability company and General Partner of Goodbody/PL LP; and
|
●
|
John W. Palmer and Richard J. Lashley, as Managing Members of PL Capital, PL Capital Advisors and Goodbody/PL LLC.
|
|
(1)
|
shares of Common Stock held in the name of Financial Edge Fund, Financial Edge Strategic and Focused Fund, in Mr. Palmer’s and Mr. Lashley’s capacity as Managing Members of (A) PL Capital: the General Partner of Financial Edge Fund, Financial Edge Strategic and Focused Fund, and (B) PL Capital Advisors: the investment advisor for Financial Edge Fund, Financial Edge Strategic and Focused Fund;
|
CUSIP No. 561409103
|
Page 12 of 19 Pages
|
|
(2)
|
shares of Common Stock held in the name of Goodbody/PL LP, in Mr. Palmer’s and Mr. Lashley’s capacity as Managing Members of (A) Goodbody/PL LLC: the General Partner of Goodbody/PL LP; and (B) PL Capital Advisors: the investment advisor for Goodbody/PL LP.
|
Item 3.
|
Source and Amount of Funds or Other Consideration
|
CUSIP No. 561409103
|
Page 13 of 19 Pages
|
Item 4.
|
Purpose of Transaction
|
CUSIP No. 561409103
|
Page 14 of 19 Pages
|
Item 5.
|
Interest in Securities of the Company
|
(A)
|
Financial Edge Fund
|
|
(c)
|
Financial Edge Fund made no purchases or sales of Common Stock during the past 60 days.
|
|
|
(d)
|
Because Messrs. Palmer and Lashley are the Managing Members of PL Capital, the general partner of Financial Edge Fund, they have the power to direct the affairs of Financial Edge Fund, including the voting and disposition of shares of Common Stock held in the name of Financial Edge Fund. Mr. Palmer and Mr. Lashley are also the Managing Members of PL Capital Advisors, the investment advisor of Financial Edge Fund. Therefore, Mr. Palmer and Mr. Lashley are deemed to share voting and disposition power with Financial Edge Fund with regard to those shares of Common Stock.
|
(B)
|
Financial Edge Strategic
|
CUSIP No. 561409103
|
Page 15 of 19 Pages
|
|
(c)
|
Financial Edge Strategic made no purchases or sales of Common Stock during the past 60 days.
|
|
(d)
|
Because Messrs. Palmer and Lashley are the Managing Members of PL Capital, the general partner of Financial Edge Strategic, they have the power to direct the affairs of Financial Edge Strategic, including the voting and disposition of shares of Common Stock held in the name of Financial Edge Strategic. Mr. Palmer and Mr. Lashley are also the Managing Members of PL Capital Advisors, the investment advisor of Financial Edge Strategic. Therefore, Mr. Palmer and Mr. Lashley are deemed to share voting and disposition power with Financial Edge Strategic with regard to those shares of Common Stock.
|
(C)
|
Focused Fund
|
|
(c)
|
Focused Fund made no purchases or sales of Common Stock during the past 60 days.
|
|
(d)
|
Because Messrs. Palmer and Lashley are the Managing Members of PL Capital, the general partner of Focused Fund, they have the power to direct the affairs of Focused Fund, including the voting and disposition of shares of Common Stock held in the name of Focused Fund. Mr. Palmer and Mr. Lashley are also the Managing Members of PL Capital Advisors, the investment advisor of Focused Fund. Therefore, Mr. Palmer and Mr. Lashley are deemed to share voting and dispositive power with Focused Fund with regard to those shares of Common Stock.
|
(D)
|
Goodbody/PL LP
|
|
(c)
|
Goodbody/PL LP made no purchases or no sales of Common Stock during the past 60 days.
|
|
(d)
|
Goodbody/PL LLC is the general partner of Goodbody/PL LP. Because Messrs. Palmer and Lashley are the Managing Members of Goodbody/PL LLC, they have the power to direct the affairs of Goodbody/PL LP. Mr. Palmer and Mr. Lashley are also the Managing Members of PL Capital Advisors, the investment advisor of Goodbody/PL LP. Therefore, Goodbody/PL LLC may be deemed to share with Messrs. Palmer and Lashley voting and disposition power with regard to the shares of Common Stock held by Goodbody/PL LP.
|
CUSIP No. 561409103
|
Page 16 of 19 Pages
|
|
(c)
|
PL Capital has made no purchases or sales of Common Stock directly.
|
|
(d)
|
PL Capital is the general partner of Financial Edge Fund, Financial Edge Strategic and Focused Fund. Because Messrs. Palmer and Lashley are the Managing Members of PL Capital, they have the power to direct the affairs of PL Capital. Therefore, PL Capital may be deemed to share with Mr. Palmer and Mr. Lashley voting and dispositive power with regard to the shares of Common Stock held by Financial Edge Fund, Financial Edge Strategic and Focused Fund.
|
|
(c)
|
PL Capital Advisors has made no purchases or sales of Common Stock directly.
|
|
(d)
|
PL Capital Advisors is the investment advisor to Financial Edge Fund, Financial Edge Strategic, Focused Fund and Goodbody/PL LP. Because they are the Managing Members of PL Capital Advisors, Mr. Palmer and Mr. Lashley have the power to direct the affairs of PL Capital Advisors. Therefore, PL Capital Advisors may be deemed to share with Mr. Palmer and Mr. Lashley voting and dispositive power with regard to the shares of Common Stock held by Financial Edge Fund, Financial Edge Strategic, Focused Fund and Goodbody/PL LP.
|
|
(c)
|
Goodbody/PL LLC has made no purchases or sales of Common Stock directly.
|
|
(d)
|
Goodbody/PL LLC is the general partner of Goodbody/PL LP. Because Messrs. Palmer and Lashley are the Managing Members of Goodbody/PL LLC, they have the power to direct the affairs of Goodbody/PL LLC. Therefore, Goodbody/PL LLC may be deemed to share with Messrs. Palmer and Lashley voting and disposition power with regard to the shares of Common Stock held by Goodbody/PL LP.
|
|
(c)
|
Mr. Palmer did not purchase or sell any shares of Common Stock during the past 60 days.
|
CUSIP No. 561409103
|
Page 17 of 19 Pages
|
|
(c)
|
Mr. Lashley did not purchase or sell shares of Common Stock during the past 60 days.
|
Item 6.
|
Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Company.
|
Item 7.
|
Material to be Filed as Exhibits
|
Exhibit No.
|
Description
|
1
|
Joint Filing Agreement*
|
2
|
Letter to Company dated October 17, 2012*
|
3
|
Letter to Board of Directors dated May 14, 2014*
|
4
|
Letter to Board of Directors dated August 8, 2014*
|
5
|
Letter to Mr. Steinmetz dated November 6, 2014
|
* Filed previously
|
|
CUSIP No. 561409103
|
Page 18 of 19 Pages
|
FINANCIAL EDGE FUND, L.P.
By: PL CAPITAL, LLC
General Partner
By: /s/ John Palmer /s/ Richard Lashley
John Palmer Richard Lashley
Managing Member Managing Member
|
FINANCIAL EDGE-STRATEGIC FUND, L.P.
By: PL CAPITAL, LLC
General Partner
By: /s/ John Palmer /s/ Richard Lashley
John Palmer Richard Lashley
Managing Member Managing Member
|
PL CAPITAL/FOCUSED FUND, L.P.
By: PL CAPITAL, LLC
General Partner
By: /s/ John Palmer /s/ Richard Lashley
John Palmer Richard Lashley
Managing Member Managing Member
|
CUSIP No. 561409103
|
Page 19 of 19 Pages
|
GOODBODY/PL CAPITAL, L.P.
By: GOODBODY/PL CAPITAL, LLC
General Partner
By: /s/ John Palmer /s/ Richard Lashley
John Palmer Richard Lashley
Managing Member Managing Member
|
GOODBODY/PL CAPITAL, LLC
By: /s/ John Palmer /s/ Richard Lashley
John Palmer Richard Lashley
Managing Member Managing Member
|
PL CAPITAL ADVISORS, LLC
By: /s/ John Palmer /s/ Richard Lashley
John Palmer Richard Lashley
Managing Member Managing Member
|
PL CAPITAL, LLC
By: /s/ John Palmer /s/ Richard Lashley
John Palmer Richard Lashley
Managing Member Managing Member
|
By: /s/ John W. Palmer
John W. Palmer
|
By: /s/ Richard J. Lashley
Richard J. Lashley
|
● |
A top to bottom review of management and key employees needs to be completed, with changes made as needed. A culture of meritocracy, not seniority, should prevail. Malvern likely has some talented young bankers who should be promoted and some poorly performing senior and/or long tenured officers and employees who should be fired or resign.
|
●
|
We have particular concerns over the quality of the financial accounting and credit review functions, given the history of credit surprises, as outlined in our letter dated May 14, 2014. Changes likely need to be made in those areas.
|
●
|
Many of the current board members were in place as the Bank struggled in 2008-2010. The Bank ultimately became subject to an October 2010 supervisory agreement with the OTS. Other members joined the board in the years since 2010. Four years later, the Bank still remains subject to heightened regulatory scrutiny, as most recently defined in the formal written agreement entered into with the OCC in October 2014. The most recent OCC agreement repeats many of the same issues noted in the October 2010 supervisory agreement, which raises the question of what the board has been doing for the past four years and whether the current board understands the severity of the situation, the responsibilities they have or the personal risks they have exposed themselves to.
|
●
|
The board should do a critical self-assessment, and only those board members with the skill set to properly oversee the Company and the Bank, and/or the willingness and ability to actively engage in business development, should remain. Additional high quality board members should be recruited as needed, particularly in geographic or market areas ripe for growth/expansion.
|
●
|
The board should adopt a stock ownership policy for directors and officers. We note that you are the only director who has invested at least one hundred thousand dollars or more in Malvern’s stock since the initial offering in 2008. We recommend that the minimum stock ownership for directors should be $100,000 or more (based upon direct out of pocket costs, not market value; stock options and grants should not be included). A policy should also be developed for officers, using a formula comparing stock ownership to a percentage of compensation.
|
●
|
The Company’s corporate governance structure and documents (e.g. bylaws) should be examined to ensure they are supportive of shareholders’ rights. PL Capital outlined several corporate governance concerns in a letter dated October 17, 2012, none of which have been addressed to our knowledge.
|
●
|
The Bank’s asset/liability mix appears to be excessively liability sensitive. The OCC’s formal written agreement made clear that interest rate risk is a significant regulatory concern. We suggest implementation of a modestly liability sensitive position. Converting from the current strongly liability sensitive position to a moderately liability sensitive position will be complicated by the current low interest rates. The assistance of qualified asset/liability consultants is recommended.
|
●
|
One of the initial strategies should be to cut costs where possible and restructure the Bank and Company to make each more efficient and productive. After restructuring, organic growth in loans, deposits and earnings should be pursued, because Malvern cannot shrink and cost cut its way to prosperity.
|
●
|
We understand that growth may entail downstreaming capital from the holding company to the Bank. We are okay with downstreaming that existing capital as the Company cannot do stock buybacks or pay dividends under its regulatory agreement anyway. We would be opposed to any additional capital raising unless it was due to a regulatory mandate.
|
●
|
We support the hiring of qualified and productive loan and relationship officers as a way to organically grow the Bank. We would oppose any attempt to grow the bank through M&A. Malvern is in no position to be an acquirer of other banks.
|
●
|
Adding high cost brick and mortar branches is also not advisable. Mr. Weagley’s vision of loan production offices and micro-branches makes sense, for both in-market and contiguous market expansions.
|
●
|
Once the initial restructuring phase is completed, the Company should provide shareholders with realistic short and long-term financial and operating projections (e.g. assets, deposits, loans, ROA, ROE, NIM, efficiency ratio, capital, NPAs, etc.).
|
●
|
The board and management should periodically compare the Company’s actual performance over time versus the projections provided publicly to shareholders. We suggest this be done at least quarterly. The public disclosures should be modified on a timely basis, as needed.
|
●
|
With the assistance of qualified, independent financial advisors, the board and management should also periodically examine whether shareholder value is being created by continuing to remain independent, versus a sale or merger of equals. The burden of proof is on Malvern to show that remaining independent is a superior strategic alternative to a sale in the short or long term. We are supportive of the Company’s strategy as long as there is demonstrable and measurable progress being made in reasonable time frames.
|