Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

The following (a) consolidated balance sheet as of September 30, 2019, which has been derived from audited financial statements, and (b) ~~the~~ unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and, accordingly, do not include all of the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal and recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending September 30, 2020, or for any interim period. The Malvern Bancorp, Inc. Annual Report on Form 10-K for the fiscal year ended September 30, 2019 (the “2019 Annual Report”) should be read in conjunction with these financial statements.

	March 31, 2020			September 30, 2019			June 30, 2020			September 30, 2019
	(Unaudited)						(Unaudited)
	(In thousands, except share data)						(In thousands, except share data)
ASSETS
Cash and due from depository institutions	$	1,829		$	1,400		$	30,653		$	1,400
Interest bearing deposits in depository institutions		124,239			152,143			28,291			152,143
Cash and Cash Equivalents		126,068			153,543			58,944			153,543
Investment securities available for sale, at fair value (amortized cost of $21,994 and $18,522, respectively)		21,839			18,411
Investment securities held to maturity (fair value of $18,434 and $22,609, respectively)		18,046			22,485
Investment securities available for sale, at fair value (amortized cost of $32,704 and $18,522, respectively)								32,222			18,411
Investment securities held to maturity (fair value of $16,507 and $22,609, respectively)								15,921			22,485
Other investments								1,023			-
Restricted stock, at cost		10,913			11,129			9,766			11,129
Loans receivable, net of allowance for loan losses of $10,556 and $10,095, respectively		1,002,907			1,007,714
Loans receivable, net of allowance for loan losses of $11,067 and $10,095, respectively								1,028,093			1,007,714
Other real estate owned		5,796			5,796			5,796			5,796
Accrued interest receivable		4,121			4,253			5,680			4,253
Operating lease right-of-use assets		2,959			-			2,799			-
Property and equipment, net		6,476			6,678			6,355			6,678
Deferred income taxes		2,974			2,840			3,103			2,840
Bank-owned life insurance		20,144			19,891			20,270			19,891
Other assets		13,869			12,482			13,873			12,482
Total Assets	$	1,236,112		$	1,265,222		$	1,203,845		$	1,265,222
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits:
Deposits-non-interest-bearing		42,874			55,684			47,443			55,684
Deposits-interest-bearing		873,026			898,127			837,001			898,127
Total Deposits		915,900			953,811			884,444			953,811
FHLB advances		133,000			133,000			130,000			133,000
Subordinated debt		24,697			24,619			24,737			24,619
Advances from borrowers for taxes and insurance		2,593			1,761			3,630			1,761
Accrued interest payable		873			978			1,096			978
Operating lease liabilities		2,976			-			2,824			-
Other liabilities		12,923			8,545			13,583			8,545
Total Liabilities		1,092,962			1,122,714			1,060,314			1,122,714
Commitments and Contingencies		-			-			-			-
Shareholders’ Equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued		-			-
Common stock, $0.01 par value, 50,000,000 shares authorized; 7,798,769 and 7,668,571 shares issued and outstanding, respectively, at March 31, 2020 and 7,782,258 and 7,765,395 shares issued and outstanding, respectively, at September 30, 2019		77			78
Preferred stock, $0.01 par value, 10,000,000 shares authorized, NaN issued								-			-
Common stock, $0.01 par value, 50,000,000 shares authorized; 7,804,469 and 7,609,953 shares issued and outstanding, respectively, at June 30, 2020 and 7,782,258 and 7,765,395 shares issued and outstanding, respectively, at September 30, 2019								76			78
Additional paid-in-capital		84,939			84,783			85,068			84,783
Retained earnings		62,437			59,744			63,891			59,744
Unearned Employee Stock Ownership Plan (ESOP) shares		(1,120	)		(1,192	)		(1,083	)		(1,192	)
Accumulated other comprehensive loss		(1,071	)		(569	)		(1,558	)		(569	)
Treasury stock, at cost: 130,198 shares and 16,863 shares at March 31, 2020 and September 30, 2019, respectively		(2,112	)		(336	)
Treasury stock, at cost: 194,516 shares and 16,863 shares at June 30, 2020 and September 30, 2019, respectively								(2,863	)		(336	)
Total Shareholders’ Equity		143,150			142,508			143,531			142,508
Total Liabilities and Shareholders’ Equity	$	1,236,112		$	1,265,222		$	1,203,845		$	1,265,222

	Three Months Ended March 31,					Six Months Ended March 31,				Three Months Ended June 30,				Nine Months Ended June 30,
	2020			2019		2020		2019		2020		2019		2020		2019
	(In thousands, except share data)									(In thousands, except share data)
Interest and Dividend Income
Loans, including fees	$	10,587		$	10,661	$	21,468	$	20,756	$	10,024	$	11,415	$	31,492	$	32,171
Investment securities, taxable		231			250		446		501		253		259		699		760
Investment securities, tax-exempt		34			57		73		118		27		49		100		167
Dividends, restricted stock		182			158		370		291		124		159		494		450
Interest-bearing cash accounts		550			475		1,022		847		26		574		1,048		1,421
Total Interest and Dividend Income		11,584			11,601		23,379		22,513		10,454		12,456		33,833		34,969
Interest Expense
Deposits		3,623			3,395		7,360		6,339		2,876		3,926		10,236		10,265
Short-term borrowings		-			2		-		7		-		-		-		7
Long-term borrowings		785			572		1,572		1,205		564		686		2,136		1,891
Subordinated debt		383			383		766		766		383		383		1,149		1,149
Total Interest Expense		4,791			4,352		9,698		8,317		3,823		4,995		13,521		13,312
Net Interest Income		6,793			7,249		13,681		14,196		6,631		7,461		20,312		21,657
Provision for Loan Losses		625			870		2,775		2,323		435		56		3,210		2,379
Net Interest Income after Provision for Loan losses		6,168			6,379		10,906		11,873		6,196		7,405		17,102		19,278
Other Income
Service charges and other fees		604			238		863		1,178		195		252		1,058		1,430
Rental income		55			64		109		131		54		53		163		184
Net gains on sale of investments		180			-		180		-
Net gains on sale and call of investments											1		27		181		27
Net gains on sale of loans		-			19		3		37		11		-		14		37
Earnings on bank-owned life insurance		125			120		252		241		128		122		380		363
Total Other Income		964			441		1,407		1,587		389		454		1,796		2,041
Other Expenses
Salaries and employee benefits		2,271			2,213		4,396		4,221		2,279		2,223		6,675		6,444
Occupancy expense		591			577		1,173		1,116		576		560		1,749		1,676
Federal deposit insurance premium		3			73		-		142		79		78		79		220
Advertising		32			30		54		60		33		30		87		90
Data processing		272			251		550		505		275		259		825		764
Professional fees		502			455		943		954		524		405		1,467		1,359
Other real estate owned expense, net		(1	)		28		70		49		29		30		99		79
Pennsylvania shares tax		170			92		340		92		169		169		509		261
Other operating expenses		798			724		1,534		1,398		720		743		2,254		2,141
Total Other Expenses		4,638			4,443		9,060		8,537		4,684		4,497		13,744		13,034
Income before income tax expense		2,494			2,377		3,253		4,923		1,901		3,362		5,154		8,285
Income tax expense		586			411		560		946		447		706		1,007		1,652
Net Income	$	1,908		$	1,966	$	2,693	$	3,977	$	1,454	$	2,656	$	4,147	$	6,633
Earnings Per Common Share:
Basic	$	0.25		$	0.26	$	0.35	$	0.52	$	0.19	$	0.35	$	0.54	$	0.87
Diluted	$	0.25		$	0.26	$	0.35	$	0.52	$	0.19	$	0.35	$	0.54	$	0.87
Weighted Average Common Shares Outstanding:
Basic		7,663,771			7,667,518		7,664,813		7,611,051		7,538,375		7,669,851		7,622,820		7,630,650
Diluted		7,663,771			7,667,518		7,664,813		7,611,051		7,538,375		7,670,106		7,622,820		7,630,944

	Three Months Ended March 31,						Six Months Ended March 31,						Three Months Ended June 30,						Nine Months Ended June 30,
	2020			2019			2020			2019			2020			2019			2020			2019
	(In thousands)												(In thousands)
Net Income	$	1,908		$	1,966		$	2,693		$	3,977		$	1,454		$	2,656		$	4,147		$	6,633
Other Comprehensive Income (Loss), Net of Tax:
Unrealized holding gains on available-for-sale securities		62			154			133			121
Unrealized holding (losses) gains on available-for-sale securities														(302	)		177			(169	)		298
Tax effect		(13	)		(32	)		(28	)		(25	)		62			(37	)		34			(62	)
Net of tax amount		49			122			105			96			(240	)		140			(135	)		236

Reclassification adjustment for net gains arising during the period (1)		(180	)		-			(180	)		-			(1	)		(27	)		(181	)		(27	)
Tax effect		38			-			38			-			-			6			38			6
Net of tax amount		(142	)		-			(142	)		-			(1	)		(21	)		(143	)		(21	)

Adjustment for loss recorded on replacement of derivative														23			-			23			-

Amortization of unrealized holding losses on securities transferred from available-for-sale to held-to-maturity (2)		1			1			2			3			1			1			3			4
Tax effect		-			-			-			(1	)		-			-			-			(1	)
Net of tax amount		1			1			2			2			1			1			3			3
Fair value adjustments on derivatives		(682	)		(393	)		(591	)		(1,103	)		(336	)		(664	)		(927	)		(1,767	)
Tax effect		143			81			124			231			66			139			190			370
Net of tax amount		(539	)		(312	)		(467	)		(872	)		(270	)		(525	)		(737	)		(1,397	)
Total other comprehensive loss		(631	)		(189	)		(502	)		(774	)		(487	)		(405	)		(989	)		(1,179	)
Total comprehensive income	$	1,277		$	1,777		$	2,191		$	3,203		$	967		$	2,251		$	3,158		$	5,454

	Common Stock			Additional Paid-In Capital		Retained Earnings		Unearned ESOP Shares			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Shareholders' Equity			Common Stock			Additional Paid-In Capital		Retained Earnings		Unearned ESOP Shares			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Shareholders' Equity
	(In thousands, except share data)																			(In thousands, except share data)
Balance, October 1, 2018		66			61,099		50,412		(1,338	)		584			-			110,823
Balance, April 1, 2019																					78			84,559		54,389		(1,265	)		(190	)		(3	)		137,568
Net Income		-			-		3,977		-			-			-			3,977			-			-		2,656		-			-			-			2,656
Other comprehensive loss		-			-		-		-			(774	)		-			(774	)		-			-		-		-			(405	)		-			(405	)
Treasury stock activity		-			-		-		-			-			(3	)		(3	)															(333	)		(333	)
Stock issuance (net of issuance of proceeds of $25,000)		12			23,332		-		-			-			-			23,344
Committed to be released ESOP shares (7,200 shares)		-			65		-		73			-			-			138
Committed to be released ESOP shares (3,600 shares)																					-			37		-		36			-			-			73
Stock based compensation		-			63		-		-			-			-			63			-			109		-		-			-			-			109
Balance, March 31, 2019		78			84,559		54,389		(1,265	)		(190	)		(3	)		137,568
Balance, June 30, 2019																					78			84,705		57,045		(1,229	)		(595	)		(336	)		139,668

Balance, October 1, 2019		78			84,783		59,744		(1,192	)		(569	)		(336	)		142,508
Balance, April 1, 2020																					77			84,939		62,437		(1,120	)		(1,071	)		(2,112	)		143,150
Net Income		-			-		2,693		-			-			-			2,693			-			-		1,454		-			-			-			1,454
Other comprehensive loss		-			-		-		-			(502	)		-			(502	)		-			-		-		-			(487	)		-			(487	)
Treasury stock activity		(1	)		-		-		-			-			(1,776	)		(1,777	)		(1	)		-		-		-			-			(751	)		(752	)
Committed to be released ESOP shares (7,200 shares)		-			78		-		72			-			-			150
Committed to be released ESOP shares (3,600 shares)																					-			5		-		37			-			-			42
Stock based compensation		-			78		-		-			-			-			78			-			124		-		-			-			-			124
Balance, March 31, 2020	$	77		$	84,939	$	62,437	$	(1,120	)	$	(1,071	)	$	(2,112	)	$	143,150
Balance, June 30, 2020																				$	76		$	85,068	$	63,891	$	(1,083	)	$	(1,558	)	$	(2,863	)	$	143,531

	Common Stock			Additional Paid-In Capital		Retained Earnings		Unearned ESOP Shares			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Shareholders' Equity
	(In thousands, except share data)
Balance, October 1, 2018		66			61,099		50,412		(1,338	)		584			-			110,823
Net Income		-			-		6,633		-			-			-			6,633
Other comprehensive loss		-			-		-		-			(1,179	)		-			(1,179	)
Treasury stock activity		-			-		-		-			-			(336	)		(336	)
Stock issuance (net of issuance of proceeds of $25,000)		12			23,332		-		-			-			-			23,344
Committed to be released ESOP shares (10,800 shares)		-			102		-		109			-			-			211
Stock based compensation		-			172		-		-			-			-			172
Balance, June 30, 2019		78			84,705		57,045		(1,229	)		(595	)		(336	)		139,668

Balance, October 1, 2019		78			84,783		59,744		(1,192	)		(569	)		(336	)		142,508
Net Income		-			-		4,147		-			-			-			4,147
Other comprehensive loss		-			-		-		-			(989	)		-			(989	)
Treasury stock activity		(2	)		-		-		-			-			(2,527	)		(2,529	)
Committed to be released ESOP shares (10,800 shares)		-			83		-		109			-			-			192
Stock based compensation		-			202		-		-			-			-			202
Balance, June 30, 2020	$	76		$	85,068	$	63,891	$	(1,083	)	$	(1,558	)	$	(2,863	)	$	143,531

	Six Months Ended March 31,						Nine Months Ended June 30,
	2020			2019			2020			2019
	(In thousands)						(In thousands)
Cash Flows from Operating Activities
Net income	$	2,693		$	3,977		$	4,147		$	6,633
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		374			382			563			573
Provision for loan losses		2,775			2,323			3,210			2,379
Deferred income tax benefit		(134	)		(363	)		(263	)		(471	)
ESOP expense		150			138			192			211
Stock based compensation		78			63			202			172
Amortization of premiums and discounts on investments securities, net		97			130			163			210
Amortization (accretion) of loan origination fees and costs		1,519			(154	)		531			(564	)
Amortization of mortgage servicing rights		33			21			58			32
Net gain on sale of investments securities available-for-sale		(180	)		-
Net gain on sale and call of investments securities available-for-sale								(181	)		(27	)
Net loss on sale of fixed assets		4			-			4			-
Net gain on sale of secondary market loans		(3	)		(37	)		(14	)		(37	)
Proceeds from sale of secondary market loans		73			2,866			449			2,867
Originations of secondary market loans		(70	)		(2,829	)		(435	)		(2,830	)
Earnings on bank-owned life insurance		(252	)		(241	)		(380	)		(363	)
Decrease (increase) in accrued interest receivable		132			(544	)
(Decrease) increase in accrued interest payable		(105	)		75
Increase in accrued interest receivable								(1,427	)		(437	)
Increase in accrued interest payable								118			659
Operating lease liability payments		(332	)		-			(499	)		-
Increase in other liabilities		7,354			2,740			7,862			4,729
Increase in other assets		(4,506	)		(3,348	)		(4,389	)		(4,990	)
Amortization of subordinate debt		78			79			118			118
Net Cash Provided by Operating Activities		9,778			5,278			10,029			8,864

Cash Flows from Investing Activities
Investment securities available-for-sale:
Purchases		(12,100	)		(5,000	)		(28,188	)		(12,000	)
Sales		5,045			25			5,297			2,055
Maturities, calls and principal repayments		3,740			10,000			7,844			10,952
Investment securities held-to-maturity:
Maturities, calls and principal repayments		4,364			3,200			6,447			6,601
Net decrease (increase) in loans		514			(102,943	)
Net increase in loans								(24,120	)		(115,800	)
Net decrease (increase) in restricted stock		216			(415	)		1,363			(1,867	)
Purchase of property and equipment		(176	)		(150	)		(244	)		(187	)
Net Cash Provided by (Used in) Investing Activities		1,603			(95,283	)
Net Cash Used in Investing Activities								(31,601	)		(110,246	)
Cash Flows from Financing Activities
Net (decrease) increase in deposits		(37,911	)		168,211			(69,367	)		183,036
Proceeds for long-term borrowings		-			30,000			25,000			70,000
Repayment of long-term borrowings		-			(50,000	)		(28,000	)		(55,000	)
Repayment of other borrowed money		-			(2,500	)		-			(2,500	)
Increase in advances from borrowers for taxes and insurance		832			939			1,869			2,040
Net proceeds from issuance of common stock		-			23,344			-			23,344
Acquisition of treasury stock		(1,777	)		(3	)		(2,529	)		(336	)
Net Cash (Used in) Provided by Financing Activities		(38,856	)		169,991			(73,027	)		220,584
Net (Decrease) Increase in Cash and Cash Equivalents		(27,475	)		79,986			(94,599	)		119,202
Cash and Cash Equivalents - Beginning		153,543			30,834			153,543			30,834
Cash and Cash Equivalents - Ending	$	126,068		$	110,820		$	58,944		$	150,036
Supplemental Cash Flows Information
Interest paid	$	9,803		$	8,242		$	13,403		$	12,653
Income taxes paid	$	902		$	769		$	1,077		$	1,255
Non-cash transfer to other real estate owned	$	-		$	5,796		$	-		$	5,796
Non-cash transfer of loans to loans held for sale							$	-		$	367
Impact of ASC 842 adoption:
Right-of-use asset							$	3,279		$	-
Operating lease liability							$	(3,279	)	$	-

Malvern Bancorp, Inc. (the “Company” or “Malvern Bancorp”), a Pennsylvania corporation, is a ~~registered~~ bank holding company registered under the Bank Holding Company Act of 1956, as amended (the “Holding Company Act”). Malvern Bancorp is the holding company for Malvern Bank, National Association (“Malvern Bank” or the “Bank”), a national bank that was originally organized in 1887 as a federally-chartered savings bank. Malvern Bank now serves as one of the oldest banks headquartered on the Philadelphia Main Line. For more than a century, the Bank has been committed to helping people build prosperous communities as a trusted financial partner, forging lasting relationships through teamwork, respect and integrity.

The Bank conducts business from its headquarters in Paoli, Pennsylvania, a suburb of Philadelphia, and through its twelve other banking locations in Chester, Delaware and Bucks counties, Pennsylvania, Morristown, New Jersey, its New Jersey regional headquarters, Palm Beach, Florida, and Montchanin, Delaware. The Bank also maintains representative offices in Wellington, Florida and Allentown, Pennsylvania. The Bank’s primary market niche is providing personalized service to its client base.

In preparing the unaudited consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the unaudited consolidated statements of condition and that affect the results of operations for the periods presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to change in the near term relate to the determination of the allowance for loan losses, other real estate owned, the evaluation of deferred tax assets, the other-than-temporary impairment evaluation of securities, and the valuation of derivative positions. The unaudited consolidated financial statements have been prepared in conformity with GAAP.

Basis of financial statement presentation. The unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements present the Company’s financial condition at ~~March 31,~~June 30, 2020 and September 30, 2019 and the results of operations for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019, and cash flows for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019. In management’s opinion, the unaudited condensed consolidated financial statements contain all adjustments, which include normal and recurring adjustments, necessary for a fair presentation of the financial position and results of operations as of the dates and for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and note disclosures included in the 2019 Annual Report filed with the Securities and Exchange Commission (“SEC”) on December 16, 2019. The consolidated statements of operations for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and the consolidated statements of cash flows for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 are not necessarily indicative of the results of operations or cash flows for the full year ending September 30, 2020 or any interim period. Subsequent events have been evaluated through the date of the issuance of the unaudited Consolidated Financial Statements. No significant subsequent events have occurred through this date requiring adjustment to the financial statements or disclosures.

There have been no significant changes to the Critical Accounting Policies as described in the 2019 Annual Report. Those significant accounting policies remain unchanged at ~~March 31,~~June 30, 2020, except as described below:

The Company accounts for its leases in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 842 - Leases. Most of our leases are recognized on the balance sheet by recording a right-of-use asset and lease liability for each lease. The right-of-use asset represents the right to use the asset under lease for the lease term, and the lease liability represents the contractual obligation to make lease payments. The right-of-use asset is tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

As a lessee, the Company enters into operating leases for certain bank branches, office space, and office equipment. The right-of-use assets and lease liabilities are initially recognized based on the net present value of the remaining lease payments, which include renewal options where management is reasonably certain they will be exercised. The net present value is determined using the incremental borrowing rate based on the Federal Home Loan Bank (“FHLB”) liquidity and funding rates at commencement date. The

right-of-use asset is measured atat the amount of the lease liability adjusted for any prepaid rent, lease incentives and initial direct costs

incurred. The right-of-use asset and lease liability is amortized over the individual lease terms. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The COVID-19 pandemic has negatively impacted the global economy. In response to the crisis, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was passed by ~~congress~~Congress and signed into law on March 27, 2020. The CARES Act provides an estimated $2.2 ~~Trillion~~trillion to fight the COVID-19 pandemic and stimulate the economy by supporting individuals and businesses through loans, grants, tax changes, and other types of relief. Section 4013 of the CARES Act, provides that, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 pandemic declared by the President of the United States under the National Emergencies Act terminates (the “applicable period”). Some of the provisions applicable to the Company include, but are not limited to:

Also in response to the COVID-19 pandemic, the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration (“NCUA”), the Office of the Comptroller of the Currency (“OCC”), and the Consumer Financial Protection Bureau (“CFPB”), in consultation with the state financial regulators (collectively, the “agencies”) issued a joint interagency statement (issued March 22, 2020; revised statement issued April 7, 2020). Some of the provisions applicable to the Company include, but are not limited to:

Reference Rate Reform. In March 2020, the FASB issued ~~Accounting Standards Update (“ASU”)~~ASU No. 2020-04, Reference Rate Reform (Topic 848). The guidance allows for companies to: (1) account for certain contract modifications as a continuation of the existing contract without additional analysis; (2) continue hedge accounting when certain critical terms of a hedging relationship change and assess effectiveness in ways that disregard certain potential sources of ineffectiveness; and (3) make a one-time sale and/or transfer of certain debt securities from held-to-maturity to available-for-sale or trading. This ASU ~~provides optional expedients and exceptions~~is available for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendment only applies to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”)adoption effective immediately, or ~~another reference rate expected to be discontinued because of reference rate reform. The ASU is effective~~ as of January 1, 2020 or any date thereafter for the Company, and applies prospectively to contract modifications and hedging relationships. The one-time election to sell and/or transfer debt securities classified as held-to-maturity may be made at any time after March 12, ~~2020 through December 31, 2022.~~2020. The ~~Company~~Corporation anticipates adopting this ASU and will continue to analyze the provisions of the ASU in connection with ongoing procedures to monitor the work of the Alternative Rates Committee of the FRB and Federal Reserve Bank of New York in identifying an alternative U.S. dollar reference interest rate. It is intoo early to predict whether a new rate index replacement, which we anticipate will be the ~~process of evaluating the impact~~Secured Overnight Financing Rate (“SOFR”). The adoption of this ~~standard but does~~new requirement is not ~~expect this standard~~expected to have a material impact on the consolidated earnings, financial position or cash flows of the ~~Company~~.Company.

Income Taxes. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740). This ASU identifies, evaluates, and improves areas of GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The adoption of this new requirement is not expected to have a material impact on the consolidated earnings, financial position or cash flows of the Company.

Credit Losses. In June 2016, the FASB issued ASUNo. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied currently will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, this ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In April 2019, the FASB issued ASU 2019-04, Codification Improvements, which provides guidance on accounting for credit losses on accrued interest receivable balances and guidance on including recoveries when estimating the allowance. In May 2019, the FASB issued ASU 2019-05, Targeted Transition Relief, which allows entities with an option to elect fair value for certain instruments upon adoption of Topic 326. This ASU will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Bank has a software system in place to assist with the calculation of Current Expected Credit Losses (“CECL”). In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) making this ASU effective for interim and annual periods beginning after December 15, 2022. As such the Company would be required to implement the ASU on October 1, 2023. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which provides guidance on stakeholders’ specific issues about certain aspects of the amendments in ASU 2016-13. The Company formed a cross functional implementation team to review the requirements of ASU 2016-13 and contracted with a third-party provider to assist in the development and implementation of the revised credit loss methodology. The impacts on the consolidated earnings, financial position and cash flows of the Company upon adoption of this ASU are currently unknown.On October 16, 2019, the FASB approved its August 2019 proposal to delay the effective date for adopting the CECL standard for certain small reporting companies and private companies/ not-for-profit organizations to January 2023. ~~In November 2019, the FASB issued ASU No. 2019-10,~~ ~~Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)~~ ~~making this ASU effective for interim and annual periods beginning after December 15, 2022.~~ ~~As such the Company would be required to implement the ASU on October 1, 2023.~~ ~~In November 2019, the FASB issued ASU No. 2019-11,~~ ~~Codification Improvements to Topic 326, Financial Instruments-Credit Losses,~~ ~~which provides guidance on stakeholders’ specific issues about certain aspects of the amendments in ASU 2016-13.~~

~~Leases. In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~ to increase transparency and comparability among organizations recognizing lease assets and lease liabilities on the balance sheet. This ASU requires lessees to recognize a right-of-use (“ROU”) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation for leases with terms of more than twelve months. Accounting by lessors remains largely unchanged from current GAAP. This ASU also requires expanded quantitative and qualitative disclosures for both lessees and lessors. In July 2018, the FASB issued ASU 2018-11, ~~Leases (Topic 842): Targeted Improvements,~~ which provides entities with an additional (and optional) transition method in which the entity applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company has applied the new transition method upon adoption. In December 2018, the FASB issued ASU 2018-20, ~~Leases (Topic 842): Narrow Scope Improvements for Lessors,~~ which clarifies the treatment of sales taxes and other taxes collected from lessees, lessor costs paid directly by lessees, and recognition of variable payments for contracts with lease and non-lease components. In March 2019, the FASB issued ASU 2019-01, ~~Leases (Topic 842): Codification Improvements,~~ which aligned the new lease guidance with the existing guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers. It also clarified an exemption for lessors and lessees from a certain interim disclosure requirement associated with adopting the board’s new lease accounting standard. The Company adopted the guidance in these ASUs on October 1, 2019 and will not restate comparative periods. As a result, the Company recorded ROU assets and related lease liabilities of $3.3 million at October 1, 2019. At March 31, 2020 the Company had ROU assets and related lease liabilities of $3.0 million.

On March 11, 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic as a result of the global spread of the coronavirus illness. In response to the outbreak, federal and state authorities in the U.S. introduced various measures to try to limit or slow the spread of the virus, including travel restrictions, nonessential business closures, stay-at-home orders, and strict social distancing. The Company activated its Pandemic Plan to protect the health of employees and clients, which includes temporarily limiting lobby hours and transitioning some of the Company’s workforce to remote work. ~~Nonetheless,~~To date, the Company has not incurred any significant disruptions to its business activities.

The full impact of COVID-19 is unknown and rapidly evolving. It has caused substantial disruption in international and U.S. economies, markets, and employment. The outbreak may have a significant adverse impact on certain industries the Company serves. Based on management’s current assessment of the increased inherit risk in the loan portfolio, fiscal ~~second~~third quarter 2020 results included an additional ~~$625,000~~$435,000 in provision for loan losses, pre-tax. Because of the significant uncertainties related to the ultimate duration of the COVID-19 pandemic and its potential effects on clients and prospects, and on the national and local economy as a whole, there can be no assurances as to how the crisis may ultimately affect the Company’s loan portfolio.

To work with clients impacted by COVID-19, the Company began providing financial hardship relief in the form of payment deferrals and forbearances to consumers and business customers across several lending products, as well as suspension of home foreclosures. The initial payment deferrals and forbearances ~~are currently~~were expected to cover ~~periods~~a period of three months. The Company subsequently approved a second forbearance period for a maximum of 90 additional days. These offers are not classified as TDRs, will not be reported as past due during the deferral period, and do not result in loans being placed on nonaccrual status. As of ~~April~~June 30, 2020, the Company entered into 137 loan modification agreements with respect to $313.5 million, representing 30.2 percent of loans outstanding, compared to 127 loan modification agreements with respect to $312.6 million, representing 30.4 percent of loans ~~outstanding.~~outstanding, as of April 30, 2020. For loans subject to the program, each borrower is required to resume making regularly scheduled loan payment at the end of the modification period and the deferred amounts will be moved to the end of the loan term.

OnAs of August 1, 2020, $269.1 million, or 85.8 percent of COVID-19 modified loans reached their initial 90 day forbearance expiration. Of this amount, $140.6 million, or 52.2 percent, have returned to original contractual monthly payments and $128.5 million, or 47.8 percent, have requested or been approved for a second forbearance period for a maximum of 90 additional days. Of the $128.5 million, $22.7 million, or 17.6 percent, started paying interest only payments during the second forbearance period.

As disclosed above, on March 27, 2020, the CARES Act was signed into law. The CARES Act is a $2.0 trillion stimulus package to provide relief to U.S. businesses and consumers struggling as a result of the pandemic. A provision in the CARES Act includes a $349.0 billion fund for the creation of the PPP through the SBA and Treasury Department. The PPP is intended to provide loans to small businesses to pay their employees, rent, mortgage interest, and utilities. The loans may be forgiven, conditioned upon the client providing payroll documentation evidencing their compliant use of funds and otherwise complying with the terms of the program. In response to the economic hardships associated with the COVID-19 pandemic, as of ~~April~~June 30, 2020, the Company has obtained approval from the SBA for ~~172~~208 loans totaling ~~$17.1~~$17.7 million for existing and new customers, with an average loan size of approximately $85,000,assisting local small businesses to retain an estimated 1,769 employees. These loans are expected to generate fee income of approximately $763,000 over future quarters. All PPP loans are classified as commercial and industrial loans held for investment. NaN allowance for loan loss was allocated to the PPP loan portfolio due to the Bank complying with the lender obligations that ensure SBA guarantee. The Company is continually monitoring the PPP and making the necessary adjustments to its own operations. Management expects to fund these short-term loans through a combination of short-term FHLB advances, and participation in the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”).

On October 1, 2018, the Company adopted the amendments of ASU 2014-09 - Revenue from Contracts with Customers (Topic 606) and all subsequent ASUs that modified Topic 606. A significant amount of the Company’s revenues is derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance. Some sources of revenue included within non-interest income fall within the scope of Topic 606, while other sources do not. The Company recognizes revenue when the performance obligations related to the transfer of goods or services under the terms of the contract are satisfied. Some obligations are satisfied at a point in time while others are satisfied over a period of time. Revenue is recognized as the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. When consideration includes a variable component, the amount of consideration attributable to variability is included in the transaction price only to the extent it is probable that significant revenue recognized will not be reversed when uncertainty associated with the variable consideration is subsequently resolved. The Company’s contracts generally do not contain terms that require significant judgement to determine the variability impacting the transaction price. The Company has included the following table regarding the Company’s ~~other~~non-interest income for the periods presented:

	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019		2020		2019		2020		2019
	(In thousands)								(In thousands)
Rental income	$	55	$	64	$	109	$	131	$	54	$	53	$	163	$	184
Net gains on sales of investments		180		-		180		-
Net gains on sale and call of investments										1		27		181		27
Net gains on sale of loans		-		19		3		37		11		-		14		37
Earnings on bank-owned life insurance		125		120		252		241		128		122		380		363
Non-interest income within the scope of other GAAP topics	$	360	$	203	$	544	$	409	$	194	$	202	$	738	$	611
ATM fees	$	1	$	1	$	3	$	2	$	2	$	2	$	5	$	4
Credit card fee income		5		6		11		11		5		6		16		17
DDA fee income		26		32		56		69		9		33		65		102
DDA service fees		19		17		38		36		16		19		54		55
Debit card fees		61		57		127		117		53		69		180		186
Other loan fee income		429		65		506		829		53		61		559		890
Other fee income		61		59		118		111		55		52		173		163
Other non-interest income		2		1		4		3		2		10		6		13
Non-interest income from contracts with customers	$	604	$	238	$	863	$	1,178	$	195	$	252	$	1,058	$	1,430
Total Non-interest Income	$	964	$	441	$	1,407	$	1,587	$	389	$	454	$	1,796	$	2,041

The increase in other loan fee income during the quarter ended March 31, 2020 is primarily due to the recognition of approximately $371,000 of net swap fees through the Bank’s commercial loan hedging program.

The decrease in other loan fee income during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 is primarily due to the recognition of approximately $337,000 less of net swap fees through the Bank’s commercial loan hedging program.

Basic earnings per common share is computed based on the weighted average number of shares outstanding reduced by unearned Employee Stock Ownership Plan (“ESOP”) shares. Diluted earnings per share is computed based on the weighted average number of shares outstanding and common stock equivalents (“CSEs”) that would arise from the exercise of dilutive securities, reduced by unearned ESOP shares. During the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020, the Company issued ~~16,357~~5,700 and ~~18,121~~23,821 restricted shares, respectively, which are considered CSEs. ~~During~~ the There were 0 stock options granted during the three ~~and six~~ months ended ~~March 31,~~June 30, 2020. Duringthe nine months ended June 30, 2020, stock options covering a total of 7,000 shares of common stock were granted. During the three and ~~six~~nine months ended ~~March 31,~~June 30, 2019, the Company granted ~~6,045~~3,391 and ~~9,283~~12,674 restricted shares, respectively, which are considered CSEs. ~~During~~ theThere were 0 stock options granted during the three ~~and six~~ months ended ~~March 31,~~June 30, 2019. Duringthe nine months ended June 30, 2019, stock options covering a total of 7,000 shares of common stock were granted.

The following table sets forth the composition of the weighted average shares (denominator) used in the earnings per share computations:

	Three Months Ended March 31,						Six Months Ended March 31,						Three Months Ended June 30,						Nine Months Ended June 30,
	2020			2019			2020			2019			2020			2019			2020			2019
	(In thousands, except share data)												(In thousands, except share data)
Net Income	$	1,908		$	1,966		$	2,693		$	3,977		$	1,454		$	2,656		$	4,147		$	6,633
Weighted average shares outstanding		7,758,718			7,776,870			7,761,566			7,722,217			7,629,722			7,775,598			7,717,778			7,740,010
Average unearned ESOP shares		(94,947	)		(109,352	)		(96,753	)		(111,166	)		(91,347	)		(105,747	)		(94,958	)		(109,360	)
Basic weighted average shares outstanding		7,663,771			7,667,518			7,664,813			7,611,051			7,538,375			7,669,851			7,622,820			7,630,650
Plus: effect of potential dilutive common stock equivalents - stock options		-			-			-			-			-			255			-			294
Diluted weighted average common shares outstanding		7,663,771			7,667,518			7,664,813			7,611,051			7,538,375			7,670,106			7,622,820			7,630,944
Earnings per common share:
Basic	$	0.25		$	0.26		$	0.35		$	0.52		$	0.19		$	0.35		$	0.54		$	0.87
Diluted	$	0.25		$	0.26		$	0.35		$	0.52		$	0.19		$	0.35		$	0.54		$	0.87

The Company maintains an ESOP for substantially all of its full-time employees. The current ESOP trustee is Pentegra. Shares of the Company’s common stock purchased by the ESOP are held until released for allocation to participants. Shares released are allocated to each eligible participant based on the ratio of each such participant’s base compensation to the total base compensation of all eligible plan participants. As the unearned shares are committed to be released and allocated among participants, the Company recognizes a compensation expense equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares released differs from the cost of such shares, the difference is charged or credited to additional paid-in capital. During the period from May 20, 2008 to September 30, 2008, the ESOP purchased 241,178 shares of Company common stock for approximately $2.6 million, at an average price of $10.86 per share, which was funded by a loan from Malvern Federal Bancorp, Inc. (the Company’s predecessor). The ESOP loan, ~~is being repaid principally from the Bank’s contributions to the ESOP. The loan,~~ which bears an interest rate of 5%, is being repaid in quarterly installments through ~~2026.~~ 2026 principally from the Bank’s contributions to the ESOP.Shares are released to participants proportionately as the ESOP loan is repaid. During each of the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019, there were ~~7,200~~3,600 shares and10,800 shares, respectively, committed to be released. At ~~March 31,~~June 30, 2020, there were ~~93,165~~89,565 unallocated shares and ~~166,053~~169,653 allocated shares held by the ESOP. The unallocated shares had an aggregate fair value of approximately $1.1 million at ~~March 31,~~June 30, 2020.

The Company’s investment securities are classified as available-for-sale or held-to-maturity at ~~March 31,~~June 30, 2020 and at September 30, 2019. Investment securities available-for-sale are reported at fair value with unrealized gains or losses included in equity, net of tax. Accordingly, the carrying value of such securities reflects their fair value at the balance sheet date. Fair value is based upon either quoted market prices, or in certain cases where there is limited activity in the market for a particular instrument, assumptions are made to determine their fair value. Held-to-maturity securities, which are carried at amortized cost, are investments where there is positive intent and ability to hold to maturity.

Transfers of debt securities from the available-for-sale category to the held-to-maturity category are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer remains in accumulated other comprehensive income and in the carrying value of the held-to-maturity investment security. Premiums or discounts on investment securities are amortized or accreted using the effective interest method over the life of the security as an adjustment of yield. Unrealized holding gains or losses that remain in accumulated other comprehensive income are amortized or accreted over the remaining life of the security as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount.

The following tables present information related to the Company’s investment securities at ~~March 31,~~June 30, 2020 and September 30, 2019:

	March 31, 2020									June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)									(In thousands)
Investment Securities Available-for-Sale:
U.S. government agencies	$	3,814	$	-	$	(2	)	$	3,812	$	5,039	$	17	$	-		$	5,056
State and municipal obligations		4,205		12		-			4,217		3,703		7		-			3,710
Single issuer trust preferred security		1,000		-		(69	)		931		1,000		-		(163	)		837
Corporate debt securities		11,475		147		(257	)		11,365		22,462		46		(389	)		22,119
Mutual fund		1,500		14		-			1,514
Mutual funds											500		-		-			500
Total	$	21,994	$	173	$	(328	)	$	21,839	$	32,704	$	70	$	(552	)	$	32,222
Investment Securities Held-to-Maturity:
State and municipal obligations	$	2,817	$	71	$	(1	)	$	2,887	$	1,802	$	120	$	-		$	1,922
Corporate debt securities		3,554		119		-			3,673		3,526		224		-			3,750
Mortgage-backed securities:
Collateralized mortgage obligations (“CMO”), fixed-rate		11,675		199		-			11,874		10,593		242		-			10,835
Total	$	18,046	$	389	$	(1	)	$	18,434	$	15,921	$	586	$	-		$	16,507
Equity Securities:
Mutual fund										$	1,000	$	23	$	-		$	1,023
Total										$	1,000	$	23	$	-		$	1,023
Total investment securities	$	40,040	$	562	$	(329	)	$	40,273	$	49,625	$	679	$	(552	)	$	49,752

For the ~~three and six~~nine months ended ~~March 31,~~June 30, 2020,proceeds of available-for-sale investment securities sold amounted to approximately ~~$5.0~~$5.3 million.There were gains of approximately $180,000 associated with these ~~sales.~~sales and $1,000 associated with a call of a security. For the three and ~~six~~nine months ended ~~March 31,~~June 30, 2019, proceeds of available-for-sale investment securities sold amounted to approximately ~~$25,000~~$2.1 million. There was noa gain ~~or loss~~of approximately $27,000 with this sale.

The following tables indicate gross unrealized losses not recognized in income and fair value, aggregated by investment category, and the length of time individual securities have been in a continuous unrealized loss position at ~~March 31,~~June 30, 2020 and September 30, 2019:

	March 31, 2020															June 30, 2020
	Less than 12 Months					More than 12 Months					Total					Less than 12 Months					More than 12 Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)															(In thousands)
Investment Securities Available for Sale:
U.S. government agencies	$	3,812	$	(2	)	$	-	$	-		$	3,812	$	(2	)
Single issuer trust preferred security		-		-			931		(69	)		931		(69	)	$	-	$	-		$	837	$	(163	)	$	837	$	(163	)
Corporate debt securities		1,915		(85	)		3,328		(172	)		5,243		(257	)		7,735		(227	)		3,337		(162	)		11,072		(389	)
Total	$	5,727	$	(87	)	$	4,259	$	(241	)	$	9,986	$	(328	)	$	7,735	$	(227	)	$	4,174	$	(325	)	$	11,909	$	(552	)
Investment Securities Held-to-Maturity:
State and municipal obligations	$	1,005	$	(1	)	$	-	$	-		$	1,005	$	(1	)
Total	$	1,005	$	(1	)	$	-	$	-		$	1,005	$	(1	)
Total investment securities	$	6,732	$	(88	)	$	4,259	$	(241	)	$	10,991	$	(329	)	$	7,735	$	(227	)	$	4,174	$	(325	)	$	11,909	$	(552	)

As of ~~March 31,~~June 30, 2020, the estimated fair value of the securities disclosed above was primarily dependent upon the movement in market interest rates, particularly given the inherent credit risk associated with these securities. These investment securities are comprised of securities that are rated investment grade by at least one bond credit rating service. Although the fair value will fluctuate as market interest rates move, management believes that these fair values will recover as the underlying portfolios mature and are reinvested in market rate yielding investments. As of ~~March 31,~~June 30, 2020, the Company held ~~one government agency security, one municipal bond, three~~8 corporate debt securities and ~~one~~1 single issuer trust preferred security which were in an unrealized loss position. The Company does not intend to sell and expects that it is unlikely that it will be required to sell these securities until such time as the value recovers or the securities mature. Management does not believe any individual unrealized loss as of ~~March 31,~~June 30, 2020 represents an other-than-temporary impairment.

Investment securities having a carrying value of approximately ~~$5.8~~$5.3 million and $6.4 million at ~~March 31,~~June 30, 2020 and September 30, 2019, respectively, were pledged to secure deposits. NoNaN investment securities were pledged to secure hedges at ~~March 31,~~June 30, 2020. Investment securities having a carrying value of$4.0 million at September 30, 2019 were pledged to secure hedges. NoNaN investment securities were pledged to secure short-term borrowings at ~~March 31,~~June 30, 2020 and September 30, 2019.

The following table presents information for investment securities at ~~March 31,~~June 30, 2020, based on scheduled maturities. Actual maturities can be expected to differ from scheduled maturities due to prepayment or early call options of the ~~issuer:~~issuer.

					June 30, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)				(In thousands)
Available-for-Sale:
Within 1 year	$	1,030	$	1,036	$	1,028	$	1,031
Over 1 year through five years		6,676		6,509		6,675		6,517
After 5 years through ten years		7,974		7,969		17,462		17,223
Over 10 years		6,314		6,325		7,539		7,451
Total	$	21,994	$	21,839	$	32,704	$	32,222
Held-to-Maturity:
Over 1 year through five years	$	3,554	$	3,673	$	3,526	$	3,750
After 5 years through ten years		1,811		1,882		1,802		1,922
Over 10 years		1,006		1,005
Mortgage-backed securities:
CMO, fixed-rate		11,675		11,874		10,593		10,835
Total	$	18,046	$	18,434	$	15,921	$	16,507
Equity:
Over 10 years					$	1,000	$	1,023
Total					$	1,000	$	1,023
Total investment securities	$	40,040	$	40,273	$	49,625	$	49,752

Loans receivable in the Company’s portfolio consisted of the following at the dates indicated below:

	March 31, 2020			September 30, 2019			June 30, 2020			September 30, 2019
	(In thousands)						(In thousands)
Residential mortgage	$	240,633		$	220,011		$	246,215		$	220,011
Construction and Development:
Residential and commercial		52,313			40,346			56,999			40,346
Land		3,579			3,420			3,535			3,420
Total Construction and Development		55,892			43,766			60,534			43,766
Commercial:
Commercial real estate		511,467			543,452			501,955			543,452
Farmland		7,537			7,563			7,531			7,563
Multi-family		59,978			62,884			66,416			62,884
Commercial and industrial		96,574			99,747			115,899			99,747
Other		7,604			4,450			8,397			4,450
Total Commercial		683,160			718,096			700,198			718,096
Consumer:
Home equity lines of credit		18,441			19,506			18,097			19,506
Second mortgages		12,393			13,737			11,704			13,737
Other		2,112			2,030			2,074			2,030
Total Consumer		32,946			35,273			31,875			35,273
Total loans		1,012,631			1,017,146			1,038,822			1,017,146
Deferred loan fees and costs, net		832			663			338			663
Allowance for loan losses		(10,556	)		(10,095	)		(11,067	)		(10,095	)
Total loans receivable, net	$	1,002,907		$	1,007,714		$	1,028,093		$	1,007,714

The following tables summarize the primary classes of the allowance for loan losses (“ALLL”), segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment, as of ~~March 31,~~June 30, 2020 and September 30, 2019. Activity in the ALLL is presented for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019 and the fiscal year ended September 30, 2019:

					Construction and Development						Commercial												Consumer																		Construction and Development					Commercial														Consumer
		Residential Mortgage			Residential and Commercial			Land			Commercial Real Estate			Farmland			Multi- Family		Commercial and Industrial		Other		Home Equity Lines of Credit			Second Mortgages			Other			Unallocated			Total				Residential Mortgage		Residential and Commercial		Land			Commercial Real Estate			Farmland			Multi- Family			Commercial and Industrial		Other			Home Equity Lines of Credit		Second Mortgages			Other			Unallocated		Total
Allowance for loan losses:		(In thousands)																																					(In thousands)
Three Months Ended March 31, 2020
Beginning Balance		$	1,282		$	585		$	18		$	6,194		$	38		$	196	$	464	$	33	$	101		$	235		$	23		$	793		$	9,962
Three Months Ended June 30, 2020
Beginning balance																																							$	1,492	$	354	$	24		$	7,282		$	42		$	444		$	516	$	35		$	127	$	212		$	21		$	7	$	10,556
Charge-offs			-			-			-			-			-			-		-		-		(62	)		(1	)		-			-			(63	)			-		-		-			-			-			-			-		-			-		-			-			-		-
Recoveries			23			-			-			1			-			-		1		-		-			6			1			-			32				1		-		-			2			-			-			1		-			1		71			-			-		76
Provisions			187			(231	)		6			1,087			4			248		51		2		88			(28	)		(3	)		(786	)		625				203		51		2			(67	)		5			203			75		8			9		(60	)		1			5		435
Ending balance		$	1,492		$	354		$	24		$	7,282		$	42		$	444	$	516	$	35	$	127		$	212		$	21		$	7		$	10,556			$	1,696	$	405	$	26		$	7,217		$	47		$	647		$	592	$	43		$	137	$	223		$	22		$	12	$	11,067


					Construction and Development						Commercial												Consumer																		Construction and Development					Commercial														Consumer
		Residential Mortgage			Residential and Commercial			Land			Commercial Real Estate			Farmland			Multi- Family		Commercial and Industrial		Other		Home Equity Lines of Credit			Second Mortgages			Other			Unallocated			Total				Residential Mortgage		Residential and Commercial		Land			Commercial Real Estate			Farmland			Multi- Family			Commercial and Industrial		Other			Home Equity Lines of Credit		Second Mortgages			Other			Unallocated		Total
Allowance for loan losses:	(In thousands)																																					(In thousands)
Three Months Ended March 31, 2019
Beginning Balance		$	1,164		$	439		$	45		$	5,344		$	64		$	274	$	432	$	30	$	79		$	391		$	44		$	941		$	9,247
Three Months Ended June 30, 2019
Beginning balance																																							$	1,130	$	601	$	33		$	5,767		$	62		$	419		$	452	$	33		$	101	$	359		$	24		$	1,035	$	10,016
Charge-offs			-			-			-			(153	)		-			-		-		-		-			(1	)		(36	)		-			(190	)			-		-		-			-			-			-			-		-			-		-			-			-		-
Recoveries			79			-			-			1			-			-		1		-		1			6			1			-			89				-		-		-			18			-			-			1		-			-		8			7			-		34
Provisions			(113	)		162			(12	)		575			(2	)		145		19		3		21			(37	)		15			94			870				66		17		(9	)		(238	)		(34	)		(7	)		90		(11	)		5		(22	)		(7	)		206		56
Ending balance		$	1,130		$	601		$	33		$	5,767		$	62		$	419	$	452	$	33	$	101		$	359		$	24		$	1,035		$	10,016			$	1,196	$	618	$	24		$	5,547		$	28		$	412		$	543	$	22		$	106	$	345		$	24		$	1,241	$	10,106

			Construction and Development					Commercial													Consumer																	Construction and Development					Commercial													Consumer
	Residential Mortgage		Residential and Commercial			Land		Commercial Real Estate			Farmland			Multi- Family		Commercial and Industrial			Other		Home Equity Lines of Credit			Second Mortgages			Other			Unallocated			Total			Residential Mortgage		Residential and Commercial			Land		Commercial Real Estate			Farmland			Multi- Family		Commercial and Industrial(1)			Other		Home Equity Lines of Credit			Second Mortgages			Other			Unallocated			Total
Allowance for loan losses:	(In thousands)																																			(In thousands)
Six Months Ended March 31, 2020
Beginning Balance	$	1,364	$	523		$	20	$	5,903		$	49		$	369	$	615		$	21	$	122		$	267		$	23		$	819		$	10,095
Nine Months Ended June 30, 2020
Beginning balance																																				$	1,364	$	523		$	20	$	5,903		$	49		$	369	$	615		$	21	$	122		$	267		$	23		$	819		$	10,095
Charge-offs		-		-			-		(2,288	)		-			-		-			-		(62	)		(3	)		-			-			(2,353	)		-		-			-		(2,288	)		-			-		-			-		(62	)		(3	)		-			-			(2,353	)
Recoveries		23		-			-		2			-			-		1			-		-			12			1			-			39			24		-			-		4			-			-		2			-		1			83			1			-			115
Provisions		105		(169	)		4		3,665			(7	)		75		(100	)		14		67			(64	)		(3	)		(812	)		2,775			308		(118	)		6		3,598			(2	)		278		(25	)		22		76			(124	)		(2	)		(807	)		3,210
Ending balance	$	1,492	$	354		$	24	$	7,282		$	42		$	444	$	516		$	35	$	127		$	212		$	21		$	7		$	10,556		$	1,696	$	405		$	26	$	7,217		$	47		$	647	$	592		$	43	$	137		$	223		$	22		$	12		$	11,067
Ending balance: individually evaluated for impairment	$	3	$	-		$	-	$	110		$	-		$	-	$	-		$	-	$	-		$	90		$	-		$	-		$	203		$	2	$	-		$	-	$	109		$	-		$	-	$	-		$	-	$	-		$	99		$	1		$	-		$	211
Ending balance: collectively evaluated for impairment	$	1,489	$	354		$	24	$	7,172		$	42		$	444	$	516		$	35	$	127		$	122		$	21		$	7		$	10,353		$	1,694	$	405		$	26	$	7,108		$	47		$	647	$	592		$	43	$	137		$	124		$	21		$	12		$	10,856
Loans receivable:
Ending balance	$	240,633	$	52,313		$	3,579	$	511,467		$	7,537		$	59,978	$	96,574		$	7,604	$	18,441		$	12,393		$	2,112					$	1,012,631		$	246,215	$	56,999		$	3,535	$	501,955		$	7,531		$	66,416	$	115,899		$	8,397	$	18,097		$	11,704		$	2,074					$	1,038,822
Ending balance: individually evaluated for impairment	$	3,469	$	-		$	-	$	18,193		$	-		$	-	$	-		$	-	$	29		$	841		$	-					$	22,532		$	3,435	$	-		$	-	$	18,187		$	-		$	-	$	-		$	-	$	28		$	861		$	1					$	22,512
Ending balance: collectively evaluated for impairment	$	237,164	$	52,313		$	3,579	$	493,274		$	7,537		$	59,978	$	96,574		$	7,604	$	18,412		$	11,552		$	2,112					$	990,099		$	242,780	$	56,999		$	3,535	$	483,768		$	7,531		$	66,416	$	115,899		$	8,397	$	18,069		$	10,843		$	2,073					$	1,016,310

				Construction and Development					Commercial												Consumer																	Construction and Development					Commercial													Consumer
	Residential Mortgage			Residential and Commercial		Land			Commercial Real Estate			Farmland			Multi- Family		Commercial and Industrial		Other		Home Equity Lines of Credit		Second Mortgages			Other			Unallocated			Total			Residential Mortgage			Residential and Commercial		Land			Commercial Real Estate			Farmland			Multi- Family		Commercial and Industrial		Other			Home Equity Lines of Credit		Second Mortgages			Other			Unallocated			Total
Allowance for loan losses:	(In thousands)																																		(In thousands)
Six Months Ended March 31, 2019
Beginning Balance	$	1,062		$	393	$	49		$	5,031		$	66		$	232	$	443	$	24	$	82	$	326		$	51		$	1,262		$	9,021
Nine Months Ended June 30, 2019
Beginning balance																																			$	1,062		$	393	$	49		$	5,031		$	66		$	232	$	443	$	24		$	82	$	326		$	51		$	1,262		$	9,021
Charge-offs		(17	)		-		-			(1,376	)		-			-		-		-		-		(1	)		(37	)		-			(1,431	)		(17	)		-		-			(1,376	)		-			-		-		-			-		(1	)		(37	)		-			(1,431	)
Recoveries		79			-		-			4			-			-		3		-		1		14			2			-			103			79			-		-			22			-			-		4		-			1		22			9			-			137
Provisions		6			208		(16	)		2,108			(4	)		187		6		9		18		20			8			(227	)		2,323			72			225		(25	)		1,870			(38	)		180		96		(2	)		23		(2	)		1			(21	)		2,379
Ending balance	$	1,130		$	601	$	33		$	5,767		$	62		$	419	$	452	$	33	$	101	$	359		$	24		$	1,035		$	10,016		$	1,196		$	618	$	24		$	5,547		$	28		$	412	$	543	$	22		$	106	$	345		$	24		$	1,241		$	10,106
Ending balance: individually evaluated for impairment	$	-		$	-	$	-		$	95		$	-		$	-	$	-	$	-	$	-	$	175		$	1		$	-		$	271		$	3		$	-	$	-		$	76		$	-		$	-	$	-	$	-		$	-	$	169		$	1		$	-		$	249
Ending balance: collectively evaluated for impairment	$	1,130		$	601	$	33		$	5,672		$	62		$	419	$	452	$	33	$	101	$	184		$	23		$	1,035		$	9,745		$	1,193		$	618	$	24		$	5,471		$	28		$	412	$	543	$	22		$	106	$	176		$	23		$	1,241		$	9,857
Loans receivable:
Ending balance	$	202,655		$	44,014	$	5,696		$	550,933		$	12,041		$	64,328	$	82,731	$	8,111	$	18,466	$	15,773		$	1,904					$	1,006,652		$	216,114		$	47,485	$	3,809		$	543,045		$	5,388		$	64,050	$	97,877	$	5,356		$	19,348	$	15,018		$	2,081					$	1,019,571
Ending balance: individually evaluated for impairment	$	3,592		$	-	$	67		$	10,155		$	-		$	-	$	-	$	-	$	32	$	685		$	1					$	14,532		$	3,571		$	-	$	-		$	9,748		$	-		$	-	$	-	$	-		$	31	$	663		$	1					$	14,014
Ending balance: collectively evaluated for impairment	$	199,063		$	44,014	$	5,629		$	540,778		$	12,041		$	64,328	$	82,731	$	8,111	$	18,434	$	15,088		$	1,903					$	992,120		$	212,543		$	47,485	$	3,809		$	533,297		$	5,388		$	64,050	$	97,877	$	5,356		$	19,317	$	14,355		$	2,080					$	1,005,557

					Construction and Development					Commercial													Consumer																		Construction and Development					Commercial													Consumer
		Residential Mortgage			Residential and Commercial		Land			Commercial Real Estate			Farmland			Multi- Family		Commercial and Industrial		Other			Home Equity Lines of Credit		Second Mortgages			Other			Unallocated			Total				Residential Mortgage			Residential and Commercial		Land			Commercial Real Estate			Farmland			Multi- Family		Commercial and Industrial		Other			Home Equity Lines of Credit		Second Mortgages			Other			Unallocated			Total
Allowance for loan losses:	(In thousands)																																				(In thousands)
Year Ended September 30, 2019
Beginning Balance		$	1,062		$	393	$	49		$	5,031		$	66		$	232	$	443	$	24		$	82	$	326		$	51		$	1,262		$	9,021
Beginning balance																																						$	1,062		$	393	$	49		$	5,031		$	66		$	232	$	443	$	24		$	82	$	326		$	51		$	1,262		$	9,021
Charge-offs			(17	)		-		-			(1,418	)		-			-		-		-			-		(45	)		(37	)		-			(1,517	)			(17	)		-		-			(1,418	)		-			-		-		-			-		(45	)		(37	)		-			(1,517	)
Recoveries			79			-		-			23			-			-		4		-			1		94			11			-			212				79			-		-			23			-			-		4		-			1		94			11			-			212
Provisions			240			130		(29	)		2,267			(17	)		137		168		(3	)		39		(108	)		(2	)		(443	)		2,379				240			130		(29	)		2,267			(17	)		137		168		(3	)		39		(108	)		(2	)		(443	)		2,379
Ending balance		$	1,364		$	523	$	20		$	5,903		$	49		$	369	$	615	$	21		$	122	$	267		$	23		$	819		$	10,095			$	1,364		$	523	$	20		$	5,903		$	49		$	369	$	615	$	21		$	122	$	267		$	23		$	819		$	10,095
Ending balance: individually evaluated for impairment		$	-		$	-	$	-		$	57		$	-		$	-	$	-	$	-		$	-	$	100		$	-		$	-		$	157			$	-		$	-	$	-		$	57		$	-		$	-	$	-	$	-		$	-	$	100		$	-		$	-		$	157
Ending balance: collectively evaluated for impairment		$	1,364		$	523	$	20		$	5,846		$	49		$	369	$	615	$	21		$	122	$	167		$	23		$	819		$	9,938			$	1,364		$	523	$	20		$	5,846		$	49		$	369	$	615	$	21		$	122	$	167		$	23		$	819		$	9,938
Loans receivable:
Ending balance		$	220,011		$	40,346	$	3,420		$	543,452		$	7,563		$	62,884	$	99,747	$	4,450		$	19,506	$	13,737		$	2,030					$	1,017,146			$	220,011		$	40,346	$	3,420		$	543,452		$	7,563		$	62,884	$	99,747	$	4,450		$	19,506	$	13,737		$	2,030					$	1,017,146
Ending balance: individually evaluated for impairment		$	3,526		$	-	$	-		$	9,707		$	-		$	-	$	-	$	-		$	30	$	728		$	-					$	13,991			$	3,526		$	-	$	-		$	9,707		$	-		$	-	$	-	$	-		$	30	$	728		$	-					$	13,991
Ending balance: collectively evaluated for impairment		$	216,485		$	40,346	$	3,420		$	533,745		$	7,563		$	62,884	$	99,747	$	4,450		$	19,476	$	13,009		$	2,030					$	1,003,155			$	216,485		$	40,346	$	3,420		$	533,745		$	7,563		$	62,884	$	99,747	$	4,450		$	19,476	$	13,009		$	2,030					$	1,003,155

In assessing the adequacy of the ALLL, it is recognized that the process, methodology and underlying assumptions require a significant degree of judgment. The estimation of loan losses is not precise; the range of factors considered is wide and is significantly dependent upon management’s judgment, including the outlook and potential changes in the economic environment. Any unallocated portion of the ALLL in conjunction with the quarterly review and changes to the qualitative factors to adjust for the risk due to current economic conditionsreflects management’s estimate of probable inherent but undetected losses within the portfolio due to uncertainties in economic conditions, regulatory requirements, delays in obtaining information, including unfavorable information about a borrower’s financial condition, the difficulty in identifying triggering events that correlate perfectly to subsequent loss rates, and risk factors that have not yet manifested themselves in loss allocation factors.

The impact of COVID-19 on companies is evolving rapidly and its future effects are uncertain. Although several of the Company’s asset quality metrics have not significantly been adversely affected during the ~~second~~third fiscal quarter of 2020, management determined it is prudent to increase its loan loss reserves through the adjustment in its qualitative factors, such as changes in current business and economic conditions, nature and volume, concentration of credit and the value of the underlying collateral. All of these factors are likely to be affected by the COVID-19 pandemic.

As previously disclosed ~~in the Company’s 10-Q/A filed on April 16, 2020, subsequent to the Company’s submission on February 10, 2020 of the original Form 10-Q~~ for the quarter ended December 31, 2019, additional information was received concerning a certain $9.1 million collateral dependent commercial loan relationship (the “Loan”), which was classified as an accruing TDR as of December 31, 2019. In determining the ALLL and impairment on the Loan as of December 31, 2019, the Company followed guidance under ASC 310-10-35. When measuring impairment on an individual basis under ASC 310-10-35, the Company considered the fair value of the Loan’s collateral, given that, based on available information, the Loan was collateral dependent. Accordingly, the Company charged-off $2.3 million of the Loan, placed the Loan on non-accrual status, recorded an additional $2.2 million provision for loan losses for the three months ended December 31, 2019 and reversed approximately $24,000 of interest income (related to the December 31, 2019 principal and interest payment), crediting it to principal.

In addition, ~~one~~1 commercial real estate loan in the amount of $10.6 million previously classified as ~~management’s attention,~~non-impaired was moved to substandard impaired and remained accruing during the second fiscal quarter 2020. ~~Subsequent to March 31, 2020 management has~~Management restructured this ~~loans~~loan and reclassified it as performing ~~TDR.~~TDR during the third fiscal quarter 2020.

The increase in impaired loans with no specific allowance is primarily due to two commercial real estate loans noted above.The following table presents impaired loans in portfolio by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary, as of ~~March 31,~~June 30, 2020 and September 30, 2019:

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans				Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance		Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
	(In thousands)										(In thousands)
March 31, 2020
June 30, 2020
Residential mortgage	$	196	$	3	$	3,273	$	3,469	$	3,653	$	195	$	2	$	3,240	$	3,435	$	3,626
Commercial:
Commercial real estate		293		110		17,900		18,193		20,505		292		109		17,895		18,187		18,187
Consumer:
Home equity lines of credit		-		-		29		29		31		-		-		28		28		31
Second mortgages		105		90		736		841		904		170		99		691		861		926
Other												1		1		-		1		1
Total impaired loans	$	594	$	203	$	21,938	$	22,532	$	25,093	$	658	$	211	$	21,854	$	22,512	$	22,771
September 30, 2019
Residential mortgage	$	-	$	-	$	3,526	$	3,526	$	3,713	$	-	$	-	$	3,526	$	3,526	$	3,713
Commercial:
Commercial real estate		9,176		57		531		9,707		9,707		9,176		57		531		9,707		9,707
Consumer:
Home equity lines of credit		-		-		30		30		32		-		-		30		30		32
Second mortgages	��	123		100		605		728		790		123		100		605		728		790
Total impaired loans	$	9,299	$	157	$	4,692	$	13,991	$	14,242	$	9,299	$	157	$	4,692	$	13,991	$	14,242

The following table presents the average recorded investment in impaired loans in portfolio and related interest income recognized for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019:

	Three Months Ended March 31, 2020				Six Months Ended March 31, 2020				Three Months Ended June 30, 2020				Nine Months Ended June 30, 2020
	Average Impaired Loans		Interest Income Recognized on Impaired Loans		Average Impaired Loans		Interest Income Recognized on Impaired Loans		Average Impaired Loans		Interest Income Recognized on Impaired Loans		Average Impaired Loans		Interest Income Recognized on Impaired Loans
	(In thousands)								(In thousands)
Residential mortgage	$	3,481	$	25	$	3,507	$	47	$	3,448	$	24	$	3,487	$	71
Commercial:
Commercial real estate		11,222		5		10,153		20		18,190		109		12,822		129
Consumer:
Home equity lines of credit		29		-		29		-		28		-		29		-
Second mortgages		879		3		862		12		844		2		856		14
Total	$	15,611	$	33	$	14,551	$	79	$	22,510	$	135	$	17,194	$	214

	Three Months Ended March 31, 2019				Six Months Ended March 31, 2019				Three Months Ended June 30, 2019				Nine Months Ended June 30, 2019
	Average Impaired Loans		Interest Income Recognized on Impaired Loans		Average Impaired Loans		Interest Income Recognized on Impaired Loans		Average Impaired Loans		Interest Income Recognized on Impaired Loans		Average Impaired Loans		Interest Income Recognized on Impaired Loans
	(In thousands)								(In thousands)
Residential mortgage	$	3,605	$	21	$	3,584	$	48	$	3,577	$	21	$	5,372	$	69
Construction and Development:
Land		69		1		71		2		44		-		93		2
Commercial:
Commercial real estate		10,222		75		12,646		151		10,007		76		17,650		227
Consumer:
Home equity lines of credit		32		-		39		-		32		-		55		-
Second mortgages		663		3		644		5		667		2		977		7
Other		1		-		13		-		1		-		14		-
Total	$	14,592	$	100	$	16,997	$	206	$	14,328	$	99	$	24,161	$	305

The following table presents the classes of the loan portfolio ~~summarized by loans considered to be rated~~categorized as pass, ~~and the categories of~~ special mention, substandard and doubtful within the Company’s internal risk rating system as of ~~March 31,~~June 30, 2020 and September 30, 2019:

	Pass		Special Mention		Substandard		Doubtful		Total		Pass		Special Mention		Substandard		Doubtful		Total
	(In thousands)										(In thousands)
March 31, 2020:
June 30, 2020:
Residential mortgage	$	237,063	$	-	$	3,570	$	-	$	240,633	$	242,683	$	-	$	3,532	$	-	$	246,215
Construction and Development:
Residential and commercial		52,313		-		-		-		52,313		56,999		-		-		-		56,999
Land		3,579		-		-		-		3,579		3,535		-		-		-		3,535
Commercial:
Commercial real estate		468,266		25,008		18,193		-		511,467		458,760		24,497		18,698		-		501,955
Farmland		7,537		-		-		-		7,537		7,531		-		-		-		7,531
Multi-family		50,399		9,579		-		-		59,978		56,885		9,531		-		-		66,416
Commercial and industrial		96,450		-		124		-		96,574		115,775		-		124		-		115,899
Other		7,604		-		-		-		7,604		8,397		-		-		-		8,397
Consumer:
Home equity lines of credit		18,324		-		117		-		18,441		17,982		-		115		-		18,097
Second mortgages		11,287		82		1,024		-		12,393		10,517		80		1,107		-		11,704
Other		2,111		-		1		-		2,112		2,073		-		1		-		2,074
Total	$	954,933	$	34,669	$	23,029	$	-	$	1,012,631	$	981,137	$	34,108	$	23,577	$	-	$	1,038,822

The following table presents loans that are no longer accruing interest as of June 30, 2020 and September 30, 2019, by portfolio class:

	March 31, 2020		September 30, 2019		June 30, 2020		September 30, 2019
	(In thousands)				(In thousands)
Non-accrual loans:
Residential mortgage	$	1,687	$	1,532	$	1,877	$	1,532
Commercial:
Commercial real estate		6,743		-		6,743		-
Consumer:
Home equity lines of credit		29		30		28		30
Second mortgages		196		259		223		259
Total non-accrual loans	$	8,655	$	1,821	$	8,871	$	1,821

As noted above, the Company charged-off $2.3 million of a $9.1 million commercial real estate loan, and placed the loan on non-accrual status. Under the Bank’s loan policy, once a loan has been placed on non-accrual status, we do not resume interest accruals until the loan has been brought current and has maintained a current payment status for not less than six consecutive months. Interest income that would have been recognized on non-accrual loans had they been current in accordance with their original terms was approximately ~~$3,000~~$49,000 and ~~$4,000~~ $63,000 for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020, respectively, and approximately ~~$10,000~~$18,000 and ~~$20,000~~$31,000 for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2019, respectively. At ~~March 31,~~June 30, 2020 and September 30, 2019, there were approximately ~~$168,000~~$265,000 and ~~$502,000,~~$502,000, respectively, of loans past due 90 days or more and still accruing interest.

Management ~~further~~ monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio and categorizing each loan as ~~determined by whether a loan~~“current”, meaning payment ~~is “current;” that is, it~~ is received from a borrower by the scheduled due date, or by the length of time a scheduled payment is past due. The following table presents the classes of the loan portfolio ~~summarized~~categorized by the aging categories described above as of ~~March 31,~~June 30, 2020 and September 30, 2019:

	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days and More Past Due		Total Past Due		Total Loans Receivable		Loans Receivable > 90 Days and Accruing		Current		30-59 Days Past Due		60-89 Days Past Due		90 Days and More Past Due		Total Past Due		Total Loans Receivable		Loans Receivable > 90 Days and Accruing
	(In thousands)														(In thousands)
March 31, 2020:
June 30, 2020:
Residential mortgage	$	235,514	$	3,136	$	1,399	$	584		5,119	$	240,633	$	-	$	243,909	$	73	$	675	$	1,558		2,306	$	246,215	$	195
Construction and Development:
Residential and commercial		52,313		-		-		-		-		52,313		-		56,999		-		-		-		-		56,999		-
Land		3,579		-		-		-		-		3,579		-		3,535		-		-		-		-		3,535		-
Commercial:
Commercial real estate		510,825		475		-		167		642		511,467		167		501,644		-		311		-		311		501,955		-
Farmland		7,537		-		-		-		-		7,537		-		7,531		-		-		-		-		7,531		-
Multi-family		59,978		-		-		-		-		59,978		-		66,416		-		-		-		-		66,416		-
Commercial and industrial		96,574		-		-		-		-		96,574		-		115,899		-		-		-		-		115,899		-
Other		7,604		-		-		-		-		7,604		-		8,397		-		-		-		-		8,397		-
Consumer:
Home equity lines of credit		18,412		-		-		29		29		18,441		-		18,022		-		47		28		75		18,097		-
Second mortgages		11,739		334		196		124		654		12,393		-		11,000		379		104		221		704		11,704		69
Other		2,099		11		1		1		13		2,112		1		2,072		-		1		1		2		2,074		1
Total	$	1,006,174	$	3,956	$	1,596	$	905	$	6,457	$	1,012,631	$	168	$	1,035,424	$	452	$	1,138	$	1,808	$	3,398	$	1,038,822	$	265

	Current		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total Loans Receivable		Loans Receivable > 90 Days and Accruing
	(In thousands)
September 30, 2019:
Residential mortgage	$	219,062	$	62	$	381	$	506	$	949	$	220,011	$	207
Construction and Development:
Residential and commercial		40,346		-		-		-		-		40,346		-
Land		3,420		-		-		-		-		3,420		-
Commercial:
Commercial real estate		543,157		-		-		295		295		543,452		295
Farmland		7,563		-		-		-		-		7,563		-
Multi-family		62,884		-		-		-		-		62,884		-
Commercial and industrial		99,247		500		-		-		500		99,747		-
Other		4,450		-		-		-		-		4,450		-
Consumer:
Home equity lines of credit		19,506		-		-		-		-		19,506		-
Second mortgages		13,102		379		112		144		635		13,737		-
Other		2,030		-		-		-		-		2,030		-
Total	$	1,014,767	$	941	$	493	$	945	$	2,379	$	1,017,146	$	502

Restructured loans deemed to be TDRs are typically the result of an extension of the loan maturity date or a reduction of the interest rate of the loan to a rate that is below market, a combination of rate and maturity extension, or by other means, including covenant modifications, forbearance and other concessions. However, the Bank generally restructures loans by modifying the payment structure to require payments of interest only for a specified period or by reducing the actual interest rate. Once a loan becomes a TDR, it will continue to be reported as a TDR during the term of the restructure.

The Company had ~~twenty-five~~NaN and ~~twenty-four~~NaN loans classified as TDRs at ~~March 31,~~June 30, 2020 and September 30, 2019, respectively, with an aggregate outstanding balance of ~~$11.2~~$21.8 million and $13.3 million, respectively. At ~~March 31,~~June 30, 2020, these loans were also classified as impaired. Nineteen of the TDR loans continue to perform under the restructured terms through ~~March 31,~~June 30, 2020 and we continued to accrue interest on such loans through such date.

Loans that have been classified as TDRs have modified payment terms and in some cases interest rate from the original agreements and allowed the borrowers, who were experiencing financial difficulty, to make interest only payments for a period of time in order to relieve some of their overall cash flow burden. Some loan modifications classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, and could result in potential incremental losses. These potential incremental losses have been factored into our overall estimate of the ALLL. The level of any defaults will likely be affected by future economic conditions. A default on a TDR loan for purposes of this disclosure occurs when the borrower is 90 days past due or a foreclosure or repossession of the applicable collateral has occurred.

TDRs may arise in cases ~~which,~~where, due to financial difficulties experienced by the borrower, the Company obtains through physical possession one or more collateral assets in satisfaction of all or part of an existing credit. Once possession is obtained, the Company reclassifies the appropriate portion of the remaining balance of the credit from loans to other real estate owned (“OREO”), which is included within other assets in the Consolidated Statements of Financial Condition. For any residential real estate property collateralizing a consumer mortgage loan, the Company is considered to possess the related collateral only if legal title is obtained upon completion of foreclosure, or the borrower conveys all interest in the residential real estate property to the Company through completion of a deed in lieu of foreclosure or similar legal agreement. Excluding OREO, the Company had ~~$172,000~~$175,000 and $111,000 of residential real estate properties in the process of foreclosure at ~~March 31,~~June 30, 2020 and September 30, 2019, respectively. However, the Company has temporarily suspended collection and foreclosure efforts on past due loans in accordance with CARES Act guidance. The following table presents total TDRs as of ~~March 31,~~June 30, 2020 and September 30, 2019:

	Total Troubled Debt Restructurings				Troubled Debt Restructured Loans That Have Defaulted on Modified Terms Within The Past 12 Months				Total Troubled Debt Restructurings				Troubled Debt Restructured Loans That Have Defaulted on Modified Terms Within The Past 12 Months
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(Dollars in thousands)								(Dollars in thousands)
March 31, 2020:
June 30, 2020:
Residential mortgage		17	$	3,500		5	$	1,246		17	$	3,475		6	$	1,446
Commercial:
Commercial real estate		4		7,559		1		6,743		5		18,187		1		6,743
Consumer:
Second mortgages		4		173		-		-		4		167		-		-
Total		25	$	11,232	$	6	$	7,989		26	$	21,829	$	7	$	8,189
September 30, 2019:
Residential mortgage		17	$	3,372		4	$	1,090		17	$	3,372		4	$	1,090
Commercial:
Commercial real estate		3		9,707		-		-		3		9,707		-		-
Consumer:
Second mortgages		4		181		-		-		4		181		-		-
Total		24	$	13,260		4	$	1,090		24	$	13,260		4	$	1,090

The following table reports the performing status of all TDR loans. The performing status is determined by a loan’s compliance with the modified terms:

	March 31, 2020				September 30, 2019				June 30, 2020				September 30, 2019
	Performing		Non-Performing		Performing		Non-Performing		Performing		Non-Performing		Performing		Non-Performing
	(In thousands)								(In thousands)
Residential mortgage	$	2,254	$	1,246	$	2,282	$	1,090	$	2,029	$	1,446	$	2,282	$	1,090
Commercial:
Commercial real estate		816		6,743		9,707		-		11,444		6,743		9,707		-
Consumer:
Second mortgages		173		-		181		-		167		-		181		-
Total	$	3,243	$	7,989	$	12,170	$	1,090	$	13,640	$	8,189	$	12,170	$	1,090

~~There were no new TDRs for the three months ended March 31, 2020 and 2019.~~ The following table shows the new TDRs for the ~~six~~three and nine months ended ~~March 31,~~June 30, 2020 and 2019:

													For the Three Months Ended June 30,
													2020						2019
													Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
													(In thousands)
Troubled Debt Restructurings:
Commercial:
Commercial real estate														1	$	10,635	$	10,635		-	$	-	$	-
Total troubled debt restructurings														1	$	10,635	$	10,635		-	$	-	$	-


	For the Six Months Ended March 31,												For the Nine Months Ended June 30,
	2020						2019						2020						2019
	Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(Dollars in thousands)												(Dollars in thousands)
Troubled Debt Restructurings:
Residential mortgage		1	$	207	$	207		4	$	732	$	719		1	$	207	$	207		4	$	732	$	704
Commercial:
Commercial real estate		1	$	295	$	293		-	$	-	$	-		2	$	10,930	$	10,926		-	$	-	$	-
Consumer:
Second mortgages		-	$	-	$	-		1	$	80	$	78		-	$	-	$	-		1	$	80	$	76
Total troubled debt restructurings		2	$	502	$	500		5	$	812	$	797		3	$	11,137	$	11,133		5	$	812	$	780

On March 14, 2019, the Company’s Board of Directors approved a stock repurchase plan under which the Company is authorized to repurchase up to 194,516 shares, or approximately 2.5 percent, of the Company’s current outstanding common stock. On February 28, 2020, the Company’s Board of Directors extended the timeframe for its current stock repurchase program from March 31, 2020 to December 31, 2020. Repurchase authority may be exercised from time to time and in such amounts as market conditions warrant. The repurchases may be made on the open market, in block trades or otherwise. The program may be suspended or discontinued at any time.During the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020the Companypurchased ~~113,335~~ 64,318 shares and 177,653 shares, respectively, of its common stock in the open market under the repurchase plan at an average cost of ~~$15.68~~$11.69 per ~~share.~~share and $14.23 per share, respectively.As of June 30, 2020, 0 shares remain available for issuance under the repurchase plan.

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.

InJuly2013,the respectiveU.S.federalbankingagenciesissuedfinalrulesimplementingBaselIIIandtheDodd-FrankAct capitalrequirements tobefully phasedinonaglobalbasisonJanuary 1,2019. Theregulations establishanewtangiblecommonequitycapitalrequirement,increasetheminimumrequirement forthe currentTier1risk-weightedasset(“RWA”) ratio,phaseoutcertainkindsofintangiblestreatedascapital andcertaintypesofinstrumentsandchangetheriskweightingsofcertainassetsusedtodetermine required capitalratios.ThenewcommonequityTier1capitalcomponent requirescapitalofthehighest quality–predominantlycomposedofretainedearningsandcommonstockinstruments.Forcommunity banks,suchas Malvern Bank,acommonequityTier1capitalratio of 4.5% becameeffectiveon January 1,2015. ThenewcapitalrulesalsoincreasedtheminimumTier1capitalratiofrom4.0% to6.0% beginningonJanuary 1,2015. The rules also establish a capital conservation buffer of 2.5% above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital and would result in the following minimum ratios: (1) a common equity Tier 1 capital ratio of 7.0%, (2) a Tier 1 capital ratio of 8.5%, and (3) a total capital ratio of 10.5%. The new capital conservation buffer requirement began to be phased in on January 1, 2016 at 0.625% of risk-weighted assets and increased by that amount each year until it became fully implemented at 2.5% on January 1, 2019. An institution is also subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of tangible and core capital (as defined in the regulations) to total adjusted tangible assets (as defined) and of risk-based capital (as defined) to risk-weighted assets (as defined).

As of ~~March 31,~~June 30, 2020, the Company’s and the Bank’s current capital levels exceed the required capital amounts to be considered “well capitalized” and they also meet the fully-phased in minimum capital requirements, including the related capital conservation buffers, as required by the Basel III capital rules.

The following table summarizes the Company’s compliance with applicable regulatory capital requirements as of ~~March 31,~~June 30, 2020 and September 30, 2019:

	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions					Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)															(Dollars in thousands)
As of March 31, 2020
As of June 30, 2020
Tier 1 Leverage (Core) Capital (to adjusted assets)	$	144,221		11.51	%	$	50,128		4.00	%	$	62,660		5.00	%	$	145,089		11.86	%	$	48,949		4.00	%	$	61,186		5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)		144,221		14.40	%		45,062		4.50	%		65,089		6.50	%		145,089		14.28	%		45,724		4.50	%		66,045		6.50	%
Tier 1 Capital (to risk weighted assets)		144,221		14.40	%		60,082		6.00	%		80,110		8.00	%		145,089		14.28	%		60,965		6.00	%		81,287		8.00	%
Total Risk Based Capital (to risk weighted assets)		179,548		17.93	%		80,110		8.00	%		100,137		10.00	%		180,974		17.81	%		81,287		8.00	%		101,608		10.00	%
As of September 30, 2019
Tier 1 Leverage (Core) Capital (to adjusted assets)	$	142,508		11.38	%	$	50,091		4.00	%	$	62,614		5.00	%	$	142,508		11.38	%	$	50,091		4.00	%	$	62,614		5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)		142,508		14.30	%		44,838		4.50	%		64,766		6.50	%		142,508		14.30	%		44,838		4.50	%		64,766		6.50	%
Tier 1 Capital (to risk weighted assets)		142,508		14.30	%		59,784		6.00	%		79,713		8.00	%		142,508		14.30	%		59,784		6.00	%		79,713		8.00	%
Total Risk Based Capital (to risk weighted assets)		177,923		17.79	%		79,713		8.00	%		99,641		10.00	%		177,923		17.79	%		79,713		8.00	%		99,641		10.00	%

The following table summarizes the Bank’s compliance with applicable regulatory capital requirements as of ~~March 31,~~June 30, 2020 and September 30, 2019:

	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions					Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)															(Dollars in thousands)
As of March 31, 2020
As of June 30, 2020
Tier 1 Leverage (Core) Capital (to adjusted assets)	$	156,721		12.52	%	$	50,082		4.00	%	$	62,602		5.00	%	$	158,625		12.98	%	$	48,898		4.00	%	$	61,123		5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)		156,721		15.67	%		45,001		4.50	%		65,001		6.50	%		158,625		15.63	%		45,659		4.50	%		65,951		6.50	%
Tier 1 Capital (to risk weighted assets)		156,721		15.67	%		60,001		6.00	%		80,002		8.00	%		158,625		15.63	%		60,878		6.00	%		81,171		8.00	%
Total Risk Based Capital (to risk weighted assets)		167,350		16.73	%		80,002		8.00	%		100,002		10.00	%		169,773		16.73	%		81,171		8.00	%		101,464		10.00	%
As of September 30, 2019
Tier 1 Leverage (Core) Capital (to adjusted assets)	$	153,086		12.23	%	$	50,055		4.00	%	$	62,569		5.00	%	$	153,086		12.23	%	$	50,055		4.00	%	$	62,569		5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)		153,086		15.38	%		44,788		4.50	%		64,694		6.50	%		153,086		15.38	%		44,788		4.50	%		64,694		6.50	%
Tier 1 Capital (to risk weighted assets)		153,086		15.38	%		59,717		6.00	%		79,623		8.00	%		153,086		15.38	%		59,717		6.00	%		79,623		8.00	%
Total Risk Based Capital (to risk weighted assets)		163,253		16.40	%		79,623		8.00	%		99,529		10.00	%		163,253		16.40	%		79,623		8.00	%		99,529		10.00	%

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future uncertain cash amounts, the value of which are determined by interest rates.

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. At ~~March 31,~~June 30, 2020, such derivatives were used to hedge the variable cash flows associated with FHLB advances.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates approximately ~~$776,000~~$977,000 to be reclassified to earnings as an increase to interest expense. The Company is hedging its exposure to the variability in future cash flows for forecasted transactions over a maximum period of twenty months (excluding forecasted transactions related to the payment of variable interest on existing financial instruments).

The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. These derivatives are not designated as hedges and are not speculative. Rather, these derivatives result from a service the Company provides to certain ~~customers, initially implemented by the Comapny during the first quarter of fiscal 2019.~~customers. As the interest rate swaps associated with this program do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.

The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Statements of Financial Condition as of ~~March 31,~~June 30, 2020 and September 30, 2019:

`	March 31, 2020										June 30, 2020
	Asset derivatives					Liability derivatives					Asset derivatives					Liability derivatives
	Notional Amount		Fair Value		Statement of Financial Condition Location	Notional Amount		Fair Value		Statement of Financial Condition Location	Notional Amount		Fair Value		Statement of Financial Condition Location	Notional Amount		Fair Value		Statement of Financial Condition Location
	(In thousands)										(In thousands)
Derivatives designated as a hedging instrument:
Interest rate swap agreement	$	-	$	-	Other assets	$	65,000	$	1,201	Other liabilities	$	-	$	-	Other assets	$	90,000	$	1,536	Other liabilities
Derivatives not designated as a hedging instrument:
Interest rate swap agreement	$	45,365	$	8,984	Other assets	$	45,365	$	8,989	Other liabilities	$	45,264	$	9,289	Other assets	$	45,264	$	9,294	Other liabilities

The tables below present the derivative assets and liabilities offsetting as of ~~March 31,~~June 30, 2020 and September 30, 2019:


Offsetting of Derivative Assets	(In thousands)													(In thousands)
as of March 31, 2020
as of June 30, 2020
							Gross Amounts Not Offset in the Statements of Financial Condition													Gross Amounts Not Offset in the Statements of Financial Condition
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Received		Net Amount			Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Received		Net Amount

Derivatives	$	8,984	$	-	$	8,984	$	-	$	-	$	8,984		$	9,289	$	-	$	9,289	$	-	$	-	$	9,289


Offsetting of Derivative Liabilities	(In thousands)													(In thousands)
as of March 31, 2020
as of June 30, 2020
							Gross Amounts Not Offset in the Statements of Financial Condition													Gross Amounts Not Offset in the Statements of Financial Condition
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Posted		Net Amount			Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Posted		Net Amount

Derivatives	$	10,190	$	-	$	10,190	$	1,251	$	11,527	$	(2,588	)	$	10,830	$	-	$	10,830	$	1,670	$	12,597	$	(3,437	)


Offsetting of Derivative Assets	(In thousands)													(In thousands)
as of September 30, 2019
							Gross Amounts Not Offset in the Statements of Financial Condition													Gross Amounts Not Offset in the Statements of Financial Condition
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Received		Net Amount			Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Received		Net Amount

Derivatives	$	5,145	$	-	$	5,145	$	173	$	-	$	4,972		$	5,145	$	-	$	5,145	$	173	$	-	$	4,972


Offsetting of Derivative Liabilities	(In thousands)													(In thousands)
as of September 30, 2019
							Gross Amounts Not Offset in the Statements of Financial Condition													Gross Amounts Not Offset in the Statements of Financial Condition
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Posted		Net Amount			Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Posted		Net Amount

Derivatives	$	5,754	$	-	$	5,754	$	767	$	2,754	$	2,233		$	5,754	$	-	$	5,754	$	767	$	2,754	$	2,233

The tables below present the net gains (losses) recorded in accumulated other comprehensive ~~income~~loss and the Consolidated Statements of Operations relating to the cash flow derivative instruments for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019:

	Three Months Ended March 31, 2020						Three Months Ended June 30, 2020
	Amount of Loss Recognized in OCI on Derivative			Amount of Loss Reclassified from OCI to Interest Expense			Amount of Loss Recognized in OCI on Derivative			Amount of Loss Reclassified from OCI to Interest Expense
	(In thousands)						(In thousands)
Interest rate swap agreements	$	(730	)	$	(47	)	$	(433	)	$	(122	)
Total derivatives		(730	)		(47	)		(433	)		(122	)

	Six Months Ended March 31, 2020						Nine Months Ended June 30, 2020
	Amount of Loss Recognized in OCI on Derivative			Amount of Loss Reclassified from OCI to Interest Expense			Amount of Loss Recognized in OCI on Derivative			Amount of Loss Reclassified from OCI to Interest Expense
	(In thousands)						(In thousands)
Interest rate swap agreements	$	(653	)	$	(61	)	$	(1,086	)	$	(183	)
Total derivatives		(653	)		(61	)		(1,086	)		(183	)

	Three Months Ended March 31, 2019					Three Months Ended June 30, 2019
	Amount of Loss Recognized in OCI on Derivative			Amount of Gain Reclassified from OCI to Interest Expense		Amount of Loss Recognized in OCI on Derivative			Amount of Gain Reclassified from OCI to Interest Expense
	(In thousands)					(In thousands)
Interest rate swap agreements	$	(297	)	$	96	$	(578	)	$	86
Total derivatives		(297	)		96		(578	)		86

	Six Months Ended March 31, 2019					Nine Months Ended June 30, 2019
	Amount of Loss Recognized in OCI on Derivative			Amount of Gain Reclassified from OCI to Interest Expense		Amount of Loss Recognized in OCI on Derivative			Amount of Gain Reclassified from OCI to Interest Expense
	(In thousands)					(In thousands)
Interest rate swap agreements	$	(936	)	$	167	$	(1,514	)	$	253
Total derivatives		(936	)		167		(1,514	)		253

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019:

The Company has agreements with each of its derivative counterparties that contain a provision providing that if the Company defaults on any of its indebtedness, including defaults where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

At ~~March 31,~~June 30, 2020 and September 30, 2019, the fair value of derivatives was in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements. There were no adjustments for nonperformance risk at ~~March 31,~~June 30, 2020 and September 30, 2019. At ~~March 31,~~June 30, 2020 and September 30, 2019, the Company has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of $0 $0and $6.4 million, respectively, against its obligations under these agreements. If the Company had breached any of these provisions at ~~March 31,~~June 30, 2020, it could have been required to settle its obligations under the agreements at the termination value and would have been required to pay any additional amounts due in excess of amounts previously posted as collateral with the respective counterparty.

The Company follows FASB ASC Topic 820 Fair Value Measurement to record fair value adjustments to certain assets and to determine fair value disclosures for the Company’s financial instruments. Investment and mortgage-backed securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans, real estate owned and certain other assets. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets.

The Company groups its assets at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1— valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2—valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3—valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset.

The Company bases its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy.

Fair value measurements for assets where there exists limited or no observable market data and, therefore, are based primarily upon the Company’s or other third-party’s estimates, are often calculated based on the characteristics of the asset, the economic and competitive environment and other factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future valuations.

The Company monitors and evaluates available data to perform fair value measurements on an ongoing basis and recognizes transfers among the levels of the fair value hierarchy as of the date event or a change in circumstances that affects the valuation method chosen. There were no changes in valuation technique or transfers between levels at ~~March 31,~~June 30, 2020 or September 30, 2019.

The tables below present the balances of assets measured at fair value on a recurring basis as of ~~March 31,~~June 30, 2020 and September 30, 2019:

	March 31, 2020								June 30, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)								(In thousands)
Assets:
Investment securities available for sale:
Debt securities:
U.S. government agencies	$	3,812	$	-	$	3,812	$	-	$	5,056	$	-	$	5,056	$	-
State and municipal obligations		4,217		-		4,217		-		3,710		-		3,710		-
Single issuer trust preferred security		931		-		931		-		837		-		837		-
Corporate debt securities		11,365		-		11,365		-		22,119		-		22,119		-
Mutual funds		1,514		1,014		-		500		500		-		-		500
Total investment securities available for sale	$	21,839	$	1,014	$	20,325	$	500	$	32,222	$	-	$	31,722	$	500
Equity securities:
Mutual fund									$	1,023	$	1,023	$	-	$	-
Total equity investment securities									$	1,023	$	1,023	$	-	$	-

Derivative instruments	$	8,984	$	-	$	8,984	$	-	$	9,289	$	-	$	9,289	$	-

Liabilities:
Derivative instruments	$	10,190	$	-	$	10,190	$	-	$	10,830	$	-	$	10,830	$	-

	September 30, 2019								September 30, 2019
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)								(In thousands)
Assets:
Investment securities available for sale:
Debt securities:
U.S. government agencies	$	3,000	$	-	$	3,000	$	-	$	3,000	$	-	$	3,000	$	-
State and municipal obligations		4,732		-		4,732		-		4,732		-		4,732		-
Single issuer trust preferred security		923		-		923		-		923		-		923		-
Corporate debt securities		9,506		-		9,506		-		9,506		-		9,506		-
Mutual funds		250		-		-		250
Mutual fund										250		-		-		250
Total investment securities available for sale	$	18,411	$	-	$	18,161	$	250	$	18,411	$	-	$	18,161	$	250

Derivative instruments	$	5,145	$	-	$	5,145	$	-	$	5,145	$	-	$	5,145	$	-

Liabilities:
Derivative instruments	$	5,754	$	-	$	5,754	$	-	$	5,754	$	-	$	5,754	$	-

The following tables present additional information about the securities available-for-sale measured at fair value on a recurring basis and for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and ~~March 31,~~June 30, 2019:

	Fair value measurements		Fair value measurements
	using significant		using significant
	unobservable inputs		unobservable inputs
	(Level 3)		(Level 3)
	(In thousands)		(In thousands)
Balance, October 1, 2019	$	250	$	250
Payments received		-		-
Total gains or losses (realized/unrealized)
Included in earnings		-		-
Included in other comprehensive income		-		-
Purchases		250		250
Transfers in and/or out of Level 3		-		-
Balance, March 31, 2020	$	500
Balance, June 30, 2020			$	500


	Fair value measurements		Fair value measurements
	using significant		using significant
	unobservable inputs		unobservable inputs
	(Level 3)		(Level 3)
	(In thousands)		(In thousands)
Balance, October 1, 2018	$	250	$	250
Payments received		-		-
Total gains or losses (realized/unrealized)
Included in earnings		-		-
Included in other comprehensive income		-		-
Purchases		-		-
Transfers in and/or out of Level 3		-		-
Balance, March 31, 2019	$	250
Balance, June 30, 2019			$	250

The majority of the Company’s available for sale investment securities are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other

things. From time to time, the Company validates prices supplied by the independent pricing service by comparison to prices obtained from third-party sources or derived using internal models.

For assets measured at fair value on a nonrecurring basis that were still held at the end of the period, the following tables provide the level of valuation assumptions used to determine each adjustment and the carrying value of the related individual assets or portfolios at ~~March 31,~~June 30, 2020 and September 30, 2019:

	March 31, 2020								June 30, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)								(In thousands)
Other real estate owned	$	5,796	$	-	$	-	$	5,796	$	5,796	$	-	$	-	$	5,796
Impaired loans⁽¹⁾		7,133		-		-		7,133		447		-		-		447
Total	$	12,929	$	-	$	-	$	12,929	$	6,243	$	-	$	-	$	6,243

March 31, 2020

June 30, 2020

Fair Value at

March 31, 2020

Valuation Technique

Unobservable Input

Range/(Weighted

Average)

Fair Value at

June 30, 2020

Valuation Technique

Unobservable Input

Range/(Weighted

Average)

(Dollars in thousands)

Other real estate owned

5,796

Appraisal of Collateral(2)

Collateral discount(3)

0%/(0%)

5,796

Appraisal of Collateral(2)

Collateral discount(3)

0%/(0%)

Impaired loans⁽¹⁾

7,133

Appraisal of Collateral(2)

Collateral discount(3)

9.5%-12.0%/(10.6%)

447

Appraisal of Collateral(2)

Collateral discount(3)

5.0%-12.0%/(5.3%)

Total

12,929

6,243

At ~~March 31,~~June 30, 2020 and September 30, 2019, the Company did not have any additions to our mortgage servicing assets. At ~~March 31,~~June 30, 2020 the Company sold loans with servicing retained. At September 30, 2019, the Company only sold loans with servicing released.

The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of FASB ASC 825. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methods. However, considerable judgment is necessarily required to interpret market data to develop the

estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company would realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. FASB ASC 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The fair value estimates presented herein are based on pertinent information available to management as of ~~March 31,~~June 30, 2020 and September 30, 2019. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since ~~March 31,~~June 30, 2020 and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

The following assumptions were used to estimate the fair value of the Company’s financial instruments:

Cash and Cash Equivalents—These assets are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.

Investment Securities—Investment and mortgage-backed securities available for sale (carried at fair value), and equity securities (carried at fair value) are measured at fair value on a recurring basis. Fair value measurements for these securities are typically obtained from independent pricing services that we have engaged for this purpose. When available, we, or our independent pricing service, use quoted market prices to measure fair value. If market prices are not available, fair value measurement is based upon models that incorporate available trade, bid and other market information and for structured securities, cash flow and, when available, loan performance data. Because many fixed income securities do not trade on a daily basis, our independent pricing service’s applications apply available information through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations. For each asset class, pricing applications and models are based on information from market sources and integrate relevant credit information. All of our securities available for sale are valued using either of the foregoing methodologies to determine fair value adjustments recorded to our financial statements.

Loans Receivable—We do not record loans at fair value on a recurring basis. As such, valuation techniques discussed herein for loans are primarily for estimating fair value for FASB ASC 825 disclosure purposes. However, from time to time, we record nonrecurring fair value adjustments to loans to reflect partial write-downs for impairment or the full charge-off of the loan carrying value. The valuation of impaired loans is discussed below. The fair value estimate for FASB ASC 825 purposes differentiates loans based on their financial characteristics, such as product classification, loan category, pricing features and remaining maturity. Prepayment and credit loss estimates are evaluated by loan type and rate. The fair value of loans is estimated by discounting contractual cash flows using discount rates based on current industry pricing, adjusted for prepayment and credit loss estimates.

Impaired Loans—Impaired loans are valued utilizing independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments to comparable assets based on the appraisers’ market knowledge and experience. The appraisals are adjusted downward by management, as necessary, for changes in relevant valuation factors subsequent to the appraisal date and are considered Level 3 inputs.

Accrued Interest Receivable—This asset is carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.

Restricted Stock—Although restricted stock is an equity interest in the FHLB, it is carried at cost because it does not have a readily determinable fair value as its ownership is restricted and it lacks a market. The estimated fair value approximates the carrying amount.

Other Real Estate Owned—Assets acquired through foreclosure or deed in lieu of foreclosure are recorded at estimated fair value less estimated selling costs when acquired, thus establishing a new cost basis. Fair value is generally based on independent appraisals. These appraisals include adjustments to comparable assets based on the appraisers’ market knowledge and experience, and are considered Level 3 inputs. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the ALLL. If the estimated fair value of the asset declines, a write-down is recorded through expense. The valuation of foreclosed assets is subjective in nature and may be adjusted in the future because of, among other factors, changes in the economic conditions.

Deposits—Deposit liabilities are carried at cost. As such, valuation techniques discussed herein for deposits are primarily for estimating fair value for FASB ASC 825 disclosure purposes. The fair value of deposits is discounted based on rates available for borrowings of similar maturities. A decay rate is estimated for non-time deposits. The discount rate for non-time deposits is adjusted for servicing costs based on industry estimates.

Borrowings—Advances from the FHLB are carried at amortized cost. However, we are required to estimate the fair value of long-term debt under FASB ASC 825. The fair value is based on the contractual cash flows discounted using rates currently offered for new notes with similar remaining maturities.

Subordinated Debt—The calculation of fair value in Level 2 is based on observable market values where available.

Derivatives— The fair value of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rate, and volatility factors to value the position. The majority of market inputs is actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

Accrued Interest Payable—This liability is carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.

Commitments to Extend Credit and Letters of Credit— The majority of the Company’s commitments to extend credit and letters of credit carry current market interest rates if converted to loans and are not included in the table below. Because commitments to extend credit and letters of credit are generally unassignable by either the Bank or the borrower, they only have value to the Company and the borrower. The estimated fair value approximates the recorded deferred fee amounts, which are not significant.

Mortgage Servicing Rights—The fair value of mortgage servicing rights is based on observable market prices when available or the present value of expected future cash flows when not available. Assumptions, such as loan default rates, costs to service, and prepayment speeds significantly affect the estimate of future cash flows. Mortgage servicing rights are carried at the lower of cost or fair value.

The carrying amount and estimated fair value of the Company’s financial instruments as of ~~March 31,~~June 30, 2020 and September 30, 2019 are presented below:

	March 31, 2020										June 30, 2020
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3		Carrying Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)										(In thousands)
Financial assets:
Cash and cash equivalents	$	126,068	$	126,068	$	126,068	$	-	$	-	$	58,944	$	58,944	$	58,944	$	-	$	-
Investment securities available-for-sale		21,839		21,839		1,014		20,325		500		32,222		32,222		-		31,722		500
Investment securities held-to-maturity		18,046		18,434		-		18,434		-		15,921		16,507		-		16,507		-
Equity investment securities												1,023		1,023		1,023		-		-
Loans receivable, net (including impaired loans)		1,002,907		1,011,358		-		-		1,011,358		1,028,093		1,039,305		-		-		1,039,305
Accrued interest receivable		4,121		4,121		-		4,121		-		5,680		5,680		-		5,680		-
Restricted stock		10,913		10,913		-		10,913		-		9,766		9,766		-		9,766		-
Mortgage servicing rights (included in Other Assets)		145		145		-		145		-		120		120		-		120		-
Derivatives (included in Other Assets)		8,984		8,984		-		8,984		-		9,289		9,289		-		9,289		-
Financial liabilities:
Savings accounts		43,550		43,550		-		43,550		-		43,702		43,702		-		43,702		-
Checking and NOW accounts		334,065		334,065		-		334,065		-		324,681		324,681		-		324,681		-
Money market accounts		280,173		280,173		-		280,173		-		281,419		281,419		-		281,419		-
Certificates of deposit		258,112		262,393		-		262,393		-		234,642		238,553		-		238,553		-
Borrowings (excluding sub debt)		133,000		134,190		-		134,190		-		130,000		130,997		-		130,997		-
Subordinated debt		24,697		24,947		-		24,947		-		24,737		25,347		-		25,347		-
Derivatives (included in Other Liabilities)		10,190		10,190		-		10,190		-		10,830		10,830		-		10,830		-
Accrued interest payable		873		873		-		873		-		1,096		1,096		-		1,096		-

	September 30, 2019										September 30, 2019
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3		Carrying Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)										(In thousands)
Financial assets:
Cash and cash equivalents	$	153,543	$	153,543	$	153,543	$	-	$	-	$	153,543	$	153,543	$	153,543	$	-	$	-
Investment securities available-for-sale		18,411		18,411		-		18,161		250		18,411		18,411		-		18,161		250
Investment securities held-to-maturity		22,485		22,609		-		22,609		-		22,485		22,609		-		22,609		-
Loans receivable, net (including impaired loans)		1,007,714		1,010,442		-		-		1,010,442		1,007,714		1,010,442		-		-		1,010,442
Accrued interest receivable		4,253		4,253		-		4,253		-		4,253		4,253		-		4,253		-
Restricted stock		11,129		11,129		-		11,129		-		11,129		11,129		-		11,129		-
Mortgage servicing rights (included in Other Assets)		178		178		-		178		-		178		178		-		178		-
Derivatives (included in Other Assets)		5,145		5,145		-		5,145		-		5,145		5,145		-		5,145		-
Financial liabilities:
Savings accounts		41,875		41,875		-		41,875		-		41,875		41,875		-		41,875		-
Checking and NOW accounts		357,723		357,723		-		357,723		-		357,723		357,723		-		357,723		-
Money market accounts		276,644		276,644		-		276,644		-		276,644		276,644		-		276,644		-
Certificates of deposit		277,569		280,024		-		280,024		-		277,569		280,024		-		280,024		-
Borrowings (excluding sub debt)		133,000		133,545		-		133,545		-		133,000		133,545		-		133,545		-
Subordinated debt		24,619		24,471		-		24,471		-		24,619		24,471		-		24,471		-
Derivatives (included in Other Liabilities)		5,754		5,754		-		5,754		-		5,754		5,754		-		5,754		-
Accrued interest payable		978		978		-		978		-		978		978		-		978		-

The components of accumulated other comprehensive loss included in shareholders’ equity are as follows:

	March 31, 2020			September 30, 2019			June 30, 2020			September 30, 2019
	(In thousands)						(In thousands)
Net unrealized holding losses on available-for-sale securities	$	(155	)	$	(111	)	$	(459	)	$	(111	)
Tax effect		33			24			96			24
Net of tax amount		(122	)		(87	)		(363	)		(87	)
Fair value adjustments on derivatives		(1,201	)		(610	)		(1,536	)		(610	)
Tax effect		252			128			341			128
Net of tax amount		(949	)		(482	)		(1,195	)		(482	)
Total accumulated other comprehensive loss	$	(1,071	)	$	(569	)	$	(1,558	)	$	(569	)

Other comprehensive loss and related tax effects are presented in the following table:

	Three Months Ended March 31,						Six Months Ended March 31,						Three Months Ended June 30,						Nine Months Ended June 30,
	2020			2019			2020			2019			2020			2019			2020			2019
	(In thousands)												(In thousands)
Net unrealized holding gains on available-for-sale securities	$	62		$	154		$	133		$	121
Net unrealized holding (losses) gains on available-for-sale securities													$	(302	)	$	177		$	(169	)	$	298

Net realized gain on securities available-for-sale		(180	)		-			(180	)		-			(1	)		(27	)		(181	)		(27	)

Amortization of unrealized holding losses on securities transferred from available-for-sale to held-to-maturity		1			1			2			3			1			1			3			4

Adjustment for loss recorded on replacement of derivative														23			-			23			-

Fair value adjustments on derivatives		(682	)		(393	)		(591	)		(1,103	)		(336	)		(664	)		(927	)		(1,767	)
Other comprehensive loss before taxes		(799	)		(238	)		(636	)		(979	)		(615	)		(513	)		(1,251	)		(1,492	)
Tax effect		168			49			134			205			128			108			262			313
Total comprehensive loss	$	(631	)	$	(189	)	$	(502	)	$	(774	)
Total other comprehensive loss													$	(487	)	$	(405	)	$	(989	)	$	(1,179	)

The Company maintains the Malvern Bancorp, Inc. 2014 Long-Term Incentive Compensation Plan (the “2014 Plan”), which permits the grant of long-term incentive and other stock and cash awards. The purpose of the 2014 Plan is to promote the success of the Company and the Bank by providing incentives to officers, employees and directors of the Company and the Bank that will link their personal interests to the financial success of the Company and to growth in shareholder value. The maximum total number of shares of the Company’s common stock available for grants under the 2014 Plan is 400,000. As of ~~March 31,~~June 30, 2020, there were ~~324,351~~318,651 remaining shares available for future grants.

Restricted stock and option awards granted vest in 20% increments beginning on the one year anniversary of the grant date, and accelerate upon a change in control of the Company. The options generally expire ten years from the date of grant. All issuances are subject to forfeiture if the recipient leaves or is terminated prior to the award’s vesting. Shares of restricted stock have the same dividend and voting rights as common stock while stock options do not.

All awards are issued at fair value of the underlying shares at the grant date. The Company expenses the cost of the awards, which is determined to be the fair market value of the awards at the date of grant.

The Company did 0t grant any stock options during the three months ended June 30, 2020. During the ~~three and six~~nine months ended ~~March 31,~~June 30, 2020, ~~and 2019~~ stock options covering a total of 7,000 shares of common stock were granted. Total compensation expense related to stock options granted under the 2014 Plan was approximately ~~$6,000~~$9,000 and ~~$12,000~~$21,000 for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020, respectively.The Company did 0t grant any stock options during the three months ended June 30, 2019. During the nine months ended June 30, 2019, stock options covering a total of 7,000 shares of common stock were granted. Total compensation expense

related to stock options granted under the 2014 Plan was approximately ~~$10,000~~$7,000 and ~~$11,000~~$18,000 for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2019,respectively.

During the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 a total of ~~16,357~~5,700 and ~~18,121~~23,821 restricted shares were awarded, respectively. During the ~~six~~nine months ended ~~March 31,~~June 30, 2020 a total of 1,610 shares were forfeited. ~~No shares were forfeited during the three months and six months ended March 31, 2019.~~ ~~During the three and six months ended March 31, 2019 a total of 6,045 and~~

~~9,283 restricted shares were awarded, respectively.~~The compensation expense related to restricted stock awards was approximately ~~$40,000~~$115,000 and ~~$66,000~~$181,000 during the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020, respectively. ~~The~~During the three and nine months ended June 30, 2019 a total of 3,391 and 12,674 restricted shares were awarded, respectively. NaN shares were forfeited during the three months and nine months ended June 30, 2019. The compensation expense related to restricted stock awards was approximately ~~$39,000~~$102,000 and ~~$52,000~~$154,000 during the three and ~~six~~nine months ended ~~March 31,~~June 30, 2019,respectively.

Stock-based compensation expense for the cost of the awards granted is based on the grant-date fair value. For stock option awards, the fair value is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model. Accordingly, while management believes that the Black-Scholes option-pricing model provides a reasonable estimate of fair value, the model does not necessarily provide the best single measure of fair value for the Company’s employee stock options.

The assumptions used in determining the fair value of stock option grants for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 are as follows:

The assumptions used in determining the fair value of stock option grants for ~~the six~~nine months ended ~~March 31,~~June 30, 2019 are as follows:

The following is a summary of stock option activity for the ~~six~~nine months ended ~~March 31,~~June 30, 2020:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value		Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Outstanding, beginning of year		18,830	$	22.05			$	21,350		18,830	$	22.05			$	21,350
Granted		7,000	$	20.28			$	-		7,000	$	20.28			$	-
Exercised		-	$	-			$	-		-	$	-			$	-
Forfeited/cancelled/expired		-	$	-			$	-		-	$	-			$	-
Outstanding, end of year		25,830	$	21.57		8.320	$	-		25,830	$	21.57		8.071	$	-
Exercisable, end of year		8,140	$	21.50		7.295	$	-		8,140	$	21.50		7.046	$	-
Nonvested, at end of year		17,690	$	21.60						17,690	$	21.60

As of ~~March 31,~~June 30, 2020, there was approximately ~~$68,000~~$92,000 of total unrecognized compensation cost related to nonvested stock options under the 2014 Plan. The cost is expected to be recognized over a weighted average period of ~~3.00~~3.41 years.

The table below summarizes the activity for the Company’s restricted stock outstanding during the ~~six~~nine months ended ~~March 31,~~June 30, 2020:

	Shares		Weighted Average Fair Value		Shares		Weighted Average Fair Value
Outstanding, beginning of year		18,493	$	21.78		18,493	$	21.78
Granted		18,121	$	22.11		23,821	$	19.62
Vested		3,651	$	21.78		10,051	$	16.62
Forfeited/cancelled/expired		1,610	$	21.43		1,610	$	21.43
Outstanding, end of year		31,353	$	21.95		30,653	$	21.98

As of ~~March 31,~~June 30, 2020, there was approximately ~~$632,000~~$588,000 of total unrecognized compensation cost related to nonvested shares of restricted stock granted under the 2014 Plan. The cost is expected to be recognized over a weighted average period of ~~4.03~~3.81 years.

Deposits classified by type with percentages to total deposits at ~~March 31,~~June 30, 2020 and September 30, 2019 consisted of the following:

	March 31,				September 30,				June 30,					September 30,
	2020				2019				2020					2019
	(Dollars in thousands)								(Dollars in thousands)

Balances by types of deposit:
Savings	$	43,550	4.75	%	$	41,875	4.39	%	$	43,702		4.94	%	$	41,875		4.39	%
Money market accounts		280,173	30.59	%		276,644	29.00	%		281,419	31.82				276,644	29.00
Interest-bearing demand		291,191	31.79	%		302,039	31.67	%		277,238	31.35				302,039	31.67
Non-interest-bearing demand		42,874	4.68	%		55,684	5.84	%		47,443	5.36				55,684	5.84
		657,788	71.81	%		676,242	70.90	%		649,802		73.47	%		676,242		70.90	%

Certificates of deposit		258,112	28.19	%		277,569	29.10	%		234,642		26.53	%		277,569		29.10	%

Total Deposits	$	915,900	100.00	%	$	953,811	100.00	%	$	884,444		100.00	%	$	953,811		100.00	%

The total amount of certificates of deposit of $250,000 and greater at ~~March 31,~~June 30, 2020 and September 30, 2019 was ~~$74.8~~$57.7 million and $63.5 million, respectively. We had brokered deposits totaling ~~$16.1~~$11.1 million and $73.1 million at ~~March 31,~~June 30, 2020 and September 30, 2019, respectively.

	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019		2020		2019		2020		2019
	(In thousands)								(In thousands)
Savings accounts	$	12	$	13	$	23	$	23	$	11	$	13	$	35	$	36
Money market accounts		1,121		1,111		2,219		2,185		902		1,338		3,122		3,523
Interest-bearing demand		1,078		1,009		2,259		1,652		661		973		2,920		2,625
Certificates of deposit		1,412		1,262		2,859		2,479		1,302		1,602		4,159		4,081
Total	$	3,623	$	3,395	$	7,360	$	6,339	$	2,876	$	3,926	$	10,236	$	10,265

As of ~~March 31,~~June 30, 2020, the scheduled maturities of certificates of deposits are as follows:

	Scheduled Maturities		Scheduled Maturities
	(In thousands)		(In thousands)
Period Ending March 31,
Period Ending June 30,
2021	$	177,318	$	178,227
2022		51,999		26,952
2023		7,495		8,257
2024		10,186		11,924
Thereafter		11,114		9,282
Total	$	258,112	$	234,642

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and operating lease liabilities on our consolidated balance sheets. ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. As our leases do not provide an implicit rate, in order to determine the present value of future payments for office leases we used our incremental borrowing rate based on the FHLB liquidity and funding rates. Our lease terms may include options to extend when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

As of ~~March 31,~~June 30, 2020, the Company leases a financial center in Glen Mills, Pennsylvania and private banking offices in Villanova, West Chester and Quakertown, Pennsylvania; ~~one~~1 private banking office in New Castle County located in Montchanin, Delaware; ~~one~~1 private banking office in Morris County located in Morristown, New Jersey; ~~one~~1 private banking office in Palm Beach County located in Palm Beach, Florida; ~~one~~1 representative office located in Wellington, Florida; and ~~one~~1 representative office in Allentown, Pennsylvania. The Company has elected not to recognize ROU assets and lease liabilities for ~~two~~2 private banking office leases and ~~two~~2 representative office leases whose terms are twelve months or less and are considered short-term leases. All of the financial center leases and ~~two~~2 private banking office leases include options to extend for terms of five years. These options have not been recognized as part of our ROU assets and lease liabilities as the Company is not reasonably certain to exercise these options. The Company has also entered into ~~three~~3 leases for office equipment for which ROU assets and lease liabilities have been recognized. All the aforementioned leases have been accounted for as operating leases.

	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019		2020		2019		2020		2019
	(In thousands)				(In thousands)				(In thousands)				(In thousands)
Operating lease cost	$	173	$	119	$	348	$	235	$	175	$	122	$	523	$	357
Finance lease cost		-		-		-		-		-		-		-		-
Short-term lease cost		28		15		53		30		26		15		79		45
Total	$	201	$	134	$	401	$	265	$	201	$	137	$	602	$	402

Supplemental information at and for June 30, 2020 and the nine months ended June 30, 2020 related to leases was as follows:

	March 31, 2020			June 30, 2020
	(Dollars in thousands)			(Dollars in thousands)
Supplemental balance sheet information
Operating lease right-of-use assets	$	2,959		$	2,799
Operating lease liabilities	$	2,976		$	2,824
Weighted average remaining lease term	5.74 years			5.57 years
Weighted average discount rate		1.98	%		1.99	%

	Six Months Ended March 31, 2020			Nine Months Ended June 30, 2020
	(In thousands)			(In thousands)
Supplemental cash flow information
Operating cash flows from operating leases	$	332		$	499
ROU assets obtained in exchange for lease obligations	$	3,279		$	3,279

	Operating Leases			Operating Leases
	(In thousands)			(In thousands)
Period Ending September 30,
Remainder of 2020	$	338		$	169
2021		601			601
2022		492			492
2023		474			474
2024		474			474
Thereafter		746			746
Total lease payments	$	3,125		$	2,956
Less: imputed interest		(149	)		(132	)
Total	$	2,976		$	2,824

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

The purpose of this analysis is to provide the reader with information relevant to understanding and assessing the Company’s results of operations for the periods presented herein and financial condition as of ~~March 31,~~June 30, 2020 and September 30, 2019. In order to fully understand this analysis, the reader is encouraged to review the consolidated financial statements and accompanying notes thereto appearing elsewhere in this report.

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company, including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, and shareholder value creation.

Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the effects of, and changes in, trade, monetary and fiscal policies and laws, including ~~recent~~ changes in interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the impact of competition and the acceptance of the Company’s products and services by new and existing customers; the impact of changes in financial services policies, laws and regulations; technological changes; any oversupply of inventory and deterioration in values of real estate in the markets in which the Company operates, both residential and commercial; the effect of changes in accounting policies and practices, as may be adopted from time-to-time by bank regulatory agencies, the Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; possible other-than-temporary impairment of securities held by us; the effects of the Company’s lack of a widely-diversified loan portfolio, including the risks of geographic and industry concentrations; ability to attract deposits and other sources of liquidity; changes in the competitive environment among financial and bank holding companies and other financial service providers; unanticipated regulatory or judicial proceedings; and the Company’s ability to manage the risk involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s 2019 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be fully reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we ~~could be~~are subject to any of the following risks, any of which could continue to have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to continue to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experience additional resolution costs.

The Company undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, unless required by law.

The accounting and reporting policies followed by the Company conform, in all material respects, to GAAP. In preparing the consolidated financial statements, management has made estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of condition and for the periods indicated in the statements of operations. Actual results could differ significantly from those estimates.

The Company’s accounting policies are fundamental to understanding Management’s Discussion and Analysis (“MD&A”) of financial condition and results of operations. The Company has identified the determination of the ALLL, OREO, fair value measurements, the evaluation of deferred tax assets, the other-than-temporary impairment evaluation of securities, and the valuation of our derivative positions to be critical because management must make subjective and/or complex judgments about matters that are inherently uncertain and could be most subject to revision as new information becomes available. Additional information on these policies can be found in the Company’s 2019 Annual Report.

There have been no significant changes to the Company’s Critical Accounting Policies as described in its 2019 Annual Report other than the adoption of ASU 2016-02.

The Company has taken significant steps to protect the health and well-being of its employees and clients and to assist clients who have been impacted by the COVID-19 pandemic The Company’s work to ensure business continuity and responsive client service includes continued proactive engagement by relationship managers with our clients and prospects to address their needs in the ~~short~~short- and ~~medium terms,~~medium-terms, leveraging our digital banking and service platforms, and enabling some our employees to serve clients remotely from the safety of their homes.

~~During March 2020, management activated its previously developed Pandemic Plan, taking~~The Company continues to take the following ~~actions~~significant steps to protect the health and well-being of its employees and clients ~~while continuing~~and to ~~exceed client needs:~~assist clients who have been impacted by the COVID-19 pandemic.

~~No furloughs or layoffs have been made to date, nor does management currently anticipate future employee furloughs or layoffs related to COVID-19.~~

The Company started accepting and processing applications for loans under the PPP in early April 2020, when the program was officially launched by the SBA and Treasury Department under the recently enacted CARES Act. As of ~~April~~June 30, 2020, the Company ~~had received 172 applications fromboth new and existing clients,~~ obtained approval from the SBA for 208 PPP loans totaling ~~over $17.1~~$17.7 million for both existing and new ~~customers.~~customers, with an average loan size of approximately $85,000. Commercial and industrial loans represented 100 percent of PPP loans at June 30, 2020. As of August 1, 2020, the Company has originated 249 PPP loans totaling $20.7 million for both existing and new customers, with an average loan size of approximately $83,000. These loans are expected to generate fee income of approximately $763,000 in future quarters.

Management has reviewed all primary and secondary sources of liquidity in preparation for any unforeseen funding needs due to the COVID-19 pandemic and prioritized based on available capacity, term flexibility, and cost. As of ~~March 31,~~June 30, 2020, the Company had adequate sources of liquidity (excluding the Company’s ability to participate in the ~~PPPLF);~~PPPLF;

The Company’s capital ratios continued to exceed the highest required regulatory benchmark levels.

As of ~~April~~June 30, 2020, the Company entered into 137 loan modification agreements with respect to ~~$312.6~~$313.5 million representing 30.2 percent of loans outstanding. For loans subject to the program, each borrower is required to resume making regularly scheduled loan ~~payment~~payments at the end of the modification period and the deferred amounts will be moved to the end of the loan term. Management anticipates this activity could continue throughout the fiscal ~~third quarter~~year of 2020 and beyond.

Certain industries are widely expected to be particularly impacted by social distancing, quarantines, and the economic impact of the COVID-19 pandemic, such as the following:

As of August 1, 2020, $269.1 million, or 85.8 percent, of COVID-19 modified loans reached their initial 90 day forbearance expiration. Of this amount, $140.6 million, or 52.2 percent, have returned to original contractual monthly payments and $128.5 million, or 47.8 percent, have requested or been approved for a second forbearance period for a maximum of 90 additional days. Of the $128.5 million, $22.7 million, or 17.6 percent, started paying interest only payments during the second forbearance period.

Certain industries are widely expected to be particularly impacted by social distancing, quarantines, and the economic impact of the COVID-19 pandemic. The following table presents the components of customers that have requested or been approved for a second forbearance period of 60-90 days:

As of ~~April~~June 30, 2020, the Company had no meaningful direct exposure to the energy or airline industries and does not

Because of the significant uncertainties related to the ultimate duration of the COVID-19 pandemic and its potential effects on our clients and prospects, and on the national and local economy as a whole, there can be no assurances as to how the crisis may ultimately affect the Company’s loan portfolio.

Net income available to common shareholders for the three months ended ~~March 31,~~June 30, 2020 amounted to ~~$1.9~~$1.5 million, or ~~$0.25~~$0.19 per fully diluted common share, a decrease of ~~$58,000,~~$1.2 million, or ~~3.0~~45.3 percent, as compared with net income of ~~$2.0~~$2.7 million, or ~~$0.26~~$0.35 per common share, for the three months ended ~~March 31,~~June 30, 2019. The decrease in net income and diluted earnings per share from the third quarter of 2019 was primarily due to an increase in provision for loan losses and a decrease in net interest income. The Company recorded a provision for loan losses of $435,000 for the quarter ended June 30, 2020, an increase of $379,000 compared to the quarter ended June 30, 2019, substantially due to economic uncertainties caused by the COVID-19 pandemic. Net interest income was lower by $830,000 for the June 30, 2020 quarter versus the June 30, 2019 quarter, driven mainly by the lower interest rate environment. The annualized return on average assets was ~~0.61~~0.48 percent for the three months ended ~~March 31,~~June 30, 2020, compared to annualized return on average assets of ~~0.70~~0.88 percent for three months ended ~~March 31,~~June 30, 2019. The annualized return on average shareholders’ equity was ~~5.29~~4.06 percent for the three month period ended ~~March 31,~~June 30, 2020, compared to ~~5.74~~7.66 percent in annualized return on average shareholders’ equity for the three months ended ~~March 31,~~June 30, 2019.

Net income available to common shareholders for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 amounted to ~~$2.7~~$4.1 million, or ~~$0.35~~$0.54 per fully diluted common share, a decrease of ~~$1.3~~$2.5 million, or ~~32.3~~37.5 percent, as compared with net income of ~~$4.0~~$6.6 million, or ~~$0.52~~$0.87 per common share, for the ~~six~~nine months ended ~~March 31,~~June 30, 2019. The decrease in net income and diluted earnings per share was primarily due to the higher provision expense and lower net interest income, as well as the partial charge-off of $2.3 million in the first fiscal quarter of 2020 related to one commercial loan relationship. The annualized return on average assets was ~~0.44~~0.45 percent for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 compared to annualized return on average assets of ~~0.72~~0.78 percent for the ~~six~~nine months ended ~~March 31,~~June 30, 2019. The annualized return on average shareholders’ equity was ~~3.74~~3.85 percent for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 compared to ~~5.87~~6.48 percent for the ~~six~~nine months ended ~~March 31,~~June 30, 2019.

Net interest income is the difference between the interest earned on the portfolio of earning assets (principally loans and investments) and the interest paid for deposits and borrowings, which support these assets.

The following table presents the components of net interest income for the periods indicated:

	For the Three Months Ended March 31,									For the Six Months Ended March 31,									For the Three Months Ended June 30,									For the Nine Months Ended June 30,
	2020		2019		Increase (Decrease)			Percent Change		2020		2019		Increase (Decrease)			Percent Change		2020		2019		Increase (Decrease)			Percent Change		2020		2019		Increase (Decrease)			Percent Change
	(Dollars in thousands)																		(Dollars in thousands)
Interest income:
Loans, including fees	$	10,587	$	10,661	$	(74	)	(0.69)%		$	21,468	$	20,756	$	712		3.43%		$	10,024	$	11,415	$	(1,391	)	(12.19)%		$	31,492	$	32,171	$	(679	)	(2.11)%
Investment securities		265		307		(42	)	(13.68)			519		619		(100	)	(16.16)			280		308		(28	)	(9.09)			799		927		(128	)	(13.81)
Interest-bearing cash accounts		550		475		75		15.79			1,022		847		175		20.66			26		574		(548	)	(95.47)			1,048		1,421		(373	)	(26.25)
Dividends, restricted stock		182		158		24		15.19			370		291		79		27.15			124		159		(35	)	(22.01)			494		450		44		9.78
Total interest income		11,584		11,601		(17	)	(0.15)			23,379		22,513		866		3.85			10,454		12,456		(2,002	)	(16.07)			33,833		34,969		(1,136	)	(3.25)
Interest expense:
Deposits		3,623		3,395		228		6.72			7,360		6,339		1,021		16.11			2,876		3,926		(1,050	)	(26.74)			10,236		10,265		(29	)	(0.28)
Short-term borrowings		-		2		(2	)	(100.00)			-		7		(7	)	(100.00)			-		-		-			-		-		7		(7	)	(100.00)
Long-term borrowings		785		572		213		37.24			1,572		1,205		367		30.46			564		686		(122	)	(17.78)			2,136		1,891		245		12.96
Subordinated debt		383		383		-			-		766		766		-			-		383		383		-			-		1,149		1,149		-			-
Total interest expense		4,791		4,352		439		10.09			9,698		8,317		1,381		16.60			3,823		4,995		(1,172	)	(23.46)			13,521		13,312		209		1.57
Net interest income	$	6,793	$	7,249	$	(456	)	(6.30)%		$	13,681	$	14,196	$	(515	)	(3.63)%		$	6,631	$	7,461	$	(830	)	(11.12)%		$	20,312	$	21,657	$	(1,345	)	(6.21)%

Net interest income decreased ~~$456,000,~~$830,000, or ~~6.3~~11.1 percent, to ~~$6.8~~$6.6 million for the three months ended ~~March 31,~~June 30, 2020 as compared to the three months ended ~~March 31,~~June 30, 2019. For the three months ended ~~March 31,~~June 30, 2020, the net interest margin (which is defined as net interest income as a percentage of total average interest-earnings assets and is presented herein on an annualized basis) decreased ~~forty-one~~twenty-five basis points to ~~2.25~~2.29 percent from ~~2.66~~2.54 percent during the three months ended ~~March 31,~~June 30, 2019. For the three months ended ~~March 31,~~June 30, 2020, a decrease of ~~three~~forty-four basis points in the annualized average cost of interest-bearing liabilities, together with a

decrease in the annualized average yield on interest-earning assets of ~~forty-three~~sixty-three basis points, resulted in a decrease in the Company’s net interest spread of ~~forty~~nineteen basis points for the period.

Net interest income decreased ~~$515,000,~~$1.3 million, or ~~3.6~~6.2 percent, to ~~$13.7~~$20.3 million for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 as compared to the ~~six~~nine months ended ~~March 31,~~June 30, 2019. For the ~~six~~nine months ended ~~six months ended March 31,~~June 30, 2020 the net interest margin decreased ~~thirty-six~~thirty-two basis points to 2.29 percent from ~~2.65~~2.61 percent during the ~~six~~nine months ended ~~March 31,~~June 30, 2019. For the ~~six~~nine months ended ~~March 31,~~June 30, 2020 a decrease in the average yield on interest-earning assets of ~~thirty~~forty-one basis points and ~~an increase~~a decrease in the average cost of interest-bearing liabilities of ~~six~~eleven basis points, resulted in a decrease in the Company’s net interest spread of ~~thirty-six~~thirty basis points for the period.

For the three months ended ~~March 31,~~June 30, 2020, total interest income decreased by ~~$17,000,~~$2.0 million, or ~~0.2~~16.1 percent, to ~~$11.6~~$10.5 million, compared to the three months ended ~~March 31,~~June 30, 2019. Average interest earning assets decreased $17.0 million for the quarter ended June 30, 2020 when compared to the quarter ended June 30, 2019, while the average yield on interest earning assets declined 63 basis points when compared to the same period in 2019. The average yield was affected by the Federal Reserve Board’s zero rate policy. The average balance of the loan portfolio increased by ~~$53.9~~$19.0 million, to ~~$1.0~~$1.029 billion, from an average of ~~$956.8 million~~$1.010 billion in the three months ended ~~March 31,~~June 30, 2019, primarily reflecting a net increase in residential loans and construction and development loans. Average loans represented approximately ~~83.5~~88.8 percent of average interest-earning assets during the three months ended ~~March 31,~~June 30, 2020 compared to ~~87.8~~85.9 percent in the three months ended ~~March 31,~~June 30, 2019. Average investment securities volume decreased during the three months ended ~~March 31,~~June 30, 2020 by ~~$7.6~~$6.1 million, to ~~$40.2~~$43.3 million, compared to the three months ended ~~March 31,~~June 30, 2019.

For the ~~six~~nine months ended ~~March 31,~~June 30, 2020 total interest income ~~increased~~decreased by ~~$866,000,~~$1.1 million, or ~~3.9~~3.3 percent, to ~~$23.4~~$33.8 million, compared to the ~~six~~nine months ended ~~March 31,~~June 30, 2019. ~~This increase~~The decline in total interest income was ~~due primarily to~~driven by a ~~volume increase in loans.~~lower earning asset yield of 41 basis points. The average balance of the loan portfolio increased by ~~$74.4~~$55.9 million, to ~~$1.0~~$1.015 billion during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 from an average of ~~$934.3~~$959.5 million in the ~~six~~nine months ended ~~March 31,~~June 30, 2019 primarily reflecting net increases in residential loans and construction and development loans. Average loans represented approximately ~~84.4~~85.8 percent of average interest-earning assets during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 compared to ~~87.4~~86.8 percent in the ~~six~~nine months ended ~~March 31,~~June 30, 2019. The average balance of investment securities decreased during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 by ~~$10.3~~$8.9 million, to ~~$40.5~~$41.5 million, compared to the ~~six~~nine months ended ~~March 31,~~June 30, 2019.

For the three months ended ~~March 31,~~June 30, 2020, interest expense ~~increased $439,000,~~decreased $1.2 million, or ~~10.1~~23.5 percent, to ~~$4.8~~$3.8 million, compared to the same three month period in fiscal 2019. The annualized average rate of total interest-bearing liabilities decreased ~~three~~forty-four basis points

to ~~1.82~~1.51 percent for the three months ended ~~March 31,~~June 30, 2020, from ~~1.85~~1.95 percent for the three months ended ~~March 31,~~June 30, 2019. Over the same time period, the average balance of total interest-bearing liabilities decreased by $9.3 million. This decrease primarily reflects an decrease in the average balance of total interest-bearing deposit accounts of $30.5 million and an increase in the average balance of borrowings of $21.2 million. The decrease in deposits was strategic, a method to reduce excess cash on the balance sheet, match funding expectations and improve the margin. The reduction in certificates were all listing services and the reduction in money market were public funds deposits. This shift in deposits also improves our strategy to develop relationship-based customers. For the three months ended June 30, 2020, the Company’s annualized net interest spread decreased to 2.10 percent, from 2.29 percent for the three months ended June 30, 2019.

For the nine months ended June 30, 2020 interest expense increased $209,000, or 1.6 percent, to $13.5 million, compared to the same nine month period in fiscal 2019. The average rate of total interest-bearing liabilities decreased eleven basis points to 1.75 percent for the nine months ended June 30, 2020 from 1.86 percent for the nine months ended June 30, 2019. Over the same time period, the average balance of total interest-bearing liabilities increased by $110.3 million. This increase primarily reflects an increase in the average balance of total interest-bearing deposit accounts of $78.2 million and an increase in the average balance of borrowings of $32.1 million. ~~For the three months ended March 31, 2020, the Company’s annualized net interest spread decreased to 2.01 percent, from 2.41 percent for the three months ended March 31, 2019.~~

For the six months ended March 31, 2020, interest expense increased $1.4 million, or 16.6 percent, to $9.7 million, compared to the same six month period in fiscal 2019. The average rate of total interest-bearing liabilities increased six basis points to 1.87 percent for the six months ended March 31, 2020, from 1.81 percent for the six months ended March 31, 2019. Over the same time period, the average balance of total interest-bearing liabilities increased by $115.8$74.1 million. This increase primarily reflects an increase in the average balance of deposits of ~~$92.1~~$51.2 million and an increase in the average balance of borrowings of ~~$23.7~~$22.9 million. The increase in the average balance of deposits consisted of a ~~$71.0~~$54.9 million increase in the average balance of other interest-bearing deposit accounts, ~~an $11.8~~and a $1.7 million increase in the average balance of money market accounts, ~~, and~~offset by an ~~$11.2~~$4.1 million ~~increase~~decrease in the average balance of certificates of deposit accounts, ~~offset by~~and a ~~$2.0~~$1.3 million decrease in the average balance of savings deposits. For the ~~six~~nine months ended ~~March 31,~~June 30, 2020 the Company’s net interest spread decreased to ~~2.04~~2.06 percent, from ~~2.40~~2.36 percent for the ~~six~~nine months ended ~~March 31,~~June 30, 2019.

The following table quantifies the impact on net interest income resulting from changes in average balances and average rates during the periods presented. Any change in interest income or expense attributable to both changes in volume and changes in rate has been allocated in proportion to the relationship of the absolute dollar amount of change in each category.

	Three Months Ended March 31,									Six Months Ended March 31,									Three Months Ended June 30,									Nine Months Ended June 30,
	2020 and 2019									2020 and 2019									2020 and 2019									2020 and 2019
	Increase (Decrease) Due to Change in:									Increase (Decrease) Due to Change in:									Increase (Decrease) Due to Change in:									Increase (Decrease) Due to Change in:
	Average Volume			Average Rate			Net Change			Average Volume			Average Rate			Net Change			Average Volume			Average Rate			Net Change			Average Volume			Average Rate			Net Change
	(In thousands)																		(In thousands)
Interest Earning Assets:
Loans, including fees	$	601		$	(675	)	$	(74	)	$	1,652		$	(940	)	$	712		$	214		$	(1,605	)	$	(1,391	)	$	1,875		$	(2,554	)	$	(679	)
Investment securities		(49	)		7			(42	)		(126	)		26			(100	)		(38	)		10			(28	)		(164	)		36			(128	)
Interest-bearing cash accounts		447			(372	)		75			662			(487	)		175			(165	)		(383	)		(548	)		482			(855	)		(373	)
Dividends, restricted stock		43			(19	)		24			75			4			79			18			(53	)		(35	)		93			(49	)		44
Total interest-earning assets	$	1,042		$	(1,059	)	$	(17	)	$	2,263		$	(1,397	)	$	866		$	29		$	(2,031	)	$	(2,002	)	$	2,286		$	(3,422	)	$	(1,136	)
Interest Bearing Liabilities:
Money Market deposits	$	49		$	(39	)	$	10		$	98		$	(64	)	$	34		$	(82	)	$	(354	)	$	(436	)	$	22		$	(423	)	$	(401	)
Savings deposits		-			(1	)		(1	)		(1	)		1			-			-			(2	)		(2	)		(1	)		-			(1	)
Certificates of deposits		63			87			150			115			265			380			(196	)		(104	)		(300	)		(65	)		143			78
Other interest-bearing deposits		212			(143	)		69			493			114			607			86			(398	)		(312	)		593			(298	)		295
Total interest-bearing deposits		324			(96	)		228			705			316			1,021			(192	)		(858	)		(1,050	)		549			(578	)		(29	)
Borrowings		244			(33	)		211			350			10			360			162			(284	)		(122	)		513			(275	)		238
Total interest-bearing liabilities	$	568		$	(129	)	$	439		$	1,055		$	326		$	1,381		$	(30	)	$	(1,142	)	$	(1,172	)	$	1,062		$	(853	)	$	209
Change in net interest income	$	474		$	(930	)	$	(456	)	$	1,208		$	(1,723	)	$	(515	)	$	59		$	(889	)	$	(830	)	$	1,224		$	(2,569	)	$	(1,345	)

Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin (net interest income as a percentage of average interest-earning assets). All average balances are based on monthly balances. Management does not believe that the monthly averages differ significantly from what the daily averages would be. Quarterly rates, yields, spreads and margins throughout this MD&A are calculated on an annualized basis where appropriate.

		Three Months Ended March 31,																	Three Months Ended June 30,
		2020								2019									2020								2019
		Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate			Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate				Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate			Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate
		(Dollars in thousands)																	(Dollars in thousands)
ASSETS
Interest Earning Assets:
Loans, including fees⁽¹⁾		$	1,010,767		$	10,587		4.19	%	$	956,840		$	10,661		4.46	%		$	1,028,996		$	10,024		3.90	%	$	1,010,033		$	11,415		4.52	%
Investment securities			40,165			265		2.64	%		47,761			307		2.57	%			43,349			280		2.58	%		49,408			308		2.49	%
Interest-bearing cash accounts			148,580			550		1.48	%		76,486			475		2.48	%			76,828			26		0.14	%		107,761			574		2.13	%
Dividends, restricted stock			10,427			182		6.98	%		8,184			158		7.72	%			10,128			124		4.90	%		9,099			159		6.99	%
Total interest-earning assets(1)			1,209,939			11,584		3.83	%		1,089,271			11,601		4.26	%			1,159,301			10,454		3.61	%		1,176,301			12,456		4.24	%
Non-interest-earning assets:
Cash and due from banks			1,347								1,535									18,497								1,452
Bank-owned life insurance			20,089								19,594									20,215								19,718
Other assets			25,775								19,117									30,533								20,598
Other real estate owned			5,796								5,796									5,796								5,796
Allowance for loan losses			(9,756	)							(9,408	)								(10,618	)							(10,061	)
Total non-interest-earning assets			43,251								36,634									64,423								37,503
Total assets		$	1,253,190							$	1,125,905								$	1,223,724							$	1,213,804
LIABILITIES & SHAREHOLDERS’ EQUITY
Interest-Bearing Liabilities:
Money Market deposits		$	277,926			1,121		1.61	%	$	266,233			1,111		1.67	%		$	281,821			902		1.28	%	$	300,204			1,338		1.78	%
Savings deposits			42,875			12		0.11	%		43,943			13		0.12	%			43,720			11		0.10	%		43,613			13		0.12	%
Certificates of deposits			252,973			1,412		2.23	%		240,955			1,262		2.09	%			249,007			1,302		2.09	%		283,758			1,602		2.26	%
Other interest-bearing deposits			318,809			1,078		1.35	%		263,281			1,009		1.53	%			277,782			661		0.95	%		255,250			973		1.52	%
Total interest-bearing deposits		$	892,583			3,623		1.62	%		814,412			3,395		1.67	%		$	852,330			2,876		1.35	%		882,825			3,926		1.78	%
Borrowings			157,955			1,168		2.96	%		125,800			957		3.04	%			161,116			947		2.35	%		139,926			1,069		3.06	%
Total interest-bearing liabilities			1,050,538			4,791		1.82	%		940,212			4,352		1.85	%			1,013,446			3,823		1.51	%		1,022,751			4,995		1.95	%
Non-interest-bearing liabilities:
Demand deposits			41,916								41,035									46,450								42,151
Other liabilities			16,440								7,728									20,509								10,192
Total non-interest liabilities			58,356								48,763									66,959								52,343
Shareholders' equity			144,296								136,930									143,319								138,710
Total liabilities and shareholders' equity		$	1,253,190							$	1,125,905								$	1,223,724							$	1,213,804
Net interest spread								2.01	%							2.41	%								2.10	%							2.29	%
Net interest margin								2.25	%							2.66	%								2.29	%							2.54	%
Net interest income					$	6,793							$	7,249								$	6,631							$	7,461

(1) Includes non-accrual loans during the respective periods. Calculated net of deferred loan fees and loan discounts.	(1) Includes non-accrual loans during the respective periods. Calculated net of deferred loan fees and loan discounts.																	(1) Includes non-accrual loans during the respective periods. Calculated net of deferred loan fees and loan discounts.

		Six Months Ended March 31,																	Nine Months Ended June 30,
		2020								2019									2020								2019
		Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate			Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate				Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate			Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate
		(Dollars in thousands)																	(Dollars in thousands)
ASSETS
Interest Earning Assets:
Loans, including fees⁽¹⁾		$	1,008,737		$	21,468		4.26	%	$	934,305		$	20,756		4.44	%		$	1,015,466		$	31,492		4.13	%	$	959,547		$	32,171		4.47	%
Investment securities			40,512			519		2.56	%		50,855			619		2.43	%			41,454			799		2.57	%		50,373			927		2.45	%
Interest-bearing cash accounts			135,335			1,022		1.51	%		75,966			847		2.23	%			115,904			1,048		1.21	%		86,564			1,421		2.19	%
Dividends, restricted stock			10,438			370		7.09	%		8,301			291		7.01	%			10,335			494		6.37	%		8,567			450		7.00	%
Total interest-earning assets(1)			1,195,022			23,379		3.91	%		1,069,427			22,513		4.21	%			1,183,159			33,833		3.81	%		1,105,051			34,969		4.22	%

Non-interest-earning assets:
Cash and due from banks			1,397								1,443									7,076								1,446
Bank-owned life insurance			20,028								19,533									20,090								19,595
Other assets			25,225								18,678									26,988								19,319
Other real estate owned			5,796								3,217									5,796								4,076
Allowance for loan losses			(9,926	)							(9,018	)								(10,156	)							(9,366	)
Total non-interest-earning assets			42,520								33,853									49,794								35,070
Total assets		$	1,237,542							$	1,103,280								$	1,232,953							$	1,140,121

LIABILITIES & SHAREHOLDERS’ EQUITY
Interest-Bearing Liabilities:
Money Market deposits		$	274,434			2,219		1.62	%	$	262,639			2,185		1.66	%		$	276,887			3,122		1.50	%	$	275,161			3,523		1.71	%
Savings deposits			42,255			23		0.11	%		44,232			23		0.10	%			42,742			35		0.11	%		44,026			36		0.11	%
Certificates of deposits			252,664			2,859		2.26	%		241,419			2,479		2.05	%			251,449			4,159		2.21	%		255,532			4,081		2.13	%
Other interest-bearing deposits			309,020			2,259		1.46	%		238,017			1,652		1.39	%			298,645			2,920		1.30	%		243,761			2,625		1.44	%
Total interest-bearing deposits		$	878,373			7,360		1.68	%		786,307			6,339		1.61	%		$	869,723			10,236		1.57	%		818,480			10,265		1.67	%
Borrowings			157,797			2,338		2.96	%		134,041			1,978		2.95	%			158,899			3,285		2.76	%		136,003			3,047		2.99	%
Total interest-bearing liabilities			1,036,170			9,698		1.87	%		920,348			8,317		1.81	%			1,028,622			13,521		1.75	%		954,483			13,312		1.86	%

Non-interest-bearing liabilities:
Demand deposits			41,816								40,724									43,355								41,200
Other liabilities			15,617								6,729									17,243								7,882
Total non-interest liabilities			57,433								47,453									60,598								49,082
Shareholders' equity			143,939								135,479									143,733								136,556
Total liabilities and shareholders' equity		$	1,237,542							$	1,103,280								$	1,232,953							$	1,140,121
Net interest spread								2.04	%							2.40	%								2.06	%							2.36	%
Net interest margin								2.29	%							2.65	%								2.29	%							2.61	%
Net interest income					$	13,681							$	14,196								$	20,312							$	21,657

(1) Includes non-accrual loans during the respective periods. Calculated net of deferred loan fees and loan discounts.	(1) Includes non-accrual loans during the respective periods. Calculated net of deferred loan fees and loan discounts.																	(1) Includes non-accrual loans during the respective periods. Calculated net of deferred loan fees and loan discounts.

The following table presents the principal categories of other income for the periods indicated:

	Three Months Ended March 31,								Six Months Ended March 31,								Three Months Ended June 30,								Nine Months Ended June 30,
					Increase			Percent					Increase			Percent					Increase			Percent					Increase			Percent
	2020		2019		(Decrease)			Change	2020		2019		(Decrease)			Change	2020		2019		(Decrease)			Change	2020		2019		(Decrease)			Change
	(Dollars in thousands)																(Dollars in thousands)
Service charges and other fees	$	604	$	238	$	366		153.78%	$	863	$	1,178	$	(315	)	(26.74)%	$	195	$	252	$	(57	)	(22.62)%	$	1,058	$	1,430	$	(372	)	(26.01)%
Rental income-other		55		64		(9	)	(14.06)		109		131		(22	)	(16.79)		54		53		1		1.89		163		184		(21	)	(11.41)
Net gains on sales of investments		180		-		180		100.00		180		-		180		100.00
Net gains on sale and call of investments																		1		27		(26	)	(96.30)		181		27		154		570.37
Net gains on sale of loans		-		19		(19	)	(100.00)		3		37		(34	)	(91.89)		11		-		11		100.00		14		37		(23	)	(62.16)
Earnings on bank-owned life insurance		125		120		5		4.17		252		241		11		4.56		128		122		6		4.92		380		363		17		4.68
Total other income	$	964	$	441	$	523		118.59%	$	1,407	$	1,587	$	(180	)	(11.34)%	$	389	$	454	$	(65	)	(14.32)%	$	1,796	$	2,041	$	(245	)	(12.00)%

For the three months ended ~~March 31,~~June 30, 2020, total other income amounted to ~~$964,000,~~$389,000, compared to total other income of ~~$441,000~~$454,000 for the same period in fiscal 2019. The ~~increase~~decrease in ~~total~~ other income was primarily due to a ~~$366,000 increase~~decrease in service charges, ~~and other fees and a $180,000 gain on sale of investments. The increase~~as there were noticeably lower customer transaction volumes in ~~service charges and other fees during~~ the quarter ended March 31, 2020 is primarily due to the recognition of approximately $371,000 of net swap fees through the Bank’s commercial loan hedging program realized during the quarter ending March 31, 2020 in concert with lending activity.COVID-19 environment.

For the ~~six~~nine months ended ~~March 31,~~June 30, 2020 total other income amounted to ~~$1.4~~$1.8 million, compared to total other income of ~~$1.6~~$2.0 million for the ~~six~~nine months ended ~~March 31,~~June 30, 2019. The decrease of ~~$180,000~~$245,000 for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 was primarily due to a ~~decrease~~result of ~~$315,000~~a $372,000 decrease in service charges and other fees, ~~a $34,000 decrease in net gains on sale of loans, and a $22,000 decrease in rental income,~~ offset by a ~~$180,000~~$154,000 increase in gain on sale of ~~investments and an $11,000 increase in earnings on bank-owned life insurance.~~investments. The decrease in service charges and other fees during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 is primarily due to the recognition of approximately $337,000 less of net swap fees through the Bank’s commercial loan hedging program. The primary benefit of the loan hedging program is to eliminate the interest rate risk on long term fixed rate loans while allowing the Bank to compete more effectively in our markets.

The following table presents the principal categories of other expense for the periods indicated:

	Three Months Ended March 31,									Six Months Ended March 31,								Three Months Ended June 30,									Nine Months Ended June 30,
						Increase			Percent					Increase			Percent					Increase			Percent						Increase			Percent
	2020			2019		(Decrease)			Change	2020		2019		(Decrease)			Change	2020		2019		(Decrease)			Change		2020		2019		(Decrease)			Change
	(Dollars in thousands)																	(Dollars in thousands)
Salaries and employee benefits	$	2,271		$	2,213	$	58		2.62%	$	4,396	$	4,221	$	175		4.15%	$	2,279	$	2,223	$	56		2.52%		$	6,675	$	6,444	$	231		3.58%
Occupancy expense		591			577		14		2.43		1,173		1,116		57		5.11		576		560		16		2.86			1,749		1,676		73		4.36
Federal deposit insurance premium		3			73		(70	)	(95.89)		-		142		(142	)	(100.00)		79		78		1		1.28			79		220		(141	)	(64.09)
Advertising		32			30		2		6.67		54		60		(6	)	(10.00)		33		30		3		10.00			87		90		(3	)	(3.33)
Data processing		272			251		21		8.37		550		505		45		8.91		275		259		16		6.18			825		764		61		7.98
Professional fees		502			455		47		10.33		943		954		(11	)	(1.15)		524		405		119		29.38			1,467		1,359		108		7.95
Other real estate owned expense, net		(1	)		28		(29	)	(103.57)		70		49		21		42.86		29		30		(1	)	(3.33)			99		79		20		25.32
Pennsylvania shares tax		170			92		78		84.78		340		92		248		269.57		169		169		-			-		509		261		248		95.02
Other operating expenses		798			724		74		10.22		1,534		1,398		136		9.73		720		743		(23	)	(3.10)			2,254		2,141		113		5.28
Total other expense	$	4,638		$	4,443	$	195		4.39%	$	9,060	$	8,537	$	523		6.13%	$	4,684	$	4,497	$	187		4.16%		$	13,744	$	13,034	$	710		5.45%

For the three months ended ~~March 31,~~June 30, 2020, total other expense increased ~~$195,000,~~$187,000, or ~~4.4~~ 4.2 percent, from the comparable three months ended ~~March 31,~~June 30, 2019. The increase was primarily due to ~~a $78,000 increase in the Pennsylvania shares tax,~~ an increase of ~~$74,000~~$119,000 in ~~other operating expense,~~professional fees, which included some COVID-19 related expenses, and an increase of ~~$58,000~~$56,000 in salaries and employee ~~benefits, and an increase of $47,000 in professional fees.~~benefits. These were partially offset by a decrease of ~~$70,000~~$23,000 in ~~the federal deposit insurance premium and a decrease of $29,000 in OREO~~ ~~expense. The increase in the Pennsylvania shares tax is due to the tax being based on equity as of January 1~~^st~~, the estimate for 2020 exceeded 2019.~~ ~~The increase in salaries and employee benefits reflect normal increases to salary and benefits.~~other operating expenses. The increase in professional fees was due to higher legal ~~expense~~ and professional ~~services of approximately $35,000~~expense. The increase in salaries and ~~$75,000,~~employee benefits were mainly due to four strategic hires to support franchise growth.

~~-53-~~ For the nine months ended June 30, 2020 total other expense increased $710,000, or 5.5 percent, compared to the nine months ended June 30, 2019. This increase primarily reflects a $248,000 increase in the Pennsylvania shares tax, a $231,000 increase in salaries and employee benefits, a $113,000 increase in other operating expenses and a $108,000 increase in professional fees. These increases were partially offset by a $141,000 decrease in the federal deposit insurance premium. The increase in the Pennsylvania

shares tax was due to the Bank not being subject to this tax until the second quarter of 2019. The increase in salaries and employee benefits during the nine-month period ended June 30, 2020 reflects normal increases to salary and benefits to support overall franchise growth. The increase in professional fees was due to higher professional services and legal expenses of $178,000 and $71,000, respectively, partially offset by lower audit and accounting ~~expense~~expenses of approximately ~~$64,000.~~ $140,000. The reduction in the federal deposit insurance premium resulted from the Deposit Insurance Fund reserve ratio exceeding the official required reserve ratio, which in turn generates credits to qualified participating banks. The ~~Company~~Bank currently does not have any further credit balance that can be used to offset premiums in future quarters.

For the six months ended March 31, 2020, salaries and employee benefits expense increased $175,000, or 4.2 percent, compared to the six months ended March 31, 2019. The increase in salaries and employee benefits primarily reflects normal increases to salary and benefits to support overall franchise growth consistent with the business plan. Full-time equivalent staffing levels was 89 at each of March 31, 2020 and March 31, 2019. ~~The increase in the Pennsylvania shares tax was due to the Bank not being subject to this tax until the second quarter of 2019 due to a charter change.~~

The Company recorded a provision for income taxes of ~~$586,000~~$447,000 and ~~$560,000~~$1.0 million for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020, respectively, reflecting an effective tax rate of 23.5 percent and ~~17.2~~19.5 percent, respectively. The Company recorded a provision for income taxes of ~~$411,000~~$706,000 and ~~$946,000~~$1.7 million for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2019 respectively, reflecting an effective tax rate of ~~17.3~~21.0 percent and ~~19.2~~19.9 percent, respectively. During the ~~six~~nine months ended ~~March 31,~~June 30, 2020, the Company recorded ~~discrete~~discreet items that reduced the effective tax rate.

For the three months ended ~~March 31,~~June 30, 2020, the average volume of investment securities decreased by ~~$7.6~~$6.1 million to approximately ~~$40.2~~$43.3 million, or ~~3.3~~3.7 percent, of average earning assets, from ~~$47.8~~$49.4 million on average, or ~~4.4~~4.2 percent of average earning assets, for the three months ended ~~March 31,~~June 30, 2019. During the ~~six~~nine months ended ~~March 31,~~June 30, 2020 the average volume of investment securities decreased by ~~$10.3~~$8.9 million to approximately ~~$40.5~~$41.5 million, or ~~3.4~~3.5 percent, of average earning assets, from ~~$50.9~~$50.4 million on average, or ~~4.8~~4.6 percent of average earning assets, for the comparable period in fiscal 2019. At ~~March 31,~~June 30, 2020, the total investment portfolio amounted to ~~$39.9~~$49.2 million, ~~a decrease~~an increase of ~~$1.0~~$8.3 million, or ~~2.5~~20.2 percent, from September 30, 2019. The ~~decrease~~increase in the investment portfolio was primarily due to purchases of $28.2 million partially offset by maturation, calls, and sales of ~~$11.2 million partially offset by purchases of $12.1~~$16.8 million. At ~~March 31,~~June 30, 2020, the principal components of the investment portfolio were government agency obligations, federal agency obligations, including mortgage-backed securities, obligations of U.S. states and political subdivision, corporate bonds and notes, a trust preferred security and taxable mutual funds.

During the three month period ended ~~March 31,~~June 30, 2020, ~~the~~ volume-related factors decreasedinvestmentrevenue by approximately ~~$49,000,~~$38,000, while rate-related factors increased investment revenue by approximately ~~$7,000~~$10,000 from the same period in fiscal 2019. The yield on investments increased by ~~seven~~nine basis points to ~~2.64~~2.58 percent for the three month period ended ~~March 31,~~June 30, 2020 as compared to ~~2.57~~2.49 percent for the three month period ended ~~March 31,~~June 30, 2019. The yield on the portfolio increased due primarily to ~~rate related~~rate-related factors.

During the ~~six~~nine months ended ~~March 31,~~June 30, 2020, ~~the~~ volume-related factors decreased investment revenue by approximately ~~$126,000,~~$164,000, while rate-related factors increased investment revenue by approximately ~~$26,000~~$36,000 from the same period in fiscal 2019. The yield on investments increased by ~~thirteen~~twelve basis points to ~~2.56~~2.57 percent for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 as compared to ~~2.43~~2.45 percent for the ~~six~~nine months ended ~~March 31,~~June 30, 2019. The increase in the yield on the portfolio in the ~~six~~nine months ended ~~March 31,~~June 30, 2020 compared to the same period in fiscal 2019 is due primarily to rate-related factors.

The Company’s loan portfolio consists of residential, construction and development, commercial and consumer loans, serving the diverse customer base in its market area. The composition of the Company’s portfolio continues to change due to the local competition. Factors such as the economic climate, interest rates, real estate values and employment all contribute to changes in the composition of the Company’s portfolio. Growth is generated through business development efforts, repeat customer requests for new financings, penetration into existing markets and entry into new markets.

The Company seeks to create growth in commercial lending, which primarily includes commercial real estate, multi-family, farmland, and commercial and industrial lending, by offering customer-focused products and competitive pricing and by capitalizing on the positive trends in its market area. Products offered are designed to meet the financial requirements of the Company’s customers. It is the objective of the Company’s credit policies to diversify the commercial loan portfolio toand limit concentrations in any single industry.

Total gross loans amounted to ~~$1.0~~$1.039 billion at ~~both March 31,~~June 30, 2020 and $1.017 billion at September 30, ~~2019,.~~2019. For the ~~six~~nine month period ended ~~March 31,~~June 30, 2020, there was ~~a decrease of $34.9 million in commercial loans, a decrease of $2.3 million in consumer loans,~~ an increase of ~~$20.6~~$26.2 million in residential mortgage loans and ~~an increase of $12.1~~$16.8 million in construction and development loans, which were partially offset by a decrease of $17.9 million in commercial loans and $3.4 million in consumer loans. Total gross loans recorded in the quarter ended ~~March 31,~~June 30, 2020 included new loan volume of ~~$61.~~1$49.5 million, which was partially offset by prepayments ~~totaling $12.2~~of $6.0 million, amortization of ~~$5.7~~$4.9 million, loan payoffs of ~~$30.8~~$9.7 million, and participations of ~~$1.5~~$3.7 million. Total loan growth for the three months ended June 30, 2020 included $17.7 million of PPP commercial and industrial loans.

At ~~March 31,~~June 30, 2020, the Company had ~~$148.8~~$140.6 million in overall undisbursed loan commitments, which consisted primarily of available usage from active construction facilities, unused commercial lines of credit and home equity lines of credit. The Company's current “Approved, Accepted but Unfunded” pipeline, includes approximately ~~$19.8~~$6.2 million in commercial and construction loans and ~~$5.3~~$3.1 million in residential mortgage loans expected to fund over the following quarter.

The average balance of our total loans increased ~~$53.9~~$19.0 million, or ~~5.6~~1.9 percent, for the three months ended ~~March 31,~~June 30, 2020 as compared to the same period in fiscal 2019, while the average yield on loans decreased ~~twenty-seven~~by sixty-two basis points for the three months ended ~~March 31,~~June 30, 2020 compared with the same period in fiscal 2019. The increase in average total loan volume was ~~partially~~ due to the volume of new loan originations. During the ~~second~~third quarter of fiscal 2020 compared to the same period fiscal 2019, the volume-related factors during the period contributed to an increase of interest income on loans of ~~$601,000,~~$214,000, while the rate-related factors decreased interest income on loans by ~~$675,000.~~$1.6 million.

Total average loan volume increased ~~$74.4~~$55.9 million, or ~~8.0~~5.8 percent, for the ~~six~~nine months ended ~~March 31,~~June 30, 2020, while the portfolio yield decreased by ~~eighteen~~thirty-four basis points compared to the same period in fiscal 2019. The volume-related factors during the period contributed increased revenue of ~~$1.7~~$1.9 million, while the average rate- related changes decreased revenue by ~~$940,000.~~$2.6 million. The increase in average total loan volume was due to the volume of new loan originations.

The purpose of the ALLL is to absorb the impact of losses inherent in the loan portfolio. Additions to the ALLL are made through provisions charged against current operations and through recoveries made on loans previously charged-off. The ALLL is maintained at an amount considered adequate by management to provide for probable loan losses inherent in the loan portfolio based upon a periodic evaluation of the portfolio’s risk characteristics. In establishing an appropriate ALLL, an assessment of the individual borrowers, a determination of the value of the underlying collateral, a review of historical loss experience and an analysis of the levels and trends of loan categories, delinquencies and problem loans are considered. Such factors as the level and trend of interest rates and current economic conditions and peer group statistics are also reviewed. Given the economic volatility impacting national, regional and local markets, the Company’s analysis of its ALLL takes into consideration the potential impact that current trends may have on the Company’s borrower base.

Although management uses the best information available, the level of the ALLL remains an estimate, which is subject to significant judgment and short-term change. Various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ALLL. Such agencies may require the Company to increase the ALLL based on their analysis of information available to them at the time of their examination. Furthermore, the majority of the Company’s loans are secured by real estate in the State of New Jersey and the State of Pennsylvania. Future adjustments to the ALLL may be necessary due to economic factors impacting New Jersey and Pennsylvania real estate and the economy in general, as well as operating, regulatory and other conditions beyond the Company’s control.

At ~~March 31,~~June 30, 2020 the ALLL, excluding PPP loans of $17.7 million, amounted to approximately ~~$10.6~~$11.1 million, or ~~1.04~~1.08 percent of total loans. At September 30, 2019, the ALLL amounted to approximately $10.1 million, or 0.99 percent of total loans. The Company recorded a provision of ~~$625,000~~$435,000 for loan losses during the quarter ended ~~March 31,~~June 30, 2020 compared to ~~$870,000 million~~$56,000 for the quarter ended ~~March 31,~~June 30, 2019. For the ~~six~~nine months ended ~~March 31,~~June 30, 2020, we recorded ~~$2.8~~$3.2 million in provision for loan losses compared to ~~$2.3~~$2.4 million for the ~~six~~nine months ended ~~March 31,~~June 30, 2019. The increase in the ALLL as a percent of gross loans ~~was principally driven by~~reflects an increase in qualitative factors as a result of COVID-19 and the economic impact it could have on the Company’s loan portfolio.

As previously disclosed in the Company’s 10-Q/A filed on April 16, 2020, subsequent to the Company’s submission on February 10, 2020 of the original Form 10-Q for the quarter ended December 31, 2019, additional information was received concerning a certain $9.1 million collateral dependent commercial loan relationship (the “Loan”), which was classified as an accruing TDR as of December 31, 2019. In determining the ALLL and impairment on the Loan as of December 31, 2019, the Company followed guidance under ASC 310-10-35. When measuring impairment on an individual basis under ASC 310-10-35, the Company considered the fair value of the Loan’s collateral, given that, based on available information, the Loan was collateral dependent. The Company internally estimated the fair value of the collateral and recorded a specific reserve of $1.6 million during the three months ended December 31, 2019 pending the receipt of a third-party appraisal. The third-party appraisal was received in March 2020 and indicated that the collateral’s fair value is approximately $700,000 less than the Company’s previous estimate. No other factors were

identified that led the Company to believe the collateral value as of December 31, 2019 had changed. Based upon this additional information, the Company determined that a partial charge-off of the Loan to reflect the collateral’s true fair value was appropriate as of December 31, 2019. Accordingly, the Company charged-off $2.3 million of the Loan, placed the Loan on non-accrual status, recorded an additional $2.2 million provision for loan losses for the three months ended December 31, 2019 and reversed approximately $24,000 of interest income (related to the December 31, 2019 principal and interest payment), crediting it to principal.

The net recoveries and net charge-offs were ~~$31,000~~$76,000 and ~~$2.3~~$2.2 million for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020, respectively, compared to ~~$101,000~~$34,000 and $1.3 million in net recoveries and net charge-offs for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2019, respectively.

We will continue to experience some level of periodic charge-offs in the future as exit strategies are considered and executed, in

particular as it relates to our clients impacted by the COVID-19 pandemic. Loans with previously established specific reserves may ultimately result in a charge-off under a variety of scenarios.

The level of the ALLL for the respective periods of fiscal 2020 and fiscal 2019 reflects the credit quality within the loan portfolio, the loan volume recorded during the periods, the changing composition of the commercial and residential real estate loan portfolios and other related factors. In management’s view, the level of the ALLL at ~~March 31,~~June 30, 2020 was adequate to cover losses inherent in the loan portfolio. Actual results could differ materially from management’s analysis, based principally upon the factors considered by management in establishing the ALLL.

Changes in the ALLL are presented in the following table for the periods indicated:

	Six Months Ended March 31,						Nine Months Ended June 30,
	2020			2019			2020			2019
	(Dollars in thousands)						(Dollars in thousands)
Average loans outstanding	$	1,008,737		$	934,305		$	1,015,466		$	959,547
Total gross loans at end of period	$	1,012,631		$	1,006,652		$	1,038,822		$	1,019,571
Analysis of the Allowance of Loan Losses:
Balance at beginning of period	$	10,095		$	9,021		$	10,095		$	9,021

Charge-offs:
Residential Mortgage		-			17			-			17
Commercial:
Commercial real estate		2,288			1,376			2,288			1,376
Consumer:
Home equity lines of credit		62			-			62			-
Second mortgages		3			1			3			1
Other		-			37			-			37
Total charge-offs		2,353			1,431			2,353			1,431
Recoveries:

Residential Mortgage		23			79			24			79
Commercial:
Commercial real estate		2			4			4			22
Commercial and industrial		1			3			2			4

Consumer:
Home equity lines of credit		-			1			1			1
Second mortgages		12			14			83			22
Other		1			2			1			9
Total recoveries		39			103			115			137
Net charge-offs		2,314			1,328			2,238			1,294
Provision for loan losses		2,775			2,323			3,210			2,379
Balance at end of period	$	10,556		$	10,016		$	11,067		$	10,106
Ratios:
Ratio of allowance for loan losses to non-performing loans		119.64	%		411.84	%		121.14	%		418.12	%
Ratio of net charge-offs to average loans outstanding (1)		0.46	%		0.28	%		0.29	%		0.18	%
Ratio of net charge-offs to total allowance for loan losses		21.92	%		13.26	%		20.22	%		12.80	%

The Company manages asset quality and credit risk by maintaining diversification in its loan portfolio and through review processes that include analysis of credit requests and ongoing examination of outstanding loans, delinquencies, and potential problem loans, with particular attention to portfolio dynamics and mix. The Company strives to identify loans experiencing difficulty early enough to correct the problems, to record charge-offs promptly based on realistic assessments of current collateral values and cash flows, and to maintain an adequate ALLL at all times.

It is generally the Company’s policy to discontinue interest accruals once a loan is past due as to interest or principal payments for a period of 90 days. When a loan is placed on non-accrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current income. Payments received on non-accrual loans are applied against principal. A loan may be restored to an accruing basis when it again becomes well-secured, all past due amounts have been collected and the borrower continues to make payments for the next six months on a timely basis. Accruing loans past due 90 days or more are generally well-secured and in the process of collection. For additional information regarding loans, see Note 8 of the Notes to the Unaudited Consolidated Financial Statements.

Non-performingloansincludenon-accrualloansandaccruingloans ~~include non-accrual loans and accruing loans~~ thatarecontractuallypastdue 90daysormore.Non-accrual loans represent loans on which interest accruals have been suspended. In general, it is the policy of management to consider the charge-off of loans at the point they become past due in excess of 90 days, with the exception of loans that are both well-secured and in the process of collection. Non-performing assets include non-performing loans and OREO. TDR loans represent loans to borrowers experiencing financial difficulties on which a concession was granted, such as a reduction in interest rate which is lower than the current market rate for new debt with similar risks, or modified repayment terms, and are performing under the restructured terms. Such loans, as long as they are performing in accordance with their restructured terms, are not included within the Company’s non-performing loans. For additional information regarding loans, see Note 8 of the Notes to the Unaudited Consolidated Financial Statements.

The following table sets forth, as of the dates indicated, the amount of the Company’s non-accrual loans, accruing loans past due 90 days or more, OREO and performing TDR loans:

	March 31, 2020		September 30, 2019		June 30, 2020		September 30, 2019
	(In thousands)				(In thousands)
Non-accruing loans:
Non-accrual loans	$	8,655	$	1,821	$	8,871	$	1,821
Accruing loans delinquent more than 90 days past due		168		502
Accruing loans more than 90 days past due						265		502
Total non-performing loans		8,823		2,323		9,136		2,323
OREO		5,796		5,796		5,796		5,796
Total non-performing assets	$	14,619	$	8,119	$	14,932	$	8,119
TDR loans - performing	$	3,243	$	12,170	$	13,640	$	12,170

Non-accrual loans were ~~$8.7~~$8.9 million at ~~March 31,~~June 30, 2020, $1.8 million at September 30, 2019, and ~~$2.4~~$2.2 million at ~~March 31,~~June 30, 2019. OREO was $5.8 million at ~~March 31,~~June 30, 2020, September 30, 2019, and ~~March 31,~~June 30, 2019. Total performing TDR loans were ~~$3.2~~$13.6 million at ~~March 31,~~June 30, 2020, $12.2 million at September 30, 2019 and, ~~$12.1~~$11.8 million at ~~March 31,~~June 30, 2019. See discussion in Note 8 of the Notes to the Unaudited Consolidated Financial Statements for further information.

At ~~March 31,~~June 30, 2020, non-performing assets totaled ~~$14.6~~$14.9 million, or ~~1.18~~1.24 percent of total assets, as compared with $8.1 million, or 0.64 percent, at September 30, 2019 and $8.2 million, or ~~0.68~~0.65 percent, at ~~March 31,~~June 30, 2019.

~~Overall credit quality in the Bank’s loan portfolio at March 31, 2020 remained relatively strong.~~ Credit quality risk ratings include categories of “pass,” “special mention,” “substandard” and “doubtful.” Assets classified as “pass” are those protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. Assets which do not currently expose the insured institution to sufficient risk to warrant classification as substandard or doubtful but possess certain identified weaknesses are required to be designated “special mention.” If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses

present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.”

At ~~March 31,~~June 30, 2020, special mention loans were ~~$34.7~~$34.1 million compared to $15.1 million at September 30, 2019. The increase in special mention loans was primarily due to two commercial loans in the amount of $13.4 million and one multi-family loan in the amount of ~~$9.6~~$9.5 million, previously classified as management attention and moved to special mention during the second fiscal quarter 2020, partially offset by payoffs of one commercial loan and one multi-family loan in the amount of $2.8 million and $400,000, respectively, during the second fiscal quarter 2020. Substandard loans were ~~$23.0~~$23.6 million and $14.8 million at ~~March 31,~~June 30, 2020 and September 30, 2019, respectively. The increase in substandard loans is primarily due to one commercial real estate loan in the amount of $10.6 million, previously classified as management attention and moved to substandard during the second fiscal quarter partially offset by a $2.3 million partial charge-off of a loan that was classified as substandard. Our loans that have been identified as special mention or substandard are considered potential problem loans due to a variety of changing conditions affecting the credits, including general economic conditions and/or conditions applicable to the specific borrowers.

At March 31, 2020, other than the loans set forth above, the Company is not aware of any loans which present serious doubts as to the ability of its borrowers to comply with present loan repayment terms and which are expected to fall into one of the categories set forth in the tables or descriptions above.

Note 2 discusses the expected impact of accounting pronouncements recently issued or proposed but not yet required to be adopted.

Asset and liability management encompasses an analysis of market risk, the control of interest rate risk (interest sensitivity management) and the ongoing maintenance and planning of liquidity and capital. The composition of the Company’s statement of condition is planned and monitored by the Asset and Liability Committee (“ALCO”). In general, management’s objective is to optimize net interest income and minimize market risk and interest rate risk by monitoring the components of the statement of condition and the interaction of interest rates.

Short-term interest rate exposure analysis is supplemented with an interest sensitivity gap model. The Company utilizes interest sensitivity analysis to measure the responsiveness of net interest income to changes in interest rate levels. Interest rate risk arises when an earning asset matures or when its interest rate changes in a time period different than that of a supporting interest-bearing liability, or when an interest-bearing liability matures or when its interest rate changes in a time period different than that of an earning asset that it supports. While the Company matches only a small portion of specific assets and liabilities, total earning assets and interest-bearing liabilities are grouped to determine the overall interest rate risk within a number of specific time frames. The difference between interest-sensitive assets and interest-sensitive liabilities is referred to as the interest sensitivity gap. At any given point in time, the Company may be in an asset-sensitive position, whereby its interest-sensitive assets exceed its interest-sensitive liabilities, or in a liability-sensitive position, whereby its interest-sensitive liabilities exceed its interest-sensitive assets, depending in part on management’s judgment as to projected interest rate trends.

The Company’s interest rate sensitivity position in each time frame may be expressed as assets less liabilities, as liabilities less assets, or as the ratio between rate sensitive assets (“RSA”) and rate sensitive liabilities (“RSL”). For example, a short-funded position (liabilities repricing before assets) would be expressed as a net negative position, when period gaps are computed by subtracting repricing liabilities from repricing assets. When using the ratio method, a RSA/RSL ratio of 1 indicates a balanced position, a ratio greater than 1 indicates an asset-sensitive position and a ratio less than 1 indicates a liability-sensitive position.

A negative gap and/or a rate sensitivity ratio less than 1 tends to expand net interest margins in a falling rate environment and reduce net interest margins in a rising rate environment. Conversely, when a positive gap occurs, generally margins expand in a rising rate environment and contract in a falling rate environment. From time to time, the Company may elect to deliberately mismatch liabilities and assets in a strategic gap position.

At ~~March 31,~~June 30, 2020, the Company reflected a positive interest sensitivity gap with an interest sensitivity ratio of ~~1.49:~~1.29:1.00 at the cumulative one-year position.

The estimation of fair value is significant to a number of the Company’s assets, including investment securities available-for-sale. These are all recorded at either fair value or the lower of cost or fair value. Fair values are volatile and may be influenced by a number of factors. Circumstances that could cause estimates of the fair value of certain assets and liabilities to change include a change in prepayment speeds, discount rates, or market interest rates. Fair values for most available-for-sale investment securities are

based on quoted market prices. If quoted market prices are not available, fair values are based on judgments regarding future expected loss experience, current economic condition risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The financial statements and notes thereto presented elsewhere herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of operations; unlike most industrial companies, nearly all of the Company’s assets and liabilities are monetary. As a result, interest rates have a greater impact on performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

The liquidity position of the Company is dependent primarily on successful management of the Bank’s assets and liabilities so as to meet the needs of both deposit and credit customers. Liquidity needs arise principally to accommodate possible deposit outflows and to meet customers’ requests for loans. Scheduled principal loan repayments, maturing investments, short-term liquid assets and deposit inflows, can satisfy such needs. The objective of liquidity management is to enable the Company to maintain sufficient liquidity to meet its obligations in a timely and cost-effective manner.

Management monitors current and projected cash flows, and adjusts positions as necessary to maintain adequate levels of liquidity. Under its liquidity risk management program, the Company regularly monitors correspondent bank funding exposure and credit exposure in accordance with guidelines issued by the banking regulatory authorities. Management uses a variety of potential funding sources and staggering maturities to reduce the risk of potential funding pressure. Management also maintains a detailed contingency funding plan designed to respond adequately to situations which could lead to stresses on liquidity. Management believes that the Company has the funding capacity to meet the liquidity needs arising from potential events. The Company maintains borrowing capacity through the FHLB of Pittsburgh secured with loans and marketable securities.

The Company’s primary sources of short-term liquidity consist of cash and cash equivalents and investment securities available-for-sale. At ~~March 31,~~June 30, 2020, the Company had ~~$126.1~~$58.9 million in cash and cash equivalent compared to $153.5 million at September 30, 2019. In addition, our available for sale investment securities amounted to ~~$21.8~~$32.2 million at ~~March 31,~~June 30, 2020 and $18.4 million at September 30, 2019.

Total deposits decreased ~~$37.9~~$69.4 million, or ~~4.0~~7.3 percent, from $953.8 million at September 30, 2019 to ~~$915.9~~$884.4 million at ~~March 31,~~June 30, 2020. Total interest-bearing deposits decreased ~~$25.1~~$61.1 million from $898.1 million at September 30, 2019 to ~~$873.0~~$837.0 million at ~~March 31,~~June 30, 2020. Interest-bearing demand, savings and time deposits under $100,000 decreased ~~$6.4~~$20.7 million to a total of ~~$690.2~~$675.9 million at ~~March 31,~~June 30, 2020 as compared to $696.6 million at September 30, 2019. Time deposits $100,000 and over decreased ~~$18.7~~$40.4 million as compared to September 30, 2019. Time deposits $100,000 and over represented ~~20.0~~18.2 percent of total deposits at ~~March 31,~~June 30, 2020 compared to 21.1 percent at September 30, 2019. We had brokered deposits totaling ~~$16.1~~$11.1 million at ~~March 31,~~June 30, 2020 compared to $73.1 million at September 30, 2019.

The Company continues to focus on the maintenance, development, and expansion of its deposit base. The reductions in deposits are in line with the Bank’s overall funding strategy to reduce excess on balance sheet cash and better match funding needs along with improvement in the deposit mix with the reduction of wholesale certificates of $14.4 million and reduction of money market public fund deposits of $29.3 million. Management believes that the emphasis on serving the needs of our communities will provide a long-term relationship base ~~that~~which in turn will allow the Company to efficiently compete for ~~business~~and retain deposits in its market.

The following table depicts the Company’s deposits classified by interest rates, with percentages to total deposits, at ~~March 31,~~June 30, 2020 and September 30, 2019:

	March 31, 2020					September 30, 2019					Dollar			June 30, 2020					September 30, 2019					Dollar
	Amount		Percentage			Amount		Percentage			Change			Amount		Percentage			Amount		Percentage			Change
Balances by types of deposit:	(Dollars in thousands)													(Dollars in thousands)
Savings	$	43,550		4.7	%	$	41,875		4.4	%	$	1,675		$	43,702		4.9	%	$	41,875		4.4	%	$	1,827
Money market accounts		280,173	30.6				276,644		29.0			3,529			281,419	31.8				276,644		29.0			4,775
Interest bearing demand		291,191	31.8				302,039		31.7			(10,848	)		277,238	31.4				302,039		31.7			(24,801	)
Non-interest bearing demand		42,874	4.7				55,684		5.8			(12,810	)		47,443	5.4				55,684		5.8			(8,241	)
	$	657,788	71.8			$	676,242		70.9		$	(18,454	)	$	649,802	73.5			$	676,242		70.9		$	(26,440	)
Certificates of deposit		258,112	28.2				277,569		29.1			(19,457	)		234,642	26.5				277,569		29.1			(42,927	)
Total	$	915,900		100.0	%	$	953,811		100.0	%	$	(37,911	)	$	884,444		100.0	%	$	953,811		100.0	%	$	(69,367	)

~~Borrowings~~Advances from the FHLB of Pittsburgh are available to supplement the Company’s liquidity position and, to the extent that maturing deposits do not remain with the Company, management may replace such funds with these advances. As of ~~March 31,~~June 30, 2020 and September 30, 2019, the Company’s outstanding balance of FHLB advances totaled $130.0 million and $133.0 ~~million.~~ million, respectively. Of the ~~$133.0~~$130.0 million in advances, ~~$28.0~~$20.0 million represent long-term, fixed-rate advances maturing in ~~2020.~~2021 and $20.0 million represent long-term, fixed-rate advances maturing in 2022. At ~~March 31,~~June 30, 2020, there were ~~five~~three short-term FHLB advances totaling ~~$105.0~~$90.0 million of fixed-rate borrowings with rollover of 90 days.

The Company did not purchase any securities sold under agreements to repurchase as a short-term funding source during the ~~second~~third fiscal ~~quarter~~quarters of 2020 or 2019.

The Consolidated Statements of Cash Flows present the changes in cash and cash equivalents resulting from the Company’s operating, investing and financing activities. During the ~~six~~nine months ended ~~March 31,~~June 30, 2020, cash and cash equivalents decreased by ~~$27.5~~$94.6 million from the balance at September 30, 2019. Net cash of ~~$9.8~~$10.0 million was provided by operating activities primarily due to an increase in other liabilities of ~~$7.4~~$7.9 million, and ~~$2.8~~$3.2 million of provision for loan losses. The increase in other liabilities was primarily due to increased swap loan hedge liability of ~~$4.0~~$5.1 million and increased operating lease liabilities of ~~$3.0~~$2.8 million. Net cash ~~provided by~~used in investing activities amounted to approximately ~~$1.6~~$31.6 million primarily due to purchases of investments of $28.2 million. The decrease in net cash from financing activities of ~~$38.9~~$73.0 million was primarily from the decrease in deposits of ~~$37.9~~$69.4 million and the acquisition of treasury stock of ~~$1.8~~$2.5 million.

Total shareholders’ equity amounted to ~~$143.2~~$143.5 million, or ~~11.6~~11.9 percent of total assets, at ~~March 31,~~June 30, 2020, compared to $142.5 million or 11.3 percent of total assets at September 30, 2019. Book value per common share was ~~$18.67~~$18.86 at ~~March 31,~~June 30, 2020, compared to $18.35 at September 30, 2019.

	March 31, 2020		September 30, 2019		June 30, 2020		September 30, 2019
	(In thousands, except for per share data)				(In thousands, except for per share data)
Shareholders’ equity		143,150		142,508		143,531		142,508
Book value per common share	$	18.67	$	18.35	$	18.86	$	18.35

At ~~March 31,~~June 30, 2020, the Bank’s common equity ~~tier~~Tier 1 capital ratio was ~~15.67~~15.63 percent, ~~tier~~Tier 1 leverage ratio was ~~12.52~~12.98 percent, ~~tier~~Tier 1 risk-based capital ratio was ~~15.67~~15.63 percent and the total risk-based capital ratio was 16.73 percent. At September 30, 2019, the Bank’s common equity ~~tier~~Tier 1 capital ratio was 15.38 percent, ~~tier~~Tier 1 leverage ratio was 12.23 percent, ~~tier~~Tier 1 risk-based capital ratio was 15.38 percent and the total risk-based capital ratio was 16.40 percent. At ~~March 31,~~June 30, 2020, the Bank was in compliance with all applicable regulatory capital requirements.

At ~~March 31,~~June 30, 2020, the Company’s common equity ~~tier~~Tier 1 capital ratio was ~~14.40~~14.28 percent, ~~tier~~Tier 1 leverage ratio was ~~11.51~~11.86 percent, ~~tier~~Tier 1 risk-based capital ratio was ~~14.40~~14.28 percent and the total risk-based capital ratio was ~~17.93~~17.81 percent. At September 30, 2019, the Company’s common equity ~~tier~~Tier 1 capital ratio was 14.30 percent, ~~tier~~Tier 1 leverage ratio was 11.38 percent, ~~tier~~Tier 1 risk-based capital ratio was 14.30 percent and the total risk-based capital ratio was 17.79 percent. At ~~March 31,~~June 30, 2020, the Company was in compliance with all applicable regulatory capital requirements.

Information on Stock Repurchases is provided in “Part II. Other Information, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds” herein.

This Item has been omitted based on the Company’s status as a smaller reporting company.

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of ~~March 31,~~June 30, 2020.

There were no changes in the Company’s internal controls over financial reporting during the three months ended ~~March 31,~~June 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s financial condition or results of operations.

The section titled “Risk Factors” in Part I, Item 1A of our 2019 Annual Report includes a discussion of the many risks and uncertainties we face, any one or more of which could have a material adverse effect on our business, results of operations, financial condition (including capital and liquidity), or prospects or the value of or return on an investment in the Company. The information presented below provides an update to, and should be read in conjunction with, the risk factors and other information contained in our 2019 Annual Report.

The recent global coronavirus (COVID-19) pandemic has led to periods of significant volatility in financial, commodities and other markets and could harm our business and results of operations.

In December 2019, a coronavirus (COVID-19) outbreak was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. Since that time, the coronavirus has spread throughout the United States, including in the regions and communities in which the Company operates. In response, many state and local governments, including the Commonwealth of Pennsylvania and the State of New Jersey, have instituted various emergency restrictions that ~~have~~continue to substantially ~~limited~~limit the operation of non-essential businesses and the activities of individuals. These restrictions could result in significant adverse effects on our borrowers and many different types of small and mid-sized businesses within the Company’s client base, particularly those in the retail, hotel, medical, leisure, hospitality and food and beverage industries, among many others, and ~~has~~have resulted in a significant number of layoffs and furloughs of employees nationwide and in the regions and communities in which we operate.

The ultimate ~~effect of COVID-19 on the local or broader economy is not known nor is the ultimate length of the restrictions described and any accompanying effects.~~

~~The~~ effect of COVID-19 and related events, including those described above and those not yet known or knowable, could have a negative effect on the stock price, business prospects, financial condition and results of operations of the Company, including as a result of quarantines, market volatility, market downturns, changes in consumer behavior, business closures, deterioration in the credit quality of borrowers or the inability of borrowers to satisfy their obligations to the Company (and any related forbearances or restructurings that may be implemented), declines in the value of collateral securing outstanding loans, branch or office closures and business interruptions.

The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as quarantines and shelter in place orders. These measures may continue to remain in place for a significant period of time and adversely affect our business, operations and financial condition, as well as the business, operations and financial conditions of our customers and business partners. The spread of the virus has also caused us to modify our business practices (including employee work locations and cancellation of physical participation in meetings) in ways that may bebecome detrimental to our business (including working remotely and its attendant cybersecurity risks). We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees and customers. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities.

We are subject to increasing credit risk as a result of the COVID-19 pandemic, which could adversely impact our profitability.

Our business depends on our ability to successfully measure and manage credit risk. As a commercial lender, we are exposed to the risk that the principal of, or interest on, a loan will not be paid timely or at all or that the value of any collateral supporting a loan will be insufficient to cover our outstanding exposure. In addition, we are exposed to risks ~~with respect to the risks~~ resulting from changes in economic and industry conditions and risks inherent in dealing with individual loans and borrowers. As the overall economic climate in the U.S., generally, and in our market areas specifically, ~~experiences~~experience material disruption due to the COVID-19 pandemic, our borrowers may ~~experience~~have difficulties in repaying their ~~loans and governmental~~loans. Governmental actions ~~may provide~~providing payment relief to borrowers affected by COVID-19 ~~and~~could preclude our ability to initiate foreclosure proceedings in certain circumstances and, as a result, the collateral we hold may decrease in value or become illiquid, and the level of our nonperforming loans, charge-offs and delinquencies could rise and require significant additional provisions for credit losses. Additional factors related to the credit quality of certain commercial real estate and multifamily residential loans include the duration of state and local moratoriums on evictions for non-payment of rent or other fees. The payment on these loans that are secured by income producing properties are typically dependent on the successful operation of the related real estate property and may subject us to risks from adverse conditions in the real estate market or the general economy.

~~The bank~~Bank regulatory agencies and various governmental authorities are urging financial institutions to work prudently with

borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19. We are actively working to support our borrowers to mitigate the impact of the COVID-19 pandemic on them and on our loan portfolio,

including through loan modifications that defer payments for those who experienced a hardship as a result of the COVID-19 pandemic. Although recent regulatory guidance provides that such loan modifications are exempt from the calculation and reporting of TDRs and loan delinquencies, we cannot predict whether such loan modifications may ultimately have an adverse impact on our profitability in future periods. Our inability to successfully manage the increased credit risk caused by the COVID-19 pandemic could have a material adverse effect on our business, financial condition and results of operations.

Our participation in the SBA PPP loan program exposes us to risks related to noncompliance with the PPP, which could have a material adverse impact on our business, financial condition and results of operations.

The Company is a participating lender in the PPP, a loan program administered through the SBA, which was created to help eligible businesses, organizations and self-employed persons fund their operational costs during the COVID-19 pandemic. Under this program, the SBA guarantees 100% of the amounts loaned under the PPP. The Company may be exposed to credit risk on PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded, or serviced. If a deficiency is identified, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from the Company.

Interest rate volatility stemming from COVID-19 could negatively affect our net interest income, lending activities, deposits and profitability.

Our net interest income, lending activities, deposits and profitability could be negatively affected by volatility in interest rates caused by uncertainties stemming from COVID-19. In March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0 to 0.25 percent, citing concerns about the impact of COVID-19 on markets and stress in the energy sector. A prolonged period of extremely volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies. Higher income volatility from changes in interest rates and spreads to benchmark indices could cause a loss of future net interest income and a decrease in current fair market values of our assets. Fluctuations in interest rates will impact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, orand financial condition.

Unpredictable future developments related to or resulting from the COVID-19 pandemic could materially and adversely affect our business and results of operations.

Given the ongoing and dynamic nature of the circumstances, it is not possible to predict the ultimate impact of the coronavirus outbreak on the stock price, business prospects, financial condition or results of operations of the Company. Any future development is highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the effectiveness of our work from home arrangements, third party providers’ ability to support our operation, and any actions taken by governmental authorities and other third parties in response to the pandemic. We are continuing to monitor the COVID-19 pandemic and related risks, although the rapid development and fluidity of the situation precludes any specific prediction as to its ultimate impact on us. However, if the pandemic continues to spread or otherwise results in a continuation or worsening of the current economic and commercial environments, our business, financial condition, results of operations and cash flows as well as our regulatory capital and liquidity ratios could be materially adversely affected and many of the risks described in our 2019 Annual Report will be heightened.

On March 14, 2019, the Company’s Board of Directors approved a stock repurchase plan, under which the Company was authorized to repurchase up to 194,516 shares, or approximately 2.5 percent of the Company’s current outstanding common stock. On February 28, 2020, the Company’s Board of Directors extended the timeframe for its current stock repurchase program from March 31, 2020 to December 31, 2020. This repurchase authority may be exercised from time to time and in such amounts as market conditions warrant. The repurchases may be made on the open market, in block trades or otherwise. The program may be suspended or discontinued at any time. ~~At March 31,~~As of June 30, 2020, ~~the Company had 64,318~~there were no shares remaining in the repurchase plan. The following table sets forth information regarding the Company’s repurchases of its common stock during the three months ended June 30, 2020:

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	MLVF	Nasdaq Stock Market, LLC

Common Stock, par value $0.01:	~~7,633,871~~7,609,953 shares
(Title of Class)	(Outstanding as of ~~May 8,~~August 10, 2020)

		Page

PART I – FINANCIAL INFORMATION		3

Item 1.	Financial Statements	4
	Consolidated Statements of Financial Condition at ~~March 31,~~June 30, 2020 (unaudited) and September 30, 2019	4
	Consolidated Statements of Operations for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019 (unaudited)	5
	Consolidated Statements of Comprehensive Income for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019 (unaudited)	6
	Consolidated Statements of Changes in Shareholders’ Equity for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019 (unaudited)	7
	Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019 (unaudited)	8
	Notes to Unaudited Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46

Item 3.	Qualitative and Quantitative Disclosures about Market Risk	6162

Item 4.	Controls and Procedures	6162

PART II – OTHER INFORMATION.		6263

Item 1.	Legal Proceedings	6263

Item 1A.	Risk Factors	6263

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6465

Item 3.	Default Upon Senior Securities	6465

Item 4.	Mine Safety Disclosure	6465

Item 5.	Other Information	6465

Item 6.	Exhibits	6465

SIGNATURES		6667

	Three Months Ended ~~March 31,~~June 30, 2020
	Consolidated Statements of Operations	Amount of Gain (Loss) Recognized in Income on derivatives
	(In thousands)
Derivatives not designated as a hedging instrument:
Interest rate swap agreement	Other income	$	-
Total		$	-

	Nine Months Ended June 30, 2020
	Consolidated Statements of Operations	Amount of Loss Recognized in Income on derivatives
	(In thousands)
Derivatives not designated as a hedging instrument:
Interest rate swap agreement	Other income	$ ~~(3)~~(6)
Total		$ ~~(3)~~(6)

				~~Six~~
	Three Months Ended ~~March 31, 2020~~June 30, 2019
	Consolidated Statements of Operations	Amount of Gain (Loss) Recognized in Income on derivatives
	(In thousands)
Derivatives not designated as a hedging instrument:
Interest rate swap agreement	Other income	$ -
Total		$ -

	Nine Months Ended June 30, 2019
	Consolidated Statements of Operations	Amount of Loss Recognized in Income on derivatives
	~~(In thousands)~~
~~Derivatives not designated as a hedging instrument:~~
~~Interest rate swap agreement~~	~~Other income~~	~~$ (6)~~
~~Total~~		~~$ (6)~~


	~~Three Months Ended March 31, 2019~~
	~~Consolidated Statements of Operations~~	~~Amount of Loss Recognized in Income on derivatives~~
	(In thousands)
Derivatives not designated as a hedging instrument:
~~Interest rate swap agreement~~	~~Other income~~	~~$ (1)~~
~~Total~~		~~$ (1)~~

	~~Six Months Ended March 31, 2019~~
	~~Consolidated Statements of Operations~~	~~Amount of Loss Recognized in Income on derivatives~~
	~~(In thousands)~~
~~Derivatives not designated as a hedging instrument:~~
Interest rate swap agreement	Other income	$ (2)
Total		$ (2)

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

	September 30, 2019
	Fair Value at September 30, 2019		Valuation Technique	Unobservable Input	Range/(Weighted Average)
	(Dollars in thousands)
Other real estate owned	$	5,796	Appraisal of Collateral(2)	Collateral discount(3)	0%/(0%)
Impaired loans⁽¹⁾		9,142	Appraisal of Collateral(2)	Collateral discount(3)	12%/(12%)
Total	$	14,938

Weighted Average Fair Value of Awards	$	4.72
Risk Free Rate			1.22	%
Dividend Yield		-%
Volatility			19.86	%
Expected Life		6.5 years

Weighted Average Fair Value of Awards	$	5.72
Risk Free Rate			2.50	%
Dividend Yield		-%
Volatility			20.39	%
Expected Life		6.5 years

	June 30, 2020
	Outstanding Exposure		Percentage of Gross Loans
	(Dollars in thousands)
Industries:
Retail	$	70,312	6.8%
Hotel		58,640	5.6
Office/Medical Office		43,865	4.2
Fitness Centers		43,723	4.2
Restaurants and food service		4,955	0.5
Total Outstanding Exposure	$	221,495	21.3%

	April 30, 2020
	Outstanding Exposure		Percentage of Gross Loans
	(Dollars in thousands)
Industries:
Retail	$	68,120	6.6%
Hotel		58,640	5.7%
Office/Medical Office		47,163	4.6%
Fitness Centers		43,723	4.3%
Restaurants and food service		4,591	0.4%
Total Outstanding Exposure	$	222,237	21.6%

	August 1, 2020
	Loan Deferrment Exposure		Percentage of Forbearance Requests
	(Dollars in thousands)
Industries:
Hotel	$	58,640		45.6	%
Retail (1)		40,666	31.6
Office/Medical Office		19,085	14.9
Restaurants and food service (2)		1,419	1.1
Other (3) (4)		8,705	6.8
Total outstanding exposure	$	128,515		100.0	%

					Maximum
					Number of Shares that
	Number of		Average Price		May yet be Purchased
	Shares		Paid Per		Under the Plan or
	Repurchased (1)		Share (2)		Program

January 1, 2020 to
January 31, 2020		-	$	-		177,653
February 1, 2020 to
February 29, 2020		1,200	$	19.58		176,453
March 1, 2020 to
March 31, 2020		112,135	$	15.64		64,318
Total for the quarter ended March 31, 2020		113,335	$	15.68

							Maximum
					Total Number of Shares Purchased as		Number of Shares that
	Number of		Average Price		Part of Publicy		May yet be Purchased
	Shares		Paid Per		Announced Plans or		Under the Plan or
	Repurchased (1)		Share (2)		Programs (1)		Program

April 1, 2020 to
April 30, 2020		32,500	$	11.87		32,500		31,818
May 1, 2020 to
May 31, 2020		31,818	$	11.50		31,818		-
June 1, 2020 to
June 30, 2020		-	$	-		-		-
Total for the quarter ended June 30, 2020		64,318				64,318

⁽¹⁾		On February 28, 2020, the Company’s Board of Directors approved a stock repurchase plan, under which, the Company was authorized to repurchase up to 194,516 shares, or approximately 2.5 percent of the Company’s current outstanding common stock, as conditions warrant, through December 31, 2020.
⁽²⁾		Average price paid per share includes commissions and is rounded to the nearest two decimal places.


3.1		Amended and Restated Articles of Incorporation of Malvern Bancorp, Inc.(1)
3.2		Amended and Restated Bylaws of Malvern Bancorp, Inc.(2)
31.1		Rule 13a-14(a)/15d-14(a) Section 302 Certification
31.2		Rule 13a-14(a)/15d-14(a) Section 302 Certification
32.0		Section 1350 Certification


101.INS		XBRL Instance ~~Document.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definitions Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


	MALVERN BANCORP, INC.


~~May 11,~~August 10, 2020	By:	/s/ Anthony C. Weagley
		Anthony C. Weagley
		President and Chief Executive Officer


~~May 11,~~August 10, 2020	By:	/s/ Joseph D. Gangemi
		Joseph D. Gangemi
		Executive Vice President and Chief Financial
		Officer