UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933

Release No. 11223 / August 15, 2023

SECURITIES EXCHANGE ACT OF 1934

Release No. 98132 / August 15, 2023

ACCOUNTING AND AUDITING ENFORCEMENT

Release No. 4441 / August 15, 2023

ADMINISTRATIVE PROCEEDING

File No. 3-21562

In the Matter of

MALVERN BANCORP, INC.

and

JOSEPH D. GANGEMI

Respondents.

ORDER INSTITUTING CEASE-ANDDESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933 AND SECTION 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

MAKING FINDINGS, AND IMPOSING A 

CEASE-AND-DESIST ORDER 

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate that ceaseand-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”), against Malvern Bancorp, Inc. (“Malvern”) and Joseph D. Gangemi (“Gangemi”) 

(collectively “Respondents”).

II.

In anticipation of the institution of these proceedings, Respondents have submitted Offers

of Settlement (the “Offers”), which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over them and the subject matter of these 

proceedings, which are admitted, and except as provided in Section V, Respondents consent to the 

entry of this Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the 
Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, 

and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 

III.

On the basis of this Order and Respondents’ Offers, the Commission finds that:

SUMMARY

1. Between December 2017 and February 2021 (“Relevant Period”), Malvern 

repeatedly failed to timely recognize and appropriately account for issues related to several large 

commercial real estate loans resulting in material misstatements of Malvern’s financial statements 

for several quarters. Gangemi was Malvern’s Chief Financial Officer and principal accounting 

officer and reviewed and approved Malvern’s accounting that was improper. During the Relevant 

Period, Malvern failed to properly account for troubled debt restructurings, loan impairments and 

charge-offs, and impairment of other real estate owned. This led to Malvern’s restatement of its 

financial statements in its amended Form 10-Q for the quarter-ended December 31, 2019 and in its 

amended Form 10-K for the fiscal year-ended September 30, 2020. Throughout the Relevant 

Period, Malvern’s books and records with respect to these loans were inaccurate and its related 

internal accounting controls were ineffective.

2. Gangemi knew or should have known information indicating that Malvern’s 

accounting for the assets was incorrect. As Chief Financial Officer and principal accounting 

officer, Gangemi also failed to maintain accurate books and records and implement effective 

internal controls over financial reporting. 

3. As a result of this conduct, Malvern violated Section 17(a)(2) and 17(a)(3) of the 

Securities Act, Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 

thereunder, and Section 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. Gangemi caused 

Malvern’s violations.

RESPONDENTS

4. Malvern Bancorp, Inc. (“Malvern”) was a corporation with its headquarters in Paoli, 

Pennsylvania. Malvern was a bank holding company. At all relevant times, Malvern’s common 

stock was registered under Section 12(b) of the Exchange Act, and traded on the NASDAQ under 

ticker symbol MVLF. Malvern had a fiscal year-end of September 30. During the Relevant Period, 

Malvern primarily operated through its wholly-owned subsidiary, Malvern Bank, National 

Association (“Bank”). The Bank had its principal place of business in Paoli, Pennsylvania, with 

other locations in Pennsylvania, New Jersey, and Florida. The principal business of Malvern, 

through its Bank subsidiary, was making commercial real estate loans, residential real estate loans, 

construction and development loans, commercial business loans, home equity loans and lines of 

credit, and other consumer loans. On July 17, 2023, pursuant to an Agreement and Plan of Merger 

By and Among First Bank, Malvern Bancorp, Inc. and Malvern Bank, National Association, 

dated December 13, 2022 ("Agreement"), Malvern Bancorp, Inc. merged with and into First 

Bank. Pursuant to the Agreement, First Bank is the surviving corporation and the successor to 

Malvern.
5. Joseph D. Gangemi, age 39, is a resident of Downingtown, Pennsylvania. Gangemi 

became Malvern’s Chief Financial Officer in 2015 and continued to serve in that role throughout 

the relevant time. Gangemi is not a Certified Public Accountant. 

FACTS

A. Accounting for Company A Loan

a. December 31, 2017 Troubled Debt Restructuring

6. Company A was a commercial real estate company incorporated to lease a large big 

box retail property it owned. Company A refinanced the property through a $7.2 million loan from 

the Bank in July 2016. The loan was secured by the retail property. Company A had a national 

retailer as its sole tenant. The loan to Company A was not guaranteed by the company’s principals. 

7. In March 2017, Company A’s sole tenant declared bankruptcy. Company A did not 

have any other sources of operational cash flow. Company A attempted to re-tenant its property 

throughout 2017 and 2018 but failed to do so. After the tenant’s bankruptcy, Company A’s 

principals refused to continue paying on the loan until the Bank provided payment relief through a 

loan modification. In September 2017, the Bank approved a fifteen-month interest-only 

modification. In December 2017, the Bank approved a reduced interest rate. Company A then paid 

the delinquent loan payments to bring the loan current.

8. Despite the interest rate and payment term concessions granted by the Bank and 

Company A’s financial difficulties and unwillingness to continue paying absent a modification, the 

Bank did not classify the restructuring of the loan as a Troubled Debt Restructuring (“TDR”) as of 

December 31, 2017.1 Gangemi reviewed the Bank’s analysis and approved the decision not to 

classify the loan as a TDR. Malvern’s conclusion that the loan restructuring was not a TDR as of 

December 31, 2017 was not appropriate. Malvern’s TDR analysis did not address relevant 

circumstances surrounding the restructuring, including the borrower’s poor financial condition 

after the loss of the property’s lease (i.e., no cash flow), the borrower’s stated intention not to 

continue paying on the loan under the original loan terms, the lack of guarantors, the loan’s 

delinquency, and the concessions provided by Malvern to reduce the borrower’s loan payments 

due to the borrower’s lack of cash flow. These facts demonstrate that the restructuring of the loan 

was a TDR as of December 31, 2017. Gangemi knew the relevant facts indicating that the loan was 

a TDR and that they were not incorporated into the TDR analysis. The Bank’s analysis relied on 

irrelevant and unsupported assumptions, such as the potential of new leases materializing.

9. By failing to identify this significant loan as a TDR, Malvern materially 

misrepresented the true status of the loan. Gangemi caused the misstatement.

1 As defined within Accounting Standard Codification (“ASC”) 310-40-20, a TDR is a restructuring of a debt 

whereby “the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession 

to the debtor that it would not otherwise consider.”
b. March 31, 2018 Loan Impairment

10. Malvern reported the loan as a TDR in its March 31, 2018 Form 10-Q, after a 

review of the loan by the Bank’s primary federal banking regulator. Per ASC 310-40-35-10, “[a] 

loan restructured in a troubled debt restructuring is an impaired loan.” Per ASC 310-10-35-22, 

when a loan is impaired, “a creditor shall measure impairment based on the present value of 

expected future cash flows discounted at the loan’s effective interest rate, except that as a practical 

expedient, a creditor may measure impairment based on [...] the fair value of the collateral if the 

loan is a collateral-dependent loan. If that practical expedient is used, Topic 820 shall apply.” The 

Bank’s March 31, 2018 impairment analysis treated the loan as collateral dependent and – relying 

on an April 2016 appraisal – concluded no impairment was required as of March 31, 2018. As 

defined within ASC 310-10-20, a collateral-dependent loan is a “loan for which the repayment is 

expected to be provided solely by the underlying collateral.” Bank policy stated the Bank should 

obtain an updated appraisal for a collateral dependent loan. However, contrary to this policy, the 

Bank did not obtain an updated appraisal until July 2018 and thus delayed recognizing any 

impairment until then.

11. The Bank concluded no impairment was required as of March 31, 2018 based on a 

brief impairment analysis, which was reviewed by Gangemi. The impairment measurement was 

unreasonable and failed to accurately determine fair value because it relied on an appraisal that was 

21-months old. Per ASC 820-10-35-2, fair value is “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.” As the April 2016 appraisal did not consider the current condition of the 

property as of the measurement date of March 31, 2018, it was an inappropriate representation of 

the fair value of the property as of that date. Gangemi knew these relevant facts indicating the 

appraisal did not reflect the current conditions of the property. When the Bank obtained an updated 

appraisal in July 2018, it provided a valuation that indicated a material loan impairment. The 

Bank’s failure to timely recognize and record a loan impairment caused a material misstatement of 

its financial statements for the quarter ended March 31, 2018. Gangemi caused the misstatement.

c. June 30, 2018 Loan Impairment

12. The August 2018 appraisal reported an “as is” value of $6.2 million and a 

“Prospective Market Value at Stabilization” value of $7.6 million. The calculated impairment 

based on the as-is value was approximately $1.3 million, and the impairment based on the asstabilized value was $172,000. The Bank determined to use a weighted average of the two 

appraisal values to determine impairment of the loan. The Bank assigned an 85% probability that a 

new lease for the property would be signed and assigned an 85% weight to the lower impairment 

calculation based on the as-stabilized value. It assigned a 15% weight to the higher impairment 

calculation based on the as-is value. Gangemi approved the use of the weighted average method, 

which resulted in an impairment of $356,000, reported in Malvern’s financial statements filed in its 

June 30, 2018 Form 10-Q. The weighted average method reduced the loan impairment by 

approximately $1 million when compared to the impairment it would have recognized using only 

the as-is value.

13. The Bank’s use of an 85% probability of lease-up was primarily based on the fact 

that Company A had been negotiating with a potential tenant in late 2017 and early 2018. 
However, at the time of the impairment analysis in July 2018, the Bank and Gangemi were aware 

that this potential tenant was no longer interested in leasing the property.

14. The Bank’s reliance on a draft lease that was no longer under consideration to value 

the collateral was not appropriate. There were no prospective leases under consideration at the time 

of impairment. Gangemi’s approval of the Bank’s selection of 85% was not supported. None of the 

Bank’s internal documentation prepared under Gangemi’s supervision supported or explained the 

appropriateness of an 85% probability of lease-up. Based on the facts and circumstances that 

existed at the time of the measurement date, the Bank should have impaired the loan using the as-is 

value of the property as of June 30, 2018. Per ASC 820-10-35-9, “[a] reporting entity shall 

measure the fair value of an asset or a liability using the assumptions that market participants 

would use in pricing the asset or liability, assuming that market participants act in their economic 

best interest.” Gangemi knew or should have known the Bank’s reliance on the “Prospective 

Market Value at Stabilization” when determining the fair value of the property as of June 30, 2018 

was unreasonable, as such a value would not be considered by a market participant, acting in their 

economic best interest, under the circumstances that existed at that time. 

15. As a result, Malvern materially misstated its financial statements in its June 30, 

2018 Form 10-Q. Gangemi caused the misstatement. Had the Bank properly accounted for the 

impairment on the Company A loan, the Bank’s income before taxes would have decreased from 

approximately $2.3 million to $1.3 million. Thus, Malvern's income before taxes was overstated by

approximately 77%. 

16. As Gangemi was aware, Malvern incorporated these materially misstated financial 

statements in the June 30, 2018 Form 10-Q into a prospectus for an October 2018 $25 million 

offering and sale of common stock.

d. September 30, 2018 Loan Charge-Off

17. During the quarter ended September 30, 2018, the Bank changed its impairment 

calculation and recorded an impairment of approximately $1.4 million based on the as-is value. 

The Bank’s documentation stated that it changed its impairment calculation because the new lease 

did not materialize. As noted above, the Bank was aware in the prior quarter that the lease likely 

would not materialize.

18. The property owned by Company A remained vacant and the loan became 

delinquent again in 2018. In June 2018, the principals began discussing providing a deed-in-lieu 

(“DIL”) of foreclosure to exit the loan. In December 2018, the Bank executed a DIL with 

Company A and recorded the collateral as an other real estate owned (“OREO”) asset. The Bank 

charged off the loan for the amount that exceeded the collateral value based on the July 2018 

appraisal.

19. The Bank’s decision to charge off the loan as of December 31, 2018 instead of 

September 30, 2018 was not appropriate because the amount of the loan balance in excess of the 

appraised value was uncollectable as of September 30, 2018. Gangemi reviewed and approved the 

Bank’s decision to charge off the loan as of December 31, 2018 instead of September 30, 2018. 

Per ASC 310-10-35-41, a “loan or trade receivable balance shall be charged off in the period in 
which the loans or trade receivables are deemed uncollectible.” There were numerous indications 

of uncollectability of the loan balance prior to September 30, 2018 (e.g., no tenant, no operational 

cash flow, no guarantor, significant delinquencies in 2017 and 2018, loan concessions, and 

discussions of a possible DIL as early as June 2018). Gangemi knew these relevant facts indicating 

the loan was uncollectable. Gangemi also knew that the Bank decided to accept the DIL and 

approved the charge-off prior to the filing of the financial statements for the quarter-end and fiscal 

year end September 30, 2018 in the company’s Form 10-K, which further demonstrates the Bank 

should have recorded the charge-off in that period.

20. As a result, Malvern materially misstated its financial statements in its September 

30, 2018 Form 10-K. Gangemi caused the misstatement. The Bank should have recognized a loan 

charge-off of $1.2 million and recognized a $1.2 million provision for loan losses in connection 

with the charge-off, which would have reduced Malvern’s quarterly income before taxes from 

approximately $3 million to $1.8 million. Thus, Malvern’s quarterly income before taxes was 

overstated by approximately 67%.

e. December 31, 2020 Impairment of Company A OREO

21. The Bank did not obtain an updated appraisal for the OREO property until April 

2021 (approximately two-and-a-half years after its prior appraisal). The Bank purportedly did not 

obtain an updated appraisal sooner due to the COVID-19 pandemic. Management, including 

Gangemi, later determined that it should have obtained appraisals sooner when it became apparent 

that the COVID-19 pandemic would be a long term impact. Between January 2019 and September 

2020, the Bank did not record a material impairment of the asset as it continued to rely on the July 

2018 appraised value 

22. In its impairment analysis for the period ending September 30, 2020, the Bank 

continued to rely on the July 2018 appraisal to conclude no impairment was required. Because of 

the age of the appraisal, the Bank’s policy stated the Bank should discount the appraisal by 20%. 

The Bank failed to do so and provided no justification for the departure from Bank policy.

23. During the December 31, 2020 quarter, Gangemi negotiated and executed a letter of 

intent (“LOI”) to sell the property on behalf of the Bank. The Bank’s policy stated that the Bank 

should record a charge-off for an asset when a LOI is signed with a lower purchase price than the 

Bank’s recorded investment in the asset unless the Bank could document why the Bank would not 

take a loss. The policy also stated that the Bank must obtain approval from the relevant 

management committee if it did not record a charge-off. The Bank failed to perform an updated 

impairment analysis as of December 31, 2020 incorporating the information from the LOI. The 

Bank did not record an impairment as of December 31, 2020 and did not obtain the required 

approval under its policy. Gangemi knew these relevant facts.

24. In April 2021, the Bank obtained an updated appraisal of the OREO, which showed 

an impairment to the asset. The Bank did not record an impairment in the March 31, 2021 quarter. 

In the June 30, 2021 Form 10-Q, the Bank recorded an $850,000 impairment after obtaining an 

updated appraisal in June 2021. 
25. The Bank’s accounting for the Company A OREO asset as of December 31, 2020 

was not appropriate. Gangemi was ultimately responsible for the Bank’s OREO impairment 

analysis. The purchase price within the LOI had been recently negotiated and represented what a 

willing buyer was willing to pay to purchase the property in an arms-length transaction. The 

Bank’s policy, which Gangemi did not follow, expressly recognized that an LOI was a reliable 

indicator of fair value. The value in the LOI was a better indicator of fair value than the two-year 

old appraisal relied upon by the Bank. The Bank’s internal documentation did not support the 

Bank’s decision to rely on the outdated appraisal when there was a more recent and reliable 

indicator of fair value available. Gangemi did not incorporate the information from the LOI into 

Malvern’s analysis. 

26. As a result, Malvern materially misstated its financial statements in its December 

31, 2020 Form 10-Q. Gangemi caused the misstatement. Had the Bank properly accounted for the 

OREO property, it would have been written down by approximately $980,000 in its financial 

statements in the December 31, 2020 Form 10-Q. This would have reduced Malvern’s income 

before taxes from approximately $3 million to $2.02 million. Thus, Malvern’s income before taxes 

was overstated by approximately 49%.

B. Accounting for Loan to Company B

a. December 31, 2017 Troubled Debt Restructuring

27. Company B was a commercial real estate company incorporated to lease a large big 

box retail property that it owned. Company B refinanced the property through a $9.7 million loan 

from the Bank in July 2016. Company B’s principals were the same as Company A. Company B 

had a national retailer as its sole tenant. The tenant was the same national retailer as Company A. 

The loan to Company B had limited guarantees at origination of approximately 6% of the loan 

balance. The guarantees reduced each month by the amount of principal repaid.

28. Like Company A, Company B’s tenant declared bankruptcy in March 2017. 

Company B did not have any other sources of operational cash flow. After the tenant’s bankruptcy, 

Company B’s principals refused to continue paying on the loan until the Bank provided payment 

relief through a loan modification. In September 2017, the Bank approved a one-year interest-only 

modification. In December 2017, the Bank approved a reduced interest rate. Company B then paid 

the delinquent loan payment to bring the loan current.

29. The Bank did not classify the loan as a TDR during its initial assessment of the loan 

modification as of December 31, 2017. The Bank’s analysis and conclusion was similar to its 

analysis and conclusion when it concluded the loan to Company A was not a TDR. 

30. Malvern reported the loan as a TDR in its March 31, 2018 Form 10-Q after a 

review of the loan by the Bank’s primary federal banking regulator.

31. Gangemi reviewed and approved the Bank’s analysis and conclusion that the loan 

was not a TDR. Malvern’s conclusion that the loan to Company B was not a TDR as of December 

31, 2017 did not address relevant circumstances surrounding the restructuring, including the 

borrower’s poor financial condition after the loss of the properties’ lease (i.e., no cash flow), the 
borrower’s stated intention not to continue paying on the loan under the original loan terms, the 

loan’s delinquency, the absence of full guarantees, and the concessions provided by Malvern to 

reduce the borrower’s loan payments due to the borrower’s lack of cash flow. Gangemi knew these 

relevant facts indicating the loan was a TDR. These facts demonstrate that the loan was a TDR as 

of December 31, 2017. The Bank’s analysis relied on unsupported assumptions, such as new leases 

and the purported willingness of limited guarantors to pay the entire loan balance.

32. As a result, Malvern materially misstated its reported aggregate outstanding loan 

balances for TDRs in its December 31, 2017 Form 10-Q. Gangemi caused the misstatement. Had 

the Bank properly classified the loans to Company A and Company B as TDRs, Malvern’s 

reported aggregate outstanding loan balances for TDRs would have increased from approximately 

$2.2 million to $18.8 million, an approximate 750% increase.

b. December 31, 2019 Impairment / Charge-Off

33. The Company B loan was impaired and a TDR. Throughout 2018 and 2019, the 

Bank did not consider the loan to be collateral dependent because of the limited guarantee. During 

this time, the Bank only required small amounts of impairment based on a present value of future 

cash flows impairment analysis. 

34. By January 2020, the guarantee had reduced to zero and the loan was due to reset at 

a higher interest rate. The Bank attempted to restructure the loan to obtain a new limited guarantee. 

For impairment purposes at December 31, 2019, the Bank – at Gangemi’s direction – initially 

calculated two different impairment amounts. The first assumed the loan was collateral dependent 

and used the fair value of the collateral, which resulted in a $3.1 million impairment. The second 

assumed the loan was not collateral dependent and used the present value of the loan’s future cash 

flows, which resulted in a $36,000 impairment. The Bank assumed a 50% probability that 

Company B would accept the loan restructuring and applied a 50% weight to the present value of 

future cash flows approach. The Bank assumed a 50% probability that Company B would not 

accept the restructuring and applied a 50% weight to the fair value of the collateral approach. 

Using this weighted approach, Malvern recorded a $1.56 million impairment based on this 

methodology in its financial statements in the originally filed December 31, 2019 Form 10-Q. This 

impairment was approximately $1.5 million less than had the impairment been calculated using 

only the collateral’s fair value.

35. The Bank attributed the change in impairment methodology for December 31, 2019 

to the death of one of the guarantors. The Bank’s internal documentation suggested that the

guarantor died in January 2020. However, the guarantor actually died in August 2018, a fact that 

some Bank employees were aware of but was not clearly communicated to management, including 

Gangemi.

36. In March 2020, the Bank obtained an updated appraisal showing a $2.3 million 

collateral shortfall compared to the Bank’s recorded investment in the loan. 

37. After an examination by the Bank’s primary federal banking regulator, the Bank 

determined the loan to Company B was collateral dependent as of December 31, 2019 and that a 

charge-off should have been recognized in its financial statements during that quarter. As a result, 
the Bank determined there was an error in the originally filed Form 10-Q and restated its financial 

statements because the loan was collateral dependent and the $2.3 million impairment should have 

been charged off in the December 31, 2019 quarter based on the appraised value. The Bank never 

filed a Form 8-K Item 4.02 to report non-reliance on the financial statements filed in the original 

Form 10-Q. Despite the restatement to correct errors in the financial statements, management 

concluded there was no material weakness in internal controls.

38. The Bank’s accounting for the loan to Company B in its originally filed December 

31, 2019 Form 10-Q was not appropriate. Gangemi reviewed and approved the impairment 

analysis. The loan was collateral dependent as of December 31, 2019 based on the borrower’s 

limited cash flow (i.e., the new tenant’s lease was not sufficient to establish a realistic repayment 

plan), the looming balloon payment at maturity, the elimination of the loan guarantee, and 

discussions with the loan sponsor of additional loan modifications due to higher reset interest rate. 

Because the loan was collateral dependent, the Bank’s policy stated it should have immediately 

ordered an updated appraisal and charged down the amount of the loan balance in excess of the 

appraised value. However, the Bank did not obtain an updated appraisal for December 31, 2019 

reporting purposes. Moreover, the use of a 50%-50% blended impairment methodology that relied 

in part on the loan’s cash flows was not appropriate for a collateral dependent loan. Such a 

methodology that relied in part on the loan’s cash flows is not consistent with the definition of a 

collateral dependent loan, which states that payment is expected to come “solely” from the 

collateral. Gangemi knew or should have known that the Bank’s methodology was not consistent 

with the definition of a collateral dependent loan.

39. As a result, Malvern materially misstated its financial statements in its originally 

filed December 31, 2019 Form 10-Q. Gangemi caused the misstatement. Had the Bank properly 

accounted for the impairment of the Company B loan, its net income would have been reduced 

from approximately $2.5 million to $785,000. Thus, Malvern’s net income was overstated by 

approximately 218%. This adjustment was reported in the amended December 31, 2019 Form 10-

Q to restate the financial statements.

C. Accounting for Loan to Company C

40. Company C was a commercial real estate company incorporated to lease retail 

space it owned in a mixed-use commercial and residential building in New York City. Company C 

obtained a $20.5 million loan from the Bank in 2017 with $18.7 million advanced initially. The 

loan eventually had cash flow issues due to difficulty finding tenants. Throughout 2019 and 2020, 

the Bank did not classify the loan as collateral dependent citing the strength of the guarantor.

38. Beginning in March 2020, the Bank granted three consecutive 90-day deferrals to 

the borrower due to COVID-19. During this time, the Bank requested – but never received –

updated financial information on the borrower and its guarantor.

41. On November 9, 2020, the Bank issued a preliminary earnings release for the 

quarter-ended and fiscal year ended September 30, 2020 based on financial statements that 

provided for no impairment of the Company C loan. The preliminary earnings release was 

furnished on Form 8-K. At the time of this release, the Bank, including Gangemi, knew that the 
borrower was having financial difficulties. Subsequent to the release, the Bank, including 

Gangemi, learned the guarantor was having financial difficulties.

42. On December 29, 2020, Malvern filed a late filing notice of the Form 10-K 

notifying investors it was evaluating the loan to Company C as collateral dependent. On January 

20, 2021, Malvern filed a Form 8-K signed by Gangemi notifying investors not to rely on the 

preliminary earnings release and that the Bank was recording a $2.9 million charge-down and 

$581,000 impairment related to the Company C loan. On January 29, 2021, Malvern filed its Form 

10-K with the information regarding Company C from the January 20, 2021 Form 8-K 

incorporated.

43. On February 26, 2021, the Bank amended its Form 10-K after receiving an updated 

appraisal to record an additional $3.1 million impairment. Management also disclosed a material 

weakness in its Internal Control over Financial Reporting based on its failure to timely identify the 

loan to Company C as collateral dependent, which resulted in the inaccurate November 9, 2020 

earnings release. Bank management later concluded the company’s decision not to order an 

appraisal in 2020 due to COVID-19 was incorrect.

44. These errors caused Malvern’s net income reported in its November 9, 2020 

earnings release and January 29, 2021 Form 10-K to be materially misstated. Gangemi caused the 

misstatements. Malvern reported net income for the quarter of $2.2 million in its earnings release, 

compared to a net loss of $3.5 million reported in the amended Form 10-K filed on February 26, 

2021, an overstatement in the earnings release of approximately $5.7 million or 164%. The 

originally filed Form 10-K reported net loss for the quarter of $546,000, an overstatement of 

approximately $3 million or 84%.

45. The Bank’s failure to recognize the loan to Company C as collateral dependent and 

impaired as of September 30, 2020 prior to issuing an earnings release was inappropriate. Gangemi 

was ultimately responsible for the Bank’s impairment analysis. The Bank should have determined 

the loan was collateral dependent and impaired as of September 30, 2020. The Bank requested 

updated financial information from the borrower and the guarantor but never received it throughout 

2020. The Bank relied on outdated information when approving loan deferrals and measuring 

impairment. The loan to Company C was collateral dependent at the time of the earnings release 

based upon the cash flow concerns and the borrower’s inability or unwillingness to provide 

updated financial information concerning the guarantor, which prevented the Bank from 

reasonably concluding that the guarantor’s financial condition had sufficiently improved to 

alleviate such concerns. Gangemi knew facts indicating the loan was impaired and collateral 

dependent as of the date of the preliminary earnings release. Moreover, as the Bank later 

concluded, it should have obtained an updated appraisal for purposes of September 30, 2020 

financial reporting and immediately charged the loan down to appraised value and recognized a 

corresponding loan loss provision. As a result, on November 9, 2020, Malvern issued a materially 

inaccurate September 30, 2020 preliminary earnings release signed by Gangemi. On February 26, 

2021, Malvern restated its September 30, 2020 Form 10-K, and concluded there was a material 

weakness in internal controls.
VIOLATIONS

46. Section 17(a)(2) of the Securities Act proscribes, in the offer or sale of a security, 

obtaining “money or property by means of any untrue statement of a material fact or any omission 

to state a material fact necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading.” As a result of the conduct described above, Malvern 

violated Section 17(a)(2) of the Securities Act. Gangemi caused Malvern’s violation of Section 

17(a)(2).

47. Section 17(a)(3) of the Securities Act proscribes, in the offer or sale of a security, 

engaging “in any transaction, practice, or course of business which operates or would operate as a 

fraud or deceit upon the purchaser.” As a result of the conduct described above, Malvern violated 

Section 17(a)(3) of the Securities Act. Gangemi caused Malvern’s violation of Section 17(a)(3).

48. Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11, and 13a-13 thereunder 

require issuers with a class of securities registered pursuant to Section 12 of the Exchange Act to 

file such periodic reports and other reports as the Commission may prescribe and in conformity with 

such rules as the Commission may promulgate. The obligation to file such reports embodies the 

requirement that they be true and correct. In addition to the information expressly required to be 

included in such reports, Rule 12b-20 of the Exchange Act requires issuers to add such further 

material information, if any, as may be necessary to make the required statements, in light of the 

circumstances under which they are made, not misleading. As a result of the conduct described 

above, Malvern violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 

13a-13 thereunder. Gangemi caused Malvern’s violations of Section 13(a) of the Exchange Act and 

Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.

49. Section 13(b)(2)(A) of the Exchange Act, which requires reporting companies to 

make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect 

their transactions and dispositions of their assets. As a result of the conduct described above, 

Malvern violated Section 13(b)(2)(A) of the Exchange Act. Gangemi caused Malvern’s violations

of Section 13(b)(2)(A) of the Exchange Act.

50. Section 13(b)(2)(B) of the Exchange Act, which requires issuers of securities 

registered pursuant to Section 12 of the Exchange Act to devise and maintain a system of internal 

accounting controls sufficient, among other things, to provide reasonable assurances that 

transactions are recorded as necessary to permit preparation of financial statements in accordance 

with generally accepted accounting principles or any other criteria applicable to such statements. As 

a result of the conduct described above, Malvern violated Section 13(b)(2)(B) of the Exchange Act.

Gangemi caused Malvern’s violations of Section 13(b)(2)(B) of the Exchange Act.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondents’ Offers.

Accordingly, it is hereby ORDERED that:
A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 

Respondent Malvern cease and desist from committing or causing any violations and any future 

violations of Section 17(a)(2) and 17(a)(3) of the Securities Act and Sections 13(a), 13(b)(2)(A), 

and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 thereunder.

B. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 

Respondent Gangemi cease and desist from committing or causing any violations and any future 

violations of Section 17(a)(2) and 17(a)(3) of the Securities Act and Sections 13(a), 13(b)(2)(A), 

and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 thereunder.

C. Respondent Malvern shall, within ten (10) business days of the entry of this Order, 

pay a civil money penalty in the amount of $350,000 to the Securities and Exchange Commission 

for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 

21F(g)(3). If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 

§3717.

D. Respondent Gangemi shall, within ten (10) business days of the entry of this Order, 

pay a civil money penalty in the amount of $40,000 to the Securities and Exchange Commission 

for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 

21F(g)(3). If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 

§3717. 

Payment must be made in one of the following ways: 

(1) Respondents may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request; 

(2) Respondents may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondents may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying 

Malvern Bancorp, Inc., or Joseph D. Gangemi, as a Respondent in these proceedings, and the file 

number of these proceedings; a copy of the cover letter and check or money order must be sent to 

Carolyn Welshhans, Associate Director, Division of Enforcement, Securities and Exchange 

Commission, 100 F St., NE, Washington, DC 20549. 
E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes. To preserve 

the deterrent effect of the civil penalty, Respondents agree that in any Related Investor Action, it 

shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of 

compensatory damages by the amount of any part of Respondents’ payment of a civil penalty in 

this action ("Penalty Offset"). If the court in any Related Investor Action grants such a Penalty 

Offset, Respondents agree that it shall, within 30 days after entry of a final order granting the 

Penalty Offset, notify the Commission's counsel in this action and pay the amount of the Penalty 

Offset to the Securities and Exchange Commission. Such a payment shall not be deemed an 

additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed 

in this proceeding. For purposes of this paragraph, a "Related Investor Action" means a private 

damages action brought against Respondents by or on behalf of one or more investors based on 

substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding.

V.

It is further Ordered that, solely for purposes of exceptions to discharge set forth in 

Section 523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and 

admitted by Respondent Gangemi, and further, any debt for disgorgement, prejudgment interest, 

civil penalty or other amounts due by Respondent Gangemi under this Order or any other 

judgment, order, consent order, decree or settlement agreement entered in connection with this 

proceeding, is a debt for the violation by Respondent Gangemi of the federal securities laws or 

any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the 

Bankruptcy Code, 11 U.S.C. §523(a)(19).

By the Commission.

Vanessa A. Countryman

Secretary