Malaga Financial Corporation Reports 8% Increase in Earnings For the First Nine Months of 2021

Rhea-AI Summary

Malaga Financial Corporation (OTCPink:MLGF) reported net income of $14.6 million for the first nine months of 2021, reflecting an 8% increase year-over-year. The third quarter's net income reached $5.0 million, a 5% rise from Q3 2020. The company reported an annualized return on average equity of 12.09% and average assets of 1.43%. Total assets grew by 11% to $1.43 billion, while the loan portfolio increased by 5% to $1.25 billion. Retail deposits rose by $107 million, contributing to regulatory capital compliance status as 'well-capitalized'.

Positive

• Net income increased by 8% year-over-year for the first nine months.
• Total assets grew 11% to $1.43 billion as of September 30, 2021.
• Retail deposits rose by $107 million to $806.1 million, enhancing liquidity.

Negative

• Interest rate spread decreased from 2.94% to 2.84%, indicating tighter margins.
• Operating expenses slightly increased to $3.07 million, higher than Q3 2020.

PALOS VERDES ESTATES, Calif., Oct. 15, 2021 (GLOBE NEWSWIRE) -- Malaga Financial Corporation (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the nine months ended September 30, 2021 was $14,639,000 ($1.90 basic and fully diluted earnings per share) compared to $13,592,000 ($1.77 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 13, 2020) for the same period ended September 30, 2020, an increase of $1,047,000 or 8%. Net income for the quarter ended September 30, 2021 was $5,017,000 ($0.65 basic and fully diluted earnings per share), an increase of $229,000 or 5% from net income of $4,788,000 ($0.63 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 13, 2020) for the quarter ended September 30, 2020. Net income for the quarter ended September 30, 2021 was $5,017,000 ($0.65 basic and fully diluted earnings per share), an increase of $111,000 or 2% from net income of $4,906,000 ($0.64 basic and fully diluted earnings per share) for the quarter ended June 30, 2021. For the first nine months of 2021, the Company’s annualized return on average equity was 12.09% and the annualized return on average assets was 1.43%.

The increase in earnings of $111,000 for the third quarter of 2021 compared to second quarter of 2021 was attributable to a $255,000 increase in net interest income after provision for loan losses, offset by a $56,000 decrease in other operating income, a $39,000 increase in other operating expenses, and a $49,000 increase in income tax expense.

Net interest income totaled $10,051,000 in the third quarter of 2021, an increase of $382,000 or 4% from the same period in 2020. This resulted primarily due to an increase in excess interest-bearing assets over interest-bearing liabilities of $11.6 million, offset by a decrease in the interest rate spread from 2.94% to 2.84%. The decrease in the interest rate spread is primarily attributable to a decrease of 0.25% in yield on average interest-earning assets offset by a decrease of 0.15% in yield on average interest-bearing liabilities.

Other operating income increased 15% in the third quarter of 2021 to $206,000 from $179,000 in the third quarter of 2020. Income increased primarily due to deposit related fees.

Operating expenses increased slightly in the third quarter of 2021 to $3,070,000 from $3,064,000 in the third quarter of 2020.  

The Company had no delinquent loans or loans with deferred payments and no foreclosed real estate owned at September 30, 2021. The Company’s allowance for loan losses was $3,775,000, or 0.30% of total loans, at September 30, 2021.

Randy C. Bowers, Chairman, President and CEO, commented, “We are pleased to report record earnings for both the quarter and first nine months of 2021. As a result of the continued execution of our business plan, earnings are improving, asset quality remains excellent and expenses are well controlled. Trends are positive and we are optimistic about the remainder of this year and 2022.”

The Company’s total assets increased by 11% to $1.429 billion at September 30, 2021 compared to $1.283 billion at September 30, 2020. The loan portfolio at September 30, 2021 was $1.246 billion, an increase of $58.9 million or 5% from September 30, 2020. The Company originates loans principally for its own portfolio and not for sale.

The Company funds its assets with a mix of retail deposits, wholesale deposits and FHLB borrowings. Retail deposits totaled $806.1 million as of September 30, 2021, a $107.0 million increase from $699.1 million at September 30, 2020. Wholesale deposits increased $51.2 million or 46% from $110.6 million at September 30, 2020 to $161.8 million at September 30, 2021. Wholesale deposits are primarily comprised of State of California certificates of deposit in the amount of $60.0 million and $88.0 million of long-term brokered certificates of deposits. FHLB borrowings decreased $25.0 million or 8% from $295.0 million at September 30, 2020 to $270.0 million at September 30, 2021.

As of September 30, 2021, Malaga Bank was in compliance with all applicable regulatory capital requirements and was deemed “well-capitalized” under applicable regulations. Core capital and risk-based capital ratios were 12.43% and 22.01%, respectively, significantly exceeding the minimum “well-capitalized” requirements of 5% and 10%, respectively.

Malaga Bank, a subsidiary of Malaga Financial Corporation, is a full-service community bank headquartered on the Palos Verdes Peninsula with six offices located in the South Bay area of Los Angeles. Malaga Bank has been awarded an A+ financial health rating by DepositAccounts.com. A more detailed breakdown of Malaga Bank’s A+ health score may be found in the health section of its dedicated page at www.depositaccounts.com/banks/malaga-bank-fsb.html#health. For over ten years Malaga Bank has been consistently recommended by one of the nation’s leading independent bank rating and research firms, Bauer Financial Inc. Malaga Bank was awarded Bauer’s premier Top 5-Star rating for the 55th consecutive quarter as of June 2021. Since 1985 Malaga has been delivering competitive banking services to residents and businesses of the South Bay, including real estate loan products custom-tailored to consumers and investors. As the largest community bank in the South Bay, Malaga is proud of its continuing tradition of relationship-based banking and legendary customer service. The Bank’s web site is located at www.malagabank.com.

Contact:        
Randy Bowers
Chairman of the Board, President and Chief Executive Officer
Malaga Financial Corporation
310-375-9000
rbowers@malagabank.com 

FAQ

What were Malaga Financial Corporation's earnings per share for Q3 2021?

Malaga Financial Corporation reported $0.65 basic and fully diluted earnings per share for Q3 2021.

How did total assets change for Malaga Financial Corporation by September 30, 2021?

Total assets for Malaga Financial Corporation increased by 11%, reaching $1.429 billion as of September 30, 2021.

What was the net income for Malaga Financial Corporation in Q3 2021?

The net income for Malaga Financial Corporation in Q3 2021 was $5,017,000.

What is the significance of Malaga Financial Corporation's interest rate spread?

The interest rate spread decreased from 2.94% to 2.84%, which could indicate tighter profit margins for the bank.

Did Malaga Financial Corporation comply with regulatory capital requirements?

Yes, as of September 30, 2021, Malaga Bank was compliant and deemed 'well-capitalized' under regulatory requirements.