Malaga Financial Corporation Reports Increased Earnings for the First Six Months of 2024

Rhea-AI Summary

Malaga Financial (OTCPink: MLGF) reported a net income of $11.791 million for the first six months of 2024, marking a 3% increase from the same period in 2023. The company's earnings per share (EPS) rose to $1.31 from $1.28. For Q2 2024, net income was $5.779 million, up by $185,000 or 3% compared to Q2 2023. The annualized return on average equity was 11.73%, and the return on average assets was 1.62% for the first half of 2024. Notably, net interest income slightly increased despite a decline in average interest-earning assets. Operating expenses dropped by 2% due to reduced deposit insurance premiums and general administrative costs. Total assets decreased by 8% to $1.425 billion, and the loan portfolio declined by 5% to $1.236 billion. Retail deposits fell by $90.2 million, while wholesale deposits grew by $15 million. FHLB borrowings decreased by $55 million. The company remains well-capitalized, with core and risk-based capital ratios significantly above regulatory requirements.

Positive

• Net income for the first six months of 2024 increased by 3% to $11.791 million.
• Earnings per share (EPS) rose to $1.31 from $1.28.
• Annualized return on average equity was 11.73%, and return on average assets was 1.62%.
• Operating expenses decreased by 2%.
• Wholesale deposits grew by $15 million.
• The company remains well-capitalized with core and risk-based capital ratios significantly above regulatory requirements.

Negative

• Total assets decreased by 8% to $1.425 billion.
• The loan portfolio declined by 5% to $1.236 billion.
• Retail deposits fell by $90.2 million.
• Net interest income only slightly increased despite a broader decline in average interest-earning assets.
• FHLB borrowings decreased by $55 million.

PALOS VERDES ESTATES, Calif., July 12, 2024 (GLOBE NEWSWIRE) -- Malaga Financial Corporation “Company” (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the six months ended June 30, 2024 was $11,791,000 ($1.31 basic and fully diluted earnings per share) compared to $11,469,000 ($1.28 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 9, 2023) for the same period ended June 30, 2023, an increase of $322,000 or 3%. Net income for the quarter ended June 30, 2024 was $5,779,000 ($0.64 basic and fully diluted earnings per share), an increase of $185,000 or 3% from net income of $5,594,000 ($0.63 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 9, 2023) for the quarter ended June 30, 2023. For the first six months of 2024, the Company’s annualized return on average equity was 11.73% and the annualized return on average assets was 1.62%.

The increase in earnings of $185,000 for the second quarter of 2024 compared to second quarter of 2023 was primarily attributed to a $170,000 increase in net interest income after provision for loan losses, a $60,000 decrease in other operating expense, and a $43,000 decrease in nonoperating expense offset by a $77,000 increase in income tax expense and an $11,000 decrease in other operating income.

Net interest income totaled $11,207,000 in the second quarter of 2024, an increase of $2,000 from the same period in 2023. This resulted primarily due to a decrease in average interest-earning assets of $61.9 million offset by an increase in the interest rate spread from 2.87% to 2.92%. The increase in the interest rate spread is primarily attributed to an increase of 0.49% in yield on average interest-earning assets offset by an increase of 0.44% in yield on average interest-bearing liabilities.

Operating expenses decreased 2% in the second quarter of 2024 to $3,448,000 from $3,508,000 in the second quarter of 2023.   The decrease is primarily attributed to decreases in deposit insurance premium of $73,000 and general and administrative of $28,000 offset by increases in data processing of $23,000 and compensation of $10,000.

The Company had no 30-day delinquent loans or loans with deferred payments and no foreclosed real estate owned at June 30, 2024. The Company’s allowance for credit losses was $3,737,000, or 0.30% of total loans, at June 30, 2024.

Randy C. Bowers, Chairman, President, and CEO, commented, “We are pleased to report continued year-over-year earnings increases for the 2^nd quarter and year-to-date 2024.This positive earnings trend along with excellent asset quality and tight expense control position us well for continued favorable performance for the remainder of the year. In spite of a very challenging operating environment, we are realistically optimistic going forward and wish to again thank our colleagues for their efforts in achieving these results.”

Malaga Bank’s total assets decreased by 8% to $1.425 billion at June 30, 2024, compared to $1.544 billion at June 30, 2023. The loan portfolio at June 30, 2024 was $1.236 billion, a decrease of $59.5 million or 5% from June 30, 2023. Malaga originates loans principally for its own portfolio and not for sale.

Malaga funds its assets with a mix of retail deposits, wholesale deposits and FHLB borrowings. Retail deposits totaled $740.5 million as of June 30, 2024, a $90.2 million decrease from $830.7 million at June 30, 2023. Wholesale deposits increased $15.0 million or 9% from $159.6 million at June 30, 2023, to $174.6 million at June 30, 2024. Wholesale deposits were primarily comprised of $123.6 million brokered long-term certificates of deposits and $51.0 million State of California certificates of deposits as of June 30, 2024. FHLB borrowings decreased $55.0 million or 16% from $335.0 million at June 30, 2023, to $280.0 million at June 30, 2024. The decrease in FHLB borrowings is an interest rate risk management strategy related to the decrease in net loan growth.

As of June 30, 2024, 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 15.01% and 26.66%, respectively, at June 30, 2024, 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. For over fifteen 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 66th consecutive quarter as of March 2024. Since 1985, Malaga Bank 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 was Malaga Financial 's net income for the first six months of 2024?

Malaga Financial reported a net income of $11.791 million for the first six months of 2024, an increase of 3% compared to the same period in 2023.

What is the earnings per share (EPS) of MLGF for the first half of 2024?

The earnings per share (EPS) for Malaga Financial for the first half of 2024 was $1.31.

How did Malaga Financial 's total assets change by June 30, 2024?

Malaga Financial 's total assets decreased by 8% to $1.425 billion by June 30, 2024.

What are the core and risk-based capital ratios of MLGF as of June 30, 2024?

As of June 30, 2024, Malaga Financial 's core capital ratio was 15.01% and the risk-based capital ratio was 26.66%.

How did Malaga Financial 's loan portfolio perform by June 30, 2024?

Malaga Financial 's loan portfolio decreased by 5% to $1.236 billion by June 30, 2024.

What was the change in retail deposits for MLGF by June 30, 2024?

Malaga Financial 's retail deposits fell by $90.2 million to $740.5 million by June 30, 2024.