Malaga Financial Corporation Reports Record Earnings Fourth Quarter and Year-to-Date 2022

Rhea-AI Summary

Malaga Financial Corporation (OTCPink: MLGF) reported a 9% increase in net income for 2022, totaling $21.35 million ($2.50 EPS), up from $19.60 million ($2.30 EPS) in 2021. The fourth quarter profit was $5.97 million ($0.70 EPS), a 20% increase from the previous year. Net interest income rose 8% to $42.85 million, aided by a rise in average interest-earning assets and a slight increase in interest rate spread to 2.85%. The bank maintained excellent credit quality, with no delinquent loans and solid capital ratios, reporting a core capital ratio of 12.94%.

Operating expenses increased by 7% to $13.38 million. The company remains optimistic about 2023 and has declared a quarterly cash dividend.

Positive

• Net income increased by 9% in 2022 to $21.35 million.
• Fourth-quarter net income rose by 20% to $5.97 million.
• Net interest income grew by 8% to $42.85 million.
• Core capital ratio was strong at 12.94%, well above regulatory requirements.
• No delinquent loans or real estate owned, indicating excellent credit quality.

Negative

• Operating expenses increased by 7% to $13.38 million.
• Wholesale deposits decreased by 8% to $175 million.

PALOS VERDES ESTATES, Calif., Jan. 24, 2023 (GLOBE NEWSWIRE) -- Malaga Financial Corporation, “Company” (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the twelve months ended December 31, 2022 was $21,352,000 ($2.50 basic and fully diluted earnings per share) compared to $19,602,000 ($2.30 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 14, 2022) for the twelve months ended December 31, 2021, a 9% increase. Net income for the quarter ended December 31, 2022 was $5,973,000 ($0.70 basic and fully diluted earnings per share), an increase of $1,010,000 or 20% from net income of $4,963,000 for the quarter ended December 31, 2021 ($0.58 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 14, 2022). For the twelve months ended December 31, 2022, the Company’s annualized return on average equity was 12.15% and the annualized return on average assets was 1.43%, as compared to 12.04% and 1.41%, respectively, for the same period in 2021.

The Company did not have any delinquent loans over 30 days or real estate owned at December 31, 2022. The Company’s allowance for loan losses was $3,829,000, or 0.31% of total loans, at December 31, 2022.

For 2022, net interest income totaled $42,847,000, an increase of $3,295,000 or 8% from 2021. This increase reflected higher average interest-earning assets of $104.5 million and an increase of 0.01% in the interest rate spread to 2.85%. The increase in the interest rate spread is primarily attributable to an increase in the yield on average interest-earning assets of 0.06% offset by an increase in the average cost of funds of 0.05%.

Provision for loan losses decreased $83,000 to $27,000 in 2022 from $110,000 in 2021. The decrease is primarily due to continued positive trends in multi-family vacancy factors and unemployment, and continued excellent credit quality of the Company’s loan portfolio despite the negative effects presented by the unprecedented pandemic and possibility of a recession.

Other operating income increased 4% in 2022 to $905,000 from $868,000 in 2021. Income increased primarily due to deposit related fees.

Operating expenses increased $903,000 or 7% to $13,381,000 in 2022 from $12,478,000 in 2021. The increase is primarily attributed to increases in compensation of $408,000, general and administrative expenses of $207,000, office rent and utilities $121,000, professional services $93,000, and data processing $69,000.

Randy C. Bowers, Chairman, President and CEO, remarked, “2022 presented a volatile operating environment as interest rates increased dramatically during the year. We are pleased to report record earnings for the full year and the 4th quarter in addition to maintaining excellent credit quality and expense control. We are cautiously optimistic with regards to 2023 and are evaluating our strategic plan to be prepared for the various scenarios that we may encounter going forward.”

Malaga Bank’s total assets increased to $1.509 billion at December 31, 2022 compared to $1.474 billion at December 31, 2021. The loan portfolio at December 31, 2022 was $1.251 billion, an increase of $5.0 million from December 31, 2021. Malaga originates loans principally for its own portfolio and not for sale.

Malaga Bank funds its assets with a mix of retail deposits, wholesale deposits and FHLB borrowings. Retail deposits totaled $834.7 million as of December 31, 2022, a $6.8 million or 1% increase from $827.9 million at December 31, 2021. Wholesale deposits decreased $14.3 million or 8% from $189.3 million at December 31, 2021. Wholesale deposits were primarily comprised of State of California certificates of deposit in the amount of $51.0 million and $108.6 million of brokered long-term certificates of deposit at December 31, 2022. FHLB borrowings were $290.0 million as of December 31, 2022, a $25.0 million increase from $265.0 million at December 31, 2021.

As of December 31, 2022, Malaga Bank was in compliance with all applicable regulatory capital requirements and was deemed “well-capitalized” under those regulations. Core capital and risk-based capital ratios were 12.94% and 23.82%, respectively, at December 31, 2022, significantly exceeding the minimum “well-capitalized” requirements of 5% and 10%, respectively.

In the fourth quarter, the Company declared a quarterly cash dividend of 25 cents per share payable in January 2023, and a special stock dividend of 5% per share payable on December 30, 2022, to shareholders of record as of December 16, 2022.

Mr. Bowers concluded, “Our results reflect the dedicated efforts of our team in very challenging circumstances. We appreciate their contributions and loyalty and the support of our shareholders and Board of Directors. We look forward to the coming year.”

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 60th consecutive quarter as of September 2022. 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, President and Chief Executive Officer Malaga Financial Corporation 310-375-9000 rbowers@malagabank.com

FAQ

What were Malaga Financial Corporation's earnings for 2022?

Malaga Financial Corporation reported net income of $21.35 million for 2022.

What was the EPS for Malaga Financial Corporation in 2022?

The earnings per share (EPS) for 2022 was $2.50.

How much did net interest income increase for Malaga Financial Corporation?

Net interest income increased by 8% to $42.85 million.

What was the total asset value of Malaga Financial Corporation at the end of 2022?

Total assets reached $1.509 billion as of December 31, 2022.

What dividend did Malaga Financial Corporation declare for Q4 2022?

A quarterly cash dividend of 25 cents per share was declared.