Malaga Financial Corporation Reports Record Earnings

Rhea-AI Summary

Malaga Financial Corporation (OTCPink:MLGF) reported a robust net income of $4.79 million for Q3 2020, marking a 23% increase from Q3 2019. This translates to $0.65 per share. Year-to-date, net income reached $13.59 million, up 22% from the prior year. Key drivers included a 17% rise in net interest income to $9.67 million, despite a decrease in other operating income. Total assets grew 4% to $1.283 billion.

Positive

• Net income increased by $906,000 or 23% YoY for Q3 2020.
• Year-to-date net income rose by $2.49 million or 22% compared to the same period last year.
• Net interest income grew by $1.39 million or 17% YoY for Q3 2020.

Negative

• Other operating income decreased by 13% to $179,000 compared to Q3 2019.
• Operating expenses rose by $341,000 in Q3 2020 compared to Q3 2019.

PALOS VERDES ESTATES, Calif., Oct. 16, 2020 (GLOBE NEWSWIRE) -- Malaga Financial Corporation, “Company” (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended September 30, 2020 was $4,788,000 ($0.65 basic and fully diluted earnings per share), an increase of $906,000 or 23% from net income of $3,882,000 ($0.53 basic and fully diluted earnings per share, as adjusted for stock dividends declared on November 15, 2019) for the quarter ended September 30, 2019, and an increase of $168,000 or 4% from net income of $4,620,000 ($0.63 basic and fully diluted earnings per share) for the quarter ended June 30, 2020. Net income for the nine months ended September 30, 2020 was $13,592,000 ($1.85 basic and fully diluted earnings per share) compared to $11,100,000 ($1.52 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2019) for the nine months ended September 30, 2019 , an increase of 22%. For the first nine months of 2020, the Company’s annualized return on average equity was 12.12% and the annualized return on average assets was 1.42%.

The increase in earnings of $168,000 for the third quarter of 2020 compared to second quarter 2020 was primarily attributable to a $363,000 increase in net interest income after provision for loan losses, offset by a $35,000 decrease in other operating income, a $77,000 increase in other operating expenses, and an $83,000 increase in income tax expense.

Net interest income totaled $9,669,000 in the third quarter of 2020, an increase of $1,389,000 or 17% from the third quarter of 2019. This result was primarily due to an increase in average interest-earning assets of $133,546,000 and an increase in the interest rate spread from 2.77% to 2.94%. The increase in the interest rate spread is primarily attributable to a decrease of 0.43% in yield on average interest-bearing liabilities offset by a decrease of 0.26% in yield on average interest-earning assets.

Other operating income decreased 13% in the third quarter of 2020 to $179,000 from $205,000 in the third quarter of 2019. Income decreased primarily due to deposit related fees.

Operating expenses increased $341,000 in the third quarter of 2020 to $3,064,000 from $2,723,000 in the third quarter of 2019. The increase was primarily due to an increase in data processing costs, and the one-time assessment credit in 2019 from the FDIC for our contributions to the Deposit Insurance Fund (DIF).

The Company had no delinquent loans or foreclosed real estate owned at September 30, 2020. The Company’s allowance for loan losses was $3,640,000, or 0.31% of total loans, at September 30, 2020.

Randy C. Bowers, Chairman, President and CEO, remarked, “We are pleased to report record earnings for both the 3^rd quarter and also year-to-date 2020. In an extremely difficult environment our colleagues rose to the occasion and continued to provide exceptional service to our clients. We are grateful for their efforts and that we all remain safe and healthy.”

Malaga Bank’s total assets increased by 4% to $1.283 billion at September 30, 2020 compared to $1.232 billion at September 30, 2019. The loan portfolio at September 30, 2020 was $1.187 billion, an increase of $59.7 million or 5% from September 30, 2019. 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 $699.1 million as of September 30, 2020, a $48.2 million increase from $650.9 million at September 30, 2019. Wholesale deposits decreased $14.3 million or 11% from $124.9 million at September 30, 2019 to $110.6 million at September 30, 2020. Wholesale deposits are primarily comprised of State of California certificates of deposit in the amount of $60 million and $39.6 million of brokered long-term certificates of deposits as of September 30, 2020. FHLB borrowings increased $5 million or 2% from $290 million at September 30, 2019 to $295 million at September 30, 2020.

As of September 30, 2020, 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 12.51% and 21.11%, respectively, at September 30, 2020, 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 named by DepositAccounts.com as one of the Top 200 Healthiest Banks out of the 5,035 banks analyzed across the United States. 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 50th consecutive quarter as of June 2020. 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 Bank 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 results for Q3 2020?

Malaga Financial Corporation reported net income of $4.79 million for Q3 2020, a 23% increase from the same quarter in 2019.

How did net interest income perform in Q3 2020 for MLGF?

Net interest income for Q3 2020 was $9.67 million, which represents a 17% increase from Q3 2019.

What is the future outlook for Malaga Financial Corporation?

Malaga Financial Corporation's strong growth in net income and interest suggests a positive outlook, supported by compliance with regulatory capital requirements.

What are the total assets of Malaga Bank as of September 30, 2020?

As of September 30, 2020, Malaga Bank's total assets increased to $1.283 billion.