PALOS VERDES ESTATES, Calif.--(BUSINESS WIRE)--Malaga Financial Corporation (OTCBB:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended March 31, 2014 was $2,733,000 ($0.46 per share basic and $0.45 fully diluted), an increase of $29,000 or 1% from net income of $2,704,000 ($0.46 per share basic and fully diluted) for the quarter ended March 31, 2013. Net income in the first quarter resulted in a pre-tax return on average equity of 19.16%.
The Company did not have any real estate owned and only one delinquent consumer loan in the amount of $5,000 at March 31, 2014. The Company’s allowance for loan losses was $2,882,000, or 0.34% of total loans, at March 31, 2014.
Net interest income totaled $7,373,000 in the first quarter of 2014, an increase of $202,000 or 3% from the first quarter of 2013. This increase resulted from an increase in average interest earning assets of $60,095,000, offset by a decrease in the interest spread from 3.44% to 3.30%. The decrease in the interest spread was due to a 0.40% decline in the weighted average yield on interest earning assets, while the weighted average rate on interest-bearing liabilities declined only 0.26%.
Operating expenses increased 4% in the first quarter of 2014, to $2,788,000 from $2,686,000 in the first quarter of 2013. Increased costs were primarily related to compensation and professional service fees.
Randy C. Bowers, President and CEO, remarked, “We are pleased to report earnings are strong and stable and our overall financial health is 'superior' as evidenced by our 25 consecutive quarters of 5 star ratings from Bauer Financial, Inc. Five stars is their highest rating and an indication that our institution is one of the strongest in the United States. A primary contributor to that success is how our team of associates continues to provide exceptional service to our clients.”
Malaga’s total assets increased by 8% to $910 million at March 31, 2014 compared to $843 million at March 31, 2013. The loan portfolio at March 31, 2014 was $844 million, an increase of $64 million or 8% from March 31, 2013. 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 $598 million as of March 31, 2014, a $35 million or 6% increase from $562 million at March 31, 2013. The continued retail deposit growth combined with earnings growth and increase in FHLB borrowings was used to fund loan growth of $64 million. The weighted average cost of funds for the first three months of 2014 was 0.82% versus 1.08% for the first three months of 2013. The decrease was due primarily to a higher mix of lower cost overnight Federal Home Loan Bank borrowings.
As of March 31, 2014, 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 13.20% and 22.90%, respectively, at March 31, 2014, significantly exceeding the minimum “well capitalized” requirements of 5% and 10%, respectively. In the first quarter, Malaga Financial paid a quarterly dividend for the 38th consecutive quarter.
Mr. Bowers concluded, “As we begin our 30th year serving the South Bay we look forward to continuing to support our community and its various organizations, reward our shareholders and to provide a safe and friendly place to encourage banking locally.”
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. 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.