PALOS VERDES ESTATES, Calif.--(BUSINESS WIRE)--Malaga Financial Corporation (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended September 30, 2016 was $2,812,000 ($0.46 basic and fully diluted earnings per share), a decrease of $17,000 from income of $2,829,000 for the quarter ended September 30, 2015. Net income for the nine months ended September 30, 2016 was $8,469,000 ($1.39 basic and $1.38 fully diluted earnings per share) as compared to $8,485,000 ($1.40 basic and $1.39 fully diluted earnings per share) for the nine months ended September 30, 2015. Net income for the first nine months of 2016 resulted in an annualized pre-tax return on average equity of 17.09%.
The Company did not have any delinquent loans or real estate owned at September 30, 2016. The Company’s allowance for loan losses was $2,974,000, or 0.34% of total loans, at September 30, 2016.
Net interest income totaled $7,524,000 in the third quarter of 2016, an increase of $11,000 from the third quarter of 2015. This increase resulted mainly from an increase in average interest earning assets of $11.5 million partially offset by a decrease in the interest spread from 2.99% to 2.97%. The decrease in the interest spread was due to a 0.10% decline in the weighted average yield on interest earning assets, while the weighted average rate on interest-bearing liabilities declined only 0.08%.
Operating expenses increased 2% in the third quarter of 2016, to $2,842,000 from $2,798,000 in the third quarter of 2015. Increase is primarily related to compensation costs.
Randy C. Bowers, President and CEO, remarked, “2016 continues to present significant challenges to the banking industry. Anticipated increases to interest rates have not materialized and the economy struggles to achieve solid growth. Persistent low interest rates have raised concerns over inflated asset values. We are focused on executing our business plan with a strong emphasis on maintaining discipline in adhering to our underwriting standards. We are pleased to report earnings remain strong and stable and asset quality is excellent.”
Malaga’s total assets increased to $999 million at September 30, 2016 compared to $980 million at September 30, 2015. The loan portfolio at September 30, 2016 was $886 million. 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 $670 million as of September 30, 2016, a $22 million or 3% increase from $648 million at September 30, 2015. The weighted average cost of funds for the third quarter of 2016 was 0.69% versus 0.77% for the third quarter of 2015.
As of September 30, 2016, 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 13.62% and 25.71%, respectively, at September 30, 2016 significantly exceeding the minimum “well capitalized” requirements of 5% and 10% respectively. In the third quarter, Malaga Financial paid a quarterly dividend for the 48th consecutive quarter.
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 the third consecutive year, Malaga Bank has been named in the top 25 healthiest banks in America. 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. 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.