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 June 30, 2017 was $3,118,000 ($0.51 basic and $0.50 fully diluted earnings per share), an increase of $320,000 or 11.4% from income of $2,798,000 for the quarter ended June 30, 2016. Net income for the six months ended June 30, 2017 was $6,170,000 ($1.00 basic and $0.99 fully diluted earnings per share) compared to $5,657,000 ($0.93 basic and $0.92 fully diluted earnings per share) for the six months ended June 30, 2016. Net income for the first six months of 2017 resulted in an annualized pre-tax return on average equity of 17.32%.
The Company did not have any delinquent loans or real estate owned at June 30, 2017. The Company’s allowance for loan losses was $3,057,000, or 0.33% of total loans, at June 30, 2017.
Net interest income totaled $8,006,000 in the second quarter of 2017, an increase of $464,000 or 6% from the second quarter of 2016. This increase resulted mainly from an increase in the interest spread from 2.99% to 3.18%. The increase in the interest spread was due to a 0.06% increase in the weighted average yield on interest earning assets, while the weighted average rate on interest-bearing liabilities declined 0.13%.
Operating expenses decreased 4% in the second quarter of 2017, to $2,820,000 from $2,926,000 in the second quarter of 2016. The decrease is primarily related to deposit insurance premiums and professional services.
Randy C. Bowers, President and CEO, remarked, “We are pleased to report record quarterly earnings – up over 11% from the prior year. Growth in our balance sheet to over $1 billion along with a decrease in operating expenses contributed to increased profitability. Asset quality remains excellent with no delinquent or non-performing loans reported during the quarter.”
Malaga’s total assets increased to $1.0 billion at June 30, 2017 compared to $994 million at June 30, 2016. The investment portfolio at June 30, 2017 was $52 million, a decrease of $27 million or 34% from June 30, 2016 and is comprised of fed funds sold and certificates of deposit. The loan portfolio at June 30, 2017 was $941 million, an increase of $53 million or 6% from June 30, 2016. 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 $666 million as of June 30, 2017, a $2 million increase from $664 million at June 30, 2016. Wholesale deposits, comprised mainly of State of California certificates of deposit, totaled $97 million as of June 30, 2017, an $9 million increase or 10% from $89 million at June 30, 2016. FHLB borrowings were $117 million as of June 30, 2017, a $19 million increase from $98 million at June 30, 2016. The weighted average cost of funds for the second quarter of 2017 was 0.57% versus 0.70% for the second quarter of 2016.
As of June 30, 2017, 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 13.12% and 23.79%, respectively, at June 30, 2017 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 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.