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, 2017 was $3,257,000 ($0.52 basic and fully diluted earnings per share), an increase of $445,000 from income of $2,812,000 for the quarter ended September 30, 2016. Net income for the nine months ended September 30, 2017 was $9,427,000 ($1.52 basic and $1.51 fully diluted earnings per share) as compared to $8,469,000 ($1.39 basic and $1.38 fully diluted earnings per share) for the nine months ended September 30, 2016. Net income for the first nine months of 2017 resulted in an annualized pre-tax return on average equity of 17.59%.
The Company did not have any delinquent loans or real estate owned at September 30, 2017. The Company’s allowance for loan losses was $3,085,000, or 0.32% of total loans, at September 30, 2017.
Net interest income totaled $8,184,000 in the third quarter of 2017, an increase of $660,000 from the third quarter of 2016. This increase resulted mainly from an increase in average interest earning assets of $12.7 million and an increase in the interest spread from 2.97% to 3.19%. The increase in the interest spread was due to a 0.16% increase in the weighted average yield on interest earning assets and a decrease of 0.06% in the weighted average rate on interest-bearing liabilities.
Operating expenses decreased 2% in the third quarter of 2017, to $2,791,000 from $2,842,000 in the third quarter of 2016. The decrease is primarily related to deposit insurance premiums and professional services.
Randy C. Bowers, President and CEO, remarked, “We are delighted to once again report record quarterly earnings – up 16% from the prior year and a new all-time high. Continued growth in our loan portfolio along with well controlled operating expenses contributed to the results.”
Malaga’s total assets increased to $1.03 billion at September 30, 2017 compared to $999 million at September 30, 2016. The loan portfolio at September 30, 2017 was $953 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 $671 million as of September 30, 2017, a $1 million increase from $670 million at September 30, 2016. Wholesale deposits, comprised mainly of State of California certificates of deposit, totaled $98 million as of September 30, 2017, an $8 million increase or 9% from $90 million at September 30, 2016. FHLB borrowings were $120 million as of September 30, 2017, a $26 million increase from $94 million at September 30, 2016. The weighted average cost of funds for the third quarter of 2017 was 0.63% versus 0.69% for the third quarter of 2016.
As of September 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 23.81%, respectively, at September 30, 2017 significantly exceeding the minimum “well capitalized” requirements of 5% and 10% respectively. In the third quarter, Malaga Financial paid a quarterly dividend for the 52nd 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.