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PALOS VERDES ESTATES, Calif., July 16, 2019 (GLOBE NEWSWIRE) -- Malaga Financial Corporation (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended June 30, 2019 was $3,761,000 ($0.54 basic and fully diluted earnings per share), an increase of $304,000 or 9% from net income of $3,457,000 ($0.50 basic and fully diluted earnings per share) for the quarter ended March 31, 2019. Compared to the same quarter last year, net income increased $16,000 from $3,745,000 ($0.54 basic and fully diluted earnings per share, as adjusted for stock dividend declared on November 19, 2018). Net income for the six months ended June 30, 2019 was $7,218,000 ($1.04 basic and fully diluted earnings per share) compared to $7,594,000 ($1.10 basic and $1.09 fully diluted earnings per share, as adjusted for the stock dividend declared on November 19, 2018) for the six months ended June 30, 2018. For the first six months of 2019, the Company’s annualized return on average equity was 10.43% and the annualized return on average assets was 1.30%.
The increase in earnings of $304,000 for the second quarter of 2019 compared to first quarter 2019 was primarily attributable to a $200,000 increase in net interest income after provision for loan losses, $63,000 increase in other operating income, and a $167,000 decrease in other operating expenses, partially offset by a $126,000 increase in income tax expense.
Net interest income totaled $8,057,000 in the second quarter of 2019, a decrease of $42,000 or 1% from the second quarter of 2018. This resulted from a decrease in the interest rate spread from 3.06% to 2.82%, offset partially by the increase in average interest earning assets of $66,626,000. The decrease in the interest rate spread is primarily attributable to an increase of 0.38% in yield on average interest-bearing liabilities offset by an increase of 0.14% in yield on average interest-earning assets.
Other operating income increased 35% in the second quarter of 2019 to $261,000 from $194,000 in the second quarter of 2018. Income increased primarily due to timing of annual safe deposit box fees.
Operating expenses increased 1% in the second quarter of 2019 to $2,992,000 from $2,950,000 in the second quarter of 2018.
The Company had one 60-89 days delinquent loan totaling $321,000 and no foreclosed real estate owned at June 30, 2019. The Company’s allowance for loan losses was $3,220,000, or 0.31% of total loans, at June 30, 2019.
Randy C. Bowers, Chairman, President and CEO, commented, “The 2nd quarter continued to present a challenging operating environment. Upward pressure on rates for deposits intensified while rates on loan originations continued to decline. Growth in the loan portfolio was strong and helped to mitigate the effects of further flattening of the yield curve. Our capital levels are strong, quality remains excellent and our efficiency ratio continues to be one of the best in the industry. We look forward to the remainder of 2019 and appreciate the contributions of our colleagues and support of our shareholders.”
Malaga’s total assets increased by 8% to $1.147 billion at June 30, 2019 compared to $1.063 billion at June 30, 2018. The loan portfolio at June 30, 2019 was $1.050 billion, an increase of $76 million or 8% from June 30, 2018. 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 $645.7 million as of June 30, 2019, a $3.5 million decrease from $649.2 million at June 30, 2018. Wholesale deposits, comprised mainly of State of California certificates of deposit, totaled $124.4 million as of June 30, 2019, a $29.1 million increase from $95.3 million at June 30, 2018. FHLB borrowings increased $46 million or 28% from $167 million at June 30, 2018 to $213 million at June 30, 2019. The increase in State of California certificates of deposit and FHLB borrowings were used to fund increase in loans.
As of June 30, 2019, 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 13.43% and 24.01%, respectively, at June 30, 2019, 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 with assets over $1 billion, headquartered on the Palos Verdes Peninsula with six offices located in the South Bay area of Los Angeles. 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 their premier Top 5-Star rating for the 46th consecutive quarter as of March 2019. Since 1985 Malaga 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.
Chairman of the Board, President and Chief Executive Officer
Malaga Financial Corporation