PALOS VERDES ESTATES, Calif., Oct. 13, 2023 (GLOBE NEWSWIRE) -- Malaga Financial Corporation "Company" (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the nine months ended September 30, 2023 was $17,198,000 ($2.01 basic and fully diluted earnings per share) compared to $15,379,000 ($1.80 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 14, 2022) for the same period ended September 30, 2022, an increase of $1,819,000 or 12%. Net income for the quarter ended September 30, 2023, was $5,729,000 ($0.67 basic and fully diluted earnings per share), an increase of $124,000 or 2% from net income of $5,605,000 ($0.66 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 14, 2022) for the quarter ended September 30, 2022. For the first nine months of 2023, the Company's annualized return on average equity was 12.16% and the annualized return on average assets was 1.51%.
Net interest income totaled $11,425,000 in the third quarter of 2023, an increase of $305,000 or 3% from the same period in 2022. This resulted primarily from an increase in excess interest-bearing assets over interest-bearing liabilities of $18.8 million offset by a decrease in the interest rate spread from 2.96% to 2.82%. The decrease in the interest rate spread is primarily attributable to an increase of 0.94% in yield on average interest-earning assets offset by an increase of 1.08% in yield on average interest-bearing liabilities.
Other operating income increased 2% in the third quarter of 2023 to $216,000 from $212,000 in the third quarter of 2022. Income increased primarily due to deposit related fees.
Operating expenses increased 8% in the third quarter of 2023 to $3,562,000 from $3,309,000 in the third quarter of 2022 primarily due to an 8% increase in compensation.
The Company had no delinquent loans or loans with deferred payments and no foreclosed real estate owned at September 30, 2023. The Company's allowance for loan losses was $3,937,000, or 0.31% of total loans, at September 30, 2023.
Randy C. Bowers, Chairman, President and CEO, commented, "As we continue to experience a very challenging operating environment, we are pleased to report an increase in earnings for the first nine months of 2023 over the prior year. While earnings continue to improve, asset quality remains excellent, capital levels are strong, and expenses are well controlled. We anticipate the remainder of 2023 and 2024 will be difficult, however are optimistic regarding our ability to continue to achieve favorable results."
The Company's total assets increased by 5% to $1.554 billion at September 30, 2023, compared to $1.477 billion at September 30, 2022. The loan portfolio at September 30, 2023, was $1.283 billion, an increase of $48.3 million or 4% from September 30, 2022. The Company originates loans principally for its own portfolio and not for sale.
The Company funds its assets with a mix of retail deposits, wholesale deposits and FHLB borrowings. Retail deposits totaled $839.2 million as of September 30, 2023, a $25.0 million decrease from $864.2 million at September 30, 2022. Wholesale deposits at September 30, 2023, were $159.6 million and comparable to $160.0 million at September 30, 2022. Wholesale deposits are primarily comprised of State of California certificates of deposit in the amount of $51.0 million and $108.6 million of long-term brokered certificates of deposits. FHLB borrowings increased $80.0 million or 32% from $250.0 million at September 30, 2022, to $330.0 million at September 30, 2023. The increase in longer-term FHLB borrowings is to better manage interest rate risk.
As of September 30, 2023, 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 13.19% and 25.80%, respectively, 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 over fifteen 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 Bauer's premier Top 5-Star rating for the 63rd consecutive quarter as of June 2023. 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.
| Contact: | Randy Bowers |
| Chairman of the Board, President and Chief Executive Officer | |
| Malaga Financial Corporation | |
| 310-375-9000 | |
| rbowers@malagabank.com |
