PALOS VERDES ESTATES, Calif., Jan. 23, 2024 (GLOBE NEWSWIRE) -- Malaga Financial Corporation, "Company" (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the twelve months ended December 31, 2023 was $22,981,000 ($2.56 basic and fully diluted earnings per share) compared to $21,352,000 ($2.38 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 9, 2023) for the twelve months ended December 31, 2022, an 8% increase. Net income for the quarter ended December 31, 2023, was $5,783,000 ($0.64 basic and fully diluted earnings per share), a decrease of $190,000 or 3% from net income of $5,973,000 for the quarter ended December 31, 2022 ($0.67 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 9, 2023). For the twelve months ended December 31, 2023, the Company's annualized return on average equity was 12.08% and the annualized return on average assets was 1.52%, as compared to 12.15% and 1.43%, respectively, for the same period in 2022.
The Company did not have any delinquent loans over 30 days or real estate owned at December 31, 2023. The Company's allowance for credit losses was $3,908,000, or 0.31% of total loans, at December 31, 2023.
For 2023, net interest income totaled $45,934,000, an increase of $3,087,000 or 7% from 2022. This increase reflected higher average interest-earning assets of $23.3 million and an increase of 0.06% in the interest rate spread to 2.91%. The increase in the interest rate spread is primarily attributable to an increase in the yield on average interest-earning assets of 0.95% offset by an increase in the average cost of funds of 0.89%. The overall increase in yields is due to a continued increase in interest rates for most of 2023.
Provision for loan losses increased $46,000 to $73,000 in 2023 from $27,000 in 2022. The increase is primarily due to an increase in net loan growth of $18.7 million for 2023 versus $5.1 million for 2022. The Company's loan portfolio continues to exhibit excellent credit quality.
Other operating income increased 7% in 2023 to $972,000 from $905,000 in 2022. Income increased primarily due to deposit related fees.
Operating expenses increased $826,000 or 6% to $14,207,000 in 2023 from $13,381,000 in 2022. The increase is primarily attributed to increases in compensation of $446,000, deposit insurance premium of $268,000, and office rent and utilities of $96,000.
Randy C. Bowers, Chairman, President and CEO, remarked, "2023 was an extremely challenging year as we continued to deal with increasing interest rates and inflationary pressure on expenses. Additionally, we encountered exceptionally weak loan demand and heightened competition for deposits from large banks, pushing the cost of funds higher. We are pleased that in spite of these issues we were able to report record annual earnings for the full year. We anticipate that the operating environment in 2024 will continue to be difficult with a high degree of uncertainty in a variety of areas. We are considering the various scenarios as we plan for 2024 and going forward."
Malaga Bank's total assets decreased to $1.475 billion at December 31, 2023, compared to $1.509 billion at December 31, 2022 and is primarily a result of outflow of excess liquidity caused by decrease in deposits. The loan portfolio at December 31, 2023 was $1.269 billion, an increase of $18.7 million from December 31, 2022. Malaga originates loans principally for its own portfolio and not for sale.
Malaga Bank funds its assets with a mix of retail deposits, wholesale deposits and FHLB borrowings. Retail deposits totaled $764.9 million as of December 31, 2023, a $85.3 million or 10% decrease from $850.2 million at December 31, 2022. This decrease was consistent with an industry-wide trend as depositors moved excess liquidity into alternate investments such as real estate, stock market, treasury securities and to pay down debt. Wholesale deposits increased $7.6 million or 5% from $159.6 million at December 31, 2022. Wholesale deposits were primarily comprised of State of California certificates of deposit in the amount of $51.0 million and $116.2 million of brokered long-term certificates of deposit at December 31, 2023. FHLB borrowings were $320.0 million as of December 31, 2023, a $30.0 million increase from $290.0 million at December 31, 2022.
As of December 31, 2023, Malaga Bank was in compliance with all applicable regulatory capital requirements and was deemed "well-capitalized" under those regulations. Core capital and risk-based capital ratios were 13.76% and 26.39%, respectively, at December 31, 2023, significantly exceeding the minimum "well-capitalized" requirements of 5% and 10%, respectively.
In the fourth quarter, the Company declared a quarterly cash dividend of 25 cents per share payable in January 2024, and a special stock dividend of 5% per share payable on December 29, 2023, to shareholders of record as of December 15, 2023.
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 64th consecutive quarter as of September 2023. 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.
| Contact: | Randy Bowers |
| Chairman, President and Chief Executive Officer | |
| Malaga Financial Corporation | |
| 310-375-9000 | |
| rbowers@malagabank.com |
