Malaga Financial Corporation Reports 51% Increase in Earnings in First Quarter
Apr 29, 2009 8:13:00 PM
Copyright Business Wire 2009
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View Additional ProfilesPALOS VERDES ESTATES, Calif.--(BUSINESS WIRE)-- Malaga Financial Corporation (OTCBB:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended March 31, 2009 was $2,411,000 ($0.42 per share basic and fully diluted), an increase of $819,000 or 51% from net income of $1,592,000 ($0.28 per share basic and fully diluted) for the quarter ended March 31, 2008, another record quarter. This resulted in return on average equity of 17.32% for the quarter ended March 31, 2009, versus 12.87% for the same period last year. Net income increased due to continued growth in interest earning assets, improvement in the interest rate spread and excellent credit quality.
The Company did not have any delinquent loans or non-performing assets at March 31, 2009. Net loan charge-offs during the quarter were minimal. The Company's allowance for loan losses was $ 2,691,000 or 0.36% of total loans, at March 31, 2009.
Net interest income totaled $6,482,000 in the first quarter of 2009, up $1,615,000 or 33% from the first quarter of 2008. This increase resulted from a $59 million or 8.5% increase in average interest earning assets to $754 million and a 0.69% increase in the interest rate spread to 3.23%. The improvement in the interest rate spread was due to a 1.44% decline in the weighted average cost of funds, while the weighted average yield on interest earning assets declined only 0.75%. Malaga's liabilities reprice more frequently than its interest earning assets, and thus Malaga will generally see an improvement in its interest rate spread during periods of declining market rates.
Operating expenses increased 17% in the first quarter of 2009, to $2,524,000 from $2,152,000 in the first quarter of 2008. Increased costs resulted primarily from $177,000 in FDIC insurance premiums and $130,000 in salary and related benefits due to branch expansion.
Randy C. Bowers, President and CEO, remarked, "We are pleased to report record quarterly earnings in spite of the continued challenging times for the banking industry and the general economy."
Malaga's total assets reached $780 million at March 31, 2009 compared to $728 million at March 31, 2008. The loan portfolio at March 31, 2009 was $745 million, an increase of $58 million or 8% from March 31, 2008. 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 $327 million as of March 31, 2009, a 5% increase from $311 million at March 31, 2008. Wholesale deposits and FHLB borrowings totaled $377 million at March 31, 2009 versus $347 million at March 31, 2008, a 9% increase. The weighted average cost of funds for the first three months of 2009 was 2.62% versus 4.05% for the first three months of 2008.
As of March 31, 2009, 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 8.64% and 13.72%, respectively, at March 31, 2009 significantly exceeding the minimum "well capitalized" requirements of 5% and 10% respectively. In the first quarter, Malaga Financial paid a quarterly dividend for the 18th consecutive quarter.
Mr. Bowers concluded, "In this volatile environment our strategy continues to be moderate internal growth combined with prudent loan underwriting and diligent cost control. We are in our 25th year of providing our customers, shareholders and the community a strong and safe place to bank. Malaga Bank continues as a five-star rated bank, the highest rating available from Bauer Financial. We are proud of our strength and exceptional team of bankers and our leadership in the communities we serve. We appreciate the support provided by our customers and board of directors and the continued hard work by our staff."
Malaga Bank, a subsidiary of MFC, is a full-service community bank headquartered on the Palos Verdes Peninsula with branch offices located on the Peninsula, in Torrance and San Pedro. In its 25th year, 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.
Source: Malaga Financial Corporation
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Malaga Financial Corporation
Randy Bowers
President and Chief Executive Officer
310-375-9000
rbowers@malagabank.com
