PALOS VERDES ESTATES, Calif.--(EON: Enhanced Online News)--Malaga Financial Corporation (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended March 31, 2017 was $3,052,000 ($0.49 basic and fully diluted earnings per share), an increase of $193,000 or 7% from net income of $2,859,000 ($0.47 basic and fully diluted earnings per share) for the quarter ended March 31, 2016. Earnings for the three months ended March 31, 2017 resulted in a pre-tax return on average equity of 16.77%.
The Company did not have any delinquent loans or foreclosed real estate owned at March 31, 2017. The Company’s allowance for loan losses was $3,033,000, or 0.33% of total loans, at March 31, 2017.
Net interest income totaled $7,791,000 in the first quarter of 2017, an increase of $151,000 or 2% from the first quarter of 2016. This resulted from an increase in the interest rate spread from 3.04% to 3.15% offset by a decrease in average interest-earning assets of $12 million. The increase in the interest rate spread is primarily attributable to a decrease of 0.16% in average cost of funds offset by a decrease of 0.05% in yield on average interest-earning assets.
Operating expenses increased 4% in the first quarter of 2017 to $2,992,000 from $2,878,000 in the first quarter 2016. Increased costs were primarily related to compensation expenses.
Randy C. Bowers, President and CEO, commented, “We are pleased to report increases in 1st Quarter earnings and core capital levels as of March 31, 2017. Asset quality remains excellent and expenses are well controlled. We are optimistic about the opportunities the remainder of 2017 will present and appreciate the efforts of our colleagues and support of our shareholders.”
Malaga’s total assets decreased by 2% to $993 million at March 31, 2017 compared to $1.012 billion at March 31, 2016. The loan portfolio at March 31, 2017 was $916 million, an increase of $28 million or 3% from March 31, 2016. 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 $678 million as of March 31, 2017, a $4 million or 1% decrease from $682 million at March 31, 2016. Wholesale deposits, comprised mainly of State of California certificates of deposit, totaled $77 million as of March 31, 2017, a $14 million or 16% decrease from $91 million at March 31, 2016.
As of March 31, 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 13.20% and 23.50%, respectively, at March 31, 2017, 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 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 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.