Malaga Financial Corporation Reports Strong First Quarter Earnings

PALOS VERDES ESTATES, Calif., April 15, 2024 (GLOBE NEWSWIRE) -- Malaga Financial Corporation “Company” (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended March 31, 2024 was $6,012,000 ($0.67 basic and fully diluted earnings per share), an increase of $137,000 or 2% from net income of $5,875,000 ($0.65 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 9, 2023) for the quarter ended March 31, 2023. For the first quarter of 2024, the Company’s annualized return on average equity was 12.06% and the annualized return on average assets was 1.64%, as compared to 12.70% and 1.57%, respectively, for the same period in 2023.

The Company did not have any delinquent loans or foreclosed real estate owned at March 31, 2024. The Company’s allowances for credit losses were $3,881,000, or 0.31% of total loans, at March 31, 2024.

Net interest income totaled $11,173,000 in the first quarter of 2024, a decrease of $600,000 or 5% from the first quarter of 2023. This decrease was due to a decrease of 0.19% in the interest rate spread to 2.86% offset partially by an increase in excess interest-earning assets over interest-bearing liabilities of $13.6 million. The decrease in the interest rate spread is primarily attributable to a 0.67% increase in the average cost of funds offset by an increase of 0.48% in the yield on average interest-earning assets.

The CARES Act provided for an Employee Retention Credit (ERC), which is a broad-based refundable payroll tax credit that incentivized businesses to retain employees on the payroll during the COVID-19 pandemic. The ERC is a credit against certain employment taxes for eligible employers based on certain wages paid after March 12, 2020, through September 30, 2021. The Company qualified for the ERC based on the partial suspension of our business due to government orders related to Covid-19 pandemic. In the first quarter of 2024, the Company recorded non-operating income of $712,000 related to ERC for the second quarter 2020 through the first quarter 2021. The tax effects of the ERC increased tax expense by $218,000 with total net ERC income of $494,000 reported as non-operating income.