Malaga Financial Corporation Reports 23% Increase in Second Quarter Earnings

PALOS VERDES ESTATES, Calif., July 17, 2020 (GLOBE NEWSWIRE) -- Malaga Financial Corporation (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended June 30, 2020 was $4,620,000 ($0.63 basic and fully diluted earnings per share), an increase of $859,000 or 23% from net income of $3,761,000 ($0.52 basic and fully diluted earnings per share, as adjusted for stock dividends declared on November 15, 2019) for the quarter ended June 30, 2019. Net income for the quarter ended June 30, 2020 was $4,620,000 ($0.63 basic and fully diluted earnings per share), an increase of $436,000 or 10% from net income of $4,184,000 ($0.57 basic and fully diluted earnings per share) for the quarter ended March 31, 2020.  Net income for the six months ended June 30, 2020 was $8,804,000 ($1.20 basic and fully diluted earnings per share) compared to $7,218,000 ($0.99 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2019) for the six months ended June 30, 2019.  For the first six months of 2020, the Company’s annualized return on average equity was 11.89% and the annualized return on average assets was 1.39%.

The increase in earnings of $436,000 for the second quarter of 2020 compared to first quarter 2020 was primarily attributable to a $545,000 increase in net interest income after provision for loan losses, $10,000 increase in other operating income, and a $47,000 decrease in other operating expenses, partially offset by a $166,000 increase in income tax expense.

Net interest income totaled $9,368,000 in the second quarter of 2020, an increase of $1,311,000 or 16% from the second quarter of 2019.  This resulted primarily due to an increase in average interest earning assets of $157,565,000 and an increase in the interest rate spread from 2.82% to 2.90%.  The increase in the interest rate spread is primarily attributable to a decrease of 0.29% in yield on average interest-bearing liabilities offset by a decrease of 0.21% in yield on average interest-earning assets.

Other operating income decreased 18% in the second quarter of 2020 to $214,000 from $261,000 in the second quarter of 2019.  Income decreased primarily due to timing of annual safe deposit box fees.

Operating expenses decreased $5,000 in the second quarter of 2020 to $2,987,000 from $2,992,000 in the second quarter of 2019.

The Company had no delinquent loans and no foreclosed real estate owned at June 30, 2020.  The Company’s allowance for loan losses was $3,640,000, or 0.31% of total loans, at June 30, 2020. There were no loans with deferred payments in the portfolio at June 30, 2020.