Malaga Financial Corporation Reports Record Earnings

PALOS VERDES ESTATES, Calif., Oct. 16, 2020 (GLOBE NEWSWIRE) -- Malaga Financial Corporation, “Company” (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended September 30, 2020 was $4,788,000 ($0.65 basic and fully diluted earnings per share), an increase of $906,000 or 23% from net income of $3,882,000 ($0.53 basic and fully diluted earnings per share, as adjusted for stock dividends declared on November 15, 2019) for the quarter ended September 30, 2019, and an increase of $168,000 or 4% from net income of $4,620,000 ($0.63 basic and fully diluted earnings per share) for the quarter ended June 30, 2020. Net income for the nine months ended September 30, 2020 was $13,592,000 ($1.85 basic and fully diluted earnings per share) compared to $11,100,000 ($1.52 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2019) for the nine months ended September 30, 2019 , an increase of 22%. For the first nine months of 2020, the Company’s annualized return on average equity was 12.12% and the annualized return on average assets was 1.42%.

The increase in earnings of $168,000 for the third quarter of 2020 compared to second quarter 2020 was primarily attributable to a $363,000 increase in net interest income after provision for loan losses, offset by a $35,000 decrease in other operating income, a $77,000 increase in other operating expenses, and an $83,000 increase in income tax expense.

Net interest income totaled $9,669,000 in the third quarter of 2020, an increase of $1,389,000 or 17% from the third quarter of 2019. This result was primarily due to an increase in average interest-earning assets of $133,546,000 and an increase in the interest rate spread from 2.77% to 2.94%. The increase in the interest rate spread is primarily attributable to a decrease of 0.43% in yield on average interest-bearing liabilities offset by a decrease of 0.26% in yield on average interest-earning assets.

Other operating income decreased 13% in the third quarter of 2020 to $179,000 from $205,000 in the third quarter of 2019. Income decreased primarily due to deposit related fees.

Operating expenses increased $341,000 in the third quarter of 2020 to $3,064,000 from $2,723,000 in the third quarter of 2019. The increase was primarily due to an increase in data processing costs, and the one-time assessment credit in 2019 from the FDIC for our contributions to the Deposit Insurance Fund (DIF).