PALOS VERDES ESTATES, Calif.--()--Malaga Financial Corporation (OTCBB:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended September 30, 2012 was $2,761,000 ($0.47 basic and $0.46 fully diluted earnings per share), an increase of $12,000 from net income of $2,749,000 ($0.47 basic and fully diluted earnings per share) for the quarter ended September 30, 2011. Net income for the nine months ended September 30, 2012 was $8,932,000 ($1.51 basic and $1.50 fully diluted earnings per share) as compared to $8,209,000 ($1.40 basic and $1.39 fully diluted earnings per share) for the nine months ended September 30, 2011, a 9% increase. Earnings for the third quarter and first nine months were the highest in Malaga Financial’s history for those periods and resulted in an annualized pre-tax return on average equity of 24.05%.
“Our financial strength has allowed us to continue to expand our retail banking operations and open our new Torrance-Skypark Branch.”
At September 30, 2012, the Company reported one delinquent loan and no real estate owned. The delinquent loan is a single family loan with an outstanding principal balance of $87,000 and was one payment delinquent. The Company’s allowance for loan losses was $2,817,000, or 0.36% of total loans, at September 30, 2012.
Net interest income totaled $7,151,000 in the third quarter of 2012, a small decrease from $7,169,000 in the third quarter of 2011. This decrease resulted primarily due to net increase of $46,000 in amortization of net deferred loan costs. Our interest rate spread was 3.47% in the third quarter of 2012 and was comparable to third quarter of 2011 at 3.46%.
Operating expenses increased 5% in the third quarter of 2012, to $2,699,000 from $2,570,000 in the third quarter of 2011. The increase is due primarily to costs related to the opening of our Torrance-Skypark branch in August 2012.
Randy C. Bowers, President and CEO, remarked, “Our financial strength has allowed us to continue to expand our retail banking operations and open our new Torrance-Skypark Branch.”
Malaga’s total assets reached $836 million at September 30, 2012 compared to $821 million at September 30, 2011. The loan portfolio at September 30, 2012 was $791 million, an increase of $4 million from September 30, 2011. 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 $519 million as of September 30, 2012, a $31 million or 6% increase from $488 million at September 30, 2011. The retail deposit growth was used to repay FHLB borrowings, which decreased $25 million or 16% from $170 million at September 30, 2011 to $145 million at September 30, 2012. The weighted average cost of funds for the third quarter of 2012 was 1.25% versus 1.69% for the third quarter of 2011.
As of September 30, 2012, 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 13.06% and 21.56%, respectively, at September 30, 2012, significantly exceeding the minimum “well-capitalized” requirements of 5% and 10% respectively.
Mr. Bowers concluded, “We are pleased that we were rated as one of the 349 safest banks in the United States by MSN.money using the complex Texas Ratio. Of the 16 California-based banks receiving this recognition, Malaga Bank is the only institution both headquartered in the South Bay and with all of its branches serving communities in that area.”
Malaga Bank, a subsidiary of MFC, is a full-service community bank headquartered on the Palos Verdes Peninsula with six offices located in the South Bay area of Los Angeles. It has been ranked the #1 performing thrift in the nation for three consecutive years by SNL Financial. 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.