PALOS VERDES ESTATES, Calif., Jan. 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 December 31, 2019 was $4,287,000 ($0.59 basic and $0.58 fully diluted earnings per share), an increase of $442,000 or 11% from net income of $3,845,000 for the quarter ended December 31, 2018 ($0.53 basic and $0.52 fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2019). Net income for the twelve months ended December 31, 2019 was $15,387,000 ($2.11 basic and $2.10 fully diluted earnings per share) compared to $15,305,000 ($2.11 basic and $2.09 fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2019) for the twelve months ended December 31, 2018, a 1% increase. For the twelve months ended December 31, 2019, the Company’s annualized return on average equity was 10.94% and the annualized return on average assets was 1.33%, as compared to 11.65% and 1.44%, respectively, for the same period in 2018.

The Company did not have any delinquent loans or real estate owned at December 31, 2019. The Company’s allowance for loan losses was $3,523,000, or 0.31% of total loans, at December 31, 2019.

For 2019, net interest income totaled $33,069,000, an increase of $492,000 or 2% from 2018. This increase reflected higher average interest-earning assets of $94.6 million offset by a decrease of 0.26% in the interest rate spread to 2.81%. The decrease in the interest rate spread is primarily attributable to an increase in the average cost of funds of 0.35% offset by an increase in the yield on average interest-earning assets of 0.09%.

Provision for loan losses increased $304,000 to $353,000 in 2019 from $49,000 in 2018. The increase is primarily due to growth in the loan portfolio.

Operating expenses decreased $179,000 or 2% to $11,775,000 in 2019 from $11,954,000 in 2018. The decrease is primarily attributed to a deposit insurance premiums credit of $230,000.

Randy C. Bowers, Chairman, President and CEO, remarked, “We are pleased to report record earnings for both the 4^th quarter and full year 2019. Loan portfolio growth for 2019 was 15% or $149 million and quarterly earnings increased 11% from the same period in 2018. These strong operating results enabled us to once again reward our shareholders with a special year-end 5% stock dividend in addition to quarterly cash dividends.”

Malaga Bank’s total assets increased to $1.248 billion at December 31, 2019 compared to $1.088 billion at December 31, 2018. The loan portfolio at December 31, 2019 was $1.143 billion, an increase of $149 million or 15% from December 31, 2018. Malaga originates loans principally for its own portfolio and not for sale.

Malaga Bank funds its assets with a mix of retail deposits, wholesale deposits and FHLB borrowings. Retail deposits totaled $668 million as of December 31, 2019, an $7 million increase from $661 million at December 31, 2018. Wholesale deposits, comprised mainly of State of California certificates of deposit, totaled $135 million as of December 31, 2019 an increase of $38 million or 39% from December 31, 2018. FHLB borrowings were $275 million as of December 31, 2019, a $100 million increase from $175 million at December 31, 2018. The increase in wholesale deposits and FHLB borrowings was used to fund the increase in loans.

As of December 31, 2019, Malaga Bank was in compliance with all applicable regulatory capital requirements and was deemed “well-capitalized” under those regulations. Core capital and risk-based capital ratios were 12.70% and 22.88%, respectively, at December 31, 2019 significantly exceeding the minimum “well-capitalized” requirements of 5% and 10%, respectively.

In the fourth quarter, the Company declared a quarterly cash dividend of 25 cents per share payable in January 2020, and a special stock dividend of 5% per share payable on December 27, 2019, to shareholders of record as of December 13, 2019.

Mr. Bowers concluded, “We appreciate the support and loyalty of our employees, shareholders and Board of Directors and look forward to continuing to serve as the local community bank of choice in the South Bay region.”

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 over ten years Malaga Bank has been consistently recommended by one of the nation’s leading independent bank rating and research firms, Bauer Financial Inc. Malaga Bank was awarded their premier Top 5-Star rating for the 48^th consecutive quarter as of September 2019. Since 1985, Malaga Bank 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.