PALOS VERDES ESTATES, Calif., Jan. 26, 2021 (GLOBE NEWSWIRE) -- Malaga Financial Corporation, “Company” (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the twelve months ended December 31, 2020 was $18,335,000 ($2.38 basic and fully diluted earnings per share) compared to $15,387,000 ($2.01 basic and $2.00 fully diluted earnings per share, as adjusted for the stock dividend declared on November 13, 2020) for the twelve months ended December 31, 2019, a 19% increase. Net income for the quarter ended December 31, 2020 was $4,743,000 ($0.62 basic and fully diluted earnings per share), an increase of $456,000 or 11% from net income of $4,287,000 for the quarter ended December 31, 2019 ($0.56 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 13, 2020). For the twelve months ended December 31, 2020, the Company’s annualized return on average equity was 12.15% and the annualized return on average assets was 1.43%, as compared to 10.94% and 1.33%, respectively, for the same period in 2019.
The Company did not have any delinquent loans over 30 days or real estate owned at December 31, 2020, nor did it have any material exposure to loans modified as a result of the COVID-19 pandemic. The Company’s allowance for loan losses was $3,686,000, or 0.31% of total loans, at December 31, 2020.
For 2020, net interest income totaled $37,638,000, an increase of $4,568,000 or 14% from 2019. This increase reflected higher average interest-earning assets of $126.7 million and an increase of 0.10% in the interest rate spread to 2.92%. The increase in the interest rate spread is primarily attributable to a decrease in the average cost of funds of 0.29% offset by an decrease in the yield on average interest-earning assets of 0.19 %.
Provision for loan losses decreased $191,000 to $162,000 in 2020 from $353,000 in 2019. The decrease is primarily due to lower growth in the loan portfolio from $149.0 million in 2019 to $53.6 million in 2020.
Other operating income decreased 10% in 2020 to $785,000 from $870,000 in 2019. Income decreased primarily due to deposit related fees.
Operating expenses increased $517,000 or 4% to $12,292,000 in 2020 from $11,775,000 in 2019. The increase is primarily attributed to increases in deposit insurance premiums of $262,000, data processing $92,000, professional services $62,000 and general and administrative expenses of $54,000. In 2019, the company received a one-time deposit insurance premium credit of $230,000 from the FDIC for our contributions to the Deposit Insurance Fund (DIF).
Randy C. Bowers, Chairman, President and CEO, remarked, “We are extremely pleased to report record earnings for the full year 2020 and an increase in quarterly earnings of 11% from the same period in 2019. These strong operating results reflect the extraordinary efforts of our dedicated staff to continue to serve our clients in very challenging conditions. We appreciate the hard work of our team and are delighted to have been able to reward them with additional compensation during this once in a lifetime pandemic...”
Malaga Bank’s total assets increased to $1.312 billion at December 31, 2020 compared to $1.248 billion at December 31, 2019. The loan portfolio at December 31, 2020 was $1.197 billion, an increase of $53.6 million or 5% from December 31, 2019. 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 $737 million as of December 31, 2020, a $69 million or 10% increase from $668 million at December 31, 2019. Wholesale deposits decreased $18.7 million or 14% from $135.3 million at December 31, 2019. Wholesale deposits were primarily comprised of State of California certificates of deposit in the amount of $60 million and $39.6 million of brokered long-term certificates of deposit at December 31, 2020. FHLB borrowings were $280 million as of December 31, 2020, a $5 million increase from $275 million at December 31, 2019.
As of December 31, 2020, 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 12.80% and 22.82%, respectively, at December 31, 2020 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 2021, and a special stock dividend of 5% per share payable on December 29, 2020, to shareholders of record as of December 14, 2020.
Mr. Bowers concluded, “We appreciate the support and loyalty of our employees, shareholders and Board of Directors and look forward to improving circumstances as we progress in 2021.”
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. Malaga Bank has been named by DepositAccounts.com as one of the Top 200 Healthiest Banks out of the 5,035 banks analyzed across the United States. A more detailed breakdown of Malaga Bank’s A+ health score may be found in the health section of its dedicated page at www.depositaccounts.com/banks/malaga-bank-fsb.html#health. 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 Bauer’s premier Top 5-Star rating for the 51st consecutive quarter as of September 2020. 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 Bank 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.
Chairman, President and Chief Executive Officer
Malaga Financial Corporation