Malaga Financial Corporation Reports Earnings for the First Six Months of 2025

Rhea-AI Summary

Malaga Financial Corporation (OTCIQ:MLGF) reported net income of $10.95 million ($1.16 per share) for H1 2025, down from $11.79 million ($1.25 per share) in H1 2024. The decline was primarily attributed to a $475,000 impact related to the prior year's Employment Retention Credit.

Q2 2025 net income was $5.55 million ($0.59 per share), a 4% decrease from Q2 2024. The company maintained strong financial metrics with a 10.23% annualized return on equity and 1.58% return on assets. Total assets decreased 2% to $1.397 billion, while the loan portfolio declined 2% to $1.209 billion.

Credit quality remained excellent with no 30-day delinquent loans and an allowance for credit losses of $3.68 million. The bank maintained strong capital ratios, with core capital at 16.57% and risk-based capital at 28.92%, significantly above "well-capitalized" requirements.

Positive

• Strong capital ratios with core capital at 16.57% and risk-based capital at 28.92%, well above requirements
• Excellent credit quality with no 30-day delinquent loans or foreclosed real estate
• Interest rate spread increased from 2.92% to 2.97%
• Operating expenses decreased by 1% in Q2 2025
• Maintained Bauer's premier Top 5-Star rating for 70th consecutive quarter

Negative

• Net income decreased by $841,000 in H1 2025 compared to H1 2024
• Total assets declined 2% to $1.397 billion
• Loan portfolio decreased by $26.9 million or 2%
• Retail deposits decreased by $22.0 million
• Net interest income declined by $191,000 in Q2 2025

PALOS VERDES ESTATES, Calif., July 16, 2025 (GLOBE NEWSWIRE) -- Malaga Financial Corporation “Company” (OTCIQ:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the six months ended June 30, 2025 was $10,950,000 ($1.16 basic and fully diluted earnings per share) compared to $11,791,000 ($1.25 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2024) for the same period ended June 30, 2024. The $841,000 decrease in net income was primarily due to a $475,000 (net of tax) impact related to the Employment Retention Credit (ERC) received in the prior year. Net income for the quarter ended June 30, 2025 was $5,546,000 ($0.59 basic and fully diluted earnings per share), a decrease of $233,000 or 4% from net income of $5,779,000 ($0.61 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2024) for the quarter ended June 30, 2024. For the first six months of 2025, the Company’s annualized return on average equity was 10.23% and the annualized return on average assets was 1.58%.

The decrease in earnings of $233,000 for the second quarter of 2025 compared to second quarter of 2024 was primarily attributed to a $191,000 decrease in net interest income, a $92,000 decrease in recovery for provision for loan losses and a $73,000 increase in nonoperating expense offset by a $96,000 decrease in income tax expense and a $25,000 decrease in other operating expense.

Net interest income totaled $11,016,000 in the second quarter of 2025, a decrease of $191,000 from the same period in 2024. This resulted primarily due to a decrease in average interest-earning assets of $60.0 million offset by an increase in the interest rate spread from 2.92% to 2.97%. The increase in the interest rate spread is primarily attributed to an increase of 0.09% in yield on average interest-earning assets offset by an increase of 0.04% in rate paid on average interest-bearing liabilities.

Decrease of $92,000 in recovery for provision for loan losses between the second quarter 2025 and the same period in 2024 is primarily due to lower decrease in net loans.

The nonoperating expense increase of $73,000 in the second quarter 2025 compared to the second quarter 2024, was primarily due to $51,000 in check fraud versus $22,000 in check fraud recovery for the same period in 2024.

Operating expenses decreased 1% in the second quarter of 2025 to $3,423,000 from $3,448,000 in the second quarter of 2024. The decrease is primarily attributed to a decrease in compensation of $73,000, offset by increases in general and administrative of $19,000, depreciation and amortization of $19,000, and data processing of $9,000.

The Company had no 30-day delinquent loans or loans with deferred payments and no foreclosed real estate owned at June 30, 2024. The Company’s allowance for credit losses was $3,678,000, or 0.30% of total loans, at June 30, 2025.

Randy C. Bowers, Chairman, President, and CEO, commented, “As noted in the prior quarter, in the second quarter 2025 we continued to experience volatility and increased uncertainty in both the economic and political environment. We are generally satisfied with our results for the period and note the year-over-year impact of the 2024 ERC credit. Credit quality remains excellent, and expenses are well controlled. In spite of a very challenging operating environment, we remain optimistic going forward and wish to again thank our colleagues for their efforts in achieving these results.”

Malaga Bank’s total assets decreased by 2% to $1.397 billion at June 30, 2025, compared to $1.425 billion at June 30, 2024. The loan portfolio at June 30, 2025, was $1.209 billion, a decrease of $26.9 million or 2% from June 30, 2024. 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 $718.5 million as of June 30, 2025, a $22.0 million decrease from $740.5 million at June 30, 2024. Wholesale deposits increased $31.9 million or 18% from $174.6 million at June 30, 2024, to $206.5 million at June 30, 2025. Wholesale deposits were primarily comprised of $155.5 million brokered long-term certificates of deposits and $51.0 million State of California certificates of deposits as of June 30, 2025. FHLB borrowings decreased $55.0 million or 20% from $280.0 million at June 30, 2024, to $225.0 million at June 30, 2025. The decrease in FHLB borrowings is an interest rate risk management strategy related to the decrease in net loan growth.

As of June 30, 2025, 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 16.57% and 28.92%, respectively, at June 30, 2025, significantly exceeding the minimum “well-capitalized” requirements of 5% and 10%, respectively.

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 fifteen 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 70th consecutive quarter as of March 2025. Since 1985, Malaga Bank has been delivering competitive banking services to residents and businesses of South Bay, including real estate loan products custom-tailored to consumers and investors. As the largest community bank in 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.

Contact:	Randy Bowers
	Chairman of the Board, President, and Chief Executive Officer
	Malaga Financial Corporation
	310-375-9000
	rbowers@malagabank.com

FAQ

What was Malaga Financial's (MLGF) earnings per share for Q2 2025?

Malaga Financial reported $0.59 basic and fully diluted earnings per share for Q2 2025, compared to $0.61 in Q2 2024.

How did Malaga Financial's (MLGF) total assets change in Q2 2025?

Total assets decreased by 2% to $1.397 billion at June 30, 2025, compared to $1.425 billion at June 30, 2024.

What are Malaga Financial's (MLGF) current capital ratios?

As of June 30, 2025, Malaga Financial's core capital ratio was 16.57% and risk-based capital ratio was 28.92%, significantly exceeding the minimum 'well-capitalized' requirements of 5% and 10% respectively.

How is Malaga Financial's (MLGF) loan quality performing?

Malaga Financial reported excellent credit quality with no 30-day delinquent loans, no loans with deferred payments, and no foreclosed real estate owned as of June 30, 2025.

What caused the decrease in Malaga Financial's (MLGF) H1 2025 earnings?

The $841,000 decrease in net income was primarily due to a $475,000 (net of tax) impact related to the Employment Retention Credit (ERC) received in the prior year.