Malaga Financial Corporation Reports Strong First Quarter Earnings

Rhea-AI Summary

Malaga Financial (OTCPink:MLGF) reported Q1 2025 net income of $5.4 million ($0.57 per share), marking a 10% decrease from $6.0 million ($0.64 per share) in Q1 2024. The company's annualized return on average equity was 10.16% and return on average assets was 1.55%, down from 12.06% and 1.64% respectively.

Key financial metrics include:

• Net interest income: $11.1 million, down 0.39% year-over-year
• Total assets: $1.381 billion, decreased from $1.456 billion
• Loan portfolio: $1.226 billion, down 3%
• Retail deposits: $714 million, decreased by $36 million
• Zero delinquent loans or foreclosed real estate

The bank maintains strong capital ratios with core capital at 16.21% and risk-based capital at 28.63%, well above the minimum requirements of 5% and 10% respectively.

Positive

• Zero delinquent loans and foreclosed real estate, indicating strong credit quality
• Well-capitalized status with core capital ratio of 16.21% and risk-based capital ratio of 28.63%
• Interest spread increased by 0.12% to 2.98%

Negative

• Net income decreased 10% year-over-year to $5.4 million
• Total assets declined by $75 million to $1.381 billion
• Retail deposits decreased by $36 million due to deposit outflows
• Loan portfolio decreased by 3% year-over-year
• Operating expenses increased by 3% to $3.69 million

PALOS VERDES ESTATES, Calif., April 15, 2025 (GLOBE NEWSWIRE) -- Malaga Financial Corporation “Company” (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended March 31, 2025 was $5,404,000 ($0.57 basic and fully diluted earnings per share), a decrease of $608,000 or 10% from net income of $6,012,000 ($0.64 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2024) for the quarter ended March 31, 2024. For the first quarter of 2025, the Company’s annualized return on average equity was 10.16% and the annualized return on average assets was 1.55%, as compared to 12.06% and 1.64%, respectively, for the same period in 2024.

The Company did not have any delinquent loans or foreclosed real estate owned at March 31, 2025. The Company’s allowance for credit losses was $3,730,000, or 0.30% of total loans, at March 31, 2025.

Net interest income totaled $11,129,000 in the first quarter of 2025, a decrease of $44,000 or 0.39% from the first quarter of 2024. This decrease is due to an overall decrease in average-interest earning assets of $76.4 million offset by an increase of 0.12% in the interest spread to 2.98%. The increase in interest spread is primarily attributable to a 0.12% increase in yield on average interest-earning assets as the average cost of funds was unchanged.

In the first quarter of 2025, the Company recorded $13,000 in expenses (net of tax) related to the Employment Retention Credit (ERC) versus $494,000 in income (net of tax) in the first quarter of 2024. The ERC is a credit against certain employment taxes for eligible employers based on certain wages paid after March 12, 2020, through September 30, 2021. The Company qualified for the ERC based on the partial suspension of our business due to government orders related to Covid-19 pandemic.

In the first quarter of 2025, operating expenses increased 3% to $3,692,000 from $3,581,000 in the first quarter of 2024. The increase is primarily attributed to increases in compensation of $55,000, and general and administrative expenses of $53,000.

Randy C. Bowers, Chairman, President and CEO, commented, “First quarter 2025 presented continued volatility with increasing uncertainty in both economic markets and the political environment. We are generally pleased with our results for the period and note the year-over-year impact of the 2024 ERC credit. Credit quality remains excellent, net interest spread has improved and expenses are well controlled. We anticipate the rest of the year to be challenging and are preparing to address changes as they become apparent. We appreciate the efforts of our colleagues and loyalty of our shareholders as we continue to adapt in this difficult environment.”

Malaga’s total assets decreased to $1.381 billion at March 31, 2025, compared to $1.456 billion at March 31, 2024. The loan portfolio at March 31, 2025, was $1.226 billion, a decrease of $37 million or 3% from March 31, 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 $714 million as of March 31, 2025, a $36 million decrease from $750 million at March 31, 2024. Much of this outflow was a result of depositors seeking higher returns in alternative investments. Wholesale deposits, comprised mainly of State of California certificates of deposit and longer-term brokered deposits, totaled $226 million as of March 31, 2025, a $57 million increase from $169 million at March 31, 2024. FHLB borrowings decreased $110 million or 35% from $310 million at March 31, 2024, to $200 million at March 31, 2025. Malaga Bank utilizes FHLB borrowings and longer-term wholesale deposits as a tool to manage interest rate risk associated with growth of the loan portfolio.

As of March 31, 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 16.21% and 28.63%, respectively, at March 31, 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 69th consecutive quarter as of December 2024. 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.

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

FAQ

What was MLGF's earnings per share in Q1 2025?

MLGF reported $0.57 basic and fully diluted earnings per share in Q1 2025, down from $0.64 in Q1 2024.

How much did Malaga Financial's loan portfolio decrease in Q1 2025?

The loan portfolio decreased by $37 million or 3% to $1.226 billion compared to March 31, 2024.

What are MLGF's current capital ratios as of Q1 2025?

Core capital ratio was 16.21% and risk-based capital ratio was 28.63%, both significantly above 'well-capitalized' requirements.

How did MLGF's retail deposits change in Q1 2025?

Retail deposits decreased by $36 million to $714 million, mainly due to depositors seeking higher returns elsewhere.

What was MLGF's credit quality status in Q1 2025?

The bank reported zero delinquent loans or foreclosed real estate, with an allowance for credit losses of $3.73 million (0.30% of total loans).