Business & Finance
Business and Finance
Business and Finance
Tue, February 10, 2009
Mon, February 9, 2009 Malaga Financial Corporation Reports Record Earnings With a 30% Increase for Fourth Quarter 2008
PALOS VERDES ESTATES, Calif.--([ BUSINESS WIRE ])--Malaga Financial Corporation (OTCBB:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the fourth quarter was $1,931,000 ($0.34 per share basic and fully diluted) compared to $1,490,000 ($0.26 per share basic and $0.25 per share fully diluted) for the fourth quarter of 2007, an increase of 30%. Net income for the year ended December 31, 2008 was $7,077,000 ($1.24 per share basic and fully diluted), an increase of $1,110,000 or 19% from net income of $5,967,000 ($1.02 per share basic and $1.01 per share fully diluted) for the year ended December 31, 2007.
Net income increased as a result primarily of a $3,270,000 increase in net interest income due to continued growth in interest earning assets and an improvement in interest rate spread. Average interest-earning assets increased $36 million and Malaga's interest rate spread increased from 2.29% in 2007 to 2.69% in 2008. The interest rate spread increased as declining market interest rates lowered Malaga's cost of funds faster than decreases in the weighted average rates earned on its adjustable rate assets.
Malaga's provision for loan losses was $329,000 in 2008 as compared to $124,000 in 2007. The increased provision was attributable to net loan growth of $59 million in 2008 versus $28 million in 2007 and the weakening economic environment. Malaga's allowance for loan losses was $2.7 million, or 0.38% of loans, at December 31, 2008. Malaga had no loan losses in 2008. Non-performing assets at December 31, 2008 consisted of one non-accrual consumer loan in the amount of $9,000.
Operating expenses increased 14% from $7,804,000 in 2007 to $8,924,000 in 2008. Salary and related benefits increased $749,000 due primarily to overall higher employee benefits cost of $140,000 and higher salary expenses of $600,000 as a result of an increase in number of employees primarily related to the new branch in San Pedro which opened in 2008. Premise and occupancy related expenses increased $311,000 primarily due to the new San Pedro branch. An additional factor contributing to higher operating expenses was an $80,000 increase in FDIC insurance premiums.
Randy C. Bowers, President and CEO of Malaga Bank, remarked, "We are pleased to report that in spite of an extremely challenging year for the banking industry, we were able to post record earnings for the fourth quarter and year 2008. We will continue to lend to creditworthy borrowers in order to grow. Due to our already strong capital position, increased earnings and lack of non-performing assets, we elected not to apply for capital augmentation of up to three percent of risk weighted assets provided by the Treasury Department for healthy institutions under the Capital Purchase Program (CPP)".
Malaga's total assets reached $764 million at December 31, 2008 compared to $704 million at December 31, 2007. The loan portfolio at December 31, 2008 was $726 million, an increase of $59 million or 9% from December 31, 2007. Malaga originates loans principally for its own portfolio and not for sale. At December 31, 2008, the loan portfolio was comprised of the following types of loans outstanding: multi-family loans – 74%; single family residential loans – 14%; commercial real estate loans– 7%; home equity lines of credit – 3% and commercial and other loans- 2%.
Net loan growth of $59 million in 2008 was funded primarily by an $18 million increase in deposits and $36 million increase in FHLB advances.
Total deposits were $369 million at December 31, 2008, compared to $351 million a year ago. The net increase in total deposits was comprised of increases of $32 million in money market accounts and $6 million in demand deposits offset by a decrease in certificates of deposit of $20 million.
As of December 31, 2008, 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 8.49% and 13.74%, respectively, at December 31, 2008. In the fourth quarter, Malaga Financial paid a quarterly dividend for the 17th consecutive quarter.
Mr. Bowers concluded, "In this volatile environment, our customers and the community seek out strong stable banks as their banking partner. Malaga Bank is that bank and has received a five-star rating, the highest rating available from Bauer Financial. We will continue to manage the bank in the prudent manner that has provided our shareholders, employees and the community a safe place to bank for over 23 years".
Malaga Bank, a subsidiary of MFC, is a full-service community bank headquartered on the Palos Verdes Peninsula with branch offices located on the Peninsula, in Torrance and San Pedro. For over 23 years, 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 ].
