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Malaga Financial Corporation Reports Record Earnings and 25% Dividend Increase

^{Published on 2010-07-14 18:00:42 - Market Wire}
 

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 quarter ended June 30, 2010 was $2,632,000 ($0.45 basic and $0.44 fully diluted earnings per share), an increase of $414,000 or 19% from net income of $2,218,000 ($0.39 basic and $0.38 fully diluted earnings per share) for the quarter ended June 30, 2009. Net income for the six months ended June 30, 2010 was $5,072,000 ($0.87 basic and $0.86 fully diluted earnings per share) as compared to $4,629,000 ($0.81 basic and $0.80 fully diluted earnings per share) for the six months ended June 30, 2009, a 10% increase. Earnings for the second quarter and first six months were the highest in Malaga Financiala™s history for those periods.

"We are pleased to announce a 25% quarterly dividend increase which is in addition to the increase in our share price during the second quarter. This rewards our loyal shareholders, many who have been with us for 25 years."

The Company also reported its Board of Directors had elected to increase the Companya™s regular quarterly dividend from $.08 per share to $.10 per share to shareholders of record on July 12, 2010.

Net income increased primarily due to continued growth in interest earning assets and improvement in the interest rate spread.

The Company did not have any delinquent loans or real estate ownedat June 30, 2010. The Companya™s allowance for loan losses was $2,862,000, or 0.37% of total loans, at June 30, 2010.

Net interest income totaled $6,887,000 in the second quarter of 2010, up $447,000 or 7% from the second quarter of 2009. This increase resulted from a $25 million or 3% increase in average interest earning assets to $797 million, and increase of 0.14% in the interest rate spread to 3.32%. The net increase in the interest rate spread was due to a decline in the weighted average cost of funds of 0.31%, which exceeded the 0.17% decline in the weighted average yield on interest earning assets.

Operating expenses decreased 8% in the second quarter of 2010, to $2,562,000 from $2,783,000 in the second quarter of 2009. The decrease is primarily attributable to $324,000 decline in FDIC insurance premiums related to a special assessment of approximately $355,000 in the second quarter 2009.

Randy C. Bowers, President and CEO, remarked, aWe are pleased to announce a 25% quarterly dividend increase which is in addition to the increase in our share price during the second quarter. This rewards our loyal shareholders, many who have been with us for 25 years.a

Malagaa™s total assets reached $818 million at June 30, 2010 compared to $793 million at June 30, 2009. The loan portfolio at June 30, 2010 was $771 million, an increase of $12 million or 2% from June 30, 2009. 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 $459 million as of June 30, 2010, a $126 million or 38% increase from $333 million at June 30, 2009. The robust retail deposit growth was used to repay wholesale deposits and FHLB borrowings, which decreased $118 million or 31% from $382 million at June 30, 2009 to $264 million at June 30, 2010. The weighted average cost of funds for the second quarter of 2010 was 2.08% versus 2.39% for the second quarter of 2009.

As of June 30, 2010, Malaga Bank was in compliance with all applicable regulatory capital requirements and was deemed awell-capitalizeda under applicable regulations. Core capital and risk-based capital ratios were 10.96% and 18.23%, respectively, at June 30, 2010, significantly exceeding the minimum awell capitalizeda requirements of 5% and 10% respectively.

Mr. Bowers concluded, aWe are pleased to have been recognized by SNL Financial, an information services company, as the top-performing thrift in the United States for the 12-month period ended March 31, 2010. Our record profitability can be attributed to the prudent guidance of our board of directors along with the dedicated efforts of our staff to continue to provide our customers with exceptional alocala service.a

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 25 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 Banka™s web site is located at [ www.malagabank.com ].