PALOS VERDES ESTATES, Calif., Jan. 22, 2025 (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, 2024 was $22,651,000 ($2.40 basic and fully diluted earnings per share) compared to $22,981,000 ($2.44 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 14, 2024) for the twelve months ended December 31, 2023, a 1% decrease. Net income for the quarter ended December 31, 2024, was $5,312,000 ($0.56 basic and fully diluted earnings per share), a decrease of $471,000 or 8% from net income of $5,783,000 for the quarter ended December 31, 2023 ($0.61 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 14, 2024). For the twelve months ended December 31, 2024, the Company’s annualized return on average equity was 11.08% and the annualized return on average assets was 1.58%, as compared to 12.08% and 1.52%, respectively, for the same period in 2023.
The Company did not have any delinquent loans over 30 days or real estate owned at December 31, 2024. The Company’s allowance for credit losses was $3,775,000, or 0.30% of total loans, at December 31, 2024.
For 2024, net interest income totaled $44,313,000, a decrease of $1,621,000 or 4% from 2023. This decrease reflected lower average interest-earning assets of $90.7 million offset by an increase of 0.01% in the interest rate spread to 2.92%. The increase in the interest rate spread is primarily attributable to an increase in the yield on average interest-earning assets of 0.36% offset by an increase in the average cost of funds of 0.35%.
The Company recorded a credit loss recovery of $137,000 in 2024 versus a credit loss expense of $73,000 in 2023. The recovery versus expense for credit loss is primarily due to a net decrease in loans of $30.3 million in 2024 versus net loan growth of $18.8 million in 2023. The Company’s loan portfolio continues to exhibit excellent credit quality.
Other operating income decreased 2% in 2024 to $949,000 from $972,000 in 2023. Income decreased primarily due to deposit-related fees.
The Company recorded non-operating income of $695,000 related to Employment Retention Credit (ERC) in 2024. The tax effects of the ERC increased tax expense by $195,000 with total net ERC income of $500,000 reported as non-operating income. The Company qualified for the ERC based on the partial suspension of its business due to government orders related to the Covid-19 pandemic. 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.
Operating expenses decreased $256,000 or 2% to $13,951,000 in 2024 from $14,207,000 in 2023. The decrease is primarily attributed to decreases in general and administrative expenses of $168,000 and check fraud-related expenses of $88,000.
Randy C. Bowers, Chairman, President and CEO, remarked, “2024 was an extremely challenging year as we continued to deal with higher interest rates and inflationary pressure on expenses. Additionally, we encountered exceptionally weak loan demand and heightened competition for deposits from large banks, pushing the cost of funds higher. We offset our decrease in assets with stable net interest rate spread and decrease in operating expenses. We are pleased that in spite of these issues we were able to report strong annual earnings for the full year. We anticipate that the operating environment in 2025 will continue to be difficult with a high degree of uncertainty in a variety of areas. We are considering the various scenarios as we plan for 2025 and going forward.”
Malaga Bank’s total assets decreased to $1.413 billion at December 31, 2024, compared to $1.475 billion at December 31, 2023, and primarily due to a decrease in cash and cash equivalents of $34.1 million and a decrease of $30.1 million in the loan portfolio. The loan portfolio at December 31, 2024, was $1.239 billion, a decrease of $30.1 million from December 31, 2023. 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 $705.5 million as of December 31, 2024, a $59.4 million or 8% decrease from $764.9 million at December 31, 2023. This decrease was consistent with an industry-wide trend as depositors moved excess liquidity into alternate investments such as real estate, stock market, treasury securities and to pay down debt. Wholesale deposits, primarily brokered long-term certificates of deposit which are utilized to manage interest rate risk, increased $59.1 million or 35% from $167.2 million at December 31, 2023. Wholesale deposits were primarily comprised of State of California certificates of deposit in the amount of $51.0 million and $175.3 million of brokered long-term certificates of deposit at December 31, 2024. FHLB borrowings were $245.0 million as of December 31, 2024, a $75.0 million decrease from $320.0 million at December 31, 2023.
As of December 31, 2024, 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 15.94% and 28.07%, respectively, at December 31, 2024, 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 2025, and a special stock dividend of 5% per share payable on December 31, 2024, to shareholders of record as of December 20, 2024.
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 68thconsecutive quarter as of September 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.
