Malaga Financial Corporation (OTCBB:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended March 31, 2011 was $2,712,000 ($0.46 per share basic and fully diluted), an increase of $272,000 or 11% from net income of $2,440,000 ($0.42 per share basic and fully diluted) for the quarter ended March 31, 2010. Net income increased primarily due to an increase in net interest income. Net income in the first quarter was the highest first quarter net income in the Company’s 26-year history.
The Company did not have any delinquent loans or real estate owned at March 31, 2011. The Company’s allowance for loan losses was $2,866,000 or 0.37% of total loans, at March 31, 2011.
Net interest income totaled $7,167,000 in the first quarter of 2011, up $525,000 or 8% from the first quarter of 2010. This increase resulted from a $10.4 million or 21% increase in net interest-earning assets over interest-bearing liabilities and increase in net interest spread from 3.15% to 3.38%. The increase in the interest rate spread was due to a 0.09% decline in the weighted average yield on interest earning assets, while the weighted average yield on interest-bearing liabilities declined 0.32%.
Operating expenses increased 2% in the first quarter of 2011, to $2,651,000, from $2,603,000 in the first quarter of 2010. Increased costs resulted primarily from a $44,000 increase in compensation expense.Randy C. Bowers, President and CEO, remarked, “We are pleased with our ongoing trend of increased quarterly earnings year over year. Our loan portfolio is performing exceptionally well and we continue to maintain tight control over expenses.” Malaga’s total assets declined slightly to $817 million at March 31, 2011 compared to $829 million at March 31, 2010. The loan portfolio at March 31, 2011 was $776 million, an increase of $8 million or 1% from March 31, 2010. Malaga originates loans principally for its own portfolio and not for sale.