Malaga Financial Corporation (OTCBB:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended March 31, 2012 was $3,054,000 ($0.52 per share basic and fully diluted), an increase of $342,000 or 13% from net income of $2,712,000 ($0.46 per share basic and fully diluted) for the quarter ended March 31, 2011. Net income increased primarily due to an increase in net interest income. Net income in the first quarter was the highest quarterly net income in the Company’s 27-year history and resulted in a pre-tax return on average equity of 25.35%.
The Company did not have any delinquent loans or real estate owned at March 31, 2012. The Company’s allowance for loan losses was $2,920,000, or 0.37% of total loans, at March 31, 2012.
Net interest income totaled $7,655,000 in the first quarter of 2012, up $488,000 or 7% from the first quarter of 2011. This increase resulted from a $9.1 million or 15% increase in net interest-earning assets over interest-bearing liabilities and increase in the interest spread from 3.38% to 3.61%. The increase in the interest spread was due to a 0.28% decline in the weighted average yield on interest earning assets, while the weighted average rate on interest-bearing liabilities declined 0.51%.
Operating expenses decreased 3% in the first quarter of 2012, to $2,563,000 from $2,651,000 in the first quarter of 2011. Decreased costs resulted primarily from a $65,000 decrease in deposit insurance premiums.Randy C. Bowers, President and CEO, remarked, “We are pleased to report record quarterly earnings in spite of continued weakness in the economy. Our loan portfolio is performing exceptionally well and we continue to maintain tight control over expenses.” Malaga’s total assets increased slightly to $833 million at March 31, 2012 compared to $817 million at March 31, 2011. The loan portfolio at March 31, 2012 was $799 million, an increase of $23 million or 3% from March 31, 2011. Malaga originates loans principally for its own portfolio and not for sale.