Malaga Financial Corporation (OTCBB:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended June 30, 2012 was $3,117,000 ($0.52 basic and fully diluted earnings per share), an increase of $369,000 or 13% from net income of $2,748,000 ($0.47 basic and $0.46 fully diluted earnings per share) for the quarter ended June 30, 2011. Net income for the six months ended June 30, 2012 was $6,171,000 ($1.04 basic and fully diluted earnings per share) as compared to $5,460,000 ($0.93 basic and $0.92 fully diluted earnings per share) for the six months ended June 30, 2011, a 13% increase. Earnings for the second quarter and first six months were the highest in Malaga Financial’s history for those periods and resulted in an annualized pre-tax return on average equity of 25.26%. At June 30, 2012, the Company reported one delinquent loan and no real estate owned. The delinquent loan is a single family loan with an outstanding principal balance of $2.7 million and was one payment delinquent. The Company’s allowance for loan losses was $2,920,000, or 0.37% of total loans, at June 30, 2012. Net interest income totaled $7,731,000 in the second quarter of 2012, up $606,000 or 9% from the second quarter of 2011. This increase resulted from a $7 million or 1% increase in average interest earning assets to $809 million, and an increase of 0.29% in the interest rate spread to 3.71%. The increase in the interest rate spread was due to a decline in the weighted average cost of funds of 0.53%, which exceeded the 0.24% decline in the weighted average yield on interest earning assets. Operating expenses remained stable with a small decrease of less than 1% in the second quarter of 2012, to $2,577,000 from $2,583,000 in the second quarter of 2011.
Randy C. Bowers, President and CEO, remarked, “As we continue to execute our business plan the results are reflected in another quarter of record earnings. Our pre-tax annualized ROE of over 25% during the quarter allows us to reward our shareholders and employees while also supporting our community both financially and through our volunteer efforts.”Malaga’s total assets reached $833 million at June 30, 2012 compared to $824 million at June 30, 2011. The loan portfolio at June 30, 2012 was $794 million, an increase of $13 million or 2% from June 30, 2011. 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 $509 million as of June 30, 2012, a $22 million or 5% increase from $487 million at June 30, 2011. The retail deposit growth was used to repay wholesale deposits and FHLB borrowings, which decreased $24 million or 10% from $232 million at June 30, 2011 to $208 million at June 30, 2012. The weighted average cost of funds for the second quarter of 2012 was 1.27% versus 1.80% for the second quarter of 2011. As of June 30, 2012, 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 12.87% and 20.95%, respectively, at June 30, 2012, significantly exceeding the minimum “well capitalized” requirements of 5% and 10% respectively. Mr. Bowers concluded, “We are pleased that our performance in 2011 resulted in our being ranked #1 of the 100 largest publicly traded thrifts in the United States by SNL Financial. This is the 3 rd consecutive year that we have received this recognition.” Malaga Bank, a subsidiary of MFC, is a full-service community bank headquartered on the Palos Verdes Peninsula with five offices located in the South Bay area of Los Angeles. Since 1985 Malaga 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.