PALOS VERDES ESTATES, Calif., Jan. 30, 2026 (GLOBE NEWSWIRE) -- Malaga Financial Corporation, "Company" (OTCIQ:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the twelve months ended December 31, 2025 was $21,554,000 ($2.18 basic and fully diluted earnings per share) compared to $22,651,000 ($2.29 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 13, 2025) for the twelve months ended December 31, 2024, a 5% decrease. Net income for the quarter ended December 31, 2025, was $5,123,000 ($0.52 basic and fully diluted earnings per share), a decrease of $189,000 or 4% from net income of $5,312,000 for the quarter ended December 31, 2024 ($0.54 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 13, 2025). For the twelve months ended December 31, 2025, the Company's annualized return on average equity was 9.92% and the annualized return on average assets was 1.53%, as compared to 11.08% and 1.58%, respectively, for the same period in 2024.
The Company did not have any delinquent loans over 30 days, or real estate owned at December 31, 2025. The Company's allowance for credit losses was $3,811,000, or 0.31% of total loans, at December 31, 2025.
For 2025, net interest income totaled $44,292,000, a decrease of $21,000 from 2024. This decrease reflected lower average interest-earning assets of $22.5 million offset by an increase of 0.02% in the interest rate spread to 2.94%. The increase in the interest rate spread is primarily attributable to an increase in the yield on average interest-earning assets of 0.07% offset by an increase in the average cost of funds of 0.05%.
The Company recorded a credit loss expense of $35,000 in 2025 versus a credit loss recovery of $137,000 in 2024. The expense versus recovery for credit loss is primarily due to a net decrease in loans of $1.9 million offset by minor changes to qualitative factors in 2025 versus net decrease in loans of $30.1 million in 2024. There were no loan charge-offs in 2025 or 2024. The Company's loan portfolio continues to exhibit excellent credit quality.
Other operating income, which consists primarily of deposit related fees, increased $16,000 from 2024 to 2025.
The Company recorded non-operating income of $89,000 in 2025 and $500,000 in 2024 related to Employment Retention Credit (ERC) net of tax. 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 increased $865,000 or 6% to $14,816,000 in 2025 from $13,951,000 in 2024. The increase is primarily attributed to an increase in general and administrative expenses of $589,000, mainly due to deposit-related fraud.
Randy C. Bowers, Chairman, President and CEO, remarked, "In 2025 we continued to face a difficult operating environment with great uncertainty resulting in elevated volatility in the markets. Loan demand continued to be weak as potential borrowers anticipated further reductions in rates while competition for deposits was aggressive. Additionally, the banking industry experienced a significant increase in attempted fraud during the year. We are generally satisfied that in spite of these challenges we were able to report stable earnings for the full year with strong and increasing capital levels to support future growth. We wish to thank our colleagues for their contribution to our success and our shareholders for their loyalty and support."
Malaga Bank's total assets increased to $1.435 billion at December 31, 2025, compared to $1.413 billion at December 31, 2024, primarily due to an increase in cash and cash equivalents of $25.4 million, offset by a decrease of $1.9 million in loans and $1.5 million in other assets. The loan portfolio at December 31, 2025, was $1.237 billion, a decrease of $1.9 million from December 31, 2024. 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 $718.8 million as of December 31, 2025, a $13.3 million or 2% increase from $705.5 million at December 31, 2024. Wholesale deposits were primarily comprised of State of California certificates of deposit in the amount of $51.0 million and $166.7 million of brokered long-term certificates of deposit at December 31, 2025. Brokered long-term certificates of deposit which are utilized to manage interest rate risk, decreased $8.6 million or 4% from $175.3 million at December 31, 2024. FHLB borrowings were $250.0 million as of December 31, 2025, a $5.0 million increase from $245.0 million at December 31, 2024.
As of December 31, 2025, 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 16.31% and 29.38%, respectively, at December 31, 2025, 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 2026, and a special stock dividend of 5% per share payable on December 31, 2025, to shareholders of record as of December 19, 2025.
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 72nd consecutive quarter as of September 2025. 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.
| Contact: | Randy Bowers Chairman, President and Chief Executive Officer Malaga Financial Corporation 310-375-9000 rbowers@malagabank.com |
