Malaga Financial Corp. Reports First Nine Months 2025 Earnings

Positive

Core capital ratio of 16.47%

Risk-based capital ratio of 29.72%

Total assets increased 2% to $1.428B

Wholesale deposits up 21% to $211.2M

Annualized ROAE of 10.15%

Negative

Net income down 5% YoY for nine months

Loan portfolio declined 2% to $1.212B

Retail deposits decreased $7.8M from prior year

Quarterly net income down 1% YoY

10/09/2025 – 01:11 PM

PALOS VERDES ESTATES, Calif., Oct. 09, 2025 (GLOBE NEWSWIRE) — Malaga Financial Corporation (OTCIQ:MLGF), the parent company of Malaga Bank FSB, today reported its financial results for the nine months ended September 30, 2025. The community bank holding company posted net income of $16.431 million, translating to $1.74 per basic and fully diluted share. This figure represents a 5% decrease compared to the $17.339 million ($1.84 per share, as adjusted for the stock dividend declared on November 15, 2024) reported for the same period in 2024. The year-over-year decline is partially attributed to a one-time Employment Retention Credit (ERC) of $500,000 recognized as non-operating income in 2024, creating a tougher comparative base.

Net income for the third quarter ended September 30, 2025, stood at $5.481 million ($0.58 per basic and fully diluted share), a marginal decrease of 1% from the $5.548 million ($0.59 per basic and fully diluted share, as adjusted) recorded in the corresponding quarter of 2024. Despite the slight dip in net income, Malaga Financial’s annualized return on average equity (ROAE) for the first nine months of 2025 was a robust 10.15%, while the annualized return on average assets (ROAA) reached 1.57%.

The bank’s performance reflects a nuanced interplay of factors. Net interest income totaled $10.929 million in the third quarter of 2025, a 1% decrease year-over-year. This was mainly due to a compression of the interest rate spread from 2.95% to 2.88%, partially offset by an $18.2 million increase in interest-earning assets over interest-bearing liabilities. The margin compression stemmed from a higher rate paid on average interest-bearing liabilities, outpacing the increase in yield on average interest-earning assets. The current macroeconomic environment, characterized by rising interest rates, presents both opportunities and challenges for community banks like Malaga, requiring careful management of asset and liability portfolios.

Other operating income saw a marginal increase of $1,000 in the third quarter of 2025, reaching $218,000. The company also benefited from an IRS refund of $930,000 related to the 2024 ERC, contributing $145,000 in related net interest income.

Operating expenses experienced a modest 1% increase, rising to $3.445 million in the third quarter of 2025. The rise was primarily due to increased depreciation and amortization expenses, attributed to a bank-wide computer replacement initiative.

Asset quality remained strong, with no delinquent loans or foreclosed real estate owned as of September 30, 2025. The company’s allowance for loan losses stood at $3.703 million, representing 0.31% of total loans.

Randy C. Bowers, Chairman, President and CEO of Malaga Financial, acknowledged the challenging operating environment but expressed optimism about the company’s ability to achieve favorable results. “We are pleased to report earnings for the first nine months of 2025 remain strong and stable, posting a modest decrease over the prior year, especially considering the rapidly changing operating environment and impact of the 2024 ERC credit in prior year earnings,” he stated. “Asset quality remains excellent, capital levels are strong, and expenses are well controlled. We anticipate the remainder of 2025 and 2026 will be challenging, however are reasonably optimistic regarding our ability to continue to achieve favorable results.”

Total assets increased by 2% to $1.428 billion at September 30, 2025, compared to $1.404 billion at the same time last year. The loan portfolio totaled $1.212 billion, a 2% decrease from September 30, 2024. Malaga Bank primarily originates loans for its own portfolio rather than for sale, reflecting a long-term investment strategy.

On the funding side, retail deposits decreased slightly to $723.5 million, while wholesale deposits increased significantly by 21% to $211.2 million. The company also strategically manages its borrowing mix, decreasing FHLB borrowings by 8% to $240.0 million. The diversification of funding sources is crucial for managing interest rate risk and maintaining balance sheet stability.

Malaga Bank continues to maintain strong capital ratios, significantly exceeding regulatory requirements. As of September 30, 2025, the core capital ratio was 16.47% and the risk-based capital ratio was 29.72%. These figures are substantially above the minimum “well-capitalized” requirements of 5% and 10%, respectively, underscoring the bank’s financial strength and resilience. The bank’s “well-capitalized” designation provides it with more flexibility in terms of potential growth and acquisitions.

Malaga Bank, a subsidiary of Malaga Financial Corporation, operates as a full-service community bank with six offices in the South Bay area of Los Angeles. It’s been consistently recognized for its stability, receiving Bauer Financial’s top 5-Star rating for 71 consecutive quarters as of June 2025.

What were Malaga Financial (MLGF) nine-month 2025 earnings per share?

Nine months ended Sept 30, 2025 EPS was $1.74 basic and diluted.

Why did Malaga (MLGF) net income fall 5% in first nine months of 2025?

The decrease reflects comparatives including a $500K one-time 2024 ERC credit.

What are Malaga Bank’s capital ratios reported on Sept 30, 2025 (MLGF)?

Core capital ratio was 16.47% and risk-based capital ratio 29.72%.

How did Malaga Financial’s (MLGF) deposits change through Sept 30, 2025?

Retail deposits fell to $723.5M while wholesale deposits rose to $211.2M.

What was Malaga Financial’s (MLGF) loan portfolio size on Sept 30, 2025?

Total loans were $1.212B, a 2% decrease year-over-year.

Is Malaga Bank considered well-capitalized on Sept 30, 2025 (MLGF)?

Yes; the bank met regulatory thresholds and was designated well-capitalized.

What were Malaga Financial’s (MLGF) annualized returns through Sept 30, 2025?

Annualized return on average equity was 10.15% and on average assets 1.57%.