Malaga Financial Corporation Reports Earnings for the First Nine Months of 2025
MWN-AI** Summary
Malaga Financial Corporation (OTCIQ:MLGF), the parent company of Malaga Bank FSB, announced its earnings for the first nine months of 2025, reporting a net income of $16.43 million, translating to $1.74 per share. This reflects a decrease of approximately 5% from the net income of $17.34 million ($1.84 per share) during the same period in 2024, mainly due to the absence of a one-time Employment Retention Credit (ERC) that had added $500,000 to last year’s figures. For Q3 2025, the company reported a slight drop in net income to $5.48 million ($0.58 per share) from $5.55 million ($0.59 per share) in Q3 2024.
The annualized return on average equity for the first nine months was 10.15%, with an annualized return on average assets of 1.57%. Net interest income for Q3 decreased by 1%, totaling $10.93 million, primarily influenced by a decrease in the interest rate spread from 2.95% to 2.88%. Operating expenses saw a minor increase of 1%, primarily from higher depreciation measures related to equipment upgrades.
Malaga Financial maintained strong asset quality, reporting no delinquent loans or foreclosed properties. The company's allowance for loan losses stood at $3.7 million, representing 0.31% of total loans. As of September 30, 2025, total assets rose 2% to $1.43 billion, while the loan portfolio decreased by 2% to $1.21 billion.
Chairman Randy C. Bowers expressed optimism despite the challenges ahead, highlighting the bank's robust capital levels and commitment to maintaining superior customer service in the competitive South Bay area. The bank has consistently received a top 5-star rating from Bauer Financial for its financial strength, marking ongoing recognition in the industry.
MWN-AI** Analysis
Malaga Financial Corporation (OTCIQ: MLGF) reported its earnings for the first nine months of 2025, revealing a slight decline in net income to $16.43 million, a 5% decrease from the previous year. This decline was partially influenced by the one-time Employment Retention Credit (ERC) benefit received in 2024. Despite the dip, earnings per share remained robust at $1.74, indicating ongoing value for shareholders.
A notable aspect is the company’s annualized return on equity of 10.15%, which reflects solid profitability metrics, although the return on assets at 1.57% suggests a slight pressure on asset efficiency. The interest income landscape presents challenges, as net interest income has also decreased due to a narrowing interest rate spread from 2.95% to 2.88%. This shift was compounded by rising costs of interest-bearing liabilities, highlighting a crucial area for management to address moving forward.
The overall solid asset quality remains a positive signal, with zero delinquent loans and a low allowance for loan losses at 0.31% of total loans. Furthermore, Malaga's compliance with regulatory capital requirements as a well-capitalized institution provides a layer of safety in a potentially volatile environment.
In terms of deposits, while retail deposits showed a mild decline, wholesale deposits increased markedly, indicating a strategic shift to bolster liquidity and manage interest rate risk. Institutional investors may want to watch how this blend evolves, as it could indicate future borrowing strategies or shifts in funding tactics.
Given the current earnings results, prospective and existing investors should adopt a cautious yet optimistic stance. Monitoring interest rate developments, operational efficiencies, and continued adherence to stringent capital requirements will be vital as Malaga navigates potential market headwinds in the upcoming quarters. Overall, the company's fundamentals appear solid, deserving consideration within a diversified portfolio.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
PALOS VERDES ESTATES, Calif., Oct. 09, 2025 (GLOBE NEWSWIRE) -- Malaga Financial Corporation “Company” (OTCIQ:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the nine months ended September 30, 2025 was $16,431,000 ($1.74 basic and fully diluted earnings per share) compared to $17,339,000 ($1.84 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2024) for the same period ended September 30, 2024, a decrease of $908,000 or 5%. This decrease was in part a result of the one-time Employment Retention Credit (ERC) credit of $500,000 reported as non-operating income in 2024. Net income for the quarter ended September 30, 2025, was $5,481,000 ($0.58 basic and fully diluted earnings per share), a decrease of $67,000 or 1% from net income of $5,548,000 ($0.59 basic and fully diluted earnings per share, as adjusted for the stock dividend declared on November 15, 2024) for the quarter ended September 30, 2024. For the first nine months of 2025, the Company’s annualized return on average equity was 10.15% and the annualized return on average assets was 1.57%.
Net interest income totaled $10,929,000 in the third quarter of 2025, a decrease of $115,000 or 1% from the same period in 2024. This resulted primarily from a decrease in the interest rate spread from 2.95% to 2.88%, offset partially by an increase in excess of interest-earning assets over interest-bearing liabilities of $18.2 million. The decrease in the interest rate spread is primarily attributable to an increase of 0.10% in rate paid on average interest-bearing liabilities offset by an increase of 0.03% in yield on average interest-earning assets.
Other operating income increased $1,000 in the third quarter of 2025 to $218,000 from $217,000 for the same period in 2024.
In the third quarter of 2025, the Company collected IRS refund of $930,000 related to the 2024 ERC and recorded $145,000 in related net interest income.
Operating expenses increased 1% in the third quarter of 2025 to $3,445,000 from $3,427,000 in the third quarter of 2024. The increase is primarily attributed to an increase in depreciation and amortization of $19,000 due to bank-wide replacement of computers.
The Company had no delinquent loans and no foreclosed real estate owned at September 30, 2025. The Company’s allowance for loan losses was $3,703,000, or 0.31% of total loans, at September 30, 2025.
Randy C. Bowers, Chairman, President and CEO, commented, “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. 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.”
The Company’s total assets increased by 2% to $1.428 billion at September 30, 2025, compared to $1.404 billion at September 30, 2024. The loan portfolio at September 30, 2025, was $1.212 billion, a decrease of $20.3 million or 2% from September 30, 2024. The Company originates loans principally for its own portfolio and not for sale.
The Company funds its assets with a mix of retail deposits, wholesale deposits and FHLB borrowings. Retail deposits totaled $723.5 million as of September 30, 2025, a $7.8 million decrease from $731.3 million at September 30, 2024. Wholesale deposits increased $36.8 million or 21% from $174.4 million at September 30, 2024, to $211.2 million at September 30, 2025. Wholesale deposits are primarily comprised of State of California certificates of deposit in the amount of $51.0 million and $160.2 million of long-term brokered certificates of deposits. FHLB borrowings decreased $20.0 million or 8% from $260.0 million at September 30, 2024, to $240.0 million at September 30, 2025. The Company utilizes long-term certificates of deposit (retail and wholesale) and FHLB borrowings to manage interest rate risk.
As of September 30, 2025, 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 16.47% and 29.72%, respectively, significantly exceeding the minimum “well-capitalized” requirements of 5% and 10%, respectively.
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 71 st consecutive quarter as of June 2025. 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 .
| Contact: | Randy Bowers |
| Chairman of the Board, President and Chief Executive Officer | |
| Malaga Financial Corporation | |
| 310-375-9000 | |
| rbowers@malagabank.com |
FAQ**
What factors contributed to the decrease in net income for Malaga Financial Corp MLGF in the first nine months of 2025 compared to the same period in 2024, especially considering the one-time Employment Retention Credit?
How does Malaga Financial Corp MLGF plan to address the challenges anticipated in 20and 20while maintaining strong capital levels and asset quality?
What strategies is Malaga Financial Corp MLGF employing to manage the decline in retail deposits and the increase in wholesale deposits as reported for September 30, 2025?
Given the significant compliance with capital requirements, what are Malaga Financial Corp MLGF’s plans for growth or expansion in the competitive South Bay banking market?
**MWN-AI FAQ is based on asking OpenAI questions about Malaga Financial Corp (OTC: MLGF).
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