Malaga Financial Corporation Reports Strong Nine-Month Earnings Growth
News related to:Malaga Financial Corporation · 3 min read
PALOS VERDES ESTATES, Calif., Oct. 16, 2026 /CourierPR/ -- Malaga Financial Corporation, the parent company of Malaga Bank FSB, reported record earnings for the third quarter and the first nine months of 2026. For the nine months ended September 30, 2026, the company's net income was $18,028,000, or $1.82 per share, marking a 10% increase from the $16,431,000, or $1.66 per share, reported for the same period in 2025. The company's annualized return on average equity was 10.52%, and the annualized return on average assets was 1.66%.
The $1,597,000 increase in year-to-date net income was primarily driven by a $2,631,000 increase in net interest income after provision for loan losses, a $307,000 identity fraud recovery, and a $622,000 increase in other operating expenses, partially offset by a $670,000 increase in income taxes. For the quarter ended September 30, 2026, the company's net income was $6,270,000, or $0.63 per share, a 14% increase from the $5,481,000, or $0.55 per share, reported for the quarter ended September 30, 2025.
Net interest income for the third quarter of 2026 was $12,324,000, a 13% increase from the same period in 2025. This growth was attributed to an increase in the interest rate spread from 2.88% to 3.15%, and an increase in the excess of interest-earning assets over interest-bearing liabilities of $8.5 million. The increase in the interest rate spread is primarily due to a 0.32% increase in the yield on average interest-earning assets, offset by a 0.05% increase in the rate paid on average interest-bearing liabilities.
Other operating income decreased by $11,000 in the third quarter of 2026 to $207,000 from $218,000 in the same period in 2025. Operating expenses increased by 5% to $3,616,000 in the third quarter of 2026 from $3,445,000 in the third quarter of 2025. The increase is primarily attributed to an increase in data processing of $76,000 and compensation of $92,000.
The company had no delinquent loans and no foreclosed real estate owned as of September 30, 2026. The allowance for loan losses was $3,797,000, or 0.31% of total loans, at September 30, 2026. 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. As of September 30, 2026, the bank's total assets increased by 2% to $1.463 billion, compared to $1.428 billion at September 30, 2025. The loan portfolio at September 30, 2026, was $1.237 billion, an increase of $24.9 million or 2% from September 30, 2025.
Retail deposits totaled $725.7 million as of September 30, 2026, a $2.2 million increase from $723.5 million at September 30, 2025. Wholesale deposits increased by $20.5 million or 10% from $211.2 million at September 30, 2025, to $231.7 million at September 30, 2026. Wholesale deposits are primarily comprised of State of California certificates of deposit in the amount of $51.0 million, long-term institutional deposits of $9.4 million, and $171.3 million of long-term brokered certificates of deposits. FHLB borrowings increased by $5.0 million or 2% from $240.0 million at September 30, 2025, to $245.0 million at September 30, 2026.
As of September 30, 2026, 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 16.85% and 28.09%, respectively, significantly exceeding the minimum "well-capitalized" requirements of 5% and 10%, respectively.