Malaga Financial Corporation (OTCBB:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the twelve months ended December 31, 2012 was $11,689,000 ($1.98 basic and $1.96 fully diluted earnings per share) as compared to $11,115,000 ($1.90 basic and $1.89 fully diluted earnings per share) for the twelve months ended December 31, 2011, a 5% increase. Net income for the quarter ended December 31, 2012 was $2,757,000 ($0.47 basic and $0.46 fully diluted earnings per share), a decrease of $149,000 or 5% from net income of $2,906,000 ($0.50 basic and fully diluted earnings per share) for the quarter ended December 31, 2011. Earnings for the twelve months ended December 31, 2012 were the highest in Malaga’s history and resulted in a pre-tax return on average equity of 23.54%.
The Company did not have any delinquent loans or foreclosed real estate owned at December 31, 2012. The Company’s allowance for loan losses was $2,762,000, or 0.35% of total loans, at December 31, 2012.
For 2012, net interest income totaled $29,503,000, an increase of $873,000 or 3% from 2011. This increase resulted primarily from an increase of 0.10% in the interest rate spread to 3.55%. The increase in the interest rate spread was due to a decline in the weighted average cost of funds of 0.44%, which exceeded the 0.34% decline in the weighted average yield on interest earning assets. The decrease in the weighted average cost of funds was due to maturity and repricing of certificates of deposit at lower rates and a $39 million decrease in the outstanding Federal Home Loan Bank borrowings, which have higher interest rates than the Company's other liabilities.
Operating expenses remained stable with a nominal increase of $221,000 or 2% to $10,526,000 in 2012 from $10,305,000 in 2011.Randy C. Bowers, President and CEO, remarked, “We are pleased to report record earnings for the 7 th consecutive year. Our strong capital position and earnings have allowed us to increase our most recent quarterly dividend by 20% in addition to declaring a special year end 2012 dividend. Our results for the year are the result of the continued execution of our business plan emphasizing high asset quality and a focus on controlling costs.” Malaga’s total assets increased $23.9 million or 3% to $851 million at December 31, 2012. The loan portfolio at December 31, 2012 was $783 million, a decrease of $12 million or 1% from December 31, 2011. Malaga originates loans principally for its own portfolio and not for sale.