Malaga Financial Corporation (OTCBB: MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended December 31, 2011 was $2,906,000 ($0.50 basic and fully diluted earnings per share), an increase of $192,000 or 7% from net income of $2,714,000 ($0.46 basic and fully diluted earnings per share) for the quarter ended December 31, 2010. Net income for the twelve months ended December 31, 2011 was $11,115,000 ($1.90 basic and $1.89 fully diluted earnings per share) as compared to $10,494,000 ($1.80 basic and $1.78 fully diluted earnings per share) for the twelve months ended December 31, 2010, a 6% increase. Earnings for the fourth quarter and twelve months were the highest in Malaga’s history for those periods and resulted in a pre-tax return on average equity of 25.05%. The Company did not have any delinquent loans or foreclosed real estate owned at December 31, 2011. The Company’s allowance for loan losses was $2,881,000, or 0.36% of total loans, at December 31, 2011. For 2011, net interest income totaled $28,977,000, an increase of $1,505,000 or 5% from 2010. This increase resulted primarily from an increase of 0.18% in the interest rate spread to 3.45%. The increase in the interest rate spread was due to a decline in the weighted average cost of funds of 0.34%, which exceeded the 0.16% decline in the weighted average yield on interest earning assets. The decrease in the average cost of funds was due to maturity and repricing of certificates of deposits at lower rates and decrease in the outstanding Federal Home Loan Bank borrowings in the amount of $23,000,000 at higher interest rates. Operating expenses remained stable with a nominal increase of $91,000 to $10,305,000 from $10,214,000 in 2010. Randy C. Bowers, President and CEO, remarked, “We are pleased to continue to report record earnings which along with our strong capital position has allowed us to significantly increase dividends to our shareholders. Our results for both the 4th quarter and year 2011 reflect the disciplined execution of our business plan emphasizing high asset quality, strong cost control and modest growth during a period of uncertain economic conditions.”
Malaga’s total assets increased $13.1 million or 2% to $827 million at December 31, 2011. The loan portfolio at December 31, 2011 was $795 million, an increase of $26 million or 3% from December 31, 2010. Malaga originates loans principally for its own portfolio and not for sale.Malaga funds its assets with a mix of retail deposits, wholesale deposits and FHLB borrowings. Retail deposits totaled $491 million as of December 31, 2011, a $24 million or 5% increase from $467 million at December 31, 2010. The retail deposit growth was used to partially repay FHLB borrowings, which decreased $23 million or 12% from $192 million at December 31, 2010 to $169 million at December 31, 2011. As of December 31, 2011, 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 12.39% and 20.20%, respectively, at December 31, 2011, significantly exceeding the minimum “well capitalized” requirements of 5% and 10% respectively. In the fourth quarter, the Company declared a quarterly cash dividend of 12.5 cents per share, payable in January 2012. This dividend reflected a 25% increase in the quarterly dividend amount in effect for the past six quarters. Mr. Bowers concluded, “We are honored that, earlier this year, we were recognized by both US Banker magazine and SNL Financial for our overall financial performance. In addition, for over ten years, Malaga Bank has been consistently recommended by one of the nation’s leading independent bank rating and research firms, BauerFinancial Inc. Again this quarter, Malaga Bank received their premier Top 5-Star rating. This recognition is a direct result of the contributions of our dedicated staff and board of directors, in addition to our loyal shareholders and customers.” Malaga Bank, a subsidiary of Malaga Financial Corporation, is a full-service community bank headquartered on the Palos Verdes Peninsula with five offices located in the South Bay area of Los Angeles. In its 27 th year, 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.