Malaga Financial Corporation (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended December 31, 2016 was $3,090,000 ($0.50 basic and fully diluted earnings per share), an increase of $169,000 or 6% from net income of $2,921,000 ($0.48 basic and fully diluted earnings per share) for the quarter ended December 31, 2015. Net income for the twelve months ended December 31, 2016 was $11,559,000 ($1.89 basic and $1.88 fully diluted earnings per share) as compared to $11,406,000 ($1.88 basic and $1.87 fully diluted earnings per share) for the twelve months ended December 31, 2015, a 1% increase. Earnings for the twelve months ended December 31, 2016 resulted in a pre-tax return on average equity of 17.25%.

The Company had one 30 day delinquent loan in the amount of $186,500 and no foreclosed real estate owned at December 31, 2016. The Company’s allowance for loan losses was $3,049,000, or 0.34% of total loans, at December 31, 2016.

For 2016, net interest income totaled $30,570,000, an increase of $235,000 or 1% from 2015. This increase reflected higher average interest-earning assets of $14.7 million, offset by decrease of 0.02% in the interest rate spread to 3.04%. The decrease in the interest rate spread is primarily attributable to a decrease in yield on average interest-earning assets of 0.10%, primarily from a decrease in loan portfolio yield and an increase in lower yield investments such as federal funds sold. Partially offsetting this was a decrease of 0.08% in the average cost of funds. The decrease in the average cost of funds was due mainly to a 0.56% decrease in the cost on borrowings.

Operating expenses remained stable with an increase of $206,000 or 2% to $11,437,000 in 2016 from $11,231,000 in 2015. The increase is primarily in compensation related costs.

Randy C. Bowers, President and CEO, commented, “Our earnings remain strong and stable which allowed us to declare a special year-end dividend for the fifth consecutive year. Additionally, we increased the first quarter 2017 dividend by 11% to 25 cents per share. We appreciate the loyalty of our shareholders and are delighted to be able to enhance their return on investment with increased dividends and share value.”

Malaga’s total assets decreased $3.0 million or less than 1% to $981 million at December 31, 2016. The loan portfolio at December 31, 2016 was $904 million, an increase of $12 million or 1% from December 31, 2015. 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 $676 million as of December 31, 2016, an $11 million or 2% increase from $665 million at December 31, 2015. Wholesale deposits, comprised mainly of State of California certificates of deposit, totaled $78 million as of December 31, 2016, a $14 million or 16% decrease from $92 million at December 31, 2015. FHLB borrowings increased $2 million or 2% from $88 million at December 31, 2015 to $90 million at December 31, 2016. The retail deposit growth was used to fund the increase in loans.

As of December 31, 2016, 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 12.85% and 23.85%, respectively, at December 31, 2016, significantly exceeding the minimum “well-capitalized” requirements of 5% and 10% respectively.

In the fourth quarter, the Company declared a quarterly cash dividend of 25 cents per share, payable in January 2017 and a special dividend of 10 cents per share payable in December 2016. The quarterly dividend reflected an 11% increase in the quarterly dividend amount in effect for the past four quarters.

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 the third consecutive year, Malaga Bank has been named in the top 25 healthiest banks in America. A more detailed breakdown of Malaga Bank’s A+ health score may be found in the health section of its dedicated page at www.depositaccounts.com/banks/malaga-bank-fsb.html#health. 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.