Malaga Financial Corporation Reports 51% Increase in Earnings in First Quarter

PALOS VERDES ESTATES, Calif.--(Business Wire)--
Malaga Financial Corporation (OTCBB:MLGF), the parent company of Malaga Bank
FSB, today reported that net income for the quarter ended March 31, 2009 was
$2,411,000 ($0.42 per share basic and fully diluted), an increase of $819,000 or
51% from net income of $1,592,000 ($0.28 per share basic and fully diluted) for
the quarter ended March 31, 2008, another record quarter. This resulted in
return on average equity of 17.32% for the quarter ended March 31, 2009, versus
12.87% for the same period last year. Net income increased due to continued
growth in interest earning assets, improvement in the interest rate spread and
excellent credit quality.

The Company did not have any delinquent loans or non-performing assets at March
31, 2009. Net loan charge-offs during the quarter were minimal. The Company`s
allowance for loan losses was $ 2,691,000 or 0.36% of total loans, at March 31,
2009.

Net interest income totaled $6,482,000 in the first quarter of 2009, up
$1,615,000 or 33% from the first quarter of 2008. This increase resulted from a
$59 million or 8.5% increase in average interest earning assets to $754 million
and a 0.69% increase in the interest rate spread to 3.23%. The improvement in
the interest rate spread was due to a 1.44% decline in the weighted average cost
of funds, while the weighted average yield on interest earning assets declined
only 0.75%. Malaga`s liabilities reprice more frequently than its interest
earning assets, and thus Malaga will generally see an improvement in its
interest rate spread during periods of declining market rates.

Operating expenses increased 17% in the first quarter of 2009, to $2,524,000
from $2,152,000 in the first quarter of 2008. Increased costs resulted primarily
from $177,000 in FDIC insurance premiums and $130,000 in salary and related
benefits due to branch expansion.

Randy C. Bowers, President and CEO, remarked, "We are pleased to report record
quarterly earnings in spite of the continued challenging times for the banking
industry and the general economy."

Malaga`s total assets reached $780 million at March 31, 2009 compared to $728
million at March 31, 2008. The loan portfolio at March 31, 2009 was $745
million, an increase of $58 million or 8% from March 31, 2008. 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 $327 million as of March 31, 2009, a 5%
increase from $311 million at March 31, 2008. Wholesale deposits and FHLB
borrowings totaled $377 million at March 31, 2009 versus $347 million at March
31, 2008, a 9% increase. The weighted average cost of funds for the first three
months of 2009 was 2.62% versus 4.05% for the first three months of 2008.

As of March 31, 2009, 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 8.64%
and 13.72%, respectively, at March 31, 2009 significantly exceeding the minimum
"well capitalized" requirements of 5% and 10% respectively. In the first
quarter, Malaga Financial paid a quarterly dividend for the 18th consecutive
quarter.

Mr. Bowers concluded, "In this volatile environment our strategy continues to be
moderate internal growth combined with prudent loan underwriting and diligent
cost control. We are in our 25th year of providing our customers, shareholders
and the community a strong and safe place to bank. Malaga Bank continues as a
five-star rated bank, the highest rating available from Bauer Financial. We are
proud of our strength and exceptional team of bankers and our leadership in the
communities we serve. We appreciate the support provided by our customers and
board of directors and the continued hard work by our staff."

Malaga Bank, a subsidiary of MFC, is a full-service community bank headquartered
on the Palos Verdes Peninsula with branch offices located on the Peninsula, in
Torrance and San Pedro. In its 25th 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.

Malaga Financial Corporation
Randy Bowers, President and Chief Executive Officer
310-375-9000
rbowers@malagabank.com

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