Malaga Financial Corporation Reports Excellent 2003 Earnings.

Business Editors

PALOS VERDES ESTATES, Calif.--(BUSINESS WIRE)--March 9, 2004

Malaga Financial Corporation (OTC:MLGF) (MFC) is pleased to report earnings of $4,889,000 for the year ended December 31, 2003. Earnings for 2003 were up $135,000, or 3%, over 2002 earnings of $4,754,000. Earnings per share were $.95 for 2003 versus $.94 for 2002. Diluted earnings per share were $.88 for both periods. Total assets at December 31, 2003 were $419 million, up 25% for the year, and stockholders' equity was $32,263,000, up $5,429,000.

Net income for the fourth quarter of 2003 was $1,267,000 or $.24 per share versus $1,260,000 or $.25 per share for the same period in 2002. The dilutive effects of a higher market value per share and the increased number of shares outstanding from the exercise of stock options were the reasons that the diluted earnings per share did not increase proportionately with the increase in income for both the year and fourth quarter 2004.

John Polen, President and CEO, stated, "We had a very successful and eventful year. In June, we formed MFC as the holding company for Malaga Bank to provide greater opportunities to raise capital and greater operating flexibility. In addition to record earnings, we had record loan growth of $75 million primarily through the direct generation of Southern California real estate loans. Shortly after its formation, MFC issued $5 million in trust preferred securities, of which $3 million was contributed to the Bank. We have retained the balance of those funds at MFC for working capital and investment."

The 2003 financials reflect changes in the balance sheet as well as operations, which are indicative of the current business conditions. In order to maintain net interest income levels, with narrowed margins between loan yields and cost of funds, and the payoffs or refinances of higher rate loans, the Bank increased its loan origination activity to build the loan portfolio. As a result, the loan portfolio grew 25% during 2003. The increased level of loan payoffs and refinances generated substantial prepayment fee income.

"We are very encouraged that the company has been able to grow substantially and generate increased earnings in today's interest rate environment where spreads have generally narrowed and seasoned loans have paid off at record levels. Once again, Malaga had no non-performing loans or loan losses in 2003. We are optimistic that we will continue to generate quality loans to build Malaga Bank's own loan portfolio, and manage our net interest margins," stated Mr. Polen.

MFC is the holding company of Malaga Bank, a full service community bank, 'Where Banking is All About You', that has served the financial needs of the affluent Palos Verdes Peninsula community for 19 years. Malaga Bank's niche is outstanding customer service, where the individual banking needs of the customer are met through quality products and effective communications. Malaga Bank is primarily a real estate lender known for its expertise in the financing of apartments, construction projects and single family residences throughout Southern California. The Bank's Web site is located at www.malagabank.com.