An exchange-coupled magnetic structure includes a ferromagnetic layer, a coercive ferrite layer, such as cobalt-ferrite, for biasing the magnetization of the ferromagnetic layer, and an oxide underlayer, such as cobalt-oxide, in proximity to the coercive ferrite layer. The oxide underlayer has a lattice structure of either rock salt or a spinel and exhibits no magnetic moment at room temperature. The underlayer affects the structure of the coercive ferrite layer and therefore its magnetic properties, providing increased coercivity and enhanced thermal stability. As a result, the coercive ferrite layer is thermally stable at much smaller thicknesses than without the underlayer. The exchange-coupled structure is used in spin valve and magnetic tunnel junction magnetoresistive sensors in read heads of magnetic disk drive systems. Because the coercive ferrite layer can be made as thin as 1 nm while remaining thermally stable, the sensor satisfies the narrow gap requirements of high recording density systems.