Friendly Hills Bank Continues Growth Through Fourth Quarter

WHITTIER, Calif., Feb. 17 /PRNewswire-FirstCall/ -- Friendly Hills Bank (OTC Bulletin Board: FHLB) reported results for the fourth quarter of 2009, completing its third full year of operations since opening on September 18, 2006.  As of December 31, 2009, the bank reported total assets of $81.0 million, a 28% increase from $63.5 million as of December 31, 2008.

The bank's overall deposit base has grown over 38% in the twelve months ended December 31, 2009, from $49.1 million as of December 31, 2008, to $67.9 million as of December 31, 2009.  Non-interest bearing deposits continue to form a substantial part of the deposit base (33%), growing from $18.6 million to $22.1 million as of December 31, 2009.  During the same time period interest-bearing deposits grew from $30.5 million to $45.8 million on December 31, 2009.   The bank has no deposits which were sourced through brokers or originated on the basis of above market rate programs.

The bank's loan portfolio, net of unearned income, grew 56% from $37.0 million as of December 31, 2008, to $57.7 million as of December 31, 2009.  The portfolio remains diversified with $11.8 million or 20% in Commercial & Industrial Loans to local businesses, $20.3 million or 35% in Residential Real Estate Loans to investors and $22.0 million or 38% in Commercial Real Estate Loans.  Owner Occupied properties represent the largest component of the Commercial Real Estate Portfolio (26%) with $14.9 million outstanding.  The bank has an additional $18.9 million in unfunded loan commitments.

For the twelve month period ending December 31, 2009, the bank reported a net loss of $1,510,032 or ($0.93) per diluted share of common stock.  This figure includes a loan loss provision of $1,016,414 for the twelve months ended December 31, 2009, which was 214% higher than the $323,963 provision for the same period one year earlier.  The bank reported a net loss of $783,316, or ($0.48) per diluted share of common stock for the twelve months ended December 31, 2008.  The increase in the allowance for loan losses reflects the growth in the loan portfolio, the reinstatement of reserve used to cover charge-offs and an increased provision is reflective of management's cautionary position towards potential risks associated with current economic conditions.

At December 31, 2009, shareholders' equity was $12.9 million and the bank's total risk-based regulatory capital ratio was 21.51%, significantly exceeding the "well-capitalized" level of 10% prescribed under regulatory requirements. The bank also continues to maintain substantial liquidity positions, retaining significant balances of liquidity as well as available collateralized borrowings and other potential sources of liquidity.

"This past year has been one of the most challenging in the history of our industry," commented Jeffrey K. Ball, Chief Executive Officer.  "The combination of historically low interest rates and an uncertain economic environment have presented meaningful challenges.  At this time it is difficult to anticipate when those conditions will improve.  But despite these circumstances we have been able to continue the consistent growth of our institution.  A major component of commercial banking is the management of risk and we have responded to the heightened risk environment by remaining focused on our original business plan.  Diligent underwriting, strong service levels and active management of our loan portfolio have enabled us to position the bank in a manner which we believe will allow us to ride out the current risk cycle and support the continued growth of our franchise.  While it has been difficult to witness the impact of the current economic environment on our local markets, we are proud of our track record in serving our clients while identifying opportunities for growth as other institutions have compromised on service.  We remain focused on the establishment of sound commercial banking relationships while maintaining strong liquidity and a low cost of funds.  Despite taking action from an accounting standpoint on some of our loan assets where collateral values have been compromised due to the uncertain environment, we remain confident in the repayment capability of all of our borrowers."

Friendly Hills Bank is a community bank which was formed to primarily serve the Southern California communities of Whittier, La Habra, Santa Fe Springs and La Habra Heights, as well as the surrounding markets of Southern California.  The bank was established in 2006 by prominent members of the local community who were seeking an alternative to the larger financial institutions in the area.  The bank is headquartered at 16011 E. Whittier Blvd. in Whittier, California with an additional branch office at 12070 East Telegraph Road, Suite #100 in Santa Fe Springs, California.  For more information on the bank, please visit www.friendlyhillsbank.com or call 562-947-1920.

Forward Looking Statements:

The numbers in this press release are unaudited. Statements such as those regarding the anticipated development and expansion of Friendly Hills Bank's business, and the intent, belief or current expectations of the bank, its directors or its officers, are "forward looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include, but are not limited to, risks related to the local and national economy, the bank's performance, including its ability to generate loan and deposit growth, changes in interest rates, and regulatory matters.

    
    
                                  Friendly Hills Bank
                                    Balance Sheets
                                      (Unaudited)
    
    
    (in thousands, except per share information)
    
                                                     12/31/09  12/31/08
                                                     --------  --------
    Assets
    Cash and cash equivalents                          $2,224    $2,678
    Fed funds sold                                      1,645     6,980
    Investment securities available-for-sale           18,779    15,527
    Loans, net of unearned income                      57,691    36,987
                                                       ------    ------
               Allowance for loan losses               (1,156)     (555)
                                                       ------      ----
               Net loans                               56,535    36,432
    Premises and equipment, net                         1,014     1,259
    Accrued interest receivable and
     other assets                                         795       632
                                                          ---       ---
               Total Assets                           $80,992   $63,508
                                                      =======   =======
    
    Liabilities
    Deposits:
                Non-interest-bearing deposits         $22,093   $18,583
                Interest-bearing deposits              45,800    30,475
                                                       ------    ------
          Total Deposits                               67,893    49,058
    Accrued interest payable and other liabilities        218       155
                                                          ---       ---
                Total Liabilities                     $68,111   $49,213
    
    Stockholders' Equity
    Common stock, no par value,
     10,000,000 shares authorized;                    $15,958   $15,958
     1,616,000 shares issued and outstanding
    Accumulated deficit                                (4,308)   (2,797)
    Additional paid-in-capital                            795       543
    Accumulated other comprehensive gain                  436       591
                                                          ---       ---
                Total Stockholders' Equity             12,881    14,295
                                                       ------    ------
                Total Liability &
                 Stockholders' Equity                 $80,992   $63,508
                                                      =======   =======
    
    Book Value Per Share                                $7.97     $8.85
    
    
    
                                   Friendly Hills Bank
                                 Statements of Operations
                                        (Unaudited)
    
    (in thousands, except per share information)
    
                                            For the twelve    For the twelve
                                             months ended      months ended
                                               12/31/09          12/31/08
                                            --------------    --------------
    
    Interest Income                             $ 3,463            $2,967
    
    Interest Expense                                489               438
                                                -------           -------
      Net Interest Income                         2,974             2,529
    
    Provision for Credit Losses                   1,016               324
      Net Interest Income after Provision 
       for Credit Losses                          1,958             2,205
    
    Other Income                                    147               125
    
    Operating Expenses                            3,614             3,149
    
    Gain on Securities                                0                37
                                                -------           -------
    Loss before Provision for Income Taxes       (1,509)             (782)
    
    Provision for Income Taxes                       (1)               (1)
                                                -------           -------
      Net Loss                                  $(1,510)           $ (783)
                                                =======           =======
    Basic (Loss) Per Share                       $(0.93)           $(0.48)
                                                =======           =======
    

SOURCE Friendly Hills Bank