Friendly Hills Bank Reports Second Quarter Results

WHITTIER, Calif., July 29, 2011 /PRNewswire/ -- Friendly Hills Bank (the "bank") (OTCBB: FHLB) announced unaudited financial results for the second quarter of 2011.

For the six month period ending June 30, 2011, the bank reported a loss of $23,000 or $0.01 per diluted share of common stock.  This figure includes a $173,000 provision for credit losses, $41,000 loss on the sale of an investment security, and a $62,000 decrease in the value of interest rate caps.  The bank reported a profit of $361,000 or $0.22 per diluted share of common stock for the six months ended June 30, 2010.  This figure includes a $83,000 provision for credit losses, a $514,000 gain on the sale of investment securities, and a $152,000 decrease in the value of an interest rate cap.

Excluding the provision for credit losses, securities gains and losses, and adjustments to the carrying value of interest rate caps, the bank reported net income of $253,000 for the six months ended June 30, 2011 compared to net income of $82,000 for the same period in 2010.

As of June, 30 2011, the bank reported total assets of $99.6 million, a 7% increase from $93.1 million as of June 30, 2010.  The bank's loan portfolio, net of unearned income, grew 1% from $61.8 million as of June 30, 2010, to $62.3 million as of June 30, 2011.  The portfolio remains diversified with $27.0 million or 43% in Commercial & Industrial Loans to local businesses (including $16.8 million in Owner Occupied Commercial Real Estate Loans), $20.4 million or 33% in Residential Real Estate Loans to investors and $10.3 million or 17% in Commercial Real Estate Loans to investors.  The bank has an additional $16.4 million in unfunded loan commitments.

The bank's overall deposit base has grown 10% in the twelve months ended June 30, 2011, from $70.9 million as of June 30, 2010, to $78.2 million as of June 30, 2011.  Non-interest bearing deposits continue to form a substantial part of the deposit base (34%), growing from $22.5 million to $26.3 million as of June 30, 2011.  During the same time period interest-bearing deposits grew from $48.4 million to $51.9 million on June 30, 2011.   The bank has no deposits which were sourced through brokers or other wholesale funding sources.

At June 30, 2011, shareholders' equity was $12.4 million and the bank's total risk-based capital ratio was 19.47%, 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.

"With a continued focus on enhancing long-term shareholder value," commented Jeffrey K. Ball, Chief Executive Officer, "we are encouraged by the bank's performance during this period of economic uncertainty.  We have continued to take the short-term steps necessary to appropriately address the current credit risk in our primary markets while mitigating the uncontrollable risks associated with potential changes in the interest rate environment.  While these actions have had a negative impact on our short-term performance, the profitability of our core operations continues to grow as we remain focused on managing the loan portfolio and controlling expenses."

The bank is also reporting the resignation of H.A. ("Hal") Beisswenger from the Board of Directors.  Mr. Beisswenger has served as Chairman of the Board since the inception of the bank and the board has accepted his request to resign so that he can focus on his health and his family.  He will continue to be involved with the bank as a Chairman Emeritus but will not be a voting member of the board.  W.C. ("Chris") Greenbeck, who is also a Founding Director of the bank, will now serve as the Chairman of the Board.

"Hal Beisswenger has been a valuable mentor for me throughout my career in banking", continued Mr. Ball, "and an important contributor towards the establishment and development of Friendly Hills Bank.  The Board of Directors respects his need to step back from these responsibilities but is also appreciative of his continued involvement with the success of our company.  He makes this transition to Chairman Emeritus with the bank being well positioned for the current environment and I am confident in the leadership Chris Greenbeck will provide as we continue our focus on enhancing shareholder value."

Company Profile:

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.

SOURCE Friendly Hills Bank