SOURCE: Friendly Hills Bank

Friendly Hills Bank

August 08, 2013 08:00 ET

Friendly Hills Bank Reports Second Quarter Results

WHITTIER, CA--(Marketwired - Aug 8, 2013) - Friendly Hills Bank (the "bank") (OTCBB: FHLB) reported results for the second quarter of 2013.

For the six month period ending June 30, 2013, the bank reported a profit of $258,000 or $0.16 per diluted share of common stock. This figure includes a $68,000 increase in the value of interest rate caps, a $181,000 gain on securities sold, and a $99,000 provision for loan losses. The bank reported a profit of $172,000 or $0.11 per diluted share of common stock for the six months ended June 30, 2012. This figure includes a $20,000 increase in the value of interest rate caps.

As of June 30, 2013, the bank reported total assets of $99.7 million, a 1% increase from $98.9 million as of June 30, 2012. The bank's loan portfolio, net of unearned income, increased 2% from $57.3 million as of June 30, 2012, to $58.6 million as of June 30, 2013. The portfolio remains diversified with $26.1 million or 43% in Commercial & Industrial Loans to local businesses (including $16.3 million in Owner Occupied Commercial Real Estate Loans), $14.7 million or 25% in Residential Real Estate Loans to investors and $13.1 million or 22% in Commercial Real Estate Loans to investors. The bank has an additional $16.3 million in unfunded loan commitments.

The bank's overall deposit base has increased 1% in the twelve months ended June 30, 2013, from $77.1 million as of June 30, 2012, to $78.0 million as of June 30, 2013. Non-interest bearing deposits continue to form a substantial part of the deposit base (42%), growing from $29.7 million to $33.0 million as of June 30, 2013. During the same time period interest-bearing deposits decreased 5% from $47.4 million to $45.0 million on June 30, 2013. The bank has no deposits which were sourced through brokers or other wholesale funding sources.

At June 30, 2013, shareholders' equity was $12.6 million and the bank's total risk-based capital ratio was 19%, significantly exceeding the "well-capitalized" level of 10% prescribed under current 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.

"The continued narrowing of interest rate margins has had a significant impact on the Company's primary revenue driver which is Net Interest Income," commented Jeffrey K. Ball, Chief Executive Officer. "While we have partially offset this trend with growth in the loan portfolio, Net Interest Income before Provision for Credit Losses has dropped 11% over the first six months of this year in comparison to the same period last year. We have offset this decline in revenue over the first six months of the year by reducing our Operating Expenses by 7% compared to the same time period a year ago. We continue to source quality loan opportunities while maintaining our strong underwriting standards with sufficient capital and liquidity to support our focus on long-term shareholder value."

The bank also announced that its Chief Executive Officer, Jeffrey K. Ball, has been elected Chairman of the California Bankers Association and began serving a one year term in May. The California Bankers Association is one of the largest state trade associations in the country and represents over 200 institutions of all sizes doing business in the State of California.

Company Profile:
Friendly Hills Bank is a community bank which was formed to primarily serve the Southern California communities of eastern Los Angeles County and northern Orange County. 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)  
   
6/30/13
   
12/31/12
   
6/30/12
 
ASSETS                        
Cash and due from banks   $ 3,342     $ 3,679     $ 2,499  
Interest bearing deposits with other financial institutions     7,874       7,515       10,750  
      Cash and Cash Equivalents     11,216       11,194       13,249  
Investment securities available-for-sale     26,421       29,906       25,282  
Federal Home Loan Bank stock     600       605       605  
Loans, net of unearned income     58,598       59,991       57,348  
Allowance for loan losses     (1,346 )     (1,168 )     (1,812 )
      Net Loans     57,252       58,823       55,536  
Premises and equipment, net     597       627       690  
Accrued interest receivable and other assets     3,605       3,552       3,552  
      Total Assets   $ 99,691     $ 104,707     $ 98,914  
                         
LIABILITIES AND SHAREHOLDERS' EQUITY                        
Liabilities                        
Deposits                        
  Noninterest-bearing deposits   $ 32,997     $ 33,698     $ 29,687  
  Interest-bearing deposits     44,992       49,092       47,377  
      Total Deposits     77,989       82,790       77,064  
FHLB advances     8,750       8,750       8,750  
Accrued interest payable and other liabilities     325       326       245  
      Total Liabilities     87,064       91,866       86,059  
Shareholders' Equity                        
  Common stock, no par value, 10,000,000 shares authorized:                        
    1,616,000 shares issued and outstanding     15,958       15,958       15,958  
  Additional paid-in-capital     1,083       1,076       1,066  
  Accumulated deficit     (4,410 )     (4,668 )     (4,640 )
  Accumulated other comprehensive income     (4 )     475       471  
      Total Shareholders' Equity     12,627       12,841       12,855  
      Total Liabilities and Shareholders' Equity   $ 99,691     $ 104,707     $ 98,914  
                         
Book Value Per Share   $ 7.81     $ 7.95     $ 7.95  
                         
   
Friendly Hills Bank  
Statements of Operations (Unaudited)  
(in thousands, except per share information)  
             
    For the six     For the six  
    months ended     months ended  
    6/30/13     6/30/12  
Interest Income   $ 1,884     $ 2,125  
Interest Expense     215       256  
  Net Interest Income     1,669       1,869  
Provision for Credit Losses     99       0  
  Net Interest Income after Provision for Credit Losses     1,570       1,869  
Other Income     163       139  
Operating Expenses     1,723       1,855  
Investment Securities and Hedging Contracts Gains     249       20  
Earnings before Provision for Income Taxes     259       173  
Income Tax Expense     (1 )     (1 )
  Net Earnings   $ 258     $ 172  
                 
Basic and Diluted Earnings Per Share   $ 0.16     $ 0.11