SOURCE: Friendly Hills Bank

Friendly Hills Bank

November 16, 2012 09:00 ET

Friendly Hills Bank Reports Third Quarter Results

WHITTIER, CA--(Marketwire - Nov 16, 2012) - Friendly Hills Bank (the "bank") (OTCBB: FHLB) reported results for the third quarter of 2012. For the nine month period ending September 30, 2012, the bank reported a profit of $313,000 or $0.19 per diluted share of common stock. The bank reported a profit of $6,000 or zero dollars per diluted share of common stock for the nine months ended September 30, 2011.

As of September 30, 2012, the bank reported total assets of $100.1 million, a 1% decrease from $100.9 million as of September 30, 2011. The bank's loan portfolio, net of unearned income, decreased 5% from $61.1 million as of September 30, 2011, to $58.3 million as of September 30, 2012. The portfolio remains diversified with $27.9 million or 47% in Commercial & Industrial Loans to local businesses (including $16.5 million in Owner Occupied Commercial Real Estate Loans), $16.0 million or 27% in Residential Real Estate Loans to investors and $10.5 million or 18% in Commercial Real Estate Loans to investors. The bank has an additional $15.0 million in unfunded loan commitments.

The bank's overall deposit base has decreased by 2% in the twelve months ended September 30, 2012, from $79.4 million as of September 30, 2011, to $77.9 million as of September 30, 2012. Non-interest bearing deposits continue to form a substantial part of the deposit base (39.6%), growing from $28.2 million to $30.9 million as of September 30, 2012. During the same time period interest-bearing deposits decreased from $51.2 million to $47.0 million on September 30, 2012. The bank has no deposits which were sourced through brokers or other wholesale funding sources.

At September 30, 2012, shareholders' equity was $13.1 million and the bank's total risk-based capital ratio was 20.4%, significantly exceeding the minimum "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.

"During this most recently completed quarter the bank recognized six full years of serving the communities of Southern California," commented Jeffrey K. Ball, Chief Executive Officer. "While we never could have anticipated the economic conditions we face today, we are proud of our achievements while providing the communities that we serve with a meaningful alternative to the larger institutions. As market conditions continue to present unique challenges we have selectively decreased the size of the bank while maintaining profitability. This prudent decrease in interest-bearing deposits corresponds to a reduction in loan assets primarily associated with lower utilization of committed lines of credit by our clients. We remain focused on expense management during this period of contraction while maintaining a consistent underwriting approach with our relationship focused approach to banking. The bank is well positioned in terms of capital, liquidity and reserves to properly address the current market conditions while maintaining an appropriate interest rate risk profile. We are appreciative of our shareholders, clients and employees as we strive to deliver shareholder value through our effective delivery of the many positive attributes associated with a community bank model."

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 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)  
    9/30/12     12/31/11     9/30/11  
Cash and due from banks   $ 2,327     $ 2,305     $ 3,183  
Interest bearing deposits with other financial institutions     3,607       4,575       16,936  
    Cash and Cash Equivalents     5,934       6,880       20,119  
Investment securities available-for-sale     32,571       26,826       19,348  
Federal Home Loan Bank stock     605       610       610  
Loans, net of unearned income     58,321       60,916       61,145  
Allowance for loan losses     (1,572 )     (1,677 )     (1,708 )
    Net Loans     56,749       59,239       59,437  
Premises and equipment, net     662       739       752  
Accrued interest receivable and other assets     3,588       3,673       661  
    Total Assets   $ 100,109     $ 97,967     $ 100,927  
  Noninterest-bearing deposits   $ 30,887     $ 27,111     $ 28,241  
  Interest-bearing deposits     47,029       49,269       51,201  
    Total Deposits     77,916       76,380       79,442  
FHLB advances     8,750       8,750       8,750  
Accrued interest payable and other liabilities     315       247       239  
    Total Liabilities     86,981       85,377       88,431  
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     1,073       1,053       1,041  
  Accumulated deficit     (4,500 )     (4,813 )     (4,956 )
  Accumulated other comprehensive income     597       392       453  
    Total Shareholders' Equity     13,128       12,590       12,496  
    Total Liabilities and Shareholders' Equity   $ 100,109     $ 97,967     $ 100,927  
Book Value Per Share   $ 8.12     $ 7.79     $ 7.73  
Friendly Hills Bank  
Statements of Operations (Unaudited)  
(in thousands, except per share information)  
    For the nine
months ended 
    For the nine
months ended 
    9/30/12     9/30/11  
Interest Income   $ 3,143     $ 3,536  
Interest Expense     377       473  
  Net Interest Income     2,766       3,063  
Provision for Credit Losses     (84 )     169  
  Net Interest Income after Provision for Credit Losses     2,850       2,894  
Other Income     207       133  
Operating Expenses     2,785       2,779  
Gain (Loss) on Securities & Hedging Contracts     42       (216 )
Earnings before Provision for Income Taxes     314       32  
Income Tax Expense     (1 )     (26 )
  Net Earnings   $ 313     $ 6  
Basic and Diluted Earnings Per Share   $ 0.19     $ ---