FHLB Friendly Hills Bancorp (PK)

Friendly Hills Bank (the "bank") (OTCBB:FHLB) reported results for the third quarter of 2013.

For the nine month period ending September 30, 2013, the bank reported a profit of $311,000 or $0.19 per diluted share of common stock. This figure includes a $97,000 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 $313,000 or $0.19 per diluted share of common stock for the nine months ended September 30, 2012. This figure includes a $42,000 increase in the value of interest rate caps and a $84,000 recapture of provision for loan losses.

As of September 30, 2013, the bank reported total assets of $105.5 million, a 5% increase from $100.1 million as of September 30, 2012. The bank's loan portfolio, net of unearned income, increased 3% from $58.3 million as of September 30, 2012, to $60.0 million as of September 30, 2013. The portfolio remains diversified with $24.0 million or 40% in Commercial & Industrial Loans to local businesses (including $16.2 million in Owner Occupied Commercial Real Estate Loans), $17.7 million or 29% 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 $17.1 million in unfunded loan commitments.

The bank's overall deposit base has increased 8% in the twelve months ended September 30, 2013, from $77.9 million as of September 30, 2012, to $83.8 million as of September 30, 2013. Non-interest bearing deposits continue to form a substantial part of the deposit base (43%), growing from $30.9 million to $36.0 million as of September 30, 2013. During the same time period interest-bearing deposits increased 2% from $47.0 million to $47.8 million on September 30, 2013.   The bank has no deposits which were sourced through brokers or other wholesale funding sources. 

At September 30, 2013, shareholders' equity was $12.7 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.

"Narrowing interest rate margins continued to have a significant impact on the bank's primary revenue driver which is Net Interest Income during the third quarter," commented Jeffrey K. Ball, Chief Executive Officer. "However, we are beginning to see improvement in quality loan demand and anticipate this trend will continue into the coming year. We continue to keep a close monitor on our expenses while staffing the bank appropriately for increased loan activity. The bank is well positioned in terms of capital, liquidity and staffing to support increased growth while remaining committed to maintaining our strong underwriting standards with a focus on long-term shareholder value."

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)
	9/30/13	12/31/12	9/30/12
ASSETS
Cash and due from banks	$ 5,519	$ 3,679	$ 2,327
Interest bearing deposits with other financial institutions	5,930	7,515	3,607
Cash and Cash Equivalents	11,449	11,194	5,934
Investment securities available-for-sale	30,748	29,906	32,571
Federal Home Loan Bank stock	600	605	605
Loans, net of unearned income	59,996	59,991	58,321
Allowance for loan losses	(1,457)	(1,168)	(1,572)
Net Loans	58,539	58,823	56,749
Premises and equipment, net	574	627	662
Accrued interest receivable and other assets	3,625	3,552	3,588
Total Assets	$ 105,535	$ 104,707	$ 100,109
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing deposits	$ 36,039	$ 33,698	$ 30,887
Interest-bearing deposits	47,759	49,092	47,029
Total Deposits	83,798	82,790	77,916
FHLB advances	8,750	8,750	8,750
Accrued interest payable and other liabilities	329	326	315
Total Liabilities	92,877	91,866	86,981
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	1,086	1,076	1,073
Accumulated deficit	(4,357)	(4,668)	(4,500)
Accumulated other comprehensive income	(29)	475	597
Total Shareholders' Equity	12,658	12,841	13,128
Total Liabilities and Shareholders' Equity	$ 105,535	$ 104,707	$ 100,109
Book Value Per Share	$ 7.83	$ 7.95	$ 8.12

Friendly Hills Bank
Statements of Operations (Unaudited)
(in thousands, except per share information)
	For the nine months ended 9/30/13	For the nine months ended 9/30/12
Interest Income	$ 2,831	$ 3,143
Interest Expense	318	377
Net Interest Income	2,513	2,766
Provision for Credit Losses	99	(84)
Net Interest Income after Provision for Credit Losses	2,414	2,850
Other Income	233	207
Operating Expenses	2,614	2,785
Investment Securities and Hedging Contracts Gains	279	42
Earnings before Provision for Income Taxes	312	314
Income Tax Expense	(1)	(1)
Net Earnings	$ 311	$ 313
Basic and Diluted Earnings Per Share	$ 0.19	$ 0.19

CONTACT: Jeffrey K. Ball (President & CEO)
         Daniel L. Erickson (EVP & CFO)
         (562) 947-1920