Friendly Hills Bank (the "bank") (OTCBB: FHLB) reported results for
the year ended December 31, 2012, after completing its sixth full
year of operations since opening on September 18, 2006.
For the twelve month period ending December 31, 2012, the bank
reported a profit of $145,000 or $0.09 per diluted share of common
stock. This figure includes a $213,000 provision for loan losses,
and a $73,000 increase in the value of interest rate caps. The bank
reported a profit of $149,000 or $0.09 per diluted share of common
stock for the twelve months ended December 31, 2011. This figure
includes a $141,000 provision for loan losses, a $48,000 loss on
the sale of investment securities, and a $147,000 decrease in the
value of interest rate caps.
Excluding the provision for loan losses, investment securities
losses, and adjustments to the carrying value of interest rate caps
("Core Earnings"), the bank reported net income of $285,000 for the
twelve months ended December 31, 2012 compared to a net income of
$485,000 for the same period in 2011.
As of December 31, 2012, the bank reported total assets of
$104.7 million, a 7% increase from $98.0 million as of December 31,
2011. The bank's loan portfolio, net of unearned income, decreased
2% from $60.9 million as of December 1, 2011, to $60.0 million as
of December 31, 2012. The portfolio remains diversified with $27.3
million or 45% in Commercial & Industrial Loans to local
businesses (including $17.7 million in Owner Occupied Commercial
Real Estate Loans), $16.9 million or 28% in Residential Real Estate
Loans to investors and $11.3 million or 19% in Commercial Real
Estate Loans to investors. The bank has an additional $15.3 million
in unfunded loan commitments.
The bank's overall deposit base has grown 8% in the twelve
months ended December 31, 2012, from $76.4 million as of December
31, 2011, to $82.8 million as of December 31, 2012. Non-interest
bearing deposits continue to form a substantial part of the deposit
base (41%), growing from $27.1 million to $33.7 million as of
December 31, 2012. During the same time period interest-bearing
deposits decreased from $49.3 million to $49.1 million on December
31, 2012. The bank has no deposits which were sourced through
brokers or other wholesale funding sources.
At December 31, 2012, shareholders' equity was $12.8 million and
the bank's total risk-based capital ratio was 19%, 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.
"Margin compression continues to have a significant impact on
the core earnings of the bank," commented Jeffrey K. Ball, Chief
Executive Officer, "primarily as a result of macro-economic
conditions and our asset mix. The current interest rate environment
has negatively impacted our loan yields particularly in the
underwriting of new and maturing assets. Despite the temptation to
accelerate loan growth as a means to preserve net interest income,
we have chosen to maintain our underwriting discipline with a
consistent focus on relationship banking. Therefore, with our
continued growth in non-interest bearing deposits, our asset mix
has gone from 60% Net Loans to Total Assets down to 56% Net Loans
to Total Assets."
"We have maintained profitability for the bank for the past year
by offsetting the resultant 11% reduction in Net Interest Income
with a focus on expense reduction and lowering our cost of funds.
This has been achieved while managing the bank's current and longer
term exposure to a rising interest rate environment with the use of
fixed rate borrowings and interest rate caps. While the environment
remains challenging, the company has sufficient capital and
liquidity to pursue additional opportunities for earnings growth as
economic conditions improve."
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.
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Friendly Hills Bank
Balance Sheets (Unaudited)
(in thousands, except per share information)
---------------------------------------------------------------------------
12/31/12 12/31/11
--------- ---------
ASSETS
Cash and due from banks $ 3,679 $ 2,305
Interest bearing deposits with other financial
institutions 7,515 4,575
--------- ---------
Cash and Cash Equivalents 11,194 6,880
Investment securities available-for-sale 29,906 26,826
Federal Home Loan Bank stock 605 610
Loans, net of unearned income 59,991 60,916
Allowance for loan losses (1,168) (1,677)
--------- ---------
Net Loans 58,823 59,239
Premises and equipment, net 627 739
Accrued interest receivable and other assets 3,552 3,673
--------- ---------
Total Assets $ 104,707 $ 97,967
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing deposits $ 33,698 $ 27,111
Interest-bearing deposits 49,092 49,269
--------- ---------
Total Deposits 82,790 76,380
FHLB advances 8,750 8,750
Accrued interest payable and other liabilities 326 247
--------- ---------
Total Liabilities 91,866 85,377
Shareholders' Equity
Common stock, no par value, 10,000,000 shares
authorized: 1,616,000 shares issued and
outstanding 15,958 15,958
Additional paid-in-capital 1,076 1,053
Accumulated deficit (4,668) (4,813)
Accumulated other comprehensive income (loss) 475 392
--------- ---------
Total Shareholders' Equity 12,841 12,590
--------- ---------
Total Liabilities and Shareholders' Equity $ 104,707 $ 97,967
========= =========
Book Value Per Share $ 7.95 $ 7.79
========= =========
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Friendly Hills Bank
Statements of Operations (Unaudited)
(in thousands, except per share information)
---------------------------------------------------------------------------
For the For the
twelve twelve
months months
ended ended
12/31/12 12/31/11
---------- ---------
Interest Income $ 4,142 $ 4,648
Interest Expense 497 610
---------- ---------
Net Interest Income 3,645 4,038
Provision for Loan Losses 213 141
---------- ---------
Net Interest Income after Provision for Loan
Losses 3,432 3,897
Other Income 273 186
Operating Expenses 3,633 3,678
Gain (Loss) on Investment Securities & Hedging
Contracts 74 (195)
---------- ---------
Earnings (Loss) before Provision for Income Taxes 146 210
Income Tax Expense 1 61
---------- ---------
Net Earnings (Loss) $ 145 $ 149
---------- ---------
Basic and Diluted Earnings (Loss) Per Share $ 0.09 $ 0.09
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