FHLB Friendly Hills Bancorp (PK)

WHITTIER, Calif., Aug. 10 /PRNewswire-FirstCall/ -- Friendly Hills Bank (OTC Bulletin Board: FHLB) reported results for the second quarter of 2010, after completing its third full year of operations since opening on September 18, 2006.  

For the six month period ending June 30, 2010, the bank reported a profit of $361,000 or $0.22 per diluted share of common stock.  This figure includes a $514,000 gain on the sale of investment securities and a $152,000 decrease in the value of an interest rate cap which was purchased during the second quarter.  The provision for credit losses for the six months ended June 30, 2010, of $83,000 was 75% less than the $333,000 provision for the same period one year earlier.  The prior year provision was impacted by the increase in the Bank's allowance for loan losses from 1.50% to 2.00% of gross loans as part of the Bank's overall risk management process.  The bank reported a net loss of $736,000, or ($0.46) per diluted share of common stock for the six months ended June 30, 2009.  

As of June 30, 2010, the bank reported total assets of $93.1 million, a 34% increase from $69.3 million as of June 30, 2009.  The bank's loan portfolio, net of unearned income, grew 39% from $44.4 million as of June 30, 2009, to $61.8 million as of June 30, 2010.  The portfolio remains diversified with $10.2 million or 16% in Commercial & Industrial Loans to local businesses, $24.2 million or 39% in Residential Real Estate Loans to investors and $23.8 million or 38% in Commercial Real Estate Loans.  Owner Occupied properties represent the largest component of the Commercial Real Estate Portfolio (22%) with $13.8 million outstanding.  The bank has an additional $17.3 million in unfunded loan commitments.

The bank's overall deposit base has grown 28% in the twelve months ended June 30, 2010, from $55.6 million as of June 30, 2009, to $70.9 million as of June 30, 2010.  Non-interest bearing deposits continue to form a substantial part of the deposit base (32%), growing from $19.0 million to $22.5 million as of June 30, 2010.  During the same time period interest-bearing deposits grew from $36.6 million to $48.4 million on June 30, 2010.   The bank has no deposits which were sourced through brokers or other wholesale funding sources.

At June 30, 2010, shareholders' equity was $13.3 million and the bank's total risk-based regulatory capital ratio was 20.83%, 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.

"The current environment continues to present many challenges with high levels of external risk for the bank and its client base," commented Jeffrey K. Ball, Chief Executive Officer.  "In response to these challenges we have taken certain steps to minimize our risk position while maintaining a very strong underwriting position on our assets.  This risk management includes taking specific steps to offset the potential impact of a rising interest rate environment which could likely materialize in the coming years.  To offset a portion of this risk we have utilized wholesale borrowing and purchased an interest rate cap contract.  The near-term impact of these actions has resulted in compressed margins and a value adjustment for the most recent quarter.  However, we are confident that they will bring long-term value to the institution by offsetting our exposure to rising interest rates in the coming years.  The environment also gives us an elevated level of concern regarding asset quality which we have responded to by maintaining our strong underwriting standards and aggressively managing the loan portfolio.  This approach has resulted in the decision to place an existing loan on non-accrual during the second quarter.  That action included the reversal of the associated interest income which has also impacted our net interest margins.  We remain confident in the quality of our loan portfolio relative to the loan loss provision we are maintaining and feel the bank has sufficient liquidity and capital to support the continued growth of our franchise."

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