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Friendly Hills Bank Reports Third Quarter Results; Receives Approval for Membership in Federal Reserve System

WHITTIER, Calif., Nov. 14, 2014 (GLOBE NEWSWIRE) -- Friendly Hills Bank (the "bank") (OTCBB:FHLB) reported results for the third quarter of 2014.

For the nine month period ending September 30, 2014, the bank reported a profit of $1.7 million or $1.07 per diluted share of common stock. This figure includes a $1.3 million tax credit, a $58,000 increase in the value of the interest rate caps and a $17,000 net gain on securities sold. The $1.3 million tax benefit results from a reduction in the bank's deferred tax valuation allowance as it is more likely than not that the bank will utilize the benefit in the future. The bank reported a profit of $311,000 or $0.19 per diluted share of common stock for the nine months ended September 30, 2013. This figure includes a $181,000 gain on securities sold, a $99,000 provision for loan loss and a $97,000 increase in the value of the interest rate caps.

As of September 30, 2014, the bank reported total assets of $113.3 million, a 7% increase from $105.5 million as of September 30, 2013. The bank's loan portfolio, net of unearned income, decreased 2% from $60.0 million as of September 30, 2013, to $58.5 million as of September 30, 2014. The portfolio remains diversified with $31.5 million or 54% in Commercial & Industrial Loans to local businesses (including $20.9 million in Owner Occupied Commercial Real Estate Loans), $11.7 million or 20% in Residential Real Estate Loans to investors and $8.8 million or 15% in Commercial Real Estate Loans to investors. The bank has an additional $16.5 million in unfunded loan commitments.

The bank's overall deposit base has increased 7% in the twelve months ended September 30, 2014, from $83.8 million as of September 30, 2013, to $89.7 million as of September 30, 2014. Non-interest bearing deposits continue to form a substantial part of the deposit base (41%), growing from $36.0 million to $36.7 million as of September 30, 2014. During the same time period interest-bearing deposits increased from $47.8 million to $53.0 million on September 30, 2014. The bank has no deposits which were sourced through brokers or other wholesale funding sources.

At September 30, 2014, shareholders' equity was $14.5 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.

The bank also announced that the Federal Reserve Bank of San Francisco, acting under its delegated authority, has approved Friendly Hills Bank's application for membership in the Federal Reserve System. The membership became effective on September 29, 2014. State-chartered banks may choose to become members of the Federal Reserve System if they meet specific, high standards set by the Board of Governors.

"Our ability to recognize the deferred tax asset is an important milestone in the continued development of the bank," commented Jeffrey K. Ball, Chief Executive Officer. "It recognizes this important benefit of the bank as we continue to expand earnings with anticipated growth. Although current market conditions continue to be challenging in terms of generating quality loans at attractive interest rate margins, the bank is well positioned in terms of capital and liquidity to support further growth. As we continuously evaluate our strategic plans for the long-term enhancement of shareholder value, we feel that the Federal Reserve's primary mission of promoting economic growth complements our continued efforts to provide a quality banking alternative for the markets we serve."

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 in Whittier, California with an additional branch office in Santa Fe Springs, California and a loan production office in Irvine, 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)

9/30/14

12/31/13

9/30/13
ASSETS
Cash and due from banks $ 4,130 $ 3,217 $ 5,519
Interest bearing deposits with other financial institutions 5,741 5,893 5,930
Cash and Cash Equivalents 9,871 9,110 11,449
Investment securities available-for-sale 39,711 37,750 30,748
Federal Home Loan Bank stock 677 646 600
Federal Reserve Bank stock 393 0 0
Loans, net of unearned income 58,501 57,635 59,996
Allowance for loan losses (1,595) (1,457) (1,457)
Net Loans 56,906 56,178 58,539
Premises and equipment, net 496 561 574
Accrued interest receivable and other assets 5,290 3,667 3,625
Total Assets $ 113,344 $ 107,912 $ 105,535
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing deposits $ 36,662 $ 37,436 $ 36,039
Interest-bearing deposits 53,039 48,911 47,759
Total Deposits 89,701 86,347 83,798
FHLB advances 8,750 8,750 8,750
Accrued interest payable and other liabilities 396 333 329
Total Liabilities 98,847 95,430 92,877
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 1,091 1,090 1,086
Accumulated deficit (2,561) (4,295) (4,357)
Accumulated other comprehensive income (loss) 9 (271) (29)
Total Shareholders' Equity 14,497 12,482 12,658
Total Liabilities and Shareholders' Equity $ 113,344 $ 107,912 $ 105,535
Book Value Per Share $ 8.97 $ 7.72 $ 7.83
Friendly Hills Bank
Statements of Operations (Unaudited)
(in thousands, except per share information)
For the nine For the nine
months ended months ended
9/30/14 9/30/13
Interest Income $ 3,085 $ 2,831
Interest Expense 273 318
Net Interest Income 2,812 2,513
Provision for Credit Losses 0 99
Net Interest Income after Provision for Credit Losses 2,812 2,414
Other Income 415 233
Operating Expenses 2,867 2,614
Net Gain on Investment Securities and Hedging Contracts 75 279
Earnings before Provision for Income Taxes 435 312
Income Tax (Expense) Benefit 1,300 (1)
Net Earnings $ 1,734 $ 311
Basic and Diluted Earnings Per Share $ 1.07 $ 0.19

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

Source:Friendly Hills Bank