Friendly Hills Bank Completes Strong Year
February 09 2009 - 8:00AM
PR Newswire (US)
WHITTIER, Calif., Feb. 9 /PRNewswire-FirstCall/ -- Friendly Hills
Bank (OTC:FHLB) (BULLETIN BOARD: FHLB) reported results for the
fourth quarter of 2008, its ninth full quarter of operations, since
opening on September 18, 2006. As of December 31, 2008, the bank
reported total assets of $63.5 million, a 40% increase from $45.5
million as of December 31, 2007. The bank's overall deposit base
has grown over 58% in the twelve months ended December 31, 2008,
from $31.0 million as of December 31, 2007, to $49.1 million as of
December 31, 2008. Non-interest bearing deposits continue to form a
substantial part of the deposit base (38%), growing from $12.9
million at year-end 2007 to $18.6 million as of December 31, 2008.
During the same time period interest bearing deposits grew from
$18.0 million to $30.5 million on December 31, 2008. The bank has
no deposits which were sourced through brokers or originated on the
basis of above-market rate programs. The bank's loan portfolio, net
of an allowance for loan losses, also continued to grow, nearly
doubling from $18.3 million as of December 31, 2007, to $36.4
million as of December 31, 2008. The portfolio remains diversified
with $10.3 million or 28% in Commercial & Industrial Loans to
local businesses and $15.5 million or 42% in Commercial Real Estate
Loans. Owner Occupied properties represent the largest component of
the Commercial Real Estate Portfolio (60%) with $9.3 million
outstanding. The bank has an additional $15.1 million in unfunded
loan commitments with no delinquent loans, non-performing loans or
residential 'sub-prime' mortgage loans. The bank's primary source
of income is net interest income which increased by 63% from $1.6
million in the twelve months ended December 31, 2007, to $2.5
million in the twelve months ended December 31, 2008. This increase
was a contributing factor in the bank reducing its net loss for the
twelve months ended December 31, 2007, by 27% from $1.1 million, or
($0.66) per diluted share of common stock, to $783,316, or ($0.48)
per diluted share of common stock for the twelve months ended
December 31, 2008. These figures include a loan loss provision of
$323,963 for the twelve months ended December 31, 2008, which was
86% higher than the $174,584 provision for the same period one year
earlier. This increase in reserves reflects the growth in the loan
portfolio and an increased provision as the bank raised its
allowance for loan losses to 1.50% of loans outstanding. The
increased provision is reflective of management's cautionary
position towards potential risks associated with current economic
conditions. The net loss numbers also reflect the impact of
accounting rules that require companies to include stock
compensation as an expense. These non-cash expenditures grew from
$219,489 in 2007 to $239,942 in 2008. "The challenges being faced
by the banking industry today are unprecedented in terms of rate
levels, economic conditions and government intervention," commented
Jeffrey K. Ball, Chief Executive Officer. "Despite these factors we
have been able to continue building a stable franchise focused on
relationship banking, strong credit underwriting and a focus on our
primary market areas. During a year in which the Federal Reserve
lowered the reference rate by 400 basis points, we have maintained
favorable net interest rate margins through a low cost of funds
which is attributable to our relationship approach strategy. While
doubling the size of our credit portfolio during a weakening
economic environment, we have maintained our focus on credit
quality and have no delinquent or non-performing loans. During the
year our total interest expense grew just 4% while we increased the
size of our deposit base by over 58%. We did this without the use
of any brokered funds or above-market rate promotions during a
period in which other banks in our market were very aggressive with
their insured deposit rates. And we staffed this growth with the
opening of a second branch office located in adjacent Santa Fe
Springs." "While we take great pride in the continued development
of our franchise and have confidence in the strategies we have
employed," continued Ball, "we are also mindful of the current
economic and political environment impacting our nation and our
state. We believe this environment presents many opportunities for
our relationship approach to banking, but it also impacts the
performance of our market which has been negatively impacted by the
economic slowdown and increasing deficits at the state level. In
response to these conditions, our Board of Directors has increased
the allowance for loan losses from 1.25% to 1.50% of gross loans.
Although our credit portfolio continues to perform well, we feel
this increased provision is more reflective of the current risk
environment given the heightened uncertainty in the market. Our
business is to manage risk in the most prudent fashion in order to
maximize the return for our shareholders and we have taken this
step with such responsibility in mind. Our company is
well-capitalized and we believe we have sufficient liquidity to
pursue forthcoming opportunities that we anticipate during the
coming years. Despite being approved for the much publicized
Capital Purchase Program of the U.S. Treasury, we declined to
accept those funds in recognition of potential dilution to current
shareholders as a result of our low cost of funds and the current
position of our capital and liquidity." 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 Los Angeles
and Orange Counties. 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 http://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 Sheet (Unaudited) (in thousands, except per
share information) 12/31/08 12/31/07 Assets Cash and cash
equivalents $2,678 $1,358 Fed funds sold 6,980 7,365 Investment
securities available-for-sale 15,527 17,340 Loans, net of unearned
income 36,987 18,492 Allowance for loan losses (555) (231) Net
loans 36,432 18,260 Premises and equipment, net 1,259 961 Accrued
interest receivable and other assets 632 218 Total Assets $63,508
$45,503 Liabilities Deposits: Non-interest-bearing deposits $18,583
$12,935 Interest-bearing deposits 30,475 18,025 Total Deposits
49,058 30,961 Accrued interest payable and other liabilities 155 95
Total Liabilities $49,213 $31,056 Stockholders' Equity Common
stock, no par value, 10,000,000 shares authorized; $15,958 $15,958
1,616,000 shares issued and outstanding Accumulated deficit (2,797)
(2,014) Additional paid-in-capital 543 303 Accumulated other
comprehensive gain (loss) 591 200 Total Stockholders' Equity 14,295
14,447 Total Liability & Stockholders' Equity $63,508 $45,503
Book Value Per Share $8.85 $8.94 Friendly Hills Bank Statement of
Operations (Unaudited) (in thousands, except per share information)
For the twelve For the twelve months ended months ended 12/31/08
12/31/07 Interest Income $2,967 $1,975 Interest Expense 438 422 Net
Interest Income 2,529 1,553 Provision for Credit Losses 324 175 Net
Interest Income after Provision for Credit Losses 2,205 1,378 Other
Income 125 57 Operating Expenses 3,149 2,502 Gain (Loss) on
Securities 37 - Loss before Provision for Income Taxes (782)
(1,067) Provision for Income Taxes (1) (2) Net Loss $(783) $(1,069)
Basic Income (Loss) Per Share $(0.48) $(0.66) DATASOURCE: Friendly
Hills Bank CONTACT: Jeffrey K. Ball, Chief Executive Officer, or
George W. Peterson, Chief Financial Officer, both of Friendly Hills
Bank, +1-562-947-1920 Web Site: http://www.friendlyhillsbank.com/
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