Friendly Hills Bank Approved for U.S. Treasury Investment - but Elects to Decline Capital Infusion From United States Government
December 23 2008 - 7:00AM
PR Newswire (US)
WHITTIER, Calif., Dec. 23 /PRNewswire-FirstCall/ -- Friendly Hills
Bank (OTC:FHLB) (BULLETIN BOARD: FHLB) has received preliminary
approval from the United States Treasury to participate in the
Capital Purchase Program. With this approval the Bank is now
eligible to receive up to $1,600,000 of additional capital in the
form of Preferred Stock. However, based on a number of factors, the
Bank's Board of Directors has decided not to participate in the
program. These factors include the Bank's current Total Risk-based
Capital Ratio of 27 percent (which is well above the
"well-capitalized" standard of 10 percent), confidence that the
Bank's capital position is sufficient for the bank to sustain
itself through the current economic environment and achieve
profitability, the strength of the bank's asset base which has no
past due or non-accrual loans and the potentially dilutive impact
of the additional capital for current shareholders. Separately, the
Bank did elect to participate in the Federal Deposit Insurance
Corporation's ("FDIC") Transaction Account Guarantee Program. This
program is part of the FDIC's Temporary Liquidity Guarantee Program
and provides unlimited FDIC insurance of 100 percent of funds
deposited in non-interest bearing transaction accounts. This would
include both personal and business checking accounts, as well as
NOW accounts which bear an interest rate of less than 0.50 percent
and certain types of attorney trust accounts. This coverage is
currently effective through December 31, 2009, and is separate from
the coverage which is available under the FDIC's general deposit
insurance rules which currently insure accounts up to $250,000. "We
are appreciative of the U.S. Treasury's approval of Friendly Hills
Bank to participate in the Capital Purchase Program," commented
Jeffrey K. Ball, Chief Executive Officer. "We recognize the
stringent standards they are employing for determining the
appropriate use of the government investments. However, in
assessing the bank's current position and the potentially dilutive
impact of this additional capital to our existing shareholders, we
have decided not to accept the proposed investment. Our initial
public offering provided an ample amount of capital from the
investment community - most of which came from private investors
based in our primary market area. We have a responsibility to
continue working towards an effective return for these investors
and feel that the proposed terms of the preferred stock investment
- at a full tax-effective cost of 9.4 percent in the first five
years - could potentially have a dilutive effect on our existing
shareholders in light of the current and projected rate
environment. With a current cost of funds below 1%, and a sound
loan portfolio with no past due or non-accrual loans, we feel
properly positioned to sustain our efforts through the current
economic conditions and achieve profitability without the need for
additional capital." Mr. Ball continued his comments in regards to
the Transaction Account Guarantee Program. "The same strong capital
position which has enabled us to bypass the Capital Purchase
Program is also a source of comfort for our depositors. And now, in
addition to their awareness that our capital ratios far exceed the
regulatory requirements for being a "well capitalized" bank,
Friendly Hills Bank depositors have the additional security of this
unlimited FDIC insurance on all of their standard checking account
deposits. While this FDIC program is currently effective to
December 31, 2009, we feel the additional comfort level provided
outweighs the Bank's cost of participating and have chosen to
participate as an additional accommodation for the safety of our
deposit clients." 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. 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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