WHITTIER, Calif., Nov. 1, 2010 /PRNewswire-FirstCall/ -- Friendly
Hills Bank (OTC Bulletin Board: FHLB) announced unaudited results
for the nine months ending September 30,
2010. During this period the bank reported a loss of
$794,000 or ($0.49) per diluted share of common stock.
This figure includes a $514,000
gain on the sale of investment securities and a $206,000 decrease in the value of an interest
rate cap which was purchased during the second quarter. The
provision for credit losses for the nine months ended September 30, 2010, of $1,082,000 was 120% more than the $492,000 provision for the same period one year
earlier. As a result, the Allowance for Loan Losses was
maintained at the previous level of 2% of gross loans following
charge-offs in the amount of $1,003,000 during the recently completed quarter.
The bank reported a net loss of $1,033,000, or ($0.64) per diluted share of common stock for the
nine months ended September 30, 2009.
As of September 30, 2010, the bank
reported total assets of $98.6
million, a 28% increase from $76.9
million as of September 30,
2009. The bank's loan portfolio, net of unearned
income, grew 28% from $48.0 million
as of September 30, 2009, to
$61.6 million as of September 30, 2010. The portfolio remains
diversified with $23.2 million or 38%
in Commercial & Industrial Loans to local businesses (including
$13.7 million in Owner Occupied
Commercial Real Estate Loans), $20.4
million or 33% in Residential Real Estate Loans to investors
and $14.3 million or 23% in
Commercial Real Estate Loans to investors. The bank has an
additional $18.2 million in unfunded
loan commitments.
The bank's overall deposit base has grown 22% in the twelve
months ended September 30, 2010, from
$63.2 million as of September 30, 2009, to $77.1 million as of September 30, 2010. Non-interest bearing
deposits continue to form a substantial part of the deposit base
(31%), growing from $20.0 million to $23.8
million as of September 30,
2010. During the same time period interest-bearing
deposits grew from $43.2 million to $53.3
million on September 30, 2010.
The bank has no deposits which were sourced through brokers
or other wholesale funding sources.
At September 30, 2010,
shareholders' equity was $12.3
million and the bank's total risk-based regulatory capital
ratio was 19.42%, 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.
"We remain concerned about the current economic environment and
what appears to be an extended path to recovery," commented
Jeffrey K. Ball, Chief Executive
Officer. "While our loan portfolio continues to perform well,
regular risk assessments have led us to take significant action
from an accounting standpoint towards certain assets. These
are loan assets which we feel have been compromised by the
prevailing economic conditions. External risk factors
contribute towards what we perceive to be a greater risk of default
in these assets which may result in exposure for the bank.
While we recognize the impact of this action on our
profitability and capital position, we feel that it is in the best
interest of the company to recognize and account for these risks
and their related costs in a timely fashion."
"Another risk component we remain focused on is the bank's
sensitivity to a rising interest rate environment," Ball continued.
"While we cannot know for certain when rates will increase,
or by how much, we have taken action to minimize the impact on the
bank in that scenario. This action has included the purchase
of an interest rate cap, fixed-rate wholesale borrowings and an
increase in short-term assets in our investment portfolio.
This risk mitigation has resulted in a lower net interest
margin and a mark-to-market adjustment ($206,000 to date) in the value of our interest
rate cap. The bank continues to maintain a strong capital
base which is significantly above well capitalized standards, has
strong liquidity with over 37% of total assets in cash and
securities, a loan loss reserve maintained at 2% of gross loans and
profitable operations as demonstrated by an efficiency ratio which
continues to be under 100%. We remain focused on the
long-term franchise value of the company and feel properly
positioned for our continued growth."
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.
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Friendly
Hills Bank
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Balance
Sheets
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(Unaudited)
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(in thousands, except per share
information)
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9/30/10
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12/31/09
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9/30/09
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ASSETS
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Cash and due from
banks
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$ 2,506
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$ 1,954
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$ 2,888
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Interest bearing deposits
with other financial institutions
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8,726
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1,915
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8,935
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Cash and Cash
Equivalents
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11,232
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3,869
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11,822
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Investment securities
available-for-sale
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25,228
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18,779
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16,565
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Loans, net of unearned
income
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61,624
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57,691
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48,012
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Allowance for loan
losses
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(1,236)
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(1,156)
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(977)
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Net Loans
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60,388
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56,535
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47,035
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Premises and equipment,
net
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873
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1,014
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1,061
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Accrued interest
receivable and other assets
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838
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795
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419
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Total
Assets
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$ 98,559
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$ 80,992
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$ 76,903
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LIABILITIES
AND SHAREHOLDERS' EQUITY
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Liabilities
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Deposits
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Noninterest-bearing
deposits
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$ 23,788
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$ 22,061
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$ 19,980
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Interest-bearing
deposits
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53,314
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45,832
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43,184
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Total Deposits
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77,102
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67,893
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63,164
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FHLB advances
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8,750
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0
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0
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Accrued interest payable
and other liabilities
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396
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218
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307
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Total
Liabilities
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86,248
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68,111
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63,470
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Shareholders'
Equity
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Common stock, no par
value, 10,000,000 shares authorized:
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1,616,000 shares issued and
outstanding
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15,958
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15,958
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15,958
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Additional
paid-in-capital
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953
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795
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728
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Accumulated
deficit
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(5,102)
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(4,308)
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(3,834)
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Accumulated other
comprehensive income
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502
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436
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580
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Total
Shareholders' Equity
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12,311
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12,881
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13,432
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Total
Liabilities and Shareholders' Equity
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$ 98,559
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$ 80,992
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$ 76,903
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Book Value
Per Share
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$ 7.62
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$ 7.97
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$ 8.31
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Friendly
Hills Bank
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Statements
of Operations
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(Unaudited)
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(in thousands, except per
share information)
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For the
nine
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For the
nine
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months
ended
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months
ended
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9/30/10
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9/30/09
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Interest Income
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$ 3,412
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$ 2,409
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Interest
Expense
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528
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355
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Net Interest
Income
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2,884
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2,054
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Provision for Credit
Losses
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1,082
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492
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Net Interest Income after
Provision for Credit Losses
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1,802
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1,562
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Other Income
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139
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112
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Operating
Expenses
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3,043
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2,706
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Gain (Loss) on Securities
& Hedging Contracts
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309
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0
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Earnings (Loss) before
Provision for Income Taxes
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(793)
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(1,032)
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Provision for Income
Taxes
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(1)
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(1)
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Net Earnings
(Loss)
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$ (794)
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$
(1,033)
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Basic and Diluted Earnings
(Loss) Per Share
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$ (0.49)
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$
(0.64)
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SOURCE Friendly Hills Bank