Friendly Hills Bancorp Reports Third Quarter Results; Planned Departure of Its Chief Executive Officer

Whittier, California, UNITED STATES

WHITTIER, Calif., Nov. 18, 2021 (GLOBE NEWSWIRE) -- Friendly Hills Bancorp (OTCBB: FHLB), the holding company for Friendly Hills Bank, reports results for the third quarter of 2021 the planned departure of its Chief Executive Officer, Jeffrey Ball, to pursue other business opportunities and the appointment of Mr. Christopher Naghibi to its Boards of Directors.

For the nine-month period ended September 30, 2021, the bank reported net income of $784,000 or $0.39 per basic and diluted share of common stock which includes $494,000 in income from an Employee Retention Tax Credit (ERTC). The bank reported net income of $622,000 or $0.31 per basic and diluted share of common stock for the nine months ended September 30, 2020 (which includes a $150,000 provision for loan losses).

As of September 30, 2021, the bank reported total assets of $315.2 million, a 33% increase from $236.3 million as of September 30, 2020, and a 54% increase from $204.2 million as of December 31, 2020. The bank’s loan portfolio, net of unearned income, decreased 33% from $139.9 million as of September 30, 2020, to $93.6 million as of September 30, 2021.  This reflects a 24% decrease from $123.2 million as of December 31, 2020. The decrease in loans in the past 12 months, $46.3 million, is attributable to the payoff of loans under the Paycheck Protection Program as borrowers successfully completed the loan forgiveness process with the U.S. Small Business Administration. The portfolio remains diversified with $36.3 million or 39% in Commercial & Industrial Loans to local businesses (including $22.3 million in Owner Occupied Commercial Real Estate Loans), $32.4 million or 35% in Commercial Real Estate Loans to investors and $22.0 million or 23% in Residential Real Estate Loans to investors.  At September 30, 2021, the bank has an additional $19.6 million in unfunded loan commitments.

The bank’s overall deposit base has increased 69% in the twelve months ended September 30, 2021, from $159.6 million as of September 30, 2020, to $269.9 million as of September 30, 2021. The increase is primarily due to the previously announced completion of the acquisition of three Bank of Southern California branches and their deposits totaling $82.4 million in September. The bank’s overall deposit base has increased 67% from $161.5 million as of December 31, 2020. Non interest-bearing deposits remain a substantial part of the deposit base (49%), increasing from $75.9 million as of September 30, 2020, to $132.9 million as of September 30, 2021. During the same period, interest-bearing deposits increased from $83.7 million as of September 30, 2020, to $137.0 million on September 30, 2021.

On September 30, 2021, shareholders’ equity was $21.0 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 entered into a mutual Separation Agreement with Jeffrey K. Ball, Chief Executive Officer, in connection with his desire to pursue other business opportunities. Mr. Ball will remain in his position as President and Chief Executive Officer until the end of the year and intends to continue serving as a director of Friendly Hills Bancorp and Friendly Hills Bank after the completion of his employment.  

“We were pleased to report the completion of the acquisition and integration of the three branch offices which together added approximately $81 million to the bank’s deposit base,” commented Jeffrey K. Ball, Chief Executive Officer. “This expansion of the bank’s deposit base and service area into Orange and San Bernardino Counties will provide greater opportunities for continued growth. While net interest margin continues to be under pressure due to current market conditions, we believe the bank is well positioned for future development with a strong balance sheet and no problem assets. I am proud to have led the bank from founding to its current position and I look forward to working with the board in identifying and supporting a new leader for the organization who can continue our pursuit of long-term shareholder value.”

“As the Founder of the Bank over 15 years ago, Jeff has demonstrated consistent leadership in the development and operation of the bank,” commented William C. Greenbeck, Board Chair. “He recognizes the bank’s need for new leadership to continue the growth that is required as the industry evolves and we are appreciative of his desire to remain part of that effort by continuing to serve as a Director. We value his continued dedication to the success of the company and wish him well in his new career endeavors.”

In addition, Mr. Christopher Naghibi, a resident of Irvine, California and Chief Credit Officer of First Foundation Bank, has joined the Bank and Bancorp’s Board of Directors.

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 additional branch offices in Orange, Redlands and Santa Fe Springs, California.   For more information on the Bank, please visit or call 562-947-1920.

This news release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, and Friendly Hills Bancorp intends for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” and similar expressions. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this news release. Factors that might cause such differences include, but are not limited to: Friendly Hills Bank’s ability to (i) successfully realize the benefits of the branch acquisition, including customer acquisition and retention, (ii) identify a new Chief Executive Officer, (iii) execute on its business plans and (iv) achieve its business objectives, including managing costs associated with the branch acquisition; changes in general economic and financial market conditions, either nationally or locally, in areas in which Friendly Hills Bank conducts its operations; changes in interest rates; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; increased competitive challenges and expanding product and pricing pressures among financial institutions; effect of governmental supervision and regulation, including any regulatory or other enforcement actions; legislation or regulatory changes which adversely affect Friendly Hills Bank’s operations or business; loss of key personnel; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. Friendly Hills Bancorp undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances except as required by law.

Friendly Hills Bank
Balance Sheets (Unaudited)
(in thousands, except share and per share information)
   9/30/21 12/31/20 9/30/20
Cash and due from banks$4,737  $2,596  $2,076 
Interest bearing deposits with other financial institutions 161,638   48,316   61,506 
  Cash and Cash Equivalents 166,375   50,912   63,582 
Investment securities available-for-sale 36,988   20,070   22,767 
Investment securities held-to-maturity 6,465   2,000   2,000 
Federal Home Loan Bank and other restricted stock 2,632   2,632   2,632 
Loans, net of unearned income 93,573   123,230   139,888 
Allowance for loan losses (1,800)  (1,464)  (1,464)
  Net Loans 91,773   121,766   138,424 
Premises and equipment, net 509   264   270 
Bank Owned Life Insurance 4,924   4,842   4,815 
Right Of Use Assets 1,921   568   627 
Goodwill and Core Deposit Intangibles 1,419   0   0 
Accrued interest receivable and other assets 2,112   1,154   1,218 
  Total Assets$315,118  $204,208  $236,335 
 Noninterest-bearing deposits$132,902  $78,997  $75,881 
 Interest-bearing deposits 136,992   82,532   83,707 
  Total Deposits 269,894   161,529   159,588 
FHLB Advances 20,500   20,500   20,500 
Accrued interest payable and other liabilities 3,698   1,664   36,185 
  Total Liabilities 294,092   183,693   216,273 
Shareholders’ Equity     
Common stock, no par value, 10,000,000 shares authorized:
2,006,393 shares issued and outstanding
 15,958   15,958   15,958 
Additional paid-in-capital 1,621   1,570   1,553 
Accumulated earnings 3,291   2,682   2,282 
Accumulated other comprehensive income 156   305   269 
  Total Shareholders’ Equity 21,026   20,515   20,062 
  Total Liabilities and Shareholders’ Equity$315,118  $204,208  $236,335 
Book Value Per Share$10.48  $10.22  $10.00 

Friendly Hills Bank
Statements of Operations (Unaudited)
(in thousands, except per share information)
   For the nine For the nine
   months ended months ended
   9/30/21 9/30/20
Interest Income$4,424  $4,330 
Interest Expense 411   576 
 Net Interest Income 4,013   3,754 
Provision for Loan Losses 0   150 
 Net Interest Income after Provision for Loan Losses 4,013   3,604 
Noninterest Income 443   440 
Non-Recurring Income Items 493   0 
Noninterest Expense 3,612   3,193 
Non-Recurring Expense Items 254   0 
Income before Provision for Income Taxes 1,083   851 
(Provision) Benefit for Income Taxes (299)  (229)
 Net Income $784  $622 
Basic and Diluted Earnings Per Share$0.39  $0.31 

Jeffrey K. Ball (President & CEO)
Viktor Uehlinger (EVP & CFO)
(562) 947-1920