GlobeNewswire Inc | May 20, 2021 09:00AM EDT

May 20, 2021

WHITTIER, Calif., May 20, 2021 (GLOBE NEWSWIRE) -- Friendly Hills Bank (the bank) (OTCBB: FHLB) reported results for the first quarter of 2021 and announced its intention to form a holding company.

For the three month period ending March 31, 2021, the bank reported net income of $240,000 or $0.12 per diluted share of common stock. The bank reported net income of $164,000 or $0.08 per diluted share of common stock for the three months ended March 31, 2020.

As of March 31, 2021, the bank reported total assets of $214.1 million, a 32% increase from $162.4 million as of March 31, 2020, and a 5% increase from $204.2 million as of December 31, 2020. The banks loan portfolio, net of unearned income, increased 28% from $99.6 million as of March 31, 2020, to $127.2 million as of March 31, 2021. This reflects a 3% increase from $123.2 million as of December 31, 2020. The portfolio remains diversified with $64.1 million or 50% in Commercial & Industrial Loans to local businesses (including $23.3 million in Owner Occupied Commercial Real Estate Loans), $37.9 million or 30% in Commercial Real Estate Loans to investors and $21.6 million or 17% in Residential Real Estate Loans to investors. At March 31, 2021, the bank has an additional $20.5 million in unfunded loan commitments.

The banks overall deposit base has increased 46% in the twelve months ended March 31, 2021, from $117.8 million as of March 31, 2020, to $171.4 million as of March 31, 2021. The banks overall deposit base has increased 6% from $161.5 million as of December 31, 2020. Non-interest bearing deposits remain a substantial part of the deposit base (52%), increasing from $51.7 million as of March 31, 2020, to $89.3 million as of March 31, 2021. During the same time period, interest-bearing deposits increased from $66.1 million as of March 31, 2020, to $82.1 million on March 31, 2021.

At March 31, 2021, shareholders equity was $20.7 million and the banks total risk-based capital ratio was 21%, 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 Board of Directors, and a majority of the banks shareholders, have also approved a holding company reorganization for the bank by which the bank will become a wholly-owned subsidiary of Friendly Hills Bancorp (Bancorp). If the transaction is approved by the banks appropriate federal and California state regulatory authorities, each of the outstanding shares of the banks common stock will be exchanged for one share of Bancorps common stock. As a result, the shares of Bancorps common stock will be owned directly by the banks shareholders in the same proportion as their existing ownership of Bank common stock immediately prior to the reorganization.

In addition, the bank also previously announced the signing of a definitive agreement with Southern California Bancorp, (OTC Pink: BCAL), the holding company for Bank of Southern California, N.A., whereby the bank will acquire three Bank of Southern California offices. The offices are located in Orange, Redlands and Santa Fe Springs, California subject to satisfaction of certain conditions, including federal and state regulatory approval.

We are pleased to report a strong start to the new year with a substantial increase in earnings per share in comparison to the previous year, commented Jeffrey K. Ball, Chief Executive Officer. The continued growth of the bank, and fee income from participation in the Paycheck Protection Program, have helped to offset continued decreases in interest rate margins associated with the sustained presence of low market interest rates. With these continued conditions, and the long-term effects of the COVID-19 pandemic being uncertain, we remain focused on maintaining a strong balance sheet while finding strategic opportunities to expand our business. That strategy is reflected in our recent announcement that we are acquiring three additional branch offices from another bank (including a branch office in Santa Fe Springs, California which we intend to promptly consolidate into our existing Santa Fe Springs, California branch). These new offices will expand our footprint into additional markets which we feel provide great opportunity for our client focused strategy of relationship banking. Furthermore, the reorganization into a holding company structure, which we have considered for several years and which is a transaction independent from the branch purchase, will provide us with additional corporate and capital flexibility.

Following the reorganization, it is expected that Bancorps common stock will trade under the same ticker symbol currently used by the Bank, FHLB.

The bank anticipates consummating the reorganization and branch office acquisitions in the third quarter of 2021.

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. 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 concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, failure to receive regulatory approval or shareholder approval of the reorganization or branch purchase, a decision by the Board of Directors to abandon the reorganization, changes in the federal, state and local economies, decline in loan production, loss of clients, adverse regulatory and litigation developments, the ability to control costs and expenses, interest rate changes, the effects of COVID-19 on our business, borrowers, clients and employees, financial policies of the United States government, natural disasters and the impact of competition in our market area. The Bank disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained in this release to reflect future events or developments except as required by law.

Friendly Hills BankBalance Sheets (Unaudited)(in thousands, except per share information)

3/31/21 12/31/20 3/31/20ASSETS Cash and due from banks $ 3,200 $ 2,596 $ 3,325 Interest bearing deposits with other 56,252 48,316 20,083 financial institutions Cash and Cash Equivalents 59,452 50,912 23,408 Investment securities 17,744 20,070 29,543 available-for-saleInvestment securities held-to-maturity 2,000 2,000 2,000 Federal Home Loan Bank and other 2,632 2,632 2,705 restricted stockLoans, net of unearned income 127,186 123,230 99,620 Allowance for loan losses (1,603 ) (1,464 ) (1,332 ) Net Loans 125,583 121,766 98,288 Premises and equipment, net 249 264 297 Bank Owned Life Insurance 4,870 4,842 4,758 Accrued interest receivable and other 1,592 1,722 1,397 assets Total Assets $ 214,122 $ 204,208 $ 162,396 LIABILITIES AND SHAREHOLDERS? EQUITY Liabilities Deposits Noninterest-bearing deposits $ 89,340 $ 78,997 $ 51,684 Interest-bearing deposits 82,055 82,532 66,097 Total Deposits 171,395 161,529 117,781 FHLB Advances 20,500 20,500 23,250 Accrued interest payable and other 1,480 1,664 1,489 liabilities Total Liabilities 193,375 183,693 142,520 Shareholders? Equity Common stock, no par value, 10,000,000 shares authorized: 2,006,393 shares issued and outstanding as of 12/31/20 1,997,993 shares issued and 15,958 15,958 15,958 outstanding as of 12/31/19 Additional paid-in-capital 1,587 1,570 1,487 Accumulated deficit 2,922 2,682 1,824 Accumulated other comprehensive 280 305 607 income (loss) Total Shareholders? Equity 20,747 20,515 19,876 Total Liabilities and $ 214,122 $ 204,208 $ 162,396 Shareholders? Equity Book Value Per Share $ 10.34 $ 10.22 $ 9.95

Friendly Hills BankStatements of Operations (Unaudited)(in thousands, except per share information) For the three For the three months ended months ended 3/31/21 3/31/20Interest Income $ 1,474 $ 1,423 Interest Expense 135 178 Net Interest Income 1,339 1,245 Provision for Loan Losses 0 0 Net Interest Income after Provision for Loan 1,339 1,245 LossesNoninterest Income 118 137 Noninterest Expense 1,126 1,159 Non-Recurring Items 0 0 Income before Provision for Income Taxes 331 223 (Provision) Benefit for Income Taxes (91 ) (59 ) Net Income $ 240 $ 164 Basic and Diluted Earnings Per Share $ 0.12 $ 0.08

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