GlobeNewswire Inc | Nov 13, 2020 09:00AM EST

November 13, 2020

WHITTIER, Calif., Nov. 13, 2020 (GLOBE NEWSWIRE) -- Friendly Hills Bank (the bank) (OTCBB: FHLB) reported results for the third quarter of 2020.

For the nine month period ending September 30, 2020, the bank reported net income of $622,000 or $0.31 per diluted share of common stock. This figure includes a $150,000 provision for loan losses. The bank reported net income of $933,000 (including a $50,000 gain on securities sold) or $0.48 per diluted share of common stock for the nine months ended September 30, 2019.

As of September 30, 2020, the bank reported total assets of $236.3 million, a 47% increase from $160.2 million as of September 30, 2019. The banks loan portfolio, net of unearned income, increased 36% from $102.9 million as of September 30, 2019, to $139.9 million as of September 30, 2020.This figure includes $47.7 million in Paycheck Protection Program loans. The portfolio remains diversified with $79.0 million or 56% in Commercial & Industrial Loans to local businesses (including $23.7 million in Owner Occupied Commercial Real Estate Loans), $37.7 million or 27% in Commercial Real Estate Loans to investors and $20.3 million or 14% in Residential Real Estate Loans to investors. The bank has an additional $20.0 million in unfunded loan commitments.

The banks overall deposit base has increased 33% in the twelve months ended September 30, 2020, from $119.8 million as of September 30, 2019, to $159.6 million as of September 30, 2020. Non-interest bearing deposits remain a substantial part of the deposit base (48%), increasing from $53.5 million as of September 30, 2019, to $75.9 million as of September 30, 2020. During the same time period, interest-bearing deposits increased from $66.4 million as of September 30, 2019, to $83.7 million on September 30, 2020.

At September 30, 2020, shareholders equity was $20.1 million and the banks total risk-based capital ratio was 20%, 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 company continues to maintain strong liquidity as the significant increases in deposits from earlier in the year remain sustainable, commented Jeffrey K. Ball, Chief Executive Officer. We have been able to serve this larger deposit base with control of our operating expenses and sufficient capital well above regulatory guidelines to handle the associated growth. Opportunities to invest that additional liquidity have been more challenging given market conditions and our desire to control risk exposure. This has resulted in reduced margins while asset quality remains strong as we continue to monitor market conditions and the needs of our client base. We still expect interest rate margins to be compressed for the foreseeable future. Contributing to this margin compression are the Paycheck Protection Program loans which accrue interest at just 1.00% and we are working diligently with those borrowers to submit their forgiveness applications to the Small Business Administration in an effort to accelerate the repayment of those low earning assets. We are proud of the work we have done under that CARES Act program to get the money into our local economy as quickly and efficiently as possible.

Company ProfileFriendly 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 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 BankBalance Sheets (Unaudited)(in thousands, except per share information) 9/30/20 12/31/19 9/30/19ASSETS Cash and due from banks $ 2,076 $ 3,203 $ 5,309 Interest bearing deposits with other 61,506 20,855 9,821 financial institutionsCash and Cash Equivalents 63,582 24,058 15,130 Investment securities 22,767 32,778 34,436 available-for-saleInvestment securities 2,000 0 0 held-to-maturityFederal Home Loan Bank and other 2,632 2,705 2,705 restricted stockLoans, net of unearned income 139,888 93,988 102,912 Allowance for loan losses (1,464 ) (1,332 ) (1,525 )Net Loans 138,424 92,656 101,387 Premises and equipment, net 896 313 578 Bank Owned Life Insurance 4,815 4,730 4,702 Deferred tax asset 65 19 305 Accrued interest receivable and other 1,154 1,175 1,003 assetsTotal Assets $ 236,335 $ 158,434 $ 160,246 LIABILITIES AND SHAREHOLDERS? EQUITY Liabilities Deposits Noninterest-bearing deposits $ 75,881 $ 54,281 $ 53,472 Interest-bearing deposits 83,707 63,932 66,370 Total Deposits 159,588 118,213 119,842 Borrowed Funds 55,670 20,531 20,551 Accrued interest payable and other 1,015 644 993 liabilitiesTotal Liabilities 216,273 139,388 141,386 Shareholders? Equity Common stock, no par value, 10,000,000 shares authorized:2,006,393 shares issued and 15,958 15,958 15,958 outstanding as of 9/30/201,997,993 shares issued and outstanding as of 9/30/19Additional paid-in-capital 1,553 1,470 1,454 Accumulated earnings 2,282 1,660 1,490 Accumulated other comprehensive 269 (42 ) (42 )income (loss)Total Shareholders? Equity 20,062 19,046 18,860 Total Liabilities and Shareholders? $ 236,335 $ 158,434 $ 160,246 Equity Book Value Per Share $ 10.00 $ 9.53 $ 9.44

Friendly Hills BankStatements of Operations (Unaudited)(in thousands, except per share information) For the For the nine nine months months ended ended 9/30/20 9/30/19Interest Income $ 4,330 $ 4,632 Interest Expense 576 478 Net Interest Income 3,754 4,154 Provision for Loan Losses 150 0 Net Interest Income after Provision for Loan 3,604 4,154 Losses Noninterest Income 440 379 Noninterest Expense 3,193 3,280 Non-Recurring Items 0 50 Income before Provision for Income Taxes 851 1,303 (Provision) Benefit for Income Taxes (229 ) (370 )Net Income $ 622 $ 933 Basic and Diluted Earnings Per Share $ 0.31 $ 0.48

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