Friendly Hills Bank Reports Second Quarter Results; Announces Appointment of Two New Directors and Completion of Holding Company Reorganization

Rhea-AI Summary

Friendly Hills Bank (OTCBB: FHLB) reported a net income of $409,000 for the six months ended June 30, 2021, highlighting a 5% decrease in total assets to $223.3 million and a significant 24% decline in its loan portfolio to $106.4 million. The bank's deposit base grew by 13% to $180.3 million, with non-interest bearing deposits representing 51%. The completion of a holding company reorganization has positioned the bank as a wholly owned subsidiary of Friendly Hills Bancorp. Additionally, two new directors were appointed to the board, aiming to strengthen leadership amid ongoing economic uncertainties.

Positive

• Net income increased to $409,000, up from $388,000 YoY.
• Deposit base grew 13% YoY, indicating strong customer confidence.
• Holding company reorganization completed, offering enhanced corporate flexibility.
• Appointment of two directors expected to bring valuable experience for growth.

Negative

• Total assets decreased by 5% from the previous year.
• Loan portfolio decreased by 24%, impacting revenue potential.

News Market Reaction – FHLB

+1.38%

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+1.38% News Effect

On the day this news was published, FHLB gained 1.38%, reflecting a mild positive market reaction.

Data tracked by StockTitan Argus on the day of publication.

WHITTIER, Calif., Aug. 13, 2021 (GLOBE NEWSWIRE) -- Friendly Hills Bank (the “bank”) (OTCBB: FHLB) reported results for the second quarter of 2021, the appointment of two new directors and the completion of its previously announced Holding Company Reorganization.

For the six month period ending June 30, 2021, the bank reported net income of $409,000 or $0.20 per basic and diluted share of common stock which includes $135,000 of non-recurring expenses associated with the previously announced pending branch acquisition and holding company formation, and other shareholder matters related to the bank’s annual meeting. The bank reported net income of $388,000 or $0.19 per basic and diluted share of common stock for the six months ended June 30, 2020.

As of June 30, 2021, the bank reported total assets of $223.3 million, a 5% decrease from $235.0 million as of June 30, 2020, and a 9% increase from $204.2 million as of December 31, 2020. The bank’s loan portfolio, net of unearned income, decreased 24% from $140.6 million as of June 30, 2020, to $106.4 million as of June 30, 2021. This reflects a 14% decrease from $123.2 million as of December 31, 2020. The majority of the decrease in loans in the past 12 months, $31.7 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 $47.7 million or 45% in Commercial & Industrial Loans to local businesses (including $23.0 million in Owner Occupied Commercial Real Estate Loans), $35.1 million or 33% in Commercial Real Estate Loans to investors and $20.5 million or 19% in Residential Real Estate Loans to investors. At June 30, 2021, the bank has an additional $18.5 million in unfunded loan commitments.

The bank’s overall deposit base has increased 13% in the twelve months ended June 30, 2021, from $159.0 million as of June 30, 2020, to $180.3 million as of June 30, 2021. The bank’s overall deposit base has increased 12% from $161.5 million as of December 31, 2020. Non-interest bearing deposits remain a substantial part of the deposit base (51%), increasing from $79.2 million as of June 30, 2020, to $91.2 million as of June 30, 2021. During the same period, interest-bearing deposits increased from $79.8 million as of June 30, 2020, to $89.1 million on June 30, 2021.

At June 30, 2021, shareholders’ equity was $20.9 million and the bank’s 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 of the bank has appointed two additional directors since its last annual meeting of shareholders. Mercedes Broening, a resident of Piedmont, California, and Jacqueline DuPont, a resident of Dana Point, California, were appointed to the board in June 2021.

The bank has also received approval of the previously announced holding company reorganization from its appropriate federal and California state regulatory authorities and has now completed the reorganization. As a result of this reorganization, the bank has become a wholly owned subsidiary of Friendly Hills Bancorp (“Bancorp”) and each of the outstanding shares of the bank’s common stock have been automatically exchanged for one share of Bancorp’s common stock. As a result, the shares of Bancorp’s common stock are owned directly by the bank’s shareholders in the same proportion as their existing ownership of Bank common stock immediately prior to the reorganization. Bancorp’s common stock trades under the same ticker symbol (“FHLB”) previously used by the Bank.

In addition, the previously announced acquisition of three branch offices from Bank of Southern California, a subsidiary of Southern California Bancorp (OTC Pink: BCAL) has been approved by the appropriate federal and California state regulatory authorities and is scheduled to close on or about September 24, 2021, subject to satisfaction of the remaining closing conditions. Those three offices are located in Orange, Redlands and Santa Fe Springs, California. The Orange and Redlands offices will continue to operate as offices of the bank and the Santa Fe Springs office will be consolidated into the bank’s existing branch office two blocks away shortly after completion of the transaction.

“We are pleased to report an increase in earnings per share in comparison to the previous year,” commented Jeffrey K. Ball, Chief Executive Officer. “The bank’s deposit base continues to grow while continued decreases in interest rate margins have been offset by fee income from participation in the Paycheck Protection Program. The bank continues to evaluate strategic opportunities to expand our business while maintaining a strong balance sheet through this period of economic uncertainty attributable to the ongoing pandemic concerns. The holding company structure provides us with additional corporate and capital flexibility. We look forward to expanding our footprint into Orange and San Bernardino Counties while having the additional guidance of our newly added directors, each of whom bring a unique background and complimentary business experiences which will be beneficial in our continued pursuit of long-term shareholder value.”

Company Profile:
Friendly Hills Bancorp is the holding company for Friendly Hills Bank. 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 in this press release 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. Words such as “will likely result”, “aims”, “anticipates”, “believes”, “could”, “estimates”, “expects”, “hopes”, “intends”, “may”, “plans”, “projects”, “seeks”, “should”, “will”, “strategy”, “possibility”, and variations of these words and similar expressions help to identify these forward-looking statements, which involve risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include failure to consummate the branch purchase, 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 Bank
Balance Sheets (Unaudited)
(in thousands, except per share information)
			6/30/21				12/31/20				6/30/20
ASSETS
Cash and due from banks			$	3,926			$	2,596			$	3,999
Interest bearing deposits with other financial institutions				87,585				48,316				54,754
		Cash and Cash Equivalents		91,511				50,912				58,753
Investment securities available-for-sale				15,743				20,070				26,355
Investment securities held-to-maturity				2,000				2,000				2,000
Federal Home Loan Bank and other restricted stock				2,632				2,632				2,632
Loans, net of unearned income				106,439				123,230				140,643
Allowance for loan losses				(1,800	)			(1,464	)			(1,464	)
		Net Loans		104,639				121,766				139,179
Premises and equipment, net				258				264				287
Bank Owned Life Insurance				4,897				4,842				4,786
Accrued interest receivable and other assets				1,648				1,722				1,045
		Total Assets	$	223,328			$	204,208			$	235,037
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits
	Noninterest-bearing deposits		$	91,212			$	78,997			$	79,226
	Interest-bearing deposits			89,135				82,532				79,751
		Total Deposits		180,347				161,529				158,977
FHLB Advances				20,500				20,500				20,500
Accrued interest payable and other liabilities				1,558				1,664				35,647
		Total Liabilities		202,405				183,693				215,124
Shareholders’ Equity
	Common stock, no par value, 10,000,000 shares authorized: 2,006,393 shares issued and outstanding as of 12/31/20			15,958				15,958				15,958
	Additional paid-in-capital			1,604				1,570				1,537
	Accumulated deficit			3,090				2,682				2,047
	Accumulated other comprehensive income (loss)			271				305				371
		Total Shareholders’ Equity		20,923				20,515				19,913
		Total Liabilities and Shareholders’ Equity	$	223,328			$	204,208			$	235,037
Book Value Per Share			$	10.43			$	10.22			$	9.92

Friendly Hills Bank
Statements of Operations (Unaudited)
(in thousands, except per share information)
			For the six				For the six
			months ended				months ended
			6/30/21				6/30/20
Interest Income			$	3,009			$	2,825
Interest Expense				270				373
	Net Interest Income			2,739				2,452
Provision for Loan Losses				0				150
	Net Interest Income after Provision for Loan Losses			2,739				2,302
Noninterest Income				321				328
Noninterest Expense				2,366				2,058
Non-Recurring Expense Items				135				0
Income before Provision for Income Taxes				559				572
(Provision) Benefit for Income Taxes				(150	)			(184	)
	Net Income		$	409			$	388
Basic and Diluted Earnings Per Share			$	0.20			$	0.19

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

FAQ

What is the net income reported by Friendly Hills Bank for the second quarter of 2021?

Friendly Hills Bank reported a net income of $409,000 for the six months ending June 30, 2021.

How have deposits changed for Friendly Hills Bank as of June 30, 2021?

The bank's deposit base increased by 13% from $159.0 million to $180.3 million.

What significant change occurred with Friendly Hills Bank's stock structure?

The bank completed a holding company reorganization, becoming a wholly owned subsidiary of Friendly Hills Bancorp.

What impact did the Paycheck Protection Program have on Friendly Hills Bank's loan portfolio?

The loan portfolio decreased by 24%, primarily due to borrowers completing the loan forgiveness process under the Paycheck Protection Program.

Who were the new directors appointed to the board of Friendly Hills Bank?

Mercedes Broening and Jacqueline DuPont were appointed as new directors in June 2021.