Friendly Hills Bancorp Reports Continued Strong Loan Growth and Fourth Quarter Operating Results

First Pacific Bank

WHITTIER, Calif., Feb. 06, 2023 (GLOBE NEWSWIRE) -- Friendly Hills Bancorp (the “Company”) (OTC Pink: FHLB), the holding company for First Pacific Bank (the “Bank”), today reported consolidated results for the fourth quarter and year ending December 31, 2022, highlighted by continued strong loan portfolio growth and improving operating results. As previously reported, the Company completed a private placement of common stock totaling $14.1 million, including $4.0 million that closed during the fourth quarter.

Highlights:

• Total loans ended the year at $205 million, increasing $116 million or 131% since year end 2021, and increased $28 million since September 30, 2022.

• The San Diego Office, opened in 2022, contributed significantly to this loan growth with $82 million of outstanding loans at year end 2022 generated by the San Diego team, further demonstrating the business community’s desire for a local, community bank that offers true relationship banking.

• The Company completed a private placement of common stock at the end of October, raising gross proceeds of $14.1 million, before issuance costs, with $10.1 million being closed in the third quarter of 2022, and the remaining $4.0 million closed in October 2022.

• Total assets ended the year at $367 million, up from $293 million at year end 2021 and $329 million at September 30, 2022.

• Noninterest-bearing deposits represent 45% of total deposits, an indication of our focus on small business relationships in the market we serve.

• Net interest margin improved to 3.58% in Q4 from 3.36% in Q3.

• The Bank ended the fourth quarter with a leverage capital ratio of 9.49% and total risk-based capital ratio was 13.3%, considered “well-capitalized” - the highest regulatory capital category.

• We aligned our brand to better serve our expanded footprint and greater lending capacity and changed the Bank’s name to First Pacific Bank.

For the fourth quarter ended December 31, 2022, the Company realized operating pre-tax, pre-provision profit of $40 thousand, compared to operating pre-tax, pre-provision loss of $249 thousand in Q3 2022. Operating pre-tax, pre-provision profit is before income taxes, before the provision for loan losses expense (if any), and in Q4 2022 excludes a non-recurring write-down on leased space and other assets that are no longer in use. Loan growth continues to drive significant improvement in net interest income, which increased $411 thousand, or 17% in the fourth quarter compared to the third quarter of 2022, and net interest margin improved to 3.58% in Q4 from 3.36% in Q3. Total noninterest expenses increased by $215 thousand during the fourth quarter, mostly attributable to the nonrecurring asset write-downs.

“Our fourth quarter results reflect our disciplined and thoughtful approach to growing the Bank and aligning our focus on small business banking in our target markets. We have delivered strong loan growth and continue to see momentum in our areas of strategic focus. Despite the challenging interest rate and economic environment, we are confident we can continue to grow our loan portfolio and maintain our strong asset quality in 2023,” said Joe Matranga, Chairman of the Board of Directors.

“2022 was a transformational year for the Company,” commented Nathan Rogge, President and Chief Executive Officer. “During the year, the Company delivered on its strategy to drive significant loan growth, invest in personnel and technology, expand our footprint, realign our brand, and increase our capital base. We had remarkable growth in our lending portfolio, which increased from $89 million as of December 31, 2021, to $205 million as of December 31, 2022,” Rogge continued, “and the portfolio remains well diversified with $88 million in Commercial Loans (including $57 million in Owner Occupied Commercial Real Estate Loans), $56 million in Other Commercial Real Estate Loans, and $40 million in Residential Real Estate Loans.”

“We ended the year on a strong note and look forward to continuing our momentum in 2023. As we look ahead, we are well-positioned to withstand the economic pressures and look forward to creating long-term value for our stakeholders,” Rogge concluded.

ABOUT FIRST PACIFIC BANK

First Pacific Bank, formerly known as Friendly Hills Bank, is a wholly owned subsidiary of Friendly Hills Bancorp (OTC Pink: FHLB), and is a growing community bank catering to individuals, professionals, and small-to-medium sized businesses throughout Southern California. With a history that spans 16 years, the Bank offers a personalized approach, access to decision makers, a broad range of solutions, and a commitment to delivering an exceptional customer experience. First Pacific Bank operates locations in Los Angeles County, Orange County, San Diego County, and the Inland Empire. For more information, visit www.firstpacbank.com or call 888.BNK.AT.FPB.

FORWARD-LOOKING STATEMENTS

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 relate to, among other things, our business plan, expectations and strategies, including, but not limited to, our expansion in the San Diego market, and 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. Factors that might cause such differences include, but are not limited to: the effects of the Covid-19 pandemic; successfully realizing the benefits of our business strategy and plans,; changes in general economic and financial market conditions, either nationally or locally, in areas in which First Pacific Bank conducts its operations; effects of inflation and 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; impact of any natural disasters, including earthquakes; effect of governmental supervision and regulation, including any regulatory or other enforcement actions; legislation or regulatory changes which adversely affect First Pacific 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. The Company does not undertake, and specifically disclaims any obligation to update any forward-looking statements to reflect occurrences or unanticipated events, or circumstances after the date of such statements except as required by law.

Contacts

Investor Relations Contact
Jim Burgess
858.461.7302
jburgess@firstpacbank.com

Media Relations Contact
Amanda Conover
562.501.9062
aconover@firstpacbank.com

--- Summary Financial Table Follows ---

Friendly Hills Bancorp and Subsidiary
Consolidated Balance Sheets (Unaudited)
(in thousands, except per share information)
							12/31/2022				12/31/2021
ASSETS
Cash and due from banks							$	4,076			$	6,499
Interest bearing deposits with other financial institutions								27,998				58,529
Cash and cash equivalents								32,074				65,028
Debt securities								116,823				126,858
Loans								205,002				88,923
Allowance for loan losses								(2,000	)			(1,800	)
Loans, net								203,002				87,123
Restricted stock and equity securities								3,747				2,632
Premises, equipment and right of use asset, net								1,893				2,313
Bank owned life insurance								5,059				4,951
Goodwill and core deposit intangible								1,337				1,788
Accrued interest receivable and other assets								2,772				2,326
Total Assets							$	366,707			$	293,019
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits
Noninterest-bearing deposits							$	118,827			$	134,625
Interest-bearing deposits								146,025				122,935
Total deposits								264,852				257,560
FHLB advances								65,000				12,000
Accrued interest payable and other liabilities								3,704				3,730
Total Liabilities								333,556				273,290
Total Shareholders' Equity								33,151				19,729
Total Liabilities and Shareholders' Equity							$	366,707			$	293,019
Common Shares Outstanding								3,776,622				2,006,393
Book Value Per Share							$	8.78			$	9.83
Friendly Hills Bancorp and Subsidiary
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share information)
			For the three				For the three				For the twelve
			months ended				months ended				months ended
			12/31/2022				9/30/2022				12/31/2022
Interest income			$	3,463			$	2,691			$	9,836
Interest expense				569				208				964
Net Interest Income				2,894				2,483				8,872
Provision for loan losses				200				-				200
Net Interest Income After Provision for Loan Losses		2,694						2,483				8,672
Noninterest income				120				201				1,200
Noninterest expense				3,147				2,933				11,350
Income (Loss) before Provision for Income Taxes				(333	)			(249	)			(1,478	)
Provision for (benefit from) income taxes				(117	)			(84	)			(489	)
Net Income (Loss)			$	(216	)		$	(165	)		$	(989	)
Earnings (Loss) Per Share Basic			$	(0.06	)		$	(0.08	)		$	(0.40	)