Friendly Hills Bancorp Reports Second Quarter Results

WHITTIER, Calif., July 27, 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 second quarter ending June 30, 2023, including a return to profitability and closing of $3.25 million in a private placement of common stock. The Company continues to maintain a strong capital and liquidity position, centered on a growing core deposit base, with access to significant liquidity resources.

Highlights:

• Total assets ended Q2 2023 at $416 million, an increase of $23 million from the prior quarter, up $49 million from $367 million at year end 2022, and up $110 million from June of 2022.
• Total deposits ended the second quarter at $319 million, increasing $14 million from the prior quarter and $54 million since year end 2022.
• Total loans ended the second quarter at $269 million, increasing $23 million from the prior quarter and $64 million since year end 2022.
• Asset quality remains excellent, and we have experienced no significant changes in classified assets or non-performing assets.
• The Bank ended the first quarter with a leverage capital ratio of 8.64% and total risk-based capital ratio was 11.25%, considered “well-capitalized” – the highest regulatory capital category.
• At June 30, 2023, cash and cash equivalents totaled $20 million, including overnight funds.
• Unused borrowing capacity from credit facilities in place at June 30, 2023, totaled over $140 million.
• Net interest margin was 3.23% in Q2 versus 3.55% in Q1 2023 and is up from 2.86% in Q2 2022.

For the second quarter ended June 30, 2023, the Company realized a pre-tax pre-provision profit of $166 thousand, compared to a pre-tax pre-provision profit of $48 thousand in Q1 2023. Net income for the second quarter of 2023 was $19k. Quarterly net interest income increased by $55 thousand compared to Q1 2023 as loan growth helped offset increasing funding costs due to market pressures.

The provision for credit losses of $150 thousand in Q2 2023, and $613k for the six months ending June 30, 2023, relates entirely to growth in the loan portfolio and is in addition to $236 thousand added at the beginning of the year from implemented new accounting pronouncements for allowances for credit losses. Asset quality remains excellent with minimal non-performing assets and the allowance for credit losses is 1.04% of total loans.

“First Pacific Bank delivered another incremental quarter of solid results in Q2 even as the industry deals with continued financial market volatility. Our capital, liquidity, and financial position remain strong, and we are pleased with the additional support demonstrated by the private placement of common shares at $8.25 per share totaling $3.25 million increase in capital,” said Joe Matranga, Chairman of the Board of Directors.

“As we progress through 2023, we continue to see opportunities in our marketplace and plan to build on our financial performance during this quarter, despite the market disruption,” commented Nathan Rogge, President and Chief Executive Officer. “As always, we are committed to executing our strategic plan to drive long-term sustainable growth while delivering value for our stakeholders,” Rogge concluded.

On June 27, 2023, the shareholders of Friendly Hills Bancorp approved changing the name of the Company from Friendly Hills Bancorp to First Pacific Bancorp. The Company is in the process of working with FINRA and OTC Markets to implement the name change and simultaneously change the ticker symbol to reflect the new name. A press release announcing the change will be issued upon the completion of the FINRA and OTC Markets review.

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)
		Jun 2023		Dec 2022		Jun 2022
ASSETS
Cash / Due From		$4,734,305		$4,203,430		$6,485,447
FFS & EBA		14,885,000		27,870,000		26,970,000
Total cash, due from banks and cash equivalents		19,619,305		32,073,430		33,455,447
Debt securities		114,060,437		116,822,614		121,889,740
Loans		269,181,057		205,001,925		138,443,508
Allowance for credit losses		(2,812,427)		(2,000,021)		(1,800,021)
Loans, net		266,368,630		203,001,904		136,643,486
Restricted stock and equity securities		3,989,550		3,747,300		2,981,750
Premises, equipment, and right of use asset, net		1,863,789		1,893,249		2,394,274
Bank owned life insurance		5,114,208		5,059,435		5,004,816
Goodwill and core deposit intangible		1,306,225		1,336,960		1,753,480
Accrued interest receivable and other assets		3,335,283		2,771,801		2,304,583
TOTAL ASSETS		$415,657,427		$366,706,692		$306,427,578
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits		$133,625,334		$118,827,117		$131,104,193
Interest-bearing deposits		185,352,721		146,025,005		127,216,754
Total deposits		318,978,055		264,852,122		258,320,947
FHLB advances		57,500,000		65,000,000		25,000,000
Accrued interest payable and other liabilities		2,810,759		3,703,516		3,668,652
Total Liabilities		379,288,814		333,555,638		286,989,599
Total Shareholders' Equity		36,368,612		33,151,054		19,437,979
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$415,657,427		$366,706,692		$306,427,578
Common Shares Outstanding		4,171,235		3,776,622		2,058,393
Book Value Per Share		$8.72		$8.78		$9.44
Friendly Hills Bancorp and Subsidiary
Consolidated Statements of Operations (Unaudited)
		For the three		For the three		For the six
		months ended		months ended		months ended
		Jun 2023		Mar 2023		Jun 2023
Interest Income		$4,930,932		$4,283,716		$9,214,648
Interest Expense		1,777,073		1,185,068		2,962,141
Net Interest Income		3,153,859		3,098,648		6,252,507
Provision for credit losses		150,000		463,000		613,000
Net Interest Income After Provision for Credit Losses		3,003,859		2,635,648		5,639,507
Noninterest income		211,507		158,229		369,736
Noninterest expense		3,199,194		3,209,121		6,408,315
Income (Loss) before Provision for Income Taxes		16,172		(415,244)		(399,072)
Provision for (benefit from) income taxes		(2,529)		(125,228)		(127,757)
Net Income (Loss)		$18,701		($290,016)		($271,315)
Earnings (Loss) Per Basic Share		$0.00		(0.08)		($0.07)