Friendly Hills Bancorp Reports Strong Third Quarter 2022 Loan Growth and Completion of Capital Offering

Rhea-AI Summary

Friendly Hills Bancorp (OTC Pink: FHLB) reported robust Q3 2022 results, showcasing a significant loan portfolio growth of 99% year-over-year, totaling $177 million. The company also successfully completed a private placement of common stock, raising $14.1 million, primarily in Q3. Total assets increased to $329 million, with noninterest-bearing deposits comprising 47% of deposits. Net interest margin improved to 3.36%, and net loss decreased to $165 thousand from $477 thousand in Q2. The company's strategy focuses on small business banking, with a strong loan pipeline anticipated for Q4.

Positive

• Loan portfolio increased by 99% year-over-year to $177 million.
• Successful private placement raised $14.1 million.
• Total assets rose to $329 million from $293 million at year-end 2021.
• Net interest margin improved to 3.36% from 2.84% in Q2.
• Net loss reduced to $165 thousand from $477 thousand in Q2.

Negative

• Net loss of $165 thousand, though improved from previous quarter.

WHITTIER, Calif., Nov. 03, 2022 (GLOBE NEWSWIRE) -- Friendly Hills Bancorp (the “Company”) (OTC Pink: FHLB), the holding company for Friendly Hills Bank (the “Bank”), today reported consolidated results for the third quarter of 2022, highlighted by continued strong loan portfolio growth. The Company also reported the successful completion of a private placement of common stock, raising a total of $14.1 million, the majority of which was closed in the third quarter of 2022.

Highlights:

• Total loans ended the quarter at $177 million, increasing $88 million or 99% since year end 2021, and are up $38 million since June 30, 2022.
• 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 remainder closed in October 2022.
• The Company believes it has achieved strong momentum in San Diego, with loan growth in San Diego representing $30 million of the total quarterly growth, further demonstrating the business community’s desire for a local community bank that offers true relationship banking.
• Total assets ended the quarter at $329 million, up from $293 million at year end 2021 and $306 million at June 30, 2022.  
• Noninterest-bearing deposits account for 47% of total deposits, reflecting continued strong, relationship-based deposits in the form of checking and savings accounts.
• Net interest margin improved to 3.36% in Q3 from 2.84% in Q2.
• The Bank ended the third quarter with a leverage capital ratio of 9.16% and total risk-based capital ratio was 13.3%, considered “well-capitalized” - the highest regulatory capital category.
  

For the third quarter ended September 30, 2022, the Company reported a net loss of $165 thousand compared to a net loss of $477 thousand for the three months ended June 30, 2022. The loan growth generated by the Bank this year is driving significant improvement in net interest income, which increased $570 thousand, or 30%, in the third quarter compared to the second quarter of 2022, and net interest margin improved to 3.36% in Q3 from 2.84% in Q2. Comparisons to Q2 also reflect the execution of our long-term plan to invest in our infrastructure, including hiring key talent, which is reflected in noninterest expenses increasing by $129 thousand during the third quarter, a portion of such noninterest expenses relate to the sale of our payroll division, which was completed October 1, 2022. “Our third quarter results were again highlighted by significant loan growth and reflect the success of implementing our growth strategy and alignment of our focus on small business banking in our target markets. We believe our continued robust loan pipeline is encouraging for another strong quarter to finish out 2022,” said Nathan Rogge, President and Chief Executive Officer of Friendly Hills Bank.

“During the first nine months of 2022, the Company delivered on its strategy to drive significant loan growth. Our lending portfolio increased from $88 million as of December 31, 2021, to $177 million as of September 30, 2022,” Rogge continued. The loan portfolio remains diversified with $76 million in Commercial Loans (including $47 million in Owner Occupied Commercial Real Estate Loans), $40 million in Other Commercial Real Estate Loans, and $41 million in Residential Real Estate Loans.

The Company also announced the completion of a private offering of common stock, which raised gross proceeds of $14.1 million, before offering expenses, representing 1,704,229 new shares of common stock at a price of $8.25 per share. A total of $10.1 million of the offering was closed in September and is reflected in the September results, while the remainder of the offering was completed in October. The Company intends to use the net proceeds from the offering for general corporate purposes to support its continued growth, including contributions to Friendly Hills Bank and future strategic opportunities.

“We are pleased with the results of our private placement, which represents a strong vote of confidence by local business owners and leaders that see the value of a Southern California-based community bank with local decision making. As we push towards the end of 2022, we anticipate that this new capital will put us in a position to continue to implement our plan and deliver meaningful long-term shareholder value while also being mindful of the current economic environment,” Rogge concluded.

ABOUT FRIENDLY HILLS BANK

Friendly Hills Bank, a wholly owned subsidiary of Friendly Hills Bancorp (OTC Pink: FHLB), 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. Friendly Hills Bank operates locations in Los Angeles County, Orange County, San Diego County, and the Inland Empire. For more information, visit www.friendlyhillsbank.com or call 562.947.1920.

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 Friendly Hills 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 Friendly Hills 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@friendlyhillsbank.com

Media Relations Contact
Amanda Conover
562.501.9062
aconover@friendlyhillsbank.com

--- Summary Financial Table Follows ---

Friendly Hills Bancorp
Consolidated Balance Sheets (Unaudited)
(in thousands, except per share information)
			9/30/2022				6/30/2022				12/31/2021
ASSETS
Cash and due from banks			$	3,987			$	6,241			$	6,499
Interest bearing deposits with other financial institutions				15,850				27,214				58,529
Cash and cash equivalents				19,837				33,455				65,028
Debt securities				119,840				121,890				126,858
Loans				176,696				138,443				88,923
Allowance for loan losses				(1,800	)			(1,800	)			(1,800	)
Loans, net				174,896				136,643				87,123
Restricted stock and equity securities				3,038				2,982				2,632
Premises, equipment and right of use asset, net				2,239				2,394				2,313
Bank owned life insurance				5,032				5,005				4,951
Goodwill and core deposit intangible				1,736				1,753				1,788
Accrued interest receivable and other assets				2,560				2,306				2,326
Total Assets			$	329,178			$	306,428			$	293,019
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits
Noninterest-bearing deposits			$	124,780			$	131,104			$	134,625
Interest-bearing deposits				139,900				127,217				122,935
Total deposits				264,680				258,321				257,560
FHLB advances				30,000				25,000				12,000
Accrued interest payable and other liabilities				5,211				3,669				3,730
Total Liabilities				299,891				286,990				273,290
Total Shareholders' Equity				29,287				19,438				19,729
Total Liabilities and Shareholders' Equity			$	329,178			$	306,428			$	293,019
Common Shares Outstanding				3,283,716				2,058,393				2,006,393
Book Value Per Share			$	8.92			$	9.44			$	9.83
Friendly Hills Bancorp
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share information)
			For the three				For the three				For the nine
			months ended				months ended				months ended
			9/30/2022				6/30/2022				9/30/2022
Interest income			$	2,691			$	1,984			$	6,374
Interest expense				208				71				395
Net Interest Income				2,483				1,913				5,979
Provision for loan losses				-				-				-
Net Interest Income After Provision for Loan Losses		2,488						1,913				5,979
Noninterest income				201				199				1,080
Noninterest expense				2,933				2,804				8,202
Income (Loss) before Provision for Income Taxes				(249	)			(692	)			(1,143	)
Provision for (benefit from) income taxes				(84	)			(215	)			(371	)
Net Income (Loss)			$	(165	)		$	(477	)		$	(772	)
Earnings (Loss) Per Share Basic			$	(0.08	)		$	(0.23	)		$	(0.37	)

FAQ

What were the Q3 2022 financial results for Friendly Hills Bancorp (FHLB)?

Friendly Hills Bancorp reported a strong loan portfolio growth of 99% year-over-year, reaching $177 million, with total assets at $329 million.

How much capital did Friendly Hills Bancorp raise in its recent stock offering?

The company raised a total of $14.1 million in a private placement of common stock.

What is the net interest margin reported by Friendly Hills Bancorp for Q3 2022?

The net interest margin improved to 3.36% in Q3 2022.

What was the net loss reported by Friendly Hills Bancorp in Q3 2022?

The net loss reported was $165 thousand, a decrease from $477 thousand in Q2 2022.

What is the primary focus of Friendly Hills Bancorp's growth strategy?

The company's strategy focuses on small business banking within its target markets.