Friendly Hills Bancorp Reports Third Quarter Results; Planned Departure of Its Chief Executive Officer

Rhea-AI Summary

Friendly Hills Bancorp (OTCBB: FHLB) reports a net income of $784,000 for the nine months ending September 30, 2021, a rise from $622,000 in 2020, aided by $494,000 from an Employee Retention Tax Credit. Total assets grew by 33% to $315.2 million, while total deposits increased by 69% to $269.9 million, largely due to the acquisition of three branches. However, the loan portfolio decreased by 33%, attributed to Paycheck Protection Program loan payoffs. CEO Jeffrey Ball will transition out by year's end, with Christopher Naghibi joining the Board. The total risk-based capital ratio stands at a strong 19%.

Positive

• Net income increased by 26% year-over-year to $784,000 for the nine-month period.
• Total assets rose by 33% to $315.2 million compared to the previous year.
• Deposits surged by 69% to $269.9 million, significantly boosted by branch acquisitions.
• Shareholders' equity reached $21.0 million with a risk-based capital ratio of 19%, well above regulatory requirements.

Negative

• Loan portfolio decreased by 33% year-over-year, down to $93.6 million.
• Net interest margin is under pressure due to current market conditions.

WHITTIER, Calif., Nov. 18, 2021 (GLOBE NEWSWIRE) -- Friendly Hills Bancorp (OTCBB: FHLB), the holding company for Friendly Hills Bank, reports results for the third quarter of 2021 the planned departure of its Chief Executive Officer, Jeffrey Ball, to pursue other business opportunities and the appointment of Mr. Christopher Naghibi to its Boards of Directors.

For the nine-month period ended September 30, 2021, the bank reported net income of $784,000 or $0.39 per basic and diluted share of common stock which includes $494,000 in income from an Employee Retention Tax Credit (ERTC). The bank reported net income of $622,000 or $0.31 per basic and diluted share of common stock for the nine months ended September 30, 2020 (which includes a $150,000 provision for loan losses).

As of September 30, 2021, the bank reported total assets of $315.2 million, a 33% increase from $236.3 million as of September 30, 2020, and a 54% increase from $204.2 million as of December 31, 2020. The bank’s loan portfolio, net of unearned income, decreased 33% from $139.9 million as of September 30, 2020, to $93.6 million as of September 30, 2021.  This reflects a 24% decrease from $123.2 million as of December 31, 2020. The decrease in loans in the past 12 months, $46.3 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 $36.3 million or 39% in Commercial & Industrial Loans to local businesses (including $22.3 million in Owner Occupied Commercial Real Estate Loans), $32.4 million or 35% in Commercial Real Estate Loans to investors and $22.0 million or 23% in Residential Real Estate Loans to investors.  At September 30, 2021, the bank has an additional $19.6 million in unfunded loan commitments.

The bank’s overall deposit base has increased 69% in the twelve months ended September 30, 2021, from $159.6 million as of September 30, 2020, to $269.9 million as of September 30, 2021. The increase is primarily due to the previously announced completion of the acquisition of three Bank of Southern California branches and their deposits totaling $82.4 million in September. The bank’s overall deposit base has increased 67% from $161.5 million as of December 31, 2020. Non interest-bearing deposits remain a substantial part of the deposit base (49%), increasing from $75.9 million as of September 30, 2020, to $132.9 million as of September 30, 2021. During the same period, interest-bearing deposits increased from $83.7 million as of September 30, 2020, to $137.0 million on September 30, 2021.

On September 30, 2021, shareholders’ equity was $21.0 million, and the bank’s total risk-based capital ratio was 19%, 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 bank entered into a mutual Separation Agreement with Jeffrey K. Ball, Chief Executive Officer, in connection with his desire to pursue other business opportunities. Mr. Ball will remain in his position as President and Chief Executive Officer until the end of the year and intends to continue serving as a director of Friendly Hills Bancorp and Friendly Hills Bank after the completion of his employment.  

“We were pleased to report the completion of the acquisition and integration of the three branch offices which together added approximately $81 million to the bank’s deposit base,” commented Jeffrey K. Ball, Chief Executive Officer. “This expansion of the bank’s deposit base and service area into Orange and San Bernardino Counties will provide greater opportunities for continued growth. While net interest margin continues to be under pressure due to current market conditions, we believe the bank is well positioned for future development with a strong balance sheet and no problem assets. I am proud to have led the bank from founding to its current position and I look forward to working with the board in identifying and supporting a new leader for the organization who can continue our pursuit of long-term shareholder value.”

“As the Founder of the Bank over 15 years ago, Jeff has demonstrated consistent leadership in the development and operation of the bank,” commented William C. Greenbeck, Board Chair. “He recognizes the bank’s need for new leadership to continue the growth that is required as the industry evolves and we are appreciative of his desire to remain part of that effort by continuing to serve as a Director. We value his continued dedication to the success of the company and wish him well in his new career endeavors.”

In addition, Mr. Christopher Naghibi, a resident of Irvine, California and Chief Credit Officer of First Foundation Bank, has joined the Bank and Bancorp’s Board of Directors.

ABOUT 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 additional branch offices in Orange, Redlands and Santa Fe Springs, California.   For more information on the Bank, please 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 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. Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this news release. Factors that might cause such differences include, but are not limited to: Friendly Hills Bank’s ability to (i) successfully realize the benefits of the branch acquisition, including customer acquisition and retention, (ii) identify a new Chief Executive Officer, (iii) execute on its business plans and (iv) achieve its business objectives, including managing costs associated with the branch acquisition; changes in general economic and financial market conditions, either nationally or locally, in areas in which Friendly Hills Bank conducts its operations; 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; 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. Friendly Hills Bancorp undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances except as required by law.

Friendly Hills Bank
Balance Sheets (Unaudited)
(in thousands, except share and per share information)
			9/30/21				12/31/20				9/30/20
ASSETS
Cash and due from banks			$	4,737			$	2,596			$	2,076
Interest bearing deposits with other financial institutions				161,638				48,316				61,506
		Cash and Cash Equivalents		166,375				50,912				63,582
Investment securities available-for-sale				36,988				20,070				22,767
Investment securities held-to-maturity				6,465				2,000				2,000
Federal Home Loan Bank and other restricted stock				2,632				2,632				2,632
Loans, net of unearned income				93,573				123,230				139,888
Allowance for loan losses				(1,800	)			(1,464	)			(1,464	)
		Net Loans		91,773				121,766				138,424
Premises and equipment, net				509				264				270
Bank Owned Life Insurance				4,924				4,842				4,815
Right Of Use Assets				1,921				568				627
Goodwill and Core Deposit Intangibles				1,419				0				0
Accrued interest receivable and other assets				2,112				1,154				1,218
		Total Assets	$	315,118			$	204,208			$	236,335
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits
	Noninterest-bearing deposits		$	132,902			$	78,997			$	75,881
	Interest-bearing deposits			136,992				82,532				83,707
		Total Deposits		269,894				161,529				159,588
FHLB Advances				20,500				20,500				20,500
Accrued interest payable and other liabilities				3,698				1,664				36,185
		Total Liabilities		294,092				183,693				216,273
Shareholders’ Equity
Common stock, no par value, 10,000,000 shares authorized: 2,006,393 shares issued and outstanding				15,958				15,958				15,958
Additional paid-in-capital				1,621				1,570				1,553
Accumulated earnings				3,291				2,682				2,282
Accumulated other comprehensive income				156				305				269
		Total Shareholders’ Equity		21,026				20,515				20,062
		Total Liabilities and Shareholders’ Equity	$	315,118			$	204,208			$	236,335
Book Value Per Share			$	10.48			$	10.22			$	10.00

Friendly Hills Bank
Statements of Operations (Unaudited)
(in thousands, except per share information)
			For the nine				For the nine
			months ended				months ended
			9/30/21				9/30/20
Interest Income			$	4,424			$	4,330
Interest Expense				411				576
	Net Interest Income			4,013				3,754
Provision for Loan Losses				0				150
	Net Interest Income after Provision for Loan Losses			4,013				3,604
Noninterest Income				443				440
Non-Recurring Income Items				493				0
Noninterest Expense				3,612				3,193
Non-Recurring Expense Items				254				0
Income before Provision for Income Taxes				1,083				851
(Provision) Benefit for Income Taxes				(299	)			(229	)
	Net Income		$	784			$	622
Basic and Diluted Earnings Per Share			$	0.39			$	0.31

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

FAQ

What were the financial results for Friendly Hills Bancorp in Q3 2021?

Friendly Hills Bancorp reported a net income of $784,000 for the nine months ending September 30, 2021.

How did the acquisition of branches affect Friendly Hills Bancorp's deposits?

The acquisition resulted in a 69% increase in deposits, totaling $269.9 million as of September 30, 2021.

What is the current risk-based capital ratio for Friendly Hills Bancorp?

The risk-based capital ratio for Friendly Hills Bancorp is 19%, exceeding the required 10%.

Who is the new addition to the Board of Directors of Friendly Hills Bancorp?

Christopher Naghibi has joined the Board of Directors of Friendly Hills Bancorp.

Why did CEO Jeffrey Ball leave Friendly Hills Bancorp?

CEO Jeffrey Ball is departing to pursue other business opportunities but will remain a director.