Friendly Hills Bank Continues Growth Through Third Quarter; Announces Hiring of Chief Financial Officer

Friendly Hills Bank Continues Growth Through Third Quarter; Announces Hiring
of Chief Financial Officer

WHITTIER, Calif., Nov. 9 /PRNewswire-FirstCall/ -- Friendly Hills Bank (OTC
Bulletin Board: FHLB) reported results for the third quarter of 2009, its
twelfth full quarter of operations, since opening on September 18, 2006. As
of September 30, 2009, the bank reported total assets of $76.9 million, a 26%
increase from $60.9 million as of September 30, 2008.

The bank's overall deposit base has grown over 35% in the twelve months ended
September 30, 2009, from $46.9 million as of September 30, 2008, to $63.2
million as of September 30, 2009. Non-interest bearing deposits continue to
form a substantial part of the deposit base (32%), growing from $17.4 million
to $20.0 million as of September 30, 2009. During the same time period,
interest bearing deposits grew from $29.5 million to $43.2 million on
September 30, 2009. The bank has no deposits which were sourced through
brokers or originated on the basis of above market rate programs.

The bank's loan portfolio, net of an allowance for loan losses, grew 28% from
$36.8 million as of September 30, 2008, to $47.0 million as of September 30,
2009. The portfolio remains diversified with $11.8 million or 25% in
Commercial & Industrial Loans to local businesses and $18.3 million or 38% in
Commercial Real Estate Loans. Owner Occupied properties represent the largest
component of the Commercial Real Estate Portfolio (57%) with $10.3 million
outstanding. The bank has an additional $22.2 million in unfunded loan
commitments.

While the bank's loan portfolio is 28% larger than it was a year ago, net
interest income increased by 12% from $1.8 million in the nine months ended
September 30, 2008, to $2.1 million in the nine months ended September 30,
2009. Net interest income is the bank's primary source of income and the
lower rate of income growth is reflective of the significant drop in interest
rates in comparison to the same time period a year ago.

For the most recent nine month period ending September 30, 2009, the bank
reported a net loss of $1,036,282 or ($0.64) per diluted share of common
stock. This figure includes a loan loss provision of $485,687 for the nine
months ended September 30, 2009, which was 105% higher than the $237,313
provision for the same period one year earlier. The bank reported a net loss
of $578,916, or ($0.36) per diluted share of common stock for the nine months
ended September 30, 2008. The increase in the allowance for loan losses
reflects the growth in the loan portfolio and an increased provision
reflective of management's cautionary position towards potential risks
associated with current economic conditions. The net loss numbers also
reflect the impact of a special deposit insurance assessment which was imposed
on all insured institutions by the Federal Deposit Insurance Corporation and
the recurring effect of accounting rules that require companies to include
stock compensation as an expense. Total accrual for the special assessment
was $23,800 for the nine months ending September 30, 2009, and there was no
special assessment in the prior year.

The bank also announces that Daniel L. Erickson has joined the executive
management team as Executive Vice President/Chief Financial Officer. Mr.
Erickson brings an extensive amount of experience in financial, technological
and operational management with community banks.

"The current economic environment presents a number of challenges to community
banks across the country and ours is no exception," commented Jeffrey K. Ball,
Chief Executive Officer. "While we continue to actively manage our loan
portfolio, and remain pleased with the continued performance of our borrowers,
many businesses in our market area are struggling and we expect this to be a
continuing challenge going into the next year. As part of our active
management of the loan portfolio we have taken action in restructuring one of
our borrower relationships and placed the related loans on non-accrual status
until performance under the new structure is demonstrated. We feel that this
was a prudent action given the continued uncertainty of the local economy and
we remain confident in the repayment capability of all of our borrowers.

"Another impact of the current environment," continued Ball, "is the change in
interest rates which has resulted in a year-over-year decline in our Net
Interest Margin. This has resulted in the growth of our Net Interest Income
not keeping pace with the rate of growth for the overall bank and our loan
portfolio. However, we remain focused on maintaining a low cost of funds in
our deposit base which is the result of our continued focus on relationship
development. And with the addition of Mr. Erickson we are confident that we
will be able to better utilize the bank's liquidity position to maximize
earnings within our defined risk parameters while enhancing the operational
efficiency of our institution. Despite the challenges of the current economic
environment, the bank continues to demonstrate the growth needed for our
primary focus of attaining profitability."

Friendly Hills Bank is a community bank which was formed to primarily serve
the Southern California communities of Whittier, La Habra, Santa Fe Springs
and La Habra Heights, as well as the surrounding markets of Southern
California. 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 at 16011 E. Whittier
Blvd. in Whittier, California with an additional branch office at 12070 East
Telegraph Road, Suite #100 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 such as those
regarding the anticipated development and expansion of Friendly Hills Bank's
business, and the intent, belief or current expectations of the bank, its
directors or its officers, are "forward looking" statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995). Because such
statements are subject to risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward looking statements.
These risks and uncertainties include, but are not limited to, risks related
to the local and national economy, the bank's performance, including its
ability to generate loan and deposit growth, changes in interest rates, and
regulatory matters.

Friendly Hills Bank
Balance Sheet
(Unaudited)

(in thousands, except per share information)

9/30/09 12/31/08 9/30/08
------- -------- -------
Assets
Cash and cash equivalents $4,393 $2,678 $2,145
Fed funds sold 7,430 6,980 5,090
Investment securities
available -for-sale 16,565 15,527 15,443
Loans, net of unearned income 48,012 36,987 37,305
------ ------ ------
Allowance for loan losses (977) (555) (469)
---- ---- ----
Net loans 47,035 36,432 36,837
Premises and equipment, net 1,061 1,259 1,069
Accrued interest receivable and
other assets 419 632 343
--- --- ---
Total Assets $76,903 $63,508 $60,926
======= ======= =======

Liabilities
Deposits
Noninterest-bearing deposits $19,980 $18,583 $17,434
Interest-bearing deposits 43,184 30,475 29,482
------ ------ ------
Total Deposits 63,164 49,058 46,916
Accrued interest payable and other
liabilities 307 155 109
--- --- ---
Total Liabilities $63,471 $49,213 47,025

Stockholders' Equity
Common stock $15,958 $15,958 $15,958
Accumulated deficit (3,834) (2,797) (2,593)
Additional paid-in-capital 728 543 493
Accumulated other comprehensive
gain (loss) 580 591 43
--- --- ---
Total Stockholders' Equity 13,432 14,295 13,901
------ ------ ------
Total Liability & Stockholders'
Equity $76,903 $63,508 $60,926
------- ------- -------

Book Value Per Share $8.31 $8.85 $8.60

Friendly Hills Bank
Statement of Operations
(Unaudited)

(in thousands, except per share information)

For the nine For the nine
months ended months ended
9/30/09 9/30/08
-------------- --------------

Interest Income $2,409 $2,153

Interest Expense 355 314
--- ---
Net Interest Income 2,054 1,839

Provision for Credit Losses 485 237
Net Interest Income after Provision
for Credit Losses 1,569 1,602

Other Income 112 90

Operating Expenses 2,716 2,307
----- -----

Gain (Loss) on Securities (0) 37
--- ---

Loss before Provision for Income Taxes (1,035) (578)

Provision for Income Taxes (1) (1)
--- ---
Net Loss $(1,036) $(579)
======= =====

Basic and Diluted Income (Loss)
Per Share $(0.64) $(0.36)
====== ======

SOURCE Friendly Hills Bank

Jeffrey K. Ball, Chief Executive Officer, or Daniel L. Erickson, Chief
Financial Officer, both of Friendly Hills Bank, +1-562-947-1920