WHITTIER, CA--(Marketwire - May 8, 2012) - Friendly Hills Bank (the "bank") (OTCBB: [ FHLB ]) reported results for the first quarter of 2012, after completing its fifth full year of operations since opening on September 18, 2006.

For the three month period ending March 31, 2012, the bank reported a profit of $75,000 or $0.05 per diluted share of common stock. This figure includes an $8,000 increase in the value of the interest rate caps. The bank reported a profit of $171,000 or $0.11 per diluted share of common stock for the three months ended March 31, 2011. This figure includes a $28,000 increase in the value of an interest rate cap.

As of March 31, 2012, the bank reported total assets of $98.8 million, a 1% increase from $98.1 million as of March 31, 2011. The bank's loan portfolio, net of unearned income, decreased 7% from $62.3 million as of March 31, 2011, to $57.6 million as of March 31, 2012. The portfolio remains diversified with $24.8 million or 43% in Commercial & Industrial Loans to local businesses (including $14.4 million in Owner Occupied Commercial Real Estate Loans), $19.0 million or 33% in Residential Real Estate Loans to investors and $9.1 million or 16% in Commercial Real Estate Loans to investors. The bank has an additional $13.3 million in unfunded loan commitments.

The bank's overall deposit base has decreased slightly in the twelve months ended March 31, 2012, from $77.2 million as of March 31, 2011, to $77.1 million as of March 31, 2012. Non-interest bearing deposits continue to form a substantial part of the deposit base (38.0%), growing from $25.7 million to $29.3 million as of March 31, 2012. During the same time period interest-bearing deposits decreased from $51.4 million to $47.8 million on March 31, 2012. The bank has no deposits which were sourced through brokers or other wholesale funding sources.

At March 31, 2012, shareholders' equity was $12.7 million and the bank's total risk-based capital ratio was 20.5%, 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.

"While we are pleased with the continued core profitability of the company," commented Jeffrey K. Ball, Chief Executive Officer, "we remain concerned about overall market conditions. Asset yields on new business continue to provide diminishing returns for relative risk providing less opportunity to leverage the bank's low cost deposit base. From a risk management perspective we continue to view these conditions as unsustainable. We remain prudent in maintaining our underwriting standards at the risk of continued reductions in the balance sheet. This strategy is consistent with our focus on a longer term outlook for shareholder value. This includes prudent management of our expenses in order to maintain profitability as the bank remains well positioned in terms of capital, liquidity and reserves. Our board continues to prioritize long term shareholder value with its commitment to further leveraging the strength of our relationship-focused approach to financial services."

Company Profile:
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 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-LookingStatements:
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.