OREANDA-NEWS. Friendly Hills Bank (the “bank”) (OTCBB:FHLB) reported results for the second quarter of 2016.

For the six month period ending June 30, 2016, the bank reported net income of $206,000 or $0.11 per diluted share of common stock. This figure includes a $36,000 net gain on securities sold. The bank reported net income of $174,000 or $0.09 per diluted share of common stock for the six months ended June 30, 2015. This figure includes a $22,000 increase in the value of the interest rate caps, a $31,000 net gain on securities sold, and a $43,000 gain on other real estate owned. The bank also announced that David B. Quizon has joined the management team as Executive Vice President/Chief Credit Officer following the retirement of L.E. “Bill” Thackery on June 30, 2016.

As of June 30, 2016, the bank reported total assets of $141.7 million, a 9% increase from $129.5 million as of June 30, 2015. The bank’s loan portfolio, net of unearned income, increased 16% from $67.8 million as of June 30, 2015, to $78.3 million as of June 30, 2016. The portfolio remains diversified with $37.3 million or 48% in Commercial & Industrial Loans to local businesses (including $23.0 million in Owner Occupied Commercial Real Estate Loans), $17.3 million or 22% in Residential Real Estate Loans to investors and $16.8 million or 22% in Commercial Real Estate Loans to investors. The bank has an additional $21.5 million in unfunded loan commitments.

The bank’s overall deposit base has increased 11% in the twelve months ended June 30, 2016, from $100.9 million as of June 30, 2015, to $112.3 million as of June 30, 2016. Non-interest bearing deposits continue to form a substantial part of the deposit base (51%), growing from $47.2 million to $57.7 million as of June 30, 2016. During the same time period interest-bearing deposits increased from $53.7 million to $54.6 million on June 30, 2016. The bank has no deposits which were sourced through brokers or other wholesale funding sources. 

At June 30, 2016, shareholders’ equity was $15.8 million and the bank’s total risk-based capital ratio was 17%, 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 was able to recognize strong growth in the loan portfolio while maintaining our strong underwriting standards in a market which remains highly competitive,” commented Jeffrey K. Ball, Chief Executive Officer. “This growth is expected to enhance our Net Interest Margin. Our deposit base remains strong with continued volatility which is attributable to having such a large percentage of core deposits. We are also pleased to welcome David Quizon to our team as Chief Credit Officer. David brings an extensive amount of experience in many aspects of commercial credit with an appreciation for the unique requirements our clients expect from us as a community bank. He is taking an important role following the retirement of Bill Thackery who we wish to thank for his many years of dedicated service in the establishment and development of Friendly Hills Bank as both an executive officer and a founding director.”

Friendly Hills Bank
Balance Sheets (Unaudited)
(in thousands, except per share information)
      6/30/16   12/31/15   6/30/15
ASSETS            
Cash and due from banks $   3,516     $   3,904     $   4,058  
Interest bearing deposits with other financial institutions   22,088       4,529       9,515  
    Cash and Cash Equivalents   25,604       8,433       13,573  
Investment securities available-for-sale   31,912       43,312       42,030  
Federal Home Loan Bank stock   779       753       753  
Federal Reserve Bank stock   457       455       455  
Loans, net of unearned income   78,334       67,876       67,796  
Allowance for loan losses   (1,525 )     (1,595 )     (1,595 )
    Net Loans   76,809       66,281       66,201  
Premises and equipment, net   234       211       288  
Accrued interest receivable and other assets   5,877       6,134       6,180  
    Total Assets $ 141,672     $ 125,579     $ 129,480  
               
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Liabilities            
Deposits            
  Noninterest-bearing deposits $ 57,716     $   42,531     $   47,207  
  Interest-bearing deposits   54,614       54,354       53,672  
    Total Deposits   112,330       96,885       100,879  
FHLB advances   13,000       13,000       13,000  
Accrued interest payable and other liabilities   542       452       466  
    Total Liabilities   125,872         110,337        114,345  
Shareholders’ Equity          
  Common stock, no par value, 10,000,000 shares authorized:          
  1,939,193 shares issued and outstanding   15,958       15,958       15,958  
  Additional paid-in-capital   1,091       1,091       1,091  
  Accumulated deficit   (1,445 )     (1,651 )     (1,871 )
  Accumulated other comprehensive income (loss)   196       (156 )     (43 )
    Total Shareholders’ Equity   15,800       15,242       15,135  
    Total Liabilities and Shareholders’ Equity $ 141,672     $ 125,579     $ 129,480  
               
Book Per Share $   8.15     $   7.86     $    7.80  
                       
Friendly Hills Bank
Statements of Operations (Unaudited)
 (in thousands, except per share information)
           
      For the six   For the six
      months ended   months ended
      6/30/16   6/30/15
Interest Income $   2,205     $   2,128  
Interest Expense   (153 )     (159 )
 Net Interest Income   2,052       1,969  
Provision for Loan Losses   0       0  
 Net Interest Income after Provision for Loan Losses     2,052         1,969     
Noninterest Income   229       177  
Noninterest Expense   (1,992 )     (1,974 )
Non-Recurring Items   36       96  
Income before Provision for Income Taxes   325       268  
(Provision) Benefit for Income Taxes   (119 )     (94 )
 Net Income $   206     $    174  
           
Basic and Diluted Earnings Per Share $  0.11     $  0.09