Friendly Hills Bank Continues Growth Pattern

WHITTIER, Calif., July 24  /PRNewswire-FirstCall/ -- Friendly Hills Bank (OTC:FHLB) (BULLETIN BOARD: FHLB)  reported results for the second quarter of 2008, its seventh full quarter of operations, since opening on September 18, 2006. As of June 30, 2008, the bank reported total assets of $55.5 million, a 22% increase from $45.5 million as of December 31, 2007.

The bank's overall deposit base has grown over 34% in the current year from $31.0 million as of December 31, 2007, to $41.6 million as of June 30, 2008.  Non-interest bearing core deposits continue to form a substantial part of the deposit base (35%) growing from $12.9 million at year-end to $14.5 million as of June 30, 2008.  During the same time period interest bearing deposits advanced over 50% from $18.0 million to $27.1 million on June 30, 2008.  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, also continued to grow, increasing over 61% from $18.3 million as of December 31, 2007, to $29.5 million as of June 30, 2008.  The portfolio remains diversified with $8.9 million or 32% in Commercial & Industrial Loans to local businesses and $14.6 million or 49.5% in Commercial Real Estate Loans.  Owner Occupied properties represent the largest component of the Commercial Real Estate Portfolio (over 52%) with $7.6 million outstanding as of June 30, 2008.  The bank has an additional $14.3 million in unfunded loan commitments and no non- performing loans or residential 'sub-prime' mortgage loans.

The bank's primary generator of income is Net Interest Income which increased by over 65% from $693,563 in the six months ending June 30, 2007, to $1,146,744 in the six months ending June 30, 2008.  This increase was a contributing factor in the bank reducing its net loss by 28% from $607,229, or ($0.38) per share of common stock for the six months ending June 30, 2007, to $438,919, or ($0.27) per share of common stock.  These figures include a loan loss provision of $142,199 for the six months ending June 30, 2008, which was 86% higher than the $76,230 provision for the same period one year earlier. The increase in reserves reflects the growth in the loan portfolio as the bank maintained its Allowance for Loan Losses at 1.25% of loans outstanding.  The net loss numbers also reflect the impact of accounting rules that require companies to include stock compensation as an expense.

"We are proud of the bank's growth in the midst of a challenging economic environment and credit our great staff of employees for this achievement", commented Jeffrey K. Ball, Chief Executive Officer.  "Most notably the bank has made significant strides in the development of its loan portfolio while preserving the strength of our deposit base.  This growth, which has been achieved while maintaining our diligent underwriting standards, was a significant factor in the improvement of our Net Interest Income.  While we are mindful of the many challenges facing the industry, we are seeing the results of our positioning the bank with a consultative relationship approach to commercial banking which provides us with a unique advantage during these uncertain times.  We have developed our deposit base to provide a low cost of funds without the need for brokered deposits or above-market rate promotions. A conservative approach which we feel will be enhanced by the market's emerging concern for bank safety and appreciation of our style of sophisticated relationship management."

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 Los Angeles and Orange Counties.  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.  For more information on the Bank, please visit http://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)

                                  6/30/08         12/31/07        6/30/07
  Assets
  Cash and cash equivalents      $3,048,483      $1,357,598     $1,473,621
  Fed funds sold                  5,970,000       7,365,000     15,005,000
  Investment securities
   available-for-sale            15,705,340      17,339,953      8,989,077
  Loans, net of unearned income  29,836,647      18,492,128     10,622,050
   Allowance for loan losses       (373,470)       (231,271)      (132,916)
   Net loans                     29,463,177      18,260,857     10,489,134
  Premises and equipment, net       947,024         960,604      1,036,538
  Accrued interest receivable and
   other assets                     331,346         218,938        152,956
   Total Assets                 $55,465,370     $45,502,950    $37,146,326

  Liabilities
  Deposits
    Noninterest-bearing
     deposits                   $14,532,655     $12,935,372    $10,497,259
    Interest-bearing deposits    27,078,142      18,025,171     12,180,439
  Accrued interest payable and
   other liabilities                 97,690          94,926         69,266
    Total Liabilities           $41,708,487     $31,055,469     22,746,964

  Stockholders' Equity
  Common stock                  $15,957,620     $15,957,620    $15,957,620
  Accumulated deficit            (2,453,244)     (2,014,323)    (1,552,537)
  Additional paid-in-capital        429,591         303,591        195,102
  Accumulated other comprehensive
   gain (loss)                     (177,084)        200,593       (200,823)
    Total Stockholders' Equity   13,756,883      14,447,481     14,399,362
    Total Liability &
     Stockholders' Equity       $55,465,370     $45,502,950    $37,146,326



                           Friendly Hills Bank
                         Statement of Operations
                               (Unaudited)

                                          For the six           For the six
                                          months ended          months ended
                                             6/30/08               6/30/07

  Interest Income                          $1,350,253             $836,720

  Interest Expense                            203,509              143,157
   Net Interest Income                      1,146,744              693,563

  Provision for Credit Losses                 142,199               76,230
   Net Interest Income after Provision for
    Credit Losses                           1,004,545              617,333

  Other Income                                 58,336               20,086

  Operating Expenses                        1,537,930            1,243,840

  Gain (Loss) on Securities                    36,934                    -
  Loss before Provision for Income Taxes     (438,115)            (606,421)

  Provision for Income Taxes                     (804)                (808)
    Net Loss                                $(438,919)           $(607,229)

  Basic Income (Loss) Per Share                $(0.27)              $(0.38)

  Book Value Per Share                          $8.51                $8.91

  Shares Outstanding                        1,616,000            1,616,000


DATASOURCE: Friendly Hills Bank



CONTACT:  Jeffrey K. Ball, Chief Executive Officer, or George W.

Peterson, Chief Financial Officer, both of Friendly Hills Bank,

[phone]



Web site:  http://www.friendlyhillsbank.com/

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