Friendly Hills Bank Reports Successful First Year

WHITTIER, Calif., Oct. 29  /PRNewswire-FirstCall/ -- Friendly Hills Bank (OTC:FHLB) (BULLETIN BOARD: FHLB)  reported results for the third quarter of 2007, completing its first full year of operations.  The bank opened for business on September 16, 2006.  As of September 30, 2007, the bank reported total assets of $41.5 million, an increase of 72% from $24.1 million on December 31, 2006.

The bank's overall deposits grew over the last nine months by 204% to $27.1 million from $8.9 million as of December 31, 2006.  During the same time period noninterest bearing deposits increased 234% from $2.9 million on December 31, 2006 to $9.6 million as of September 30, 2007.  Interest bearing deposits advanced 191% from $6.0 million on December 31, 2006 to $17.5 million on September 30, 2007.  As of September 30, 2007, noninterest bearing deposits comprised over 35% of the bank's total deposit base.

The bank's loan portfolio, net of an allowance for loan losses, also continued to grow, increasing 194% from $4.5 million as of December 31, 2006, to $13.2 million as of September 30, 2007.  Of the $13.2 million in net loans, $5.0 million or 38% are classified as commercial and industrial and $7.7 million or 58% are loans to local businesses which are secured by real estate. The bank has an additional $15.3 million in unfunded loan commitments and no residential 'sub-prime' mortgage loans.

For the nine months ended September 30, 2007, the bank reported a net loss of $855,000, which includes a loan loss provision of $110,000, or ($0.53) per share of common stock.  For the three months ended September 30, 2007, the bank reported a net loss of $247,000, including a loan loss provision of $34,000, or ($0.15) per share of common stock.  These numbers also reflect the impact of accounting rules that require companies to include stock compensation as an expense.

"We are very proud of the bank's performance during its first full year of operations," commented Jeffrey K. Ball, Chief Executive Officer of the Bank. "We have maintained our focus on relationship banking with local businesses and professionals.  This approach has provided a strong base of lower cost deposits during a period of time in which many institutions, particularly at this stage of development, tend to have a higher cost of funds.  Our business model has also enabled us to establish a well-diversified portfolio of loans with a focus on local businesses for which we are providing all of their commercial banking needs."

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.

                             Friendly Hills Bank
                                Balance Sheet
                                 (Unaudited)



                                                 9/30/07         12/31/06
  Assets

  Cash and cash equivalents                    $1,486,188         $558,545

  Fed funds sold                               13,825,000        9,015,000

  Investment securities available-for-sale     11,855,776        8,802,262

  Loans, net of unearned income                13,365,651        4,543,658

    Allowance for loan losses                    (166,913)         (56,686)

    Net loans                                  13,198,738        4,486,972

  Premises and equipment, net                     986,309        1,061,661

  Accrued interest receivable and other
   assets                                         188,739          174,284

    Total Assets                              $41,540,750      $24,098,724


  Liabilities

  Deposits

    Noninterest-bearing deposits               $9,562,144       $2,865,127

    Interest-bearing deposits                  17,531,193        6,021,210

  Accrued interest payable and other
   liabilities                                     61,314          135,477

    Total Liabilities                         $27,154,651       $9,021,814


  Stockholders' Equity

  Common stock                                $15,957,620      $15,957,620

  Accumulated deficit                          (1,799,918)        (945,306)

  Additional paid-in-capital                      250,602           84,102

  Accumulated other comprehensive loss            (22,205)         (19,506)

   Total Stockholders' Equity                  14,386,099       15,076,910

   Total Liability & Stockholders'
    Equity                                    $41,540,750      $24,098,724



                             Friendly Hills Bank
                           Statement of Operations
                                 (Unaudited)



                                              For the three     For the nine
                                              months ended      months ended
                                                 9/30/07          9/30/07


  Interest Income                               $532,377        $1,369,097

  Interest Expense                               127,149           270,306

    Net Interest Income                          405,228         1,098,791

  Provision for Credit Losses                     33,996           110,227
    Net Interest Income after Provision
     for Credit Losses                           371,232           988,564

  Other Income                                    11,721            31,807

  Operating Expenses                             630,332         1,874,171

  Loss before Provision for Income Taxes        (247,379)         (853,800)

  Provision for Income Taxes                          (2)             (810)

    Net Loss                                   $(247,381)        $(854,610)

  Basic Income (Loss) Per Share                   $(0.15)           $(0.53)

  Book Value Per Share                             $8.90             $8.90

  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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