Oddball companies

We have long been concerned and dismayed by the inability of management and the Company's board of directors (the "Board") to create value for shareholders, and we believe that it is time for that to change. Soon, you will receive proxy materials from us in which we outline our vision for a better future for the bank and its employees and customers... . In our view, any change must start by refreshing the Board with the addition of new, independent members who understand the bank, its history and its mission, and who are committed to make Friendly Hills responsive to its stakeholders rather than a piggybank for its current Chairman, Vice Chairman, and CEO. We urge you to consider the following recent failures of the Company's management and Board, which we believe have destroyed tremendous value for shareholders: June 2021, the Board approved a poorly conceived, strategically flawed merger that cost shareholders $0.66 per share in Q3 2021 alone, by reducing net tangible value to $9.56 while burying additional losses in a 10-year expense recognition. Bloated, top-heavy management, with four executives earning more than $200,000 in base salary (with bonuses & expenses the annual amount is over $1 million). Over the past five years, the Company's return on assets has been mired around 0.45% - for comparison, well-run banks typically return approximately 1.0-1.5%. Federal Home Loan Bank borrowings totaled $20.5 million and cost $491,000 in interest expense in 2020 - in our view, a waste of precious shareholder resources. Management has granted options representing 7.0% of the bank to themselves at $6.89, significantly below net tangible book value. In total, since 2016 management and directors have rewarded themselves more than $5 million in compensation in a bank with approximately $19 million in equity. We believe Friendly Hills urgently needs new independent directors who will advocate for shareholder rights and interests. With the departure of the CEO, the board will select the direction and leadership for the ...Read More