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Friendly Hills Bank Shareholder Frank Kavanaugh Releases Public Letter to Shareholders
Friendly Hills Bank Shareholder Frank Kavanaugh Releases Public Letter to Shareholders.
About this update from First Pacific Bancorp
[{"type":"text","content":"\nFrank Kavanaugh, a long-term shareholder of Friendly Hills Bank (OTCBB: FHLB) (“FHLB”) today released a public letter to shareholders of FHLB.\n\nNovember 22, 2021\n\nDear Fellow Friendly Hills Shareholders,\n\nWe are a group of shareholders that represent more than 25% of the outstanding shares of Friendly Hills Bank (“Friendly Hills” or “the Company”). 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.\n\nSoon, 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.\n\nWe urge you to consider the following recent failures of the Company’s management and Board, which we believe have destroyed tremendous value for shareholders:\n\n\nJune 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.\n\n\nBloated, top-heavy management, with four executives earning more than $200,000 in base salary (with bonuses & expenses the annual amount is over $1 million).\n\n\nOver 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%.\n\n\nFederal 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.\n\n\nManagement has granted options representing 7.0% of the bank to themselves at $6.89, significantly below net tangible book value.\n\n\nIn total, since 2016 management and directors have rewarded themselves more than $5 million in compensation in a bank with approximately $19 million in equity.\n\n\nWe believe Friendly Hills urgently needs new independent director...