• Total assets, total deposits and net loans all set new first-quarter records
• Net income registered $4.7 million, equal to 37 cents per diluted share
• Net interest income of $26.4 million reflects lower operating margins compared to the prior year
• Bank adds substantially to loan loss reserves in challenging environment

First Regional Bancorp (Nasdaq:FRGB), maintained profitability in the first quarter of 2008 while bolstering its balance sheet by adding substantially to its loan loss reserve.

For the three months ended March 31, 2008, net income was $4.7 million, equal to 37 cents per diluted share, compared with last year’s first quarter totals of $9.0 million, or 69 cents per diluted share. At March 31, 2008, total assets amounted to $2.321 billion, up 14.5% from $2.027 billion one year earlier. Total deposits at the end of the quarter were $1.696 billion, an increase of approximately 7% from $1.587 billion in the prior year. Net loans grew 19%, to $2.166 billion from $1.824 billion at March 31, 2007. Total capital at quarter’s end was $177.8 million, an increase of 13.2% from $157.1 million one year ago, the gain achieved primarily through the retention of earnings. First Regional continues to exceed all financial ratio requirements for Well Capitalized status under applicable regulations.

Results for the first quarter of 2008 reflected certain nonrecurring items. First Regional recorded a $2.8 million gain (included in other income) as a result of the redemption of a portion of the company’s stock in Visa International in conjunction with Visa’s initial public offering in late March of this year. Also, as a result of that initial public offering, First Regional was able to reverse a $2.2 million reserve for contingent liabilities established in late 2007 due to Visa-related litigation. The two Visa-related transactions increased after-tax net income by $2.9 million, equal to 23 cents per diluted share.

Reflecting concerns with the economic climate and its potential impact, in the first quarter First Regional made a $10.8 million provision to its loan loss reserve, bringing that reserve to $33.6 million, or 1.53% of gross loans, at March 31, 2008. Nonperforming assets as of the same date totaled $17.8 million, or 0.81% of gross loans, compared to $10.5 million at December 31, 2007, and just $63,000 on March 31, 2007.

H. Anthony Gartshore, President and Chief Executive Officer, commented: “As underscored by the constant stream of negative headlines, these are unusually challenging times for financial institutions like First Regional, and obviously our results are being adversely affected by these difficult conditions. While we have avoided involvement in sub-prime mortgages and other ultra high-risk segments of real estate credit, we must anticipate that areas of real estate in which we do participate will be impacted by the current economic realities. Consistent with the conservative and prudent basis on which First Regional has always operated, we are being even more selective on loan transactions, and will continue to make loan loss provisions as necessary based on our ongoing analysis of First Regional’s loan portfolio performance and economic conditions in general.”

Mr. Gartshore continued: “The Federal Reserve is focused on reversing the current economic slowdown by reducing interest rates. Our operating margins felt the impact of the Federal Reserve’s actions during the first quarter, as our net interest margin fell to 4.88% from 5.76% in the same period a year ago. Net interest income was $26.4 million in the first quarter of 2008 compared to the $26.5 million recorded in last year’s first quarter, as higher loan totals largely offset our lower net interest margin.

“Recognizing the cyclical nature of the environment in which we operate, we have taken care to position First Regional to address challenging conditions when they arise with the overriding goal of prospering on a long-term basis. To execute our strategy, we have built a highly talented and experienced management team along with a capable and professional staff. Our organization is structured to provide our clients with our signature level of service while operating on an efficient, cost-effective basis.”

Mr. Gartshore concluded: “We foresee many challenges going forward, but also opportunities, and we look to the future with a sense of confidence and determination. While we expect our actions in the present environment will have the effect of limiting short-term growth, we believe they are necessary to protect the value of our franchise. Over the years, we have built substantial value for our shareholders, and remain dedicated to preserving and enhancing shareholder value.”

First Regional Bancorp is a bank holding company headquartered in Century City. Its subsidiary, First Regional Bank, specializes in providing businesses and professionals with the management expertise of a major bank and the personalized service of an independent.

The following is a schedule of new loans booked (not including loan renewals) by First Regional’s subsidiary, First Regional Bank, during each month of the first quarter of 2008:

The following is a schedule describing the primary components of First Regional Bank’s loan portfolio as of March 31, 2008 and 2007:

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein may constitute forward-looking statements. Although First Regional believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from First Regional’s expectations include fluctuations in interest rates, inflation, government regulations, and economic conditions and competition in the geographic and business areas in which First Regional conducts its operations.

First Regional Bancorp
H. Anthony Gartshore
President and Chief Executive Officer
310-552-1776