Capital Position Strengthens, Remains Well-Capitalized

First Regional Bancorp (Nasdaq:FRGB), returned to profitable operations for the third quarter ended September 30, 2008.

For the three months ended September 30, 2008 net income was $1.2 million, equal to 9 cents per diluted share, compared with last year's third quarter profit of $8.1 million, or 62 cents per diluted share. Reflecting the Company’s loss in the second quarter of 2008, results for the first nine months of 2008 were a net loss of $12.6 million, or $1.07 per diluted share, versus a profit of $25.7 million, or $1.98 per diluted share, for the first nine months of 2007. At September 30, 2008, total assets were $2.418 billion, up 14.6% from $2.110 billion one year earlier. Total deposits grew 22.3% to $2.045 billion from $1.672 billion a year earlier, and net loans posted growth of 15.2% to $2.248 billion from $1.951 billion at September 30, 2007. First Regional’s capital ratios strengthened further in the third quarter of 2008, and continue to exceed all financial ratio requirements under applicable regulations for “Well Capitalized” status, the highest level established by banking regulators.

H. Anthony Gartshore, President and Chief Executive Officer, commented: "We are pleased with First Regional’s prompt return to profitability in the third quarter despite the challenging economic times for financial institutions. Much uncertainty remains regarding the economic environment in which we operate. While operating margins are under pressure due to the Federal Reserve's actions to reduce interest rates, our core earnings remain strong. Moreover, First Regional’s long-standing emphasis on capital strength continues to serve us well, enabling us to deal realistically with the economic environment while maintaining 'well capitalized' capital ratios, the highest standard established by banking regulators."

Mr. Gartshore continued: “First Regional’s third quarter profit comes against a backdrop of continued weakness in the real estate industry. As noted in the past, we benefit from having avoided involvement in sub-prime mortgages and other exotic financial instruments, which are the source of much of the nation’s current economic woes. However, there are few real estate, financial, or other economic segments which have escaped the current environment unscathed. First Regional’s approach has always been to confront challenges fully, directly, and realistically. We perform ongoing analyses of our loan portfolio and economic conditions, and make loan loss provisions as necessary.”

In the third quarter of 2008 First Regional made a $10.4 million provision to its loan loss reserve, which brought the loan loss reserve to $54.7 million, or 2.37% of gross loans at September 30, 2008. In comparison, the loan loss provision for the second quarter of 2008 was $44.7 million. Nonperforming assets at the end of the third quarter of 2008 totaled $33.1 million, or 1.43% of gross loans and OREO, compared to $32.9 million (or 1.41% of gross loans and OREO) at June 30, 2008, and just $12,000 on September 30, 2007.

Mr. Gartshore added: “We continue to provide our clients with financial strength and safety; efficient, cost-effective operation; and our unrivaled level of service. That effort is made possible by our skilled and experienced management and our capable and professional staff. These members of the First Regional team have the talent and experience to execute our strategy, confront the challenges, and capitalize on the opportunities that will undoubtedly arise as the economy and the credit markets return to health.”

Mr. Gartshore concluded: “While we are pleased to have returned to profitability in the third quarter, we will continue our pursuit of the operating results we expect of ourselves and the shareholder value that our investors deserve. Nonetheless, our third quarter profit is an important milestone. While we foresee many challenges, we remain confident regarding First Regional’s future in this difficult time for the Southern California economy.”

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.

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