First Regional Bancorp (Nasdaq:FRGB) today announced financial results for both the fourth quarter and year ended December 31, 2008. Reflecting higher loan loss provisions due to the continuing economic recession, the Company reported operating losses for both the quarter and the full year. Core earnings (before loan loss provisions and taxes) declined from earlier periods but remained substantial.

The net loss for the quarter ended December 31, 2008 was $10.2 million, equal to 86 cents per diluted share, compared to net income for the fourth quarter of 2007 of $7.9 million, equal to 62 cents per diluted share. For the full year 2008, the Company recorded a net loss of $22.8 million, or $1.93 per diluted share, versus 2007 net income of $33.6 million, equal to $2.59 per diluted share.

At December 31, 2008, total assets were $2.467 billion, compared to $2.174 billion one year earlier. Total deposits grew to $2.130 billion from $1.721 billion a year earlier, and net loans rose to $2.259 billion from $2.020 billion at December 31, 2007. The increase in loans was the result of a decline in loan payoffs due to slower sales of completed condominium units and the ongoing funding of previously-approved construction loan commitments. At the end of 2008, equity totaled $151.0 million. As First Regional has no “intangible” assets on its books, all of the Company’s equity is tangible. First Regional continues to exceed all financial ratio requirements under applicable regulations for "Well Capitalized" status, the highest level established by banking regulators.

Reflecting the impact of the economic downturn, in the fourth quarter of 2008 First Regional made a $26.3 million provision to its loan loss reserve and charged off a total of $14.2 million in loans. These transactions brought the loan loss reserve to $66.2 million, or 2.85% of gross loans, at December 31, 2008. Nonperforming assets as of the same date totaled $121.0 million, or 5.33% of gross loans plus other real estate owned, compared to $10.5 million at December 31, 2007.

H. Anthony Gartshore, President and Chief Executive Officer, commented: "Clearly these are challenging times for the nation and for financial institutions, and obviously our results have been adversely affected by these difficult conditions. The impact of the economic climate on real estate values has been of particular concern. Our 2008 loan loss provisions reflect our ongoing review of our loan portfolio, and our current assessment of collateral values and borrower performance. It should be emphasized that the vast majority of our loan portfolio continues to be well-secured and to perform as agreed. Nonetheless, our nonperforming assets increased in the fourth quarter of 2008. First Regional is continuing its long-standing practice of confronting challenges fully, directly, and realistically. We do not hesitate to place loans on nonaccrual status (rendering them “nonperforming” by definition) as part of our enhanced collection program. Most of our nonperforming assets are secured by real estate, and thus our risk of loss is mitigated by the value of the underlying collateral even in a declining market. Reflecting the economic environment in which we now operate, we remain highly selective on loan transactions. While we believe we are dealing effectively with our problem loans, the economic future remains unclear, and additional loan loss provisions will be made if warranted based on our ongoing analysis of First Regional's loan portfolio performance and economic conditions in general."

Mr. Gartshore continued: "First Regional's long-standing emphasis on capital strength has enabled us to deal realistically with the economic environment while maintaining "well capitalized" capital ratios, the highest standard established by banking regulators. Moreover, our core earnings (before loan loss provisions and taxes), though reduced, remain substantial despite the decline in operating margins in 2008 due to the Federal Reserve's actions to reduce interest rates in an attempt to stimulate the economy.

"As we move forward, we will continue to benefit from our skilled and experienced management and our capable and professional staff. These members of the First Regional team have shown the talent and experience to confront the challenges and to capitalize on the opportunities that will doubtless arise as the economy and the credit markets return to health. We will continue to provide our clients with our unmatched level of service and the efficient, cost-effective operation they have come to expect."

Mr. Gartshore concluded: "While we foresee many challenges, we remain confident regarding the future. The current environment continues to require difficult measures, but we are committed to taking those actions as necessary steps in enhancing value over time for First Regional's shareholders."

First Regional Bancorp is a bank holding company headquartered in Century City, California. 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.

The following is a schedule of the primary components of First Regional Bank’s loan portfolio as of December 31, 2008.

First Regional Bancorp
H. Anthony Gartshore
310-552-1776