• Loss Reduced Substantially from Immediately Preceding Fourth Quarter
• Further Progress in Addressing Credit Problems Associated with Current Economic Recession
• Loan Loss Reserves Further Strengthened
• Bank Exceeds All Financial Ratio Requirements for “Well Capitalized” Status
• Total Assets, Deposits and Net Loans Surpass Year Ago Levels

First Regional Bancorp (Nasdaq: FRGB) reported an operating loss for the first quarter of 2009, which was substantially reduced from the immediately preceding fourth quarter of 2008, reflecting the company’s progress in mitigating the credit problems arising from the current deep economic recession.

For the three months ended March 31, 2009, the net loss was $3.2 million, equal to 27 cents per diluted share, versus net income of $4.7 million, or 37 cents per diluted share, in last year’s first quarter. Results for the first quarter of 2008 benefited from certain nonrecurring items: a $2.8 million gain (included in other income) and a $2.2 million reserve reversal (which reduced operating expense), in conjunction with the successful public offering of Visa International. The two Visa-related transactions increased after-tax net income by $2.9 million, equal to 23 cents per diluted share. Current quarter results reflected substantial progress from the net loss of $11.0 million, or 93 cents per diluted share, recorded in the fourth quarter of 2008.

At March 31, 2009, total assets were $2.481 billion, versus $2.321 billion one year earlier. Total deposits at the end of the quarter were $2.207 billion, up from $1.696 billion in the prior year. Net loans grew to $2.235 billion at the first quarter’s close, compared to $2.166 billion at March 31, 2008. Reflecting the impact of operating losses over the past year in an extraordinarily difficult environment, total capital at the end of the first quarter of 2009 amounted to $147.4 million, as against $177.8 million a year ago. First Regional continues to exceed all financial ratio requirements for Well Capitalized status under applicable regulations. As First Regional holds no material intangible assets, all of First Regional’s equity capital is tangible.

Reflecting the continued difficult economic climate, in the first quarter, First Regional made provisions of $7.5 million to its reserve for loan losses, compared to provisions of $10.8 million and $27.4 million, respectively, to reserves in the first quarter and fourth quarter of 2008. First Regional’s loan loss reserve totaled $68.3 million, or 2.96% of gross loans at March 31, 2009, compared to a reserve of $33.6 million, or 1.53% of gross loans at the close of 2008’s first quarter.

Operating results were also adversely impacted by historic lows in interest rates resulting from the Federal Reserve’s aggressive actions directed at reviving the economy during the past twelve months. These actions—including a combined 175 basis point reduction in the federal funds rate through a series of cuts during the fourth quarter of 2008 alone—significantly impacted the yield on First Regional’s loan portfolio, comprised almost entirely of variable-rate notes that adjust immediately. In contrast, money market and time deposit yields remain locked in and will require a longer period until maturity and to re-price accordingly. As a result, first quarter of 2009 net interest income amounted to $15.952 million, down sharply from $26.396 million in the corresponding quarter of 2008.

H. Anthony Gartshore, President and Chief Executive Officer, commented: “While times certainly remain extremely difficult for First Regional and for financial institutions in general, the key point is that we are making steady progress in confronting our challenges. Our highest priority today is to resolve our problem assets spawned by the current economic recession. We are dealing firmly and pragmatically with delinquent borrowers, and we do not hesitate to take forceful action, such as foreclosure, if borrowers do not perform. Although these measures have led to a spike in nonperforming assets, we expect those totals to decline as we complete the asset disposal transactions which we have in progress.

“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 the present soft market. As required by applicable accounting standards, we have already made loan loss provisions to reflect our updated estimates of such potential losses, and we 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: “As previously announced, First Regional and its subsidiary, First Regional Bank, recently entered into agreements with their respective regulators designed to ensure that we maintain our financial strength and reduce our problem assets in the face of the current uncertain economic conditions. We remain in full compliance with the provisions of those agreements, and are ahead of schedule in completing many of the goals contained in those agreements.

“As we move through the balance of 2009, we expect to accelerate the pace of our progress in important respects. Our stepped-up loan collection efforts combined with normal loan repayments are anticipated to result in a reduction of total assets. This asset shrinkage, along with the historically low interest rate environment currently prevailing, will place continued pressure on our 2009 operating results. However, and importantly, that compression will also allow us to establish a solid, high quality foundation for future growth. In the interim, our talented team of experienced bankers continues to provide customers and prospects with creative solutions to their loan and deposit needs, and the unmatched level of personal service which our clients enjoy continues uninterrupted.”

Mr. Gartshore concluded: “Despite the many remaining challenges, we are confident that economic recovery will bring many attractive opportunities, and we look to the future with confidence and determination. While we expect our actions in the present environment will limit growth and profitability for the near-term, these important measures will contribute to our fundamental goal of enhancing value for our shareholders over time.”

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 describing the primary components of First Regional Bank’s loan portfolio as of

March 31, 2009:

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