First Regional Bancorp (Nasdaq-GSM:FRGB) today announced financial results for the third quarter and nine months ended September 30, 2009. The Company reported a net loss for the quarter ended September 30, 2009 of $1.6 million, equal to 13 cents per diluted share, compared to net income for the third quarter of 2008 of $1.2 million, equal to 9 cents per diluted share.

Following the findings of a recent regulatory examination of the Company''s First Regional Bank subsidiary, the Company determined that it will restate its Quarterly Report on Form 10-Q for the period ended June 30, 2009. By restating, the Company will ensure consistency between the revised Form 10-Q and First Regional Bank''s June 30, 2009 quarterly Call Report, which was re-filed to reflect the examination findings. As a result, the second-quarter net loss increased to $110.8 million, or $9.36 per share. For the first nine months of 2009, the Company recorded a net loss of $115.6 million, or $9.77 per diluted share, versus a net loss of $12.6 million, equal to $1.07 per diluted share, for the same period in 2008.

Changes to the second quarter include a $69.9 million increase in the allowance for loan losses to reflect an adjustment to the factors utilized in calculating the allowance for loan losses as of June 30, 2009. These include recent trends in delinquent, classified and non-performing loans in the Bank''s loan portfolio, as well as changes in property values in the market areas served by the Bank. The revised report also reflects the write-down of certain loans, and the $20.7 million expense of establishing a valuation allowance for deferred tax assets. The joint examination commenced on July 13, 2009 and concluded on September 24, 2009 using a June 30, 2009 control date.

In the third quarter, the Company continued its program of reducing assets in order to focus more closely on its core banking relationships, and at September 30, 2009 total assets were $2.188 billion, compared to $2.418 billion one year earlier. Total deposits declined to $1.858 billion from $2.045 billion a year earlier, while net loans fell to $1.930 billion from $2.248 billion at September 30, 2008.

Reflecting the current severe economic conditions, and the results of the recently-completed joint examination of First Regional Bank, for the nine months ended September 30, 2009 First Regional has made $109.0 million in provisions to its allowance for loan losses and charged off a total of $112.8 million in loans. These transactions brought the loan loss allowance to $57.8 million, or 2.91% of gross loans, at September 30, 2009. Nonperforming assets as of the same date totaled $384.3 million, or 18.65% of gross loans plus other real estate owned, compared to $33.1 million at September 30, 2008.

H. Anthony Gartshore, President and Chief Executive Officer, commented: "The current economic environment has severely impacted businesses and financial institutions, and First Regional certainly is no exception. We are confident, however, that we have the determination, the resources, and the experience necessary to meet these profound challenges.

“While the vast majority of our loan portfolio continues to be well-secured and to perform as agreed, we remain focused on our long-standing practice of confronting challenges fully, directly, and realistically. Notably, 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 today''s distressed market. We continued to make steady progress in reducing our inventory of nonperforming assets in the third quarter. Nonetheless, 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 been a key factor throughout the current economic environment. Recent operating losses, however, including those of our revised second quarter, have reduced some of First Regional Bank''s capital ratios below the ''well capitalized'' standards, and below the levels which the bank has committed to its regulators to maintain. Accordingly, we are working diligently, and exploring a variety of approaches, to restore First Regional''s capital strength to the standards to which we have long adhered. To that end, we applaud the prompt congressional passage of a bill to amend the tax treatment of net operating loss carry-backs. Thanks to this bill, First Regional will be able to recover a substantial portion of its recently-established valuation allowance for deferred tax assets, further strengthening our capital position.”

He concluded: "One of our core strengths is the ability to provide our clients with the high-quality service and the efficient, cost-effective operation they have come to expect, along with today''s increased FDIC-insured safety.

“Throughout its 30-year history, First Regional has demonstrated the ability to navigate challenging economic times. Today''s environment continues to require stringent measures, but we are committed to taking the actions necessary, however difficult, to support current operations and prepare the way for progress and profitable growth as the economy stabilizes and begins to recover."

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 September 30, 2009.

Contacts:

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