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PRESS RELEASE: Paid content from ACCESSWIRE
Press release content from ACCESSWIRE. The AP news staff was not involved in its creation.

The Freedom Bank of Virginia Announces Earnings For the Third Quarter of 2019

October 30, 2019 GMT
FAIRFAX, VA / ACCESSWIRE / October 30, 2019 / The Freedom Bank of Virginia (OTCQX:FDVA), (the "Bank" or "Freedom") today announced net income of $932,348, or $0.13 per diluted share, for the quarter ended September 30, 2019. Joseph J. Thomas, ...
FAIRFAX, VA / ACCESSWIRE / October 30, 2019 / The Freedom Bank of Virginia (OTCQX:FDVA), (the "Bank" or "Freedom") today announced net income of $932,348, or $0.13 per diluted share, for the quarter ended September 30, 2019. Joseph J. Thomas, ...

FAIRFAX, VA / ACCESSWIRE / October 30, 2019 / The Freedom Bank of Virginia (OTCQX:FDVA), (the “Bank” or “Freedom”) today announced net income of $932,348, or $0.13 per diluted share, for the quarter ended September 30, 2019.

Joseph J. Thomas, President and CEO, commented “Freedom is beginning to demonstrate the rebranding of our innovative bank, the resolve of our committed colleagues and the respect of our valued clients, as evidenced in the 83% increase in our third quarter net income compared to the prior quarter and the improvement in the quarterly ROAA to 0.75%. This has been driven by 16.8% annualized growth in loans in the third quarter, an increase in the net Interest margin to 3.51%, a 24 basis point increase over the second quarter, and a 31.1% increase in non-interest income in the third quarter compared to the prior quarter due to strong mortgage revenue. We have also remained vigilant on expense management as our efficiency ratio improved to 81.4% in the quarter and through the first nine months of 2019 compared to the same period in 2018, we have shed $902 thousand in non-interest expenses. Despite the market head winds and intense competitive conditions, our strategy is gaining traction as we crested $500 million in total assets at the end of the third quarter”

Third Quarter 2019 Highlights include:

Net Interest Income

The Bank recorded net interest income of $4.21 million for the third quarter of 2019, an increase of 11.58% compared to the previous quarter and lower by 5.79% compared to the same period in 2018. The net interest margin in the third quarter of 2019 was 3.51%, higher by 24 basis points compared to the previous quarter, and lower by 3 basis points compared to the same period in 2018.

The following factors contributed to the changes in net interest margin during the third quarter of 2019 compared to the previous quarter:

The following factors contributed to the changes in net interest margin during the third quarter of 2019 compared to the same period in 2018:

Non-interest Income

Non-interest income was $1.84 million for the third quarter, higher by 31.14% compared to the previous quarter. Non-interest income in the third quarter of 2018 was a loss of $284,723, primarily due to extraordinary pre-tax losses of $1.2 million from the sale of debt securities during the quarter. If those losses were to be excluded, non-interest income for the third quarter of 2018 would have been $896,385. The principal contributors to the increase in non-interest income was higher gain-on-sale revenue from mortgage loans.

Non-interest Expenses

Non-interest expenses increased by 11.96% compared to the previous quarter and decreased by 6.13% compared to the same period in 2018. Non-interest expenses decreased by 6.12% for the first nine months of 2019 compared to the same period in 2018.

Principal categories of non-interest expenses that changed in the third quarter of 2019 were the following:

Income Taxes

Income tax expense was $145,115 in the third quarter of 2019, equivalent to an effective tax rate of 13.47% compared to a tax benefit of $226,718 for the same period in 2018.

Asset Quality

Non-accrual loans were $2.18 million or 0.53% of total loans at the end of the third quarter of 2019, compared to $3.05 million or 0.76% of total loans at the end of the prior quarter. As of both September 30, 2019 and June 30, 2019, there were no troubled debt restructurings (“TDRs”) not on nonaccrual. On September 30, 2019 there were $598,863 of loans that were 90 days or more past due and not on no-accrual, equivalent to 0.14% of total loans, compared to $148,321 of loans that were 90 days or more past due and not on non-accrual, equivalent to 0.04% of total loans on June 30, 2019. Additionally, there was no other real estate owned (“OREO”) on the balance sheet on September 30, 2019 or June 30, 2019. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and not on non-accrual, loans that were TDRs but not on non-accrual, and OREO assets) were $2.78 million or 0.55% of total assets at September 30, 2019 compared to $3.19 million or 0.65% of total assets, at the end of the previous quarter.

The Bank recognized a provision for loan and lease losses of $47,000 during the third quarter, compared to a provision of $147,500 in the prior quarter. The Bank’s ALLL was 1.12% of loans held-for-investment at September 30, 2019, compared to 1.14% of loans held-for-investment at June 30, 2019.

Total Assets

Total assets at September 30, 2019 were $507.39 million compared to $489.91 million on June 30, 2019. Changes in major asset categories during linked quarters were as follows:

Total Liabilities

Total liabilities at September 30, 2019 were $444.20 million, compared to total liabilities of $428.66 million on June 30, 2019. Total deposits were $396.65 million on September 30, 2019 compared to total deposits of $398.41 million on June 30, 2019. On a linked quarter basis, interest bearing demand deposits declined by $2.00 million, with the bulk of the decline occurring in higher cost money market balances. Non-interest bearing demand deposits decreased slightly during the quarter by $833,469 on seasonal activity to $80.92 million, but comprised 20.40% of total deposits at the end of the quarter, compared to 16.72% of total deposits on December 31, 2018. Federal Home Loan Bank advances increased by $17.01 million during the quarter, as the bank took advantage of the decline in wholesale borrowing rates to supplement liquidity and fund the strong loan growth during the quarter.

Stockholders’ Equity and Capital

Stockholders’ equity at September 30, 2019 was $63.19 million compared to $61.25 million on June 30, 2019. Additional paid in capital at September 30, 2019 was $58.45 million compared to $57.66 million on June 30, 2019. Accumulated Other Comprehensive Income (“AOCI”), which generally comprises unrealized gains and losses on available-for-sale securities on the balance sheet, increased by $205,339 on lower unrealized losses during the quarter and has increased by $1.08 million since December 31, 2018. Total shares issued and outstanding were 7,211,046 on September 30, 2019 compared to 6,981,602 on December 31, 2018. The book value of the Bank’s common stock at September 30, 2019 was $8.76 per share compared to $8.47 per share on December 31, 2018.

As of September 30, 2019, all of the Bank’s capital ratios were well above regulatory minimum capital ratios for well capitalized banks. The Bank’s capital ratios on September 30, 2019 and December 31, 2018 were as follows:

September 30, 2019December 31, 2018

Total Capital Ratio

15.84%15.85%

Tier 1 Capital Ratio

14.79%14.73%

Common Equity Tier 1 Capital Ratio

14.79%14.73%

Leverage Ratio

12.80%12.15%

About Freedom Bank

Freedom Bank is a community-oriented bank with locations in Fairfax, Reston, Chantilly and Vienna, Virginia. Freedom Bank also has a mortgage division headquartered in Chantilly. For information about Freedom Bank’s deposit and loan services, visit the Bank’s website at www.freedom.bank

Forward Looking Statements

This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management’s projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, maintenance and development of well-established and valued client relationships and referral source relationships, the adequacy or inadequacy of our allowance for loan and lease losses, and acquisition or loss of key production personnel. The Bank cautions readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and the Bank may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance. Some of the financial tables in this document reflect classifications to accounts to improve consistency in financial reporting.

THE FREEDOM BANK OF VIRGINIA CONSOLIDATED BALANCE SHEETS

(Unaudited)(Unaudited)(Audited)
September 30,June 30,December 31,
201920192018

ASSETS

Cash and Due from Banks

$890,654$1,451,117$1,270,559

Interest Bearing Deposits with Banks

20,590,24617,686,06114,376,684

Securities Available-for-Sale

44,984,63346,997,84548,204,339

Restricted Stock Investments

4,013,7503,277,8003,076,000

Loans Held for Sale

19,338,24314,094,0574,415,520

Loans Held for Investment

400,817,788389,069,949394,080,457

Allowance for Loan Losses

(4,502,835)(4,435,737)(4,572,393)

Net Loans

396,314,953384,634,112389,508,064

Bank Premises and Equipment, net

1,547,0081,618,9401,748,935

Other Real Estate Owned

---

Accrued Interest Receivable

1,252,0141,368,9641,229,534

Deferred Tax Asset

779,577864,6421,247,513

Bank-Owned Life Insurance

12,686,87812,589,85512,401,317

Other Assets

4,989,3235,322,1371,336,522

Total Assets

507,387,279489,905,630$478,814,987

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Deposits

Demand deposits

Non-interest bearing

$80,916,899$81,750,368$67,012,857

Interest bearing

110,200,698112,197,896128,403,358

Savings deposits

2,726,0462,544,3413,023,239

Time deposits

202,808,547201,914,936202,292,311

Total Deposits

396,652,190398,407,541400,731,765

Federal Home Loan Bank advances

41,857,14324,850,00017,142,857

Other Liabilities

4,808,5314,768,4191,607,491

Accrued interest payable

882,971630,123218,537

Total Liabilities

444,200,835428,656,083419,700,650

Stockholders' Equity

Preferred stock, $0.01 par value, 5,000,000 shares authorized;

0 shares issued and outstanding, 2019 and 2018

---

Common stock, $0.01 par value, 25,000,000 shares:

23,000,000 shares voting and 2,000,000 shares non-voting.

Voting Common Stock:

6,538,046, 6,449,102 and 6,423,602 shares issued and outstanding

at September 30, June 30, 2019 and December 31, 2018, respectively

(includes 125,500, 125,500 and 115,000 unvested shares at September 30,

June 30, 2019 and December 31, 2018 respectively)

64,17563,23663,086

Non-Voting Common Stock:

673,000 shares issued and outstanding September 30, June 30, 2019

and December 31 2018

6,7306,7306,730

Additional paid-in capital

58,453,41657,655,14557,416,068

Accumulated other comprehensive loss, net

(47,841)(253,180)(1,124,101)

Retained earnings

4,709,9643,777,6162,752,554

Total Stockholders' Equity

63,186,44461,249,54759,114,337

Total Liabilities and Stockholders' Equity

$507,387,279$489,905,630$478,814,987

THE FREEDOM BANK OF VIRGINIA CONSOLIDATED STATEMENTS OF OPERATIONS

For the quarter endedFor the quarter endedFor the nine months endedFor the nine months ended
September 30,September 30,September 30,September 30,
2019201820192018

Interest Income

Interest and fees on loans

$5,541,462$5,401,115$15,768,433$15,787,709

Interest on investment securities

343,288498,5061,091,6581,402,539

Interest on Federal funds sold

82,83160,077303,138309,696

Total Interest Income

5,967,5815,959,69817,163,22917,499,944

Interest Expense

Interest on deposits

1,585,2091,389,6404,693,4823,895,193

Interest on borrowings

174,810103,954382,639232,892

Total Interest Expense

1,760,0191,493,5955,076,1214,128,084

Net Interest Income

4,207,5634,466,10412,087,10813,371,860

Provision for Loan Losses

47,000-194,500-

Net Interest Income after

11,892,60813,371,860

Provision for Loan Losses

4,160,5634,466,104

Non-Interest Income

Gain on sale of mortgage loans

1,702,767846,6543,665,9582,500,123

Service charges and other income

36,27536,079111,168144,696

Gain(Loss) on sale of securities

-(1,181,108)105,722(1,181,108)

Increase in cash surrender value of bank-

owned life insurance

97,02213,653285,56140,774

Total Non-interest Income

1,836,064(284,723)4,168,4091,504,485

Non-Interest Expenses

Officer and employee compensation

and benefits

3,064,2443,151,3018,709,1428,829,772

Occupancy expense

285,798277,941849,787829,021

Equipment and depreciation expense

216,275166,368629,513492,236

Insurance expense

(26,872)97,320166,666423,632

Professional fees

297,947609,798827,6141,566,031

Data and item processing

256,535365,946696,156937,722

Business development

63,54347,320223,088188,005

Franchise taxes

154,265141,887394,868411,352

Mortgage fees and settlements

312,346137,423642,999403,059

Other operating expense

295,082245,204689,132650,306

Total Non-interest Expenses

4,919,1635,240,50813,828,96514,731,136

Income before Income Taxes

1,077,463(1,059,127)2,232,050145,209

Income Tax Expense

145,115(226,718)274,640(30,818)

Net Income

$932,348$(832,409)$1,957,409$176,027

Earnings per Common Share - Basic

$0.13$(0.12)$0.27$0.03

Earnings per Common Share - Diluted

$0.13$(0.12)$0.27$0.03

Weighted-Average Common Shares

Outstanding - Basic

7,150,6496,873,1237,118,5456,637,619

Weighted-Average Common Shares

Outstanding - Diluted

7,194,7866,873,1237,161,8626,995,540

THE FREEDOM BANK OF VIRGINIA CONSOLIDATED STATEMENTS OF OPERATIONS

For the quarter endedFor the quarter endedFor the quarter endedFor the quarter endedFor the quarter ended
September 30,June 30,March 31,December 31,September 30,
20192019201920182018

Interest Income

Interest and fees on loans

$5,541,462$5,022,252$5,204,718$5,320,254$5,401,115

Interest on investment securities

343,288381,352367,017337,702498,506

Interest on Federal funds sold and Other

82,83194,979125,328174,69360,077

Total Interest Income

5,967,5815,498,5835,697,0635,832,6495,959,698

Interest Expense

Interest on deposits

1,585,2091,606,9531,501,3191,457,0421,389,640

Interest on borrowings

174,810120,69687,13289,481103,954

Total Interest Expense

1,760,0191,727,6491,588,4511,546,5231,493,594

Net Interest Income

4,207,5623,770,9344,108,6124,286,1264,466,104

Provision for Loan Losses

47,000147,500-406,000-

Net Interest Income after

Provision for Loan Losses

4,160,5623,623,4344,108,6123,880,1264,466,104

Non-Interest Income

Gain on sale of mortgage loans

1,702,7671,168,251794,939668,073846,654

Service charges and other income

36,27532,46242,43143,19636,079

Gains on sale of securities

-103,0342,688-(1,181,108)

Increase in cash surrender value of bank-

owned life insurance

97,02296,32492,21522,39613,652

Total Non-interest Income

1,836,0641,400,071932,273733,665(284,723)

Non-Interest Expenses

Officer and employee compensation

and benefits

3,064,2442,711,9062,932,9932,824,4803,151,301

Occupancy expense

285,798288,213275,776269,963277,941

Equipment and depreciation expense

216,275277,717185,521172,048166,369

Insurance expense

(26,872)77,98477,98478,34597,320

Professional fees

297,947243,880323,358478,838609,798

Data and item processing

256,535187,073252,547312,108365,946

Business development

63,543124,27635,26957,28947,320

Franchise taxes

154,26598,717141,887141,886141,887

Mortgage fees and settlements

312,346198,771131,88195,353137,423

Other operating expense

295,082185,124158,927179,851245,202

Total Non-interest Expenses

4,919,1634,393,6614,516,1434,610,1615,240,508

Income before Income Taxes

1,077,463629,844524,7423,630(1,059,127)

Income Tax Expense

145,115120,7698,756(11,605)(226,718)

Net Income

$932,348$509,075$515,986$15,235$(832,409)

Earnings per Common Share - Basic

$0.13$0.07$0.07$0.00$(0.12)

Earnings per Common Share - Diluted

$0.13$0.07$0.07$0.00$(0.12)

Weighted-Average Common Shares

Outstanding - Basic

7,150,6497,114,1907,097,6357,085,6366,873,123

Weighted-Average Common Shares

Outstanding - Diluted

7,194,7867,177,9847,173,6567,207,7596,873,123

Average Balances, Income and Expenses, Yields and Rates (Unaudited)

Three Months EndedThree Months Ended
September 30, 2019June 30, 2019
Average BalanceIncome/ExpenseYieldAverage BalanceIncome/ExpenseYield

Assets

Cash

$16,053,908$82,8312.05%$19,212,889$94,9791.98%

Investments (Tax Exempt)

$4,481,837$38,451$4,380,278$38,468

Investments (Taxable)

$45,525,802$312,913$51,397,468$350,962

Total Investments

$50,007,639$351,3642.79%$55,777,746$389,4302.80%

Loans (Tax Exempt)

$4,590,156$61,620$4,618,618$61,329

Loans (Taxable)

$406,752,716$5,492,782$385,967,635$4,973,795

Total Loans

$411,342,872$5,554,4025.36%$390,586,253$5,035,1245.17%

Earning Assets

$477,404,419$5,988,5974.98%$465,576,888$5,519,5334.76%

Assets

$494,059,141$483,716,025

Liabilities

Interest Checking

$10,544,633$14,3410.54%$7,006,451$9,3070.53%

Money Market

$94,166,514$328,2721.38%$108,817,738$386,7931.43%

Savings

$2,538,392$1,2800.20%$2,411,698$1,2020.20%

Time Deposits

$202,523,113$1,241,3162.43%$201,531,076$1,209,6512.38%

Interest Bearing Deposits

$309,772,652$1,585,2092.03%$319,766,963$1,606,9532.02%

FHLB Borrowings

$37,231,599$174,8111.86%$21,830,769$120,6962.22%

Interest Bearing Liabilities

$347,004,251$1,760,0202.01%$341,597,732$1,727,6492.03%

Non Interest Bearing Deposits

$79,607,547$76,077,226

Cost of Funds

1.64%1.66%

Net Interest Margin1

$4,228,5773.51%$3,791,8843.27%

Shareholders Equity

$62,102,356$60,715,800

1 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank’s net yield on its earning assets

Average Balances, Income and Expenses, Yields and Rates (Unaudited)

Three Months EndedThree Months EndedNine Months EndedNine Months Ended
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Average BalanceIncome/ ExpenseYieldAverage BalanceIncome/ ExpenseYieldAverage BalanceIncome/ ExpenseYieldAverage BalanceIncome/ ExpenseYield

Assets

Cash

$16,053,908$82,8312.05%$14,848,329$60,0761.61%$19,636,069$303,1372.06%$26,009,340$309,2311.59%

Investments (Tax Exempt)

$4,481,837$38,451$28,631,429$223,778$4,501,297$120,037$29,339,457$691,900

Investments (Taxable)

$45,525,802$312,913$50,389,824$321,721$48,730,310$996,829$48,387,847$855,939

Total Investments

$50,007,639$351,3642.79%$79,021,253$545,4992.74%$53,231,607$1,116,8662.81%$77,727,304$1,547,8392.66%

Loans (Tax Exempt)

$4,590,156$61,620$0$0$3,290,195$135,134$0$0

Loans (Taxable)

$406,752,716$5,492,782$412,337,461$5,401,108$393,884,993$15,661,677$407,885,664$15,787,690

Total Loans

$411,342,872$5,554,4025.36%$412,337,461$5,401,1085.20%$397,175,188$15,796,8115.32%$407,885,664$15,787,6905.18%

Earning Assets

$477,404,419$5,988,5974.98%$506,207,043$6,006,6834.71%$470,042,864$17,216,8144.90%$511,622,308$17,644,7604.61%

Assets

$494,059,141$512,317,206$486,801,916$516,988,189

Liabilities

Interest Checking

$10,544,633$14,3410.54%$5,873,454$8,0770.55%$8,174,820$32,8130.54%$6,165,752$23,6280.51%

Money Market

$94,166,514$328,2721.38%$163,557,757$550,8061.34%$106,461,251$1,110,3041.40%$172,696,987$1,588,6671.23%

Savings

$2,538,392$1,2800.20%$2,149,103$1,0940.20%$2,612,952$3,8930.20%$2,173,756$3,3570.21%

Time Deposits

$202,523,113$1,241,3162.43%$188,938,817$829,6061.74%$201,292,978$3,546,4692.36%$192,820,100$2,279,5401.58%

Interest Bearing Deposits

$309,772,652$1,585,2092.03%$360,519,131$1,389,5831.53%$318,542,001$4,693,4791.97%$373,856,595$3,895,1921.39%

FHLB Borrowings

$37,231,599$174,8111.86%$19,948,758$103,9542.07%$25,471,664$382,6382.01%$15,141,681$232,8912.06%

Interest Bearing Liabilities

$347,004,251$1,760,0202.01%$380,467,889$1,493,5931.56%$344,013,665$5,076,1171.97%$388,998,276$4,128,0831.42%

Non Interest Bearing Deposits

$79,607,547$72,823,900$76,628,794$67,272,743

Cost of Funds

1.64%1.31%1.61%1.21%

Net Interest Margin1

$4,228,5773.51%$4,513,0903.54%$12,140,6973.45%$13,516,6773.53%

Shareholders Equity

$62,102,356$57,543,960$60,805,772$55,592,217

ROAA

0.75%-0.64%0.54%0.05%

ROAE

5.96%-5.74%4.30%0.42%

1 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank’s net yield on its earning assets

Selected Financial Data by Quarter Ended:

(Unaudited)

Balance Sheet Ratios

September 30, 2019June 30, 2019March 31, 2019December 31, 2018September 30, 2018

Loans to Deposits

105.93%101.19%98.18%99.44%93.64%

Income Statement Ratios

Return on Average Assets (ROAA)

0.75%0.42%0.43%0.01%-0.64%

Return on Average Equity (ROAE)

5.96%3.36%3.51%0.10%-5.74%

Efficiency Ratio

81.39%84.97%89.59%91.84%125.33%

Net Interest Margin1

3.51%3.27%3.60%3.49%3.54%

Yield on Average Earning Assets

4.98%4.76%4.99%4.74%4.71%

Yield on Securities

2.79%2.80%2.83%2.67%2.74%

Yield on Loans

5.36%5.17%5.42%5.22%5.20%

Cost of Funds

1.64%1.66%1.54%1.41%1.31%

Per Share Data

Tangible Book Value

$8.76$8.60$8.48$8.47$8.36

Share Price Data

Closing Price

$9.95$9.98$10.00$10.23$12.12

Book Value Multiple

114%116%116%121%145%

Common Stock Data

Outstanding Shares at End of Period

7,211,0467,122,1027,112,1026,981,6026,950,165

Weighted Average shares outstanding, basic

7,150,6497,114,1907,097,6357,085,6366,873,123

Weighted Average shares outstanding, diluted

7,194,7867,177,9847,173,6567,207,7596,873,123

Capital Ratios

Tier 1 Leverage ratio

12.80%12.71%12.61%12.16%11.66%

Common Equity Tier 1 ratio

14.79%14.91%15.28%14.73%14.46%

Tier 1 Risk Based Capital ratio

14.79%14.91%15.28%14.73%14.46%

Total Risk Based Capital ratio

15.84%15.98%16.42%15.85%15.50%

Credit Quality

Net Charge-offs to Average Loans

0.00%0.06%0.02%0.03%0.01%

Total Non-performing Loans to Total Loans

0.67%0.79%0.80%0.83%1.45%

Total Non-performing Assets to Total Assets

0.55%0.65%0.64%0.69%1.38%

Nonaccrual Loans to Total Loans

0.53%0.76%0.65%0.71%1.07%

Allowance for Loan and Lease Losses to loans held-for-investment

1.12%1.14%1.19%1.16%1.06%

1 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank’s net yield on its earning assets

Contact:

Joseph J. Thomas

President & Chief Executive Officer

703-667-4161: Phone

: Email

SOURCE: Freedom Bank of VA

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