Freedom Financial Holdings Announces Earnings for Second Quarter of 2022

Rhea-AI Summary

Freedom Financial Holdings (FDVA) reported a net income of $2.23 million or $0.30 per diluted share for Q2 2022, down from $2.78 million in Q1 2022. The decline was attributed to a significant drop in fee-based revenue, particularly from mortgage banking, which fell by 51.29%. However, a robust 18.24% growth in net interest income helped mitigate losses. The company's Tier 1 Capital Ratio stands at 13.84%. Total assets increased to $895.52 million, up 3.75% from the prior quarter, while non-interest income decreased by 27.72%.

Positive

• Net interest income increased by 18.24% year-over-year, reflecting strong loan growth.
• Total assets grew to $895.52 million, indicating a 3.75% increase from the prior quarter.
• Strong Tier 1 Capital Ratio of 13.84% ensuring solid capital position.

Negative

• Net income decreased by 20% compared to the linked quarter.
• Mortgage banking revenue dropped by $1.04 million or 51.29%.
• Fees from PPP loan forgiveness decreased by 244.42%, affecting overall income.
• Non-interest income fell by 27.72% year-over-year.

FAIRFAX, Va., July 29, 2022 /PRNewswire/ -- Freedom Financial Holdings (OTCQX: FDVA), (the "Company" or "Freedom"), the holding company for The Freedom Bank of Virginia (the "Bank") today announced net income of $2,227,385 or $0.30 per diluted share, for the three months ended June 30, 2022. This compares to net income of $2,784,296 or $0.38 per diluted share, for the linked quarter and net income of $2,626,381 or $0.36 per diluted share for the three months ending June 30, 2021.    

Joseph J. Thomas, President, and CEO, commented, "We experienced the full impact of cyclical changes in the economy in the second quarter of 2022 as fee-based revenue fell meaningfully, but the decline was largely offset by very strong core income from loan growth and net interest margin expansion.  As interest rates increased, the residential real estate market began to cool, with mortgage banking revenues declining by $1.04 million or 51.29%.  Likewise, as the federal government's Paycheck Protection Program ("PPP") wound down, the Bank's income from PPP loan forgiveness decreased by $364,438 or 244.42%, in the second quarter of 2022, compared to the same period in 2021.  Our banking team was able to offset these expected declines in fee-based revenue with growth in net interest income (excluding the impact of PPP loans) of 18.24% in the second quarter of 2022 compared to the same period in 2021. This was driven by strong growth in loans held for investment (excluding PPP loans) of 28.72% annualized and 23.50% annualized growth in deposits, relative to the prior quarter.  In response to the increase in interest rates, the Bank's net interest margin expanded by 27-basis points to 3.65% in the second quarter of 2022 compared to the same period in 2021. Consequently, our pre-tax, pre-provision net income declined by 11.5% to $3.24 million in the second quarter of 2022 compared to the same period in 2021.    Notably, the allowance for loan losses at 1.13% (excluding PPP loans) and Tier 1 Capital Ratio at 13.84% puts us in a very strong position to manage through a potentially more challenging economic environment and continue to focus on proactively serving and innovatively growing with our clients."

Second Quarter 2022 Highlights include:

• Net income for the second quarter was $2,227,385 or $0.30 per diluted share compared to net income of $2,784,297 or $0.38 per diluted share in the linked quarter and net income of $2,626,381 or $0.36 per diluted share for the three months ending June 30, 2021.
• Return on Average Assets ("ROAA") was 1.01% for the quarter ended June 30, 2022, compared to 1.29% for the linked quarter and 1.24% for the three months ended June 30, 2021.
• Return on Average Equity ("ROAE") was 11.44% for the three months ended June 30, 2022, compared to 13.53% for the linked quarter and 13.65% for the three months ended June 30, 2021.
• Total assets were $895.52 million on June 30, 2022, an increase of $32.40 million or 3.75% from the end of the prior quarter and an increase of 2.15% from total assets on December 31, 2021.
• Loans held-for-investment (excluding PPP loans) increased by $41.60 million or 7.16% during the quarter.
• PPP loan balances decreased by $3.66 million during the second quarter on loan forgiveness and mortgage loans held for sale decreased by $4.49 million during the same period, on a decline in mortgage activity.
• Cash balances at the Federal Reserve decreased by $5.40 million during the second quarter.
• Available for sale investment securities increased by $1.28 million during the second quarter.
• Total deposits increased by $41.90 million or by 5.86% in the second quarter. Non-interest-bearing demand deposits increased by $8.04 million from the linked quarter to $216.21 million and represented 28.58% of total deposits on June 30, 2022.
• Excluding income from PPP loans, net interest income in the second quarter of 2022 increased by $1.68 million or by 29.17% compared to the same period in 2021. Excluding PPP loans, the net interest margin for the second quarter of 2022 was 3.62%, higher by 9 basis points compared to the prior quarter and was higher by 49 basis points compared to the same period in 2021. The net interest margin for the second quarter of 2022 was 3.65% if the income from PPP loans was included.
• The cost of funds was 0.45% for the second quarter, higher by 9 basis points compared to the linked quarter and higher by 3 basis points compared to the same period in 2021, as deposit and borrowing costs increased during the quarter.
• Non-interest income decreased by 8.84% compared to the linked quarter and decreased by 27.72% compared to the same period in 2021. The decrease in non-interest income compared to the linked quarter was primarily due to lower mortgage revenue and other fee income. The decrease in non-interest income compared to the calendar quarter was primarily due to lower mortgage revenue stemming from a slowdown in mortgage activity, partially offset by higher revenue from SBA loan sales and other fee income.
• Non-interest expense in the second quarter increased by 3.72% compared to the linked quarter and was higher by 6.09% compared to the same period in 2021. The increase in non-interest expense in linked quarters was primarily due to higher professional fees and an increase in data processing expenses. Higher expenses compared to the calendar quarter were primarily related to an increase in compensation costs in the second quarter of 2022.
• The Efficiency Ratio was 65.10% for the quarter ended June 30, 2022, compared to 61.70% for the linked quarter and 62.38% for the same period in 2021.
• Non-accrual loans were relatively unchanged in the second quarter from the prior period, and the ratio of non-performing assets to total assets was 0.97% on June 30, 2022, compared to 0.11% on June 30, 2021.
• As a result of an increase in loans held-for-investment during the quarter and an assessment of the risks in the held-for-investment loan portfolio, the Company recognized a $375,000 provision for loan losses during the second quarter and the ratio of the allowance for loan and lease losses ("ALLL") to loans held-for-investment was 1.11% (or 1.13% excluding PPP loans, which carry a full faith and credit guarantee of the US Government) compared to 1.12% in the linked quarter (or 1.15% excluding PPP loans);
• The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 11.95%, Common Equity Tier 1 ratio of 13.84%, Tier 1 Risk Based Capital ratio of 13.84% and a Total Capital ratio of 14.77%.

Paycheck Protection Program ("PPP") Activity

For the first six months of 2022, 103 PPP loans with balances of $13.35 million were forgiven by the SBA, and the Company recognized $608,952 of income from acceleration of processing fees associated with these loans. This compares with 354 PPP loans with balances of $55.08 million forgiven by the SBA in the first six months of 2021 with $1.09 million of income from acceleration of processing fees. 

Net Interest Income

The Company recorded net interest income of $7.61 million for the second quarter of 2022, relatively unchanged compared to the linked quarter, and 11.53% higher than the same period in 2021.

Income from PPP loans during the second quarter of 2022 was $166,582 (including $149,105 from forgiveness of $3.15 million of PPP loans), compared to PPP loan income of $504,177 (including $459,847 from forgiveness of $14.42 million of PPP loans) during the first quarter of 2022, and $1,061,442 (including $513,343 from forgiveness of $30.25 million of PPP loans) during the second quarter of 2021. Excluding income from PPP loans, net interest income in the second quarter of 2022 increased by $338,597 or 4.76%, and by $1.68 million or 29.17% compared to the same period in 2021. 

The net interest margin in the second quarter of 2022 was 3.65%, lower by 3 basis points compared to the linked quarter and higher by 27 basis points compared to the same period in 2021. Excluding PPP loans, the net interest margin increased by 9 basis points compared to the prior quarter and was higher by 49 basis points compared to the same period in 2021.

The following factors contributed to the changes in net interest margin during the second quarter of 2022 compared to the linked quarter:

• Yields on average earning assets increased by 7 basis points to 4.08% compared to 4.01% in the linked quarter, driven by higher yields on investments and deposits at the Federal Reserve, offset partially by lower yields on loans during the quarter.
• Loan yields decreased by 8 basis points to 4.67% from 4.75% in the linked quarter, while yields on investment securities increased by 33 basis points to 2.78% from 2.45% in the linked quarter. Excluding PPP loans, loan yields would have increased by 5 bp from the prior quarter.
• Cost of funds increased by 9 basis points to 0.45%, from 0.36% in the linked quarter, on higher deposit and borrowing costs.
• Excluding the impact of PPP loans from the second and prior quarter, the net interest margin increased by 9 basis points across linked quarters.

The following factors contributed to the changes in net interest margin during the second quarter of 2022 compared to the calendar quarter:

• Yields on average earning assets increased by 30 basis points to 4.08% compared to 3.78% in the calendar quarter, driven by higher yields on loans, investments, and deposits at the Federal Reserve.
• Loan yields increased by 19 basis points to 4.67% from 4.48% in the calendar quarter, while yields on investment securities increased by 56 basis points to 2.78% from 2.22% in the calendar quarter.
• Cost of funds increased by 3 basis points to 0.45%, from 0.42% in the calendar quarter, on higher deposit and borrowing costs.
• Excluding the impact of PPP loans from the second and calendar quarter, the net interest margin increased by 49 basis points across quarters.

Non-interest Income
Non-interest income was $1.66 million for the second quarter, lower by 8.84% compared to the linked quarter and lower by 27.72% compared to the same period in 2021. The lower non-interest income across linked quarters was primarily due to a decline in mortgage revenue and lower fee income from other sources, while the decline in non-interest income compared to the calendar quarter was largely due to lower mortgage gain-on-sale and fee revenue, stemming from a decline in mortgage activity, partially offset by higher SBA income and fee income from other sources.

Total Revenue
Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was lower by 1.69% compared to the linked quarter, primarily due to lower non-interest income, and higher by 1.66% compared to the same period in 2021, primarily due to net margin expansion and loan growth.

Non-interest Expenses
Non-interest expenses in the second quarter of 2022 were higher by 3.72% compared to the linked quarter and increased by 6.09% compared to the same period in 2021. The increase in non-interest expenses in the second quarter compared to the prior quarter was largely due to higher professional fees and an increase in data processing expenses. Higher expenses compared to the calendar quarter were largely due to an increase in compensation costs in the second quarter of 2022. 

The Efficiency Ratio was 65.10% for the quarter ended June 30, 2022, compared to 61.70% for the prior quarter and 62.38% for the same period in 2021.

Asset Quality
Non-accrual loans were $8,712,326 or 1.38% of loans held-for-investment as of June 30, 2022, compared to $8,770,552 or 1.48% of loans held-for-investment at the end of the linked quarter. There were no troubled debt restructurings ("TDRs") as June 30, 2022. On June 30, 2022, there were no loans that were 90 days or more past due and accruing.  There was no Other Real Estate Owned ("OREO") on the balance sheet as of June 30, 2022. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and accruing, loans that are TDRs but not on non-accrual, and OREO assets) were $8,712,326 or 0.97% of total assets on June 30, 2022, compared to $8,770,552 or 1.02% of assets, at the end of the linked quarter.

Following an assessment of the collectability of the loans held-for-investment at the end of the second quarter, it was determined that a $375,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Company booked a provision of $191,000 in the first quarter of 2022. The Company's ALLL ratio was 1.11% of loans held-for-investment (or 1.13% of loans held-for investment excluding PPP loans) as of June 30, 2022, compared to an ALLL ratio of 1.12% on March 31, 2022 (or 1.15% of loans held-for-investment excluding PPP loans).

Total Assets
Total assets on June 30, 2022, were $895.52 million compared to $863.12 million on March 31, 2022. Changes in major asset categories during linked quarters were as follows:

• Cash balances at the Federal Reserve decreased by $5.40 million
• Available for sale investment balances increased by $1.28 million
• PPP loan balances decreased by $3.66 million on loan forgiveness by the SBA
• Other loans held-for investment grew by $41.60 million
• Mortgage loans held-for-sale declined by $4.49 million

Total Liabilities
Total liabilities on June 30, 2022, were $820.05 million compared to total liabilities of $783.33 million on March 31, 2022. Total deposits were $756.58 million compared to total deposits of $714.69 million on March 31, 2022. Non-interest-bearing demand deposits increased by $8.04 million during the quarter and comprised 28.58% of total deposits at the end of the quarter, compared to 31.66% of total deposits on December 31, 2021. Other interest-bearing demand deposits increased by $9.02 million, savings deposits decreased by $730,576 and time deposits increased by $25.56 million during the quarter. Federal Home Loan Bank advances decreased by $10.75 million during the quarter, while Federal Reserve borrowings increased by $6.28 million.

Stockholders' Equity and Capital
Stockholders' equity on June 30, 2022, was $75.47 million compared to $79.79 million on March 31, 2022. Additional paid-in capital was $58.82 million on June 30, 2022, compared to $58.66 million on March 31, 2022. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, decreased by $6.71 million on net unrealized losses during the second quarter of 2022. Retained earnings were $28.56 million on June 30, 2022, compared to $26.33 million at the end of the prior quarter. Total shares issued and outstanding were 7,319,006 on June 30, 2022, compared to 7,286,915 shares on March 31, 2022. The tangible book value of the Company's common stock on June 30, 2022, was $10.29 per share compared to $10.95 per share on March 31, 2022, and $10.81 per share on June 30, 2021.

As of June 30, 2022, the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized bank holding companies. The Bank's capital ratios on June 30, 2022, and March 31, 2022, were as follows:

	June 30, 2022	March 31, 2022
Total Capital Ratio	14.77 %	15.15 %
Tier 1 Capital Ratio	13.84 %	14.23 %
Common Equity
Tier 1 Capital Ratio	13.84 %	14.23 %
Leverage Ratio	11.95 %	12.09 %

 

About Freedom Financial Holdings, Inc.

Freedom Financial Holdings, Inc. is the holding company of The Freedom Bank of Virginia, a community bank with locations in Fairfax, Reston, Chantilly, Vienna, and Manassas, Virginia. The Freedom Bank of Virginia also has a mortgage division headquartered in Chantilly. For information about deposit, loan and other services, visit the 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; general economic and financial market conditions, in the United States generally and particularly in the markets in which the Company operates and which its loans are concentrated, including the effects of declines in real estate values, increases in unemployment levels, inflation, recessions and slowdowns in economic growth, including as a result of COVID-19 and the impact of the geopolitical conflict between Russia and Ukraine;  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; acquisition or loss of key production personnel; and the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, wars, terrorist acts or public health events (such as COVID-19), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Company's borrowers to satisfy their obligations to the Company, on the value of collateral securing loans, on the demand for the Company's loans or its other products and services, on incidents of cyberattack and fraud, on the Company's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Company's business operations and on financial markets and economic growth. The Company 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 Company 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.

Contact:
Joseph J. Thomas
President & Chief Executive Officer
703-667-4161: Phone
jthomas@freedom.bank: Email

FREEDOM FINANCIAL HOLDINGS
CONSOLIDATED BALANCE SHEETS
	(Unaudited)		(Unaudited)		(Audited)
	June 30,		March 31,		December 31,
	2022		2022		2021
ASSETS
Cash and Due from Banks	$                           3,923,888		$                               2,348,210		$                           2,536,450
Interest Bearing Deposits with Banks	23,290,289		28,687,951		31,696,891
Securities Available-for-Sale	170,386,775		169,108,572		171,532,394
Securities Held-to-Maturity	17,952,914		17,982,536		18,012,874
Restricted Stock Investments	3,422,700		3,797,700		3,321,250
Loans Held for Sale	6,770,732		11,256,546		13,297,125
PPP Loans Held for Investment	9,386,915		13,046,988		32,355,451
Other Loans Held for Investment	622,247,733		580,650,677		570,013,870
Allowance for Loan Losses	(7,025,120)		(6,650,120)		(6,486,120)
Net Loans	624,609,528		587,047,545		595,883,201
Bank Premises and Equipment, net	1,060,288		1,099,230		1,139,204
Accrued Interest Receivable	2,659,581		2,412,068		2,466,712
Deferred Tax Asset	1,669,731		1,642,041		1,631,115
Bank-Owned Life Insurance	24,914,186		24,740,507		24,579,879
Right of Use Asset, net	2,223,461		2,464,873		2,704,888
Other Assets	12,638,343		10,533,227		7,870,617
Total Assets	$  895,522,416		$      863,121,006		$  876,672,600
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand Deposits
Non-interest Bearing	$          216,207,976		$  208,170,761		222,167,095
Interest Bearing	335,752,409		326,732,976		300,361,979
Savings Deposits	6,740,850		7,471,426		5,841,800
Time Deposits	197,874,220		172,310,577		173,322,527
Total Deposits	756,575,455		714,685,740		701,693,401
Federal Home Loan Bank Advances	15,142,857		25,892,857		29,035,714
Other Borrowings	19,387,174		13,106,863		32,055,915
Subordinated Debt (Net of Issuance Costs)	19,655,832		19,636,350		19,616,869
Accrued Interest Payable	286,422		388,953		294,237
Lease Liability	2,335,741		2,581,181		2,823,885
Other Liabilities	6,665,567		7,035,034		6,993,855
Total Liabilities	$  820,049,048		$      783,326,978		$  792,513,876
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized:
0 Shares Issued and Outstanding, June 30, 2022, March 31, 2022 and December 31, 2021,
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:
6,646,006, 6,626,819 and 6,589,757 Shares Issued and Outstanding
at June 30, 2022, March 31, 2022 and December 31, 2021 respectively
(Includes 94,503, 86,381 and 106,171 Unvested Shares on June 30, 2022, March 31, 2022 and
December 31, 2021, respectively)	65,515		65,404		65,898
Non-Voting Common Stock:
673,000 Shares Issued and Outstanding at June 30, 2022, March 31, 2022
and December 31, 2021	6,730		6,730		6,730
Additional Paid-in Capital	58,824,430		58,659,955		59,884,615
Accumulated Other Comprehensive Income, Net	(11,985,199)		(5,272,569)		651,272
Retained Earnings	28,561,892		26,334,508		23,550,209
Total Stockholders' Equity	75,473,368		79,794,028		84,158,724
Total Liabilities and Stockholders' Equity	$  895,522,416		$      863,121,006		$  876,672,600

 

FREEDOM FINANCIAL HOLDINGS
CONSOLIDATED STATEMENTS OF OPERATIONS
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
		For the three		For the three		For the six		For the six
		months ended		months ended		months ended		months ended
		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Interest Income
Interest and Fees on Loans		$                7,159,610		$                6,951,964		$                14,301,609		$                    13,864,350
Interest on Investment Securities		1,278,759		655,996		2,424,136		1,292,738
Interest on Deposits with Other Banks		74,550		15,170		90,146		24,002
Total Interest Income		8,512,919		7,623,130		16,815,891		15,181,090
Interest Expense
Interest on Deposits		673,396		582,997		1,092,184		1,258,821
Interest on Borrowings		225,115		212,703		495,894		425,626
Total Interest Expense		898,511		795,700		1,588,078		1,684,447
Net Interest Income		7,614,408		6,827,430		15,227,813		13,496,643
Provision for Loan Losses		(375,000)		(191,000)		(539,000)		(255,000)
Net Interest Income After
Provision for Loan Losses		7,239,408		6,636,430		14,688,813		13,241,643
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue		986,160		2,012,153		2,024,138		4,834,339
SBA Gain-on-Sale Revenue		263,806		66,652		529,830		66,652
Service Charges and Other Income		175,853		43,501		477,380		92,203
Gain on Sale of Securities		-		1,726		(131)		14,610
Servicing Income		57,917		42,847		110,065		94,490
Swap Fee Income		-		-		-		-
Increase in Cash Surrender Value of Bank-
owned Life Insurance		173,679		126,117		334,307		252,003
Total Non-interest Income		1,657,415		2,292,996		3,475,589		5,354,297
Non-Interest Expenses
Officer and Employee Compensation
and Benefits		4,005,945		3,760,697		8,009,266		8,422,931
Occupancy Expense		304,153		306,521		636,519		596,910
Equipment and Depreciation Expense		183,315		159,420		355,421		315,336
Insurance Expense		74,983		65,356		145,609		122,412
Professional Fees		323,647		359,159		571,976		650,593
Data and Item Processing		342,340		311,000		607,965		578,783
Advertising		114,966		82,605		220,335		155,683
Franchise Taxes and State Assessment Fees		224,636		192,508		424,734		377,937
Mortgage Fees and Settlements		129,210		274,231		235,059		737,651
Other Operating Expense		332,567		177,593		647,983		338,954
Total Non-interest Expenses		6,035,762		5,689,090		11,854,868		12,297,190
Income Before Income Taxes		2,861,061		3,240,336		6,309,535		6,298,750
Income Tax Expense		633,677		613,955		1,297,853		1,204,158
Net Income		$                   2,227,385		$                    2,626,381		$                      5,011,682		$                      5,094,592
Earnings per Common Share - Basic		$                            0.31		$                              0.36		$                                0.69		$                                0.70
Earnings per Common Share - Diluted		$                            0.30		$                              0.36		$                                0.68		$                                0.69
Weighted-Average Common Shares
Outstanding - Basic		7,290,417		7,306,710		7,313,766		7,300,953
Weighted-Average Common Shares
Outstanding - Diluted		7,312,200		7,354,389		7,343,634		7,344,697

 

 

FREEDOM FINANCIAL HOLDINGS
CONSOLIDATED STATEMENTS OF OPERATIONS
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
	For the three		For the three		For the three		For the three		For the three
	months ended		months ended		months ended		months ended		months ended
	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
Interest Income
Interest and Fees on Loans	$   7,159,610		$   7,141,999		$         7,556,406		$          6,914,453		$   6,951,964
Interest on Investment Securities	1,278,759		1,145,377		1,092,427		750,570		655,996
Interest on Deposits with Other Banks	74,550		15,596		35,908		26,994		15,170
Total Interest Income	8,512,919		8,302,972		8,684,741		7,692,017		7,623,130
Interest Expense
Interest on Deposits	673,396		418,788		470,791		546,168		582,997
Interest on Borrowings	225,115		270,778		189,834		150,599		212,703
Total Interest Expense	898,511		689,566		660,625		696,767		795,700
Net Interest Income	7,614,408		7,613,406		8,024,116		6,995,249		6,827,430
PPP income	$166,582		$504,177						$1,061,442
Net Interest Income (ex PPP loans)	7,447,826		7,109,229						5,765,988
Provision for Loan Losses	(375,000)		(164,000)		(355,000)		(229,000)		(191,000)
Net Interest Income after
Provision for Loan Losses	7,239,408		7,449,406		7,669,116		6,766,249		6,636,430
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue	986,160		1,037,978		1,456,195		1,995,535		2,012,153
SBA Gain-on-Sale Revenue	263,806		266,023		-		371,172		66,652
Service Charges and Other Income	175,853		301,396		95,335		67,374		43,501
Gains on Sale of Securities	-		-		6,315		(13,493)		1,726
Servicing Income	57,917		52,149		53,479		44,443		42,847
Swap Fee Income	-		-		-		-		-
Increase in Cash Surrender Value of Bank-
owned Life Insurance	173,679		160,628		151,054		141,608		126,117
Total Non-interest Income	1,657,415		1,818,174		1,762,378		2,606,639		2,292,996
Total Revenue	$       9,271,823		$       9,431,580		$             9,786,494		$              9,601,889		$       9,120,426
Non-Interest Expenses
Officer and Employee Compensation
and Benefits	4,005,945		4,003,321		4,055,344		3,862,969		3,760,697
Occupancy Expense	304,153		332,366		317,038		318,109		306,521
Equipment and Depreciation Expense	183,315		172,107		170,335		176,379		159,420
Insurance Expense	74,983		70,626		74,357		70,814		65,356
Professional Fees	323,647		248,329		470,786		243,678		359,159
Data and Item Processing	342,340		265,625		299,120		303,444		311,000
Advertising	114,966		105,369		80,569		92,806		82,605
Franchise Taxes and State Assessment Fees	224,636		200,099		200,084		200,048		192,508
Mortgage Fees and Settlements	129,210		105,849		172,967		230,582		274,231
Other Operating Expense	332,567		315,416		287,459		220,739		177,593
Total Non-interest Expenses	6,035,762		5,819,107		6,128,059		5,719,568		5,689,090
Income before Income Taxes	2,861,061		3,448,473		3,303,435		3,653,322		3,240,336
Income Tax Expense	633,677		664,176		560,347		763,041		613,955
Net Income	$         2,227,385		$        2,784,297		$              2,743,088		$               2,890,281		$        2,626,381
Earnings per Common Share - Basic	$                  0.31		$                 0.38		$                       0.37		$                        0.39		$                 0.36
Earnings per Common Share - Diluted	$                  0.30		$                 0.38		$                       0.37		$                        0.39		$                 0.36
Weighted-Average Common Shares
Outstanding - Basic	7,290,417		7,324,527		7,336,016		7,341,635		7,306,710
Weighted-Average Common Shares
Outstanding - Diluted	7,312,200		7,362,290		7,380,138		7,395,062		7,354,389

 

 

 

Average Balances, Income and Expenses, Yields and Rates
(Unaudited)
		Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended
		June 30, 2022						March 31, 2022						December 31, 2021						September 30, 2021						June 30, 2021
		Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield
Assets
Cash		$              35,469,783		$       74,550		0.84 %		$              40,375,846		$       15,596		0.16 %		$              91,458,843		$       35,908		0.16 %		$              71,114,495		$       26,994		0.15 %		$              64,848,200		$       15,170		0.09 %
Investments (Tax Exempt)		22,199,648		187,816				23,331,336		187,632				23,460,432		190,195				27,138,446		177,809				23,292,663		223,691
Investments (Taxable)		167,905,374		1,130,385				165,979,811		957,745				153,582,906		942,173				113,180,210		610,101				103,971,494		479,280
Total Investments		190,105,022		1,318,201		2.78 %		189,311,147		1,145,377		2.45 %		177,043,338		1,132,368		2.54 %		140,318,656		787,910		2.23 %		127,264,157		702,971		2.22 %
Total Loans		615,110,994		7,159,610		4.67 %		609,412,292		7,141,999		4.75 %		586,725,477		7,556,406		5.11 %		602,948,952		$6,914,454		4.55 %		622,826,541		$6,951,964		4.48 %
Earning Assets		840,685,799		8,552,361		4.08 %		839,099,285		8,302,972		4.01 %		855,227,658		8,724,682		4.05 %		814,382,103		7,729,358		3.77 %		814,938,898		7,670,105		3.78 %
Assets		$            880,810,523						$            876,180,566						$            891,226,178						$            847,472,317						$            846,402,419
Liabilities
Interest Checking		$            128,008,728		134,727		0.42 %		$            110,305,411		48,246		0.18 %		$              88,172,651		38,893		0.18 %		$              36,659,322		12,240		0.13 %		$              34,272,772		10,907		0.13 %
Money Market		203,094,067		180,932		0.36 %		206,230,959		89,516		0.18 %		202,560,648		85,450		0.17 %		189,055,851		80,347		0.17 %		164,337,737		63,989		0.16 %
Savings		8,303,586		2,147		0.10 %		6,652,079		1,725		0.11 %		5,336,531		1,431		0.11 %		4,147,591		1,170		0.11 %		4,195,416		1,078		0.10 %
Time Deposits		186,130,419		355,590		0.77 %		174,009,190		279,301		0.65 %		187,240,613		345,016		0.73 %		197,133,663		452,411		0.91 %		197,180,571		507,023		1.03 %
Interest Bearing Deposits		525,536,800		673,396		0.51 %		497,197,639		418,788		0.34 %		483,310,443		470,790		0.38 %		426,996,427		546,168		0.51 %		399,986,496		582,997		0.58 %
Borrowings		$              56,154,130		225,115		1.61 %		$              71,634,636		270,778		1.53 %		$              81,399,848		189,834		0.93 %		$            101,033,443		150,599		0.59 %		$            138,398,143		212,703		0.62 %
Interest Bearing Liabilities		581,690,931		898,511		0.62 %		568,832,275		689,566		0.49 %		564,710,291		660,624		0.46 %		528,029,870		696,767		0.52 %		538,384,639		795,700		0.59 %
Non Interest Bearing Deposits		$            212,429,933						$            213,315,104						$            231,181,073						$            226,514,808						$            217,927,934
Cost of Funds						0.45 %						0.36 %						0.33 %						0.37 %						0.42 %
Net Interest Margin1				$  7,653,850		3.65 %				$  7,613,406		3.68 %				$  8,064,057		3.74 %				$  7,032,590		3.43 %				$  6,874,405		3.38 %
Shareholders Equity		$              78,112,151						$              83,440,208						$              82,994,140						$              80,866,605						$              77,178,196
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 Ended						Three Months Ended						Six Months Ended						Six Months Ended
	June 30, 2022		Income /				June 30, 2021		Income /				June 30, 2022		Income /				June 30, 2021		Income /
	Average Balance		Expense		Yield		Average Balance		Expense		Yield		Average Balance		Expense		Yield		Average Balance		Expense		Yield
Assets
Cash	$               35,469,783		$          74,550		0.84 %		$               64,848,200		$        15,170		0.09 %		$         37,909,262		$          90,146		0.48 %		$         53,767,576		$          24,002		0.09 %
Investments (Tax Exempt)	22,199,648		187,816				23,292,663		223,691				22,762,366		375,447				23,673,128		451,599
Investments (Taxable)	167,905,374		1,130,385				103,971,494		479,280				166,947,911		2,127,533				97,857,510		935,975
Total Investments	190,105,022		1,318,201		2.78 %		127,264,158		702,971		2.22 %		189,710,277		2,502,980		2.66 %		121,530,638		1,387,574		2.30 %
Total Loans	615,110,994		7,159,610		4.67 %		622,826,541		6,951,964		4.48 %		612,277,385		14,301,609		4.71 %		615,394,581		13,864,350		4.54 %
Earning Assets	840,685,799		8,552,361		4.08 %		814,938,898		7,670,105		3.78 %		$839,896,924		16,894,735		4.06 %		790,692,795		15,275,926		3.90 %
Assets	$            880,810,523						$            846,402,419						$      878,508,335						$      820,758,422
Liabilities
Interest Checking	$            128,008,728		134,727		0.42 %		$               34,272,772		10,907		0.13 %		$      122,562,966		182,973		0.30 %		$         29,739,959		$          26,536		0.18 %
Money Market	203,094,067		180,932		0.36 %		164,337,737		63,989		0.16 %		201,296,855		270,448		0.27 %		155,132,593		126,485		0.16 %
Savings	8,303,586		2,147		0.10 %		4,195,416		1,078		0.10 %		7,482,395		3,872		0.10 %		3,751,099		1,892		0.10 %
Time Deposits	186,130,419		355,590		0.77 %		197,180,571		507,023		1.03 %		180,103,288		634,891		0.71 %		185,927,578		1,103,908		1.20 %
Interest Bearing Deposits	525,536,800		673,396		0.51 %		399,986,496		582,997		0.58 %		511,445,504		1,092,184		0.43 %		374,551,228		1,258,821		0.68 %
Borrowings	56,154,130		225,115		1.61 %		138,398,143		212,703		0.62 %		63,851,619		495,894		1.57 %		136,271,310		425,626		0.63 %
Interest Bearing Liabilities	581,690,931		898,511		0.62 %		538,384,639		795,700		0.59 %		575,297,123		1,588,078		0.56 %		510,822,538		1,684,447		0.66 %
Non Interest Bearing Deposits	$            212,429,933						$            217,927,934						$      212,870,074						$      216,545,940
Cost of Funds					0.45 %						0.42 %						0.41 %						0.47 %
Net Interest Margin1			$    7,653,850		3.65 %				$  6,874,405		3.38 %				$  15,306,657		3.68 %				$  13,591,479		3.47 %
Shareholders Equity	$               78,112,151						$               77,178,196						$         80,761,461						$         75,836,853
ROAA	1.01 %						1.24 %						1.15 %						1.25 %
ROAE	11.44 %						13.65 %						12.51 %						13.55 %
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	June 30, 2022	March 31, 2022	December 31, 2021	September 30, 2021	June 30, 2021
Loans held-for-investment to Deposits	83.49 %	83.07 %	85.85 %	84.45 %	96.14 %
Income Statement Ratios (Quarterly)
Return on Average Assets (ROAA)	1.01 %	1.29 %	1.22 %	1.35 %	1.24 %
Return on Average Equity (ROAE)	11.44 %	13.53 %	13.11 %	14.18 %	13.65 %
Efficiency Ratio	65.10 %	61.70 %	62.62 %	59.57 %	62.38 %
Net Interest Margin1	3.65 %	3.68 %	3.74 %	3.43 %	3.38 %
Yield on Average Earning Assets	4.08 %	4.01 %	4.05 %	3.77 %	3.78 %
Yield on Securities	2.78 %	2.45 %	2.54 %	2.23 %	2.22 %
Yield on Loans	4.67 %	4.75 %	5.11 %	4.55 %	4.48 %
Cost of Funds	0.45 %	0.36 %	0.33 %	0.37 %	0.42 %
Noninterest income to Total Revenue	17.88 %	19.28 %	18.01 %	27.15 %	25.14 %
Per Share Data
Tangible Book Value	$10.31	$10.95	$11.59	$11.14	$10.81
Share Price Data
Closing Price	$14.80	$14.06	$13.37	$12.55	$11.98
Book Value Multiple	144 %	128 %	115 %	113 %	111 %
Common Stock Data
Outstanding Shares at End of Period	7,319,006	7,286,915	7,262,757	7,312,565	7,305,581
Weighted Average shares outstanding, basic	7,290,417	7,324,527	7,336,016	7,341,635	7,306,710
Weighted Average shares outstanding, diluted	7,312,200	7,362,290	7,438,268	7,395,062	7,354,389
Capital Ratios (Bank Only)
Tier 1 Leverage ratio	11.95 %	12.09 %	11.85 %	10.47 %	10.56 %
Common Equity Tier 1 ratio	13.84 %	14.23 %	14.49 %	12.73 %	12.90 %
Tier 1 Risk Based Capital ratio	13.84 %	14.23 %	14.49 %	12.73 %	12.90 %
Total Risk Based Capital ratio	14.77 %	15.15 %	15.42 %	13.68 %	13.86 %
Credit Quality
Net Charge-offs to Average Loans	0.00 %	0.00 %	-0.02 %	0.00 %	0.00 %
Total Non-performing Loans to loans held-for-investment	1.38 %	1.48 %	1.46 %	0.15 %	0.15 %
Total Non-performing Assets to Total Assets	0.97 %	1.02 %	1.00 %	0.10 %	0.11 %
Nonaccrual Loans to loans held-for-investment	1.38 %	1.48 %	1.46 %	0.15 %	0.15 %
Provision for Loan and Lease Losses	$375,000	$164,000	$355,000	$229,000	$191,000
Allowance for Loan and Lease Losses to net loans held-for-investment	1.11 %	1.12 %	1.08 %	1.05 %	0.96 %
Allowance for Loan and Lease Losses to net loans held-for-investment (ex PPP loans)	1.13 %	1.15 %	1.14 %	1.17 %	1.15 %
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

 

 

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SOURCE Freedom Financial Holdings

FAQ

What were Freedom Financial Holdings' earnings for Q2 2022 (FDVA)?

Freedom Financial Holdings reported a net income of $2.23 million or $0.30 per diluted share for Q2 2022.

How did the net interest income change for FDVA in Q2 2022?

Net interest income increased by 18.24% year-over-year, largely due to growth in loans held for investment.

What is the current Tier 1 Capital Ratio for Freedom Financial Holdings (FDVA)?

The Tier 1 Capital Ratio stands at 13.84%, reflecting a strong capital position.

How did non-interest income perform for Freedom Financial Holdings in Q2 2022?

Non-interest income decreased by 27.72% compared to the same period in 2021, primarily due to lower mortgage revenue.

What was the change in total assets for FDVA as of June 30, 2022?

Total assets grew to $895.52 million, an increase of 3.75% from the previous quarter.