Freedom Financial Holdings Announces Earnings for Third Quarter of 2022

Rhea-AI Summary

Freedom Financial Holdings (OTCQX: FDVA) reported a net income of $2,689,950 or $0.37 per diluted share for Q3 2022, an increase from $2,227,385 or $0.30 in Q2 2022 but down from $2,890,281 or $0.39 in Q3 2021. For the first nine months of 2022, net income was $7,701,632 or $1.05 per diluted share. Total assets grew to $964.28 million, with annualized organic loan growth of 22.33% and deposit growth of 43.01%. Non-interest income saw a decline of 31.44% due to mortgage revenue reductions. The Company maintains a strong balance sheet with a Tier 1 Capital Ratio of 13.62%.

Positive

• Net income increased to $2,689,950 in Q3 2022, up from $2,227,385 in Q2 2022.
• Annualized organic loan growth of 22.33% in Q3 2022.
• Strong annualized deposit growth of 43.01%, attracting new clients.
• Efficiency ratio improved to 59.19% from 65.10% in Q2 2022.
• Net interest income rose by 8.25% compared to Q2 2022.

Negative

• Total revenue decreased by 2.32% compared to Q3 2021.
• Non-interest income fell by 31.44% compared to Q2 2022.
• Cost of funds increased by 47 basis points to 0.92%.

FAIRFAX, Va., Oct. 28, 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 $2,689,950, or $0.37 per diluted share, for the three months ended September 30, 2022. This compares to net income of $2,227,385 or $0.30 per diluted share, for the linked quarter and net income of $2,890,281 or $0.39 per diluted share for the three months ended September 30, 2021. Net income for the first nine months of 2022 was $7,701,632 or $1.05 per diluted share compared to net income of $7,984,873 or $1.09 per diluted share for the first nine months of 2021.   

Joseph J. Thomas, President, and CEO, commented, "Our team continues to pivot in the face of changing market conditions to innovate our products and help our clients grow and succeed. These efforts translated into a pre-tax, pre-provision net income¹ increase of 18.28% to $3.83 million in the third quarter of 2022 compared to the prior quarter.  We were able to grow our assets at an annualized rate of 30.46% in the quarter and, more importantly, enjoyed annualized organic loan growth of 22.33% in the third quarter. We were also able to achieve strong annualized deposit growth of 43.01% in the quarter by attracting new clients to our high tech and high touch operating platform and offering competitive interest rates. While we experienced a 47 basis points increase in cost of funds when compared to the linked quarter to 92 basis points, our net margin remains strong at 3.71%, increasing 28 basis points compared to prior year. Total revenue² was down by $223,021 or 2.32% compared to the prior year, as mortgage banking activity has been negatively impacted by higher rates. To achieve these results, we also used strong expense control to drive down our efficiency ratio⁴ to 59.19% for the third quarter compared to 65.10% for the prior quarter.  We continue to maintain a strong balance sheet given the more challenging economic environment with allowance for loan losses at 1.13% (excluding PPP loans) and Tier 1 Capital Ratio at 13.62%."

Third Quarter 2022 Highlights include:

• Net income for the third quarter was $2,689,950 or $0.37 per diluted share compared to net income of $2,227,385 or $0.30 per diluted share in the linked quarter and net income of $2,890,281 or $0.39 per diluted share for the three months ended September 30, 2021.
• Return on Average Assets ("ROAA") was 1.15% for the quarter ended September 30, 2022, compared to 1.01% for the linked quarter and 1.35% for the three months ended September 30, 2021.
• Return on Average Equity ("ROAE") was 13.81% for the three months ended September 30, 2022, compared to 11.44% for the linked quarter and 14.18% for the three months ended September 30, 2021.
• Total assets were $964.28 million as of September 30, 2022, an increase of $87.61 million or 9.99% from total assets as of December 31, 2021.
• Loans held-for-investment (excluding PPP loans) increased by $35.02 million or 5.63% during the quarter.
• PPP loan balances decreased by $2.56 million during the third quarter on loan forgiveness and mortgage loans held for sale decreased by $3.66 million during the same period, on a decline in mortgage activity.
• Cash balances at the Federal Reserve and the Federal Home Loan Bank (FHLB) increased by $28.38 million during the third quarter.
• Available for sale investment securities increased by $11.17 million during the third quarter.
• Total deposits increased by $82.02 million or by 10.84% in the third quarter. Non-interest-bearing demand deposits decreased by $11.48 million from the linked quarter to $204.73 million and represented 24.41% of total deposits as of September 30, 2022.
• The net interest margin³ increased in the third quarter to 3.71%, higher by 6 basis points compared to the linked quarter and higher by 28 basis points compared to the same period in 2021. Excluding PPP loans, the net interest margin³ would have been 3.68%. The increase in the net interest margin³ across linked quarters was primarily due to higher yields on investment securities and loans offset by a rising cost of funds.
• The cost of funds was 0.92% for the third quarter, higher by 47 basis points compared to the linked quarter and higher by 55 basis points compared to the same period in 2021. This was driven largely by rising rates on interest checking deposits and money market accounts.
• Non-interest income decreased by 31.44% compared to the linked quarter and decreased by 56.41% compared to the same period in 2021. The decrease in non-interest income compared to the prior calendar quarter and same period in 2021 was primarily due to lower mortgage revenue stemming from a slowdown in mortgage activity as well as a reduction in SBA gain on sale revenue. During the current quarter, the Bank was granted the designation as a Preferred Lender by the SBA. This designation gives the Bank more authority to process, close, service, and liquidate SBA-guaranteed loans. As a Preferred Lender, the Bank is authorized to make SBA-guaranteed loans without prior SBA review of eligibility or creditworthiness allowing for a more seamless and timely loan process.
• Non-interest expense in the third quarter decreased by 8.03% compared to the linked quarter and decreased by 2.94% compared to the same period in 2021. The decrease in non-interest expense from the prior calendar quarters was primarily due to lower performance related costs: specifically, commissions paid to mortgage loan officers and mortgage settlement costs.
• The Efficiency Ratio⁴ was 59.19% for the quarter ended September 30, 2022, compared to 65.10% for the linked quarter and 59.57% for the same period in 2021.
• Non-accrual loans were unchanged in the third quarter from the prior period, and the ratio of non-performing assets to total assets was 0.90% as of September 30, 2022, compared to 0.10% as of September 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 $382,000 provision for loan losses during the third quarter and the ratio of the allowance for loan and lease losses to loans held-for-investment was 1.12% (or 1.13% excluding PPP loans, which carry a full faith and guarantee of the US Government) compared to 1.11% in the linked quarter (or 1.13% excluding PPP loans);
• The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 11.59%, Common Equity Tier 1 ratio of 13.62%, Tier 1 Risk Based Capital ratio of 13.62% and a Total Capital ratio of 14.55%.

Net Interest Income

The Company recorded net interest income of $8.24 million for the third quarter of 2022, an increase of 8.25% compared to the linked quarter, and 17.83% higher than the same period in 2021. The net interest margin³ in the third quarter of 2022 was 3.71%, higher by 6 basis points compared to the linked quarter and higher by 28 basis points compared to the same period in 2021. Income from PPP loan forgiveness during the third quarter was $123,150 (from $2.10 million of PPP loans forgiven by the SBA), compared to PPP loan forgiveness income of $149,105 (from $3.15 million of PPP loans forgiven by the SBA) during the second quarter of 2022. Excluding the PPP loans, the net interest margin³ in the third quarter would have been 3.68%.

The following factors contributed to the changes in net interest margin³ during the third quarter of 2022 compared to the linked quarter:

• Yields on average earning assets increased by 50 basis points to 4.58% compared to 4.08% in the linked quarter, driven by higher yields on investment securities and loans.
• Loan yields increased by 47 basis points to 5.14% from 4.67% in the linked quarter, while yields on investment securities increased by 51 basis points to 3.29% from 2.78% in the linked quarter. Rising rates on floating rate securities contributed to the increase in investment yields.
• Cost of funds increased by 47 basis points to 0.92%, from 0.45% in the linked quarter, due to rising rates on interest checking and money market deposit accounts. Borrowing costs increased 10 basis points due to maturing borrowing repricing at higher rates as well as fewer low-cost advances from the PPP Liquidity Facility. Advances from the PPP Liquidity Facility are retired as the associated PPP loans are forgiven or paid off.
• Excluding PPP loans would have decreased the net interest margin³ by 6 basis points.

The following factors contributed to the changes in net interest margin³ during the third quarter of 2022 compared to the prior calendar quarter:

• Yields on average earning assets increased by 81 basis points to 4.58% compared to 3.77% in the prior calendar quarter, driven by higher yields on loans, investments, and interest earning cash balances.
• Loan yields increased by 59 basis points to 5.14% from 4.55% in the calendar quarter, while yields on investment securities increased by 106 basis points to 3.29% from 2.23% in the prior calendar quarter.
• Cost of funds increased by 55 basis points to 0.92%, from 0.37% in the calendar quarter, on higher deposit and borrowing costs.
• Excluding the impact of PPP loans from the same quarter previous year, the net interest margin³ increased by 45 basis points.

Non-interest Income

Non-interest income was $1.14 million for the third quarter, a decreased of 31.44% when compared to the linked quarter and a decreased of 56.41% when compared to the same period in 2021. The decrease in non-interest income compared to linked and calendar quarters was primarily due to lower mortgage revenue stemming from a slowdown in mortgage activity, as well as lower revenue from SBA loan sales. Secondary market premiums for SBA loans decreased during the third quarter, and the Company held more closed SBA loans on its balance sheet instead of selling them into the secondary market.

Total Revenue²

Total Revenue², defined as the sum of net interest income, before provision for loan losses, and non-interest income, was higher by 1.15% compared to the linked quarter, primarily due to higher interest income on investment securities and loans offset by rising costs of deposits and reduced activity in current period gain-on-sale income.  Total Revenue² was lower by 2.32% compared to the same period in 2021, primarily due to lower non-interest income in the prior calendar quarter.

Non-interest Expenses

Non-interest expenses in the third quarter of 2022 decreased by 8.03% compared to the linked quarter and decreased by 2.94% compared to the same period in 2021. The decrease in non-interest expenses in the third quarter compared to the prior quarter was largely due to lower compensation costs, a decrease in legal fees and lower mortgage settlements costs. 

The Efficiency Ratio⁴ was 59.19% for the quarter ended September 30, 2022, compared to 65.10% for the prior quarter and 59.57% for the same period in 2021.

Asset Quality

Non-accrual loans were $8,677,688 or 1.31% of loans held-for-investment as of September 30, 2022, compared to $8,712,326 or 1.38% of loans held-for-investment at the end of the linked quarter. There were no troubled debt restructurings ("TDRs") as of September 30, 2022. As of September 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 September 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 $8,677,688 or 0.90% of total assets as of September 30, 2022, compared to $8,712,326 or 0.97% 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 third quarter, it was determined that a $382,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Company booked a provision of $375,000 in the second quarter of 2022. The Company's ALLL ratio was 1.12% of loans held-for-investment (or 1.13% of loans held-for investment excluding PPP loans) as of September 30, 2022, compared to an ALLL ratio of 1.11% as of June 30, 2022 (or 1.13% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets as of September 30, 2022, were $964.28 million compared to $895.52 million as of June 30, 2022. Changes in major asset categories during linked quarters were as follows:

• Cash balances at the Federal Reserve and Federal Home Loan Bank increased by $28.38 million
• Available for sale investment balances increased by $11.12 million
• PPP loan balances decreased by $2.56 million on loan forgiveness by the SBA
• Other loans held-for investment grew by $35.02 million
• Mortgage loans held-for-sale declined by $3.66 million

Total Liabilities

Total liabilities as of September 30, 2022, were $891.79 million compared to total liabilities of $820.05 million as of June 30, 2022. Total deposits were $838.60 million compared to total deposits of $756.58 million as of June 30, 2022. Non-interest-bearing demand deposits decreased by $11.48 million during the quarter and comprised 24.41% of total deposits at the end of the quarter, compared to 28.58% of total deposits as of June 30, 2022. Other interest-bearing demand deposits increased by $23.11 million, savings deposits decreased by $696.23 thousand and time deposits increased by $71.08 million during the quarter. Federal Home Loan Bank advances decreased by $10.14 million during the quarter, while PPP Liquidity Facility term advances decreased by $2.31 million, in line with PPP loan forgiveness.

Stockholders' Equity and Capital

Stockholders' equity as of September 30, 2022, was $72.49 million compared to $75.47 million as of June 30, 2022. Additional paid-in capital was $58.45 million on September 30, 2022, compared to $58.82 million as of June 30, 2022. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, decreased by $5.30 million on net unrealized losses during the third quarter of 2022. Retained earnings were $31.25 million on September 30, 2022, compared to $28.56 million at the end of the prior quarter. Total shares issued and outstanding were 7,281,606 as of September 30, 2022, compared to 7,319,006 shares as of June 30, 2022. The tangible book value⁵ of the Company's common stock on September 30, 2022, was $9.96 per share compared to $10.31 per share as of June 30, 2022, and $11.14 per share as of September 30, 2021.

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

		September 30, 2022		June 30, 2022
Total Capital Ratio		14.55 %		14.77 %
Tier 1 Capital Ratio		13.62 %		13.84 %
Common Equity
Tier 1 Capital Ratio		13.62 %		13.84 %
Leverage Ratio		11.59 %		11.95 %

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, Virginia and an SBA division headquartered in Mamaroneck, NY. 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)
		Sep 30,				Jun 30,				Dec 31,
		2022				2022				2021
ASSETS
Cash and Due from Banks		$	1,959,084			$	3,923,888			$	2,536,450
Interest Bearing Deposits with Banks			51,668,557				23,290,289				31,696,891
Securities Available-for-Sale			181,558,490				170,386,775				171,532,394
Securities Held-to-Maturity			17,586,727				17,952,914				18,012,874
Restricted Stock Investments			3,389,200				3,422,700				3,321,250
Loans Held for Sale			3,107,940				6,770,732				13,297,125
PPP Loans Held for Investment			6,824,897				9,386,915				32,355,451
Other Loans Held for Investment			657,263,342				622,247,733				570,013,870
Allowance for Loan Losses			(7,407,120)				(7,025,120)				(6,486,120)
Net Loans			656,681,119				624,609,528				595,883,201
Bank Premises and Equipment, net			1,018,840				1,060,288				1,139,204
Accrued Interest Receivable			2,822,515				2,659,581				2,466,712
Deferred Tax Asset			1,842,093				1,669,731				1,631,115
Bank-Owned Life Insurance			26,090,001				24,914,186				24,579,879
Right of Use Asset, net			1,980,602				2,223,461				2,704,888
Other Assets			14,573,695				12,638,343				7,870,617
Total Assets		$	964,278,863			$	895,522,416			$	876,672,600
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Demand Deposits
Non-interest Bearing		$	204,729,741			$	216,207,976			$	222,167,095
Interest Bearing			358,864,222				335,752,409				300,361,979
Savings Deposits			6,044,616				6,740,850				5,841,800
Time Deposits			268,956,966				197,874,220				173,322,527
Total Deposits			838,595,545				756,575,455				701,693,401
Federal Home Loan Bank Advances			15,000,000				25,142,857				29,035,714
PPP Liquidity Facility Advances			7,075,513				9,387,174				32,055,915
Subordinated Debt (Net of Issuance Cost)			19,675,313				19,655,832				19,616,869
Accrued Interest Payable			741,780				286,422				294,237
Lease Liability			2,088,416				2,335,741				2,823,885
Other Liabilities			8,612,267				6,665,567				6,993,855
Total Liabilities		$	891,788,834			$	820,049,048			$	792,513,876
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized;
0 Shares Issued and Outstanding, all periods presented			-				-				-
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:
6,608,606, 6,646,006 and 6,676,545 Shares Issued and Outstanding
at September 30, 2022, June 30, 2022 and December 31, 2021, respectively
(Includes 93,003, 94,503 and 86,788 Unvested Shares at September 30, 2022, June 30, 2022
and December 31, 2021, respectively)			65,156				65,515				65,898
Non-Voting Common Stock:
673,000 Shares Issued and Outstanding, all periods presented			6,730				6,730				6,730
Additional Paid-in Capital			58,454,038				58,824,430				59,884,615
Accumulated Other Comprehensive Loss, Net			(17,287,737)				(11,985,199)				651,272
Retained Earnings			31,251,842				28,561,892				23,550,209
Total Stockholders' Equity			72,490,029				75,473,368				84,158,724
Total Liabilities and Stockholders' Equity		$	964,278,863			$	895,522,416			$	876,672,600

 

FREEDOM FINANCIAL HOLDINGS
CONSOLIDATED STATEMENTS OF OPERATIONS
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
		For the three				For the three				For the nine				For the nine
		months ended				months ended				months ended				months ended
		Sep-22				Sep-21				Sep-22				Sep-21
Interest Income
Interest and Fees on Loans		$	8,408,971			$	6,914,454			$	22,710,581			$	20,778,804
Interest on Investment Securities			1,626,322				750,570				4,050,458				2,043,308
Interest on Deposits with Other Banks			171,644				26,994				261,790				50,996
Total Interest Income			10,206,937				7,692,018				27,022,829				22,873,108
Interest Expense
Interest on Deposits			1,735,027				546,168				2,827,212				1,804,989
Interest on Borrowings			229,283				150,599				725,176				576,226
Total Interest Expense			1,964,310				696,767				3,552,388				2,381,215
Net Interest Income			8,242,627				6,995,251				23,470,441				20,491,893
Provision for Loan Losses			(382,000)				(229,000)				(921,000)				(484,000)
Net Interest Income After
Provision for Loan Losses			7,860,627				6,766,251				22,549,441				20,007,893
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue			710,149				1,995,535				2,734,287				6,829,874
SBA Gain-on-Sale Revenue			63,727				371,172				593,557				437,825
Service Charges and Other Income			52,755				67,374				530,135				159,576
Gain on Sale of Securities			10,600				(13,493)				10,469				1,117
Servicing Income			54,792				44,443				164,858				138,934
Swap Fee Income			68,404				-				68,404				-
Increase in Cash Surrender Value of Bank-											-				-
owned Life Insurance			175,815				141,608				510,122				393,611
Total Non-interest Income			1,136,242				2,606,639				4,611,832				7,960,937
Non-Interest Expenses
Officer and Employee Compensation
and Benefits			3,655,913				3,862,969				11,665,177				12,285,901
Occupancy Expense			311,070				318,109				947,589				915,018
Equipment and Depreciation Expense			170,070				176,379				525,492				491,715
Insurance Expense			76,563				70,814				222,173				193,227
Professional Fees			251,597				243,678				823,573				894,270
Data and Item Processing			299,501				303,444				907,465				882,227
Advertising			104,119				92,806				324,454				248,489
Franchise Taxes and State Assessment Fees			282,912				200,048				707,648				577,986
Mortgage Fees and Settlements			97,495				230,582				332,554				968,232
Other Operating Expense			301,977				220,739				949,961				559,693
Total Non-interest Expenses			5,551,217				5,719,568				17,406,086				18,016,758
Income Before Income Taxes			3,445,652				3,653,322				9,755,187				9,952,072
Income Tax Expense			755,702				763,041				2,053,554				1,967,199
Net Income		$	2,689,950			$	2,890,281			$	7,701,633			$	7,984,873
Earnings per Common Share - Basic		$	0.37			$	0.39			$	1.05			$	1.09
Earnings per Common Share - Diluted		$	0.37			$	0.39			$	1.05			$	1.09
Weighted-Average Common Shares
Outstanding - Basic			7,271,784				7,341,635				7,308,866				7,310,007
Weighted-Average Common Shares
Outstanding - Diluted			7,285,786				7,395,062				7,333,499				7,357,383

 

FREEDOM FINANCIAL HOLDINGS
CONSOLIDATED STATEMENTS OF OPERATIONS
		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
		September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
Interest Income
Interest and Fees on Loans		$	8,408,971			$	7,159,610			$	7,141,999			$	7,556,406			$	6,914,454
Interest on Investment Securities			1,626,322				1,278,759				1,145,377				1,092,427				750,570
Interest on Deposits with Other Banks			171,644				74,550				15,596				35,908				26,994
Total Interest Income			10,206,937				8,512,919				8,302,972				8,684,741				7,692,018
Interest Expense
Interest on Deposits			1,735,027				673,396				418,788				470,791				546,168
Interest on Borrowings			229,283				225,115				270,778				189,834				150,599
Total Interest Expense			1,964,310				898,511				689,566				660,625				696,767
Net Interest Income			8,242,627				7,614,408				7,613,406				8,024,116				6,995,251
Provision for Loan Losses			(382,000)				(375,000)				(164,000)				(355,000)				(229,000)
Net Interest Income after
Provision for Loan Losses			7,860,627				7,239,408				7,449,406				7,669,116				6,766,251
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue			710,149				986,160				1,037,978				1,456,195				1,995,535
SBA Gain-on-Sale Revenue			63,727				263,806				266,023				-				371,172
Service Charges and Other Income			52,755				175,984				301,396				95,335				67,374
Gains on Sale of Securities			10,600				(131)				-				6,315				(13,493)
Servicing Income			54,792				57,917				52,149				53,479				44,443
Swap Fee Income			68,404				-				-				-				-
Increase in Cash Surrender Value of Bank-
owned Life Insurance			175,815				173,679				160,628				151,054				141,608
Total Non-interest Income			1,136,242				1,657,415				1,818,174				1,762,378				2,606,639
Revenue		$	9,378,869			$	9,271,823			$	9,431,580			$	9,786,494			$	9,601,890
Non-Interest Expenses
Officer and Employee Compensation
and Benefits			3,655,913				4,005,945				4,003,321				4,055,344				3,862,969
Occupancy Expense			311,070				304,153				332,366				317,038				318,109
Equipment and Depreciation Expense			170,070				183,315				172,107				170,335				176,379
Insurance Expense			76,563				74,983				70,626				74,357				70,814
Professional Fees			251,597				323,647				248,329				470,786				243,678
Data and Item Processing			299,501				342,340				265,625				299,120				303,444
Advertising			104,119				114,966				105,369				80,569				92,806
Franchise Taxes and State Assessment Fees			282,912				224,636				200,099				200,084				200,048
Mortgage Fees and Settlements			97,495				129,210				105,849				172,967				230,582
Other Operating Expense			301,977				332,567				315,416				287,459				220,739
Total Non-interest Expenses			5,551,217				6,035,762				5,819,107				6,128,059				5,719,568
Income before Income Taxes			3,445,652				2,861,061				3,448,473				3,303,435				3,653,322
Income Tax Expense			755,702				633,676				664,176				560,347				763,041
Net Income		$	2,689,950			$	2,227,385			$	2,784,297			$	2,743,088			$	2,890,281
Earnings per Common Share - Basic		$	0.37			$	0.31			$	0.38			$	0.37			$	0.39
Earnings per Common Share - Diluted		$	0.37			$	0.30			$	0.38			$	0.37			$	0.39
Weighted-Average Common Shares
Outstanding - Basic			7,271,784				7,290,417				7,324,527				7,336,016				7,341,635
Weighted-Average Common Shares
Outstanding - Diluted			7,285,786				7,312,200				7,362,290				7,438,268				7,395,062

 

Average Balances, Income and Expenses, Yields and Rates
(Unaudited)
		Three Months Ended												Three Months Ended												Three Months Ended												Three Months Ended												Three Months Ended
		September 30, 2022												June 30, 2022												March 31, 2022												December 31, 2021												September 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		$	37,133,361			$	171,644			1.83 %				$	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 %
Investments (Tax Exempt)			21,615,440				186,314								22,199,648				187,816								23,331,336			$	187,632								23,460,432			$	190,195								27,138,446			$	177,809
Investments (Taxable)			179,086,818				1,479,134								167,905,374				1,130,385								165,979,811			$	997,148								153,582,906			$	942,173								113,180,210			$	610,101
Total Investments			200,702,258				1,665,448			3.29 %					190,105,022				1,318,201			2.78 %					189,311,147				1,184,780			2.54 %					177,043,338				1,132,368			2.54 %					140,318,656				787,910			2.23 %
Total Loans			648,964,205			$	8,408,971			5.14 %					615,110,994			$	7,159,610			4.67 %					609,412,292			$	7,141,999			4.75 %					586,725,477			$	7,556,406			5.11 %					602,942,022			$	6,914,454			4.55 %
Earning Assets			886,799,824				10,246,063			4.58 %					840,685,799				8,552,361			4.08 %					839,099,285				8,342,375			4.03 %					855,227,658				8,724,682			4.05 %					814,375,173				7,729,358			3.77 %
Assets		$	929,265,436											$	880,810,523											$	876,180,566											$	891,226,178											$	847,472,317
Liabilities
Interest Checking		$	132,342,701			$	458,605			1.37 %				$	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 %
Money Market			216,851,257				581,082			1.06 %					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 %
Savings			6,659,935				2,119			0.13 %					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 %
Time Deposits			218,365,001				693,222			1.26 %					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 %
Interest Bearing Deposits			574,218,894				1,735,028			1.20 %					525,536,800				673,396			0.51 %					497,197,639				418,788			0.34 %					483,310,443				470,790			0.39 %					426,996,427				546,168			0.51 %
Borrowings			53,279,949				229,283			1.71 %					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 %
Interest Bearing Liabilities			627,498,843				1,964,311			1.24 %					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 %
Non Interest Bearing Deposits		$	215,426,363											$	212,429,933											$	213,315,104											$	231,181,073											$	226,514,808
Cost of Funds										0.92 %												0.45 %												0.36 %												0.33 %												0.37 %
Net Interest Margin3						$	8,281,752			3.71 %								$	7,653,850			3.65 %								$	7,652,809			3.70 %								$	8,064,058			3.74 %								$	7,032,591			3.43 %
Shareholders Equity		$	77,295,762											$	78,112,151											$	83,440,208											$	82,994,140											$	80,866,605
ROAA			1.15	%											1.01	%											1.29	%											1.22	%											1.35	%
ROAE			13.81	%											11.44	%											13.53	%											13.11	%											14.18	%

 

Average Balances, Income and Expenses, Yields and Rates
(Unaudited)
	Three Months Ended												Three Months Ended												Nine Months Ended												Nine Months Ended
	September 30, 2022				Income /								September 30, 2021				Income /								September 30, 2022				Income /								September 30, 2021				Income /
	Average Balance				Expense				Yield				Average Balance				Expense				Yield				Average Balance				Expense				Yield				Average Balance				Expense				Yield
Assets
Cash	$	37,133,361			$	171,644			1.83 %				$	71,114,495			$	26,994			0.15 %				$	37,647,786			$	261,790			0.93 %				$	59,613,424			$	50,996			0.11 %
Investments (Tax Exempt)		21,615,440				186,314								27,138,446				177,809								22,375,856				561,761								24,840,927				478,487
Investments (Taxable)		179,086,818				1,479,134								113,180,210				610,101								171,038,679				3,606,666								103,021,204				1,665,303
Total Investments		200,702,258				1,665,448			3.29 %					140,318,656				787,910			2.23 %					193,414,535				4,168,427			2.88 %					127,862,131				2,143,790			2.24 %
Total Loans		648,964,205				8,408,971			5.14 %					602,942,022				6,914,454			4.55 %					624,640,709				22,710,581			4.86 %					611,197,616				20,778,804			4.55 %
Earning Assets		886,799,824				10,246,063			4.58 %					814,375,173				7,729,358			3.77 %					855,703,031				27,140,798			4.24 %					798,673,171				22,973,589			3.85 %
Assets	$	929,265,436											$	847,472,317											$	895,613,292											$	829,760,907
Liabilities
Interest Checking	$	132,342,701				458,605			1.37 %				$	36,659,322				12,240			0.13 %				$	125,858,701				641,578			0.68 %				$	34,253,465				38,776			0.15 %
Money Market		216,851,257				581,082			1.06 %					189,055,851				80,347			0.17 %					206,538,632				851,530			0.55 %					167,601,257				206,832			0.16 %
Savings		6,659,935				2,119			0.13 %					4,147,591				1,170			0.11 %					7,205,229				5,992			0.11 %					3,884,715				3,062			0.11 %
Time Deposits		218,365,001				693,222			1.26 %					197,133,663				452,411			0.91 %					192,997,346				1,328,113			0.92 %					189,703,988				1,556,319			1.10 %
Interest Bearing Deposits		574,218,894				1,735,028			1.20 %					426,996,427				546,168			0.51 %					532,599,908				2,827,212			0.71 %					395,443,425				1,804,989			0.61 %
Borrowings		53,279,949				229,283			1.71 %					101,033,443				150,599			0.59 %					60,289,005				725,176			1.61 %					124,396,278				576,226			0.62 %
Interest Bearing Liabilities		627,498,843				1,964,311			1.24 %					528,029,870				696,767			0.52 %					592,888,913				3,552,388			0.80 %					519,839,703				2,381,215			0.61 %
Non Interest Bearing Deposits	$	215,426,363											$	226,514,808											$	213,731,534											$	219,905,412
Cost of Funds									0.92 %												0.37 %												0.59 %												0.43 %
Net Interest Margin3					$	8,281,752			3.71 %								$	7,032,591			3.43 %								$	23,588,410			3.69 %								$	20,592,374			3.45 %
Shareholders Equity	$	77,295,762											$	80,866,605											$	79,593,533											$	77,531,861
ROAA		1.15	%											1.35	%											1.15	%											1.29	%
ROAE		13.81	%											14.18	%											12.94	%											13.77	%

 

Selected Financial Data by Quarter Ended:
(Unaudited)
Balance Sheet Ratios	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Loans held-for-investment to Deposits	79.19 %			83.49 %			83.07 %			85.85 %			84.45 %
Income Statement Ratios (Quarterly)
Return on Average Assets (ROAA)	1.15 %			1.01 %			1.29 %			1.22 %			1.35 %
Return on Average Equity (ROAE)	13.81 %			11.44 %			13.53 %			13.11 %			14.18 %
Efficiency Ratio4	59.19 %			65.10 %			61.70 %			62.62 %			59.57 %
Net Interest Margin3	3.71 %			3.65 %			3.70 %			3.74 %			3.43 %
Yield on Average Earning Assets	4.58 %			4.08 %			4.03 %			4.00 %			3.77 %
Yield on Securities	3.29 %			2.78 %			2.54 %			2.54 %			2.23 %
Yield on Loans	5.14 %			4.67 %			4.75 %			5.11 %			4.55 %
Cost of Funds	0.92 %			0.45 %			0.36 %			0.33 %			0.37 %
Noninterest income to Total Revenue2	12.11 %			17.88 %			19.28 %			18.01 %			27.15 %
Per Share Data
Tangible Book Value5	$	9.96		$	10.31		$	10.94		$	11.45		$	11.13
Tangible Book Value (ex AOCI)5	$	12.33		$	11.95		$	11.66		$	11.36		$	10.99
Share Price Data
Closing Price	$	14.60		$	14.80		$	14.06		$	13.37		$	12.55
Book Value Multiple	147 %			144 %			129 %			117 %			113 %
Common Stock Data
Outstanding Shares at End of Period		7,281,606			7,319,006			7,296,063			7,349,545			7,317,081
Weighted Average shares outstanding, basic		7,271,784			7,290,417			7,324,527			7,336,016			7,341,635
Weighted Average shares outstanding, diluted		7,285,786			7,312,200			7,362,290			7,438,268			7,395,062
Capital Ratios
Tier 1 Leverage ratio	11.59 %			11.95 %			12.09 %			11.85 %			10.47 %
Common Equity Tier 1 ratio	13.62 %			13.84 %			14.23 %			14.49 %			12.73 %
Tier 1 Risk Based Capital ratio	13.62 %			13.84 %			14.23 %			14.49 %			12.73 %
Total Risk Based Capital ratio	14.55 %			14.77 %			15.15 %			15.42 %			13.68 %
Credit Quality
Net Charge-offs to Average Loans	0.00 %			0.00 %			0.00 %			0.00 %			0.00 %
Total Non-performing Loans to Total Loans	1.31 %			1.38 %			1.48 %			1.46 %			0.15 %
Total Non-performing Assets to Total Assets	0.90 %			0.97 %			1.02 %			1.00 %			0.10 %
Nonaccrual Loans to Total Loans	1.31 %			1.38 %			1.48 %			1.46 %			0.15 %
Provision for Loan and Lease Losses	$	382,000		$	375,000		$	164,000		$	355,000		$	229,000
Allowance for Loan and Lease Losses to loans held-for-investment	1.12 %			1.11 %			1.12 %			1.08 %			1.05 %
Allowance for Loan and Lease Losses to loans held-for-investment (ex PPP loans)	1.13 %			1.13 %			1.15 %			1.14 %			1.17 %

 

 

 

FREEDOM FINANCIAL HOLDINGS, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
DEFINITIONS AND RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES:
1Pre-tax Pre-provision Income (Non-GAAP)				Quarter-to-Date																								Year-to-Date
				September 30, 2022				June 30, 2022				March 31, 2022						December 31, 2021						September 30, 2021				September 30, 2022				September 30, 2021
Net Interest Income				$	8,242,627			$	7,614,408			$	7,613,406					$	8,024,116					$	6,995,251			$	23,470,441			$	20,491,893
Non-Interest Income					1,136,242				1,657,415				1,818,174						1,762,378						2,606,639				4,611,832				7,960,937
Non-Interest Expense					5,551,217				6,035,762				5,819,107						6,128,059						5,719,568				17,406,086				18,016,758
Pre-tax Pre-provision Income (non-GAAP)				$	3,827,652			$	3,236,061			$	3,612,473					$	3,658,435					$	3,882,322			$	10,676,187			$	10,436,073
2 Total Revenues (Non-GAAP)				Quarter-to-Date																								Year-to-Date
				September 30, 2022				June 30, 2022				March 31, 2022						December 31, 2021						September 30, 2021				September 30, 2022				September 30, 2021
Net Interest Income				$	8,242,627			$	7,614,408			$	7,613,406					$	8,024,116					$	6,995,251			$	23,470,441			$	20,491,893
Non-Interest Income					1,136,242				1,657,415				1,818,174						1,762,378						2,606,639				4,611,832				7,960,937
Total Revenue (non-GAAP)				$	9,378,869			$	9,271,823			$	9,431,579					$	9,786,494					$	9,601,890			$	28,082,273			$	28,452,830
3 Net interest income has been computed on a fully taxable equivalent basis ("FTE") using a 21% federal income tax rate for the 2022 and 2021 periods.				Quarter-to-Date																								Year-to-Date
				September 30, 2022				June 30, 2022				March 31, 2022						December 31, 2021						September 30, 2021				September 30, 2022				September 30, 2021
Income on Tax Exempt Securities				$	147,188			$	148,374			$	148,229					$	150,254					$	140,469			$	443,791			$	378,005
Tax Equivalent Adjustment					39,126				39,441				39,403						39,941						37,340				117,970				100,482
Income on Tax Exempt Securities (Non-GAAP)					186,314				187,816				187,632						190,195						177,809				561,761				478,487
Average Earnings Assets					886,799,824				840,685,799				839,099,285						855,227,658						814,375,173				855,703,031				798,673,171
Yield on Interest Earning Assets (GAAP)					4.57	%			4.06	%			4.01	%					4.03	%					3.75	%			4.22	%			3.84	%
Yield on Interest-Earning Assets (FTE) (Non-GAAP)					4.58	%			4.08	%			4.03	%					4.05	%					3.77	%			4.24	%			3.85	%
Net Interest Margin (NIM) (GAAP)					3.69	%			3.63	%			3.68	%					3.72	%					3.41	%			3.67	%			3.44	%
Net Interest Margin (NIM) (FTE) (Non-GAAP)					3.71	%			3.65	%			3.70	%					3.74	%					3.43	%			3.69	%			3.45	%
4 Efficiency Ratio (Non-GAAP)				Quarter-to-Date																								Year-to-Date
				September 30, 2022				June 30, 2022				March 31, 2022						December 31, 2021						September 30, 2021				September 30, 2022				September 30, 2021
Net Interest Income					8,242,627				7,614,408				7,613,406						8,024,116						6,995,251				23,470,441				20,491,893
Non-Interest Income					1,136,242				1,657,415				1,818,174						1,762,378						2,606,639				4,611,832				7,960,937
					9,378,869				9,271,823				9,431,579						9,786,494						9,601,890				28,082,273				28,452,830
Non-Interest Expense					5,551,217				6,035,762				5,819,107						6,128,059						5,719,568				17,406,086				18,016,758
Efficiency Ratio (Non-GAAP)					59.19	%			65.10	%			61.70	%					62.62	%					59.57	%			61.98	%			63.32	%
5 Tangible Book Value (ex-AOCI) (non-GAAP)				As of
				September 30, 2022				June 30, 2022				March 31, 2022						December 31, 2021						September 30, 2021
Shareholder's Equity					72,490,029				75,473,368				79,794,028						84,158,724						81,454,923
Outstanding Shares at End of Period					7,281,606				7,319,006				7,296,063						7,349,545						7,317,081
Tangible Book Value (GAAP)				$	9.96			$	10.31			$	10.94					$	11.45					$	11.13
Accumulated Other Comprehensive Income (Net) (AOCI)					(17,287,737)				(11,985,199)				(5,272,569)						651,272						1,012,293
AOCI per share equivalent					(2.37)				(1.64)				(0.72)						0.09						0.14
Tangible Book Value (ex-AOCI) (non-GAAP)				$	12.33			$	11.95			$	11.66					$	11.36					$	10.99

 

 

 

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SOURCE Freedom Financial Holdings

FAQ

What were Freedom Financial Holdings' earnings for Q3 2022?

Freedom Financial Holdings reported net income of $2,689,950, or $0.37 per diluted share, for Q3 2022.

How did Freedom Financial's loan growth perform in Q3 2022?

The company achieved an annualized organic loan growth of 22.33% in Q3 2022.

What is Freedom Financial's guidance for future quarters?

While the company has shown strong deposit and loan growth, declining non-interest income due to mortgage activity may impact future earnings.

What is the current asset size of Freedom Financial Holdings?

As of September 30, 2022, Freedom Financial Holdings reported total assets of $964.28 million.

How has Freedom Financial's efficiency ratio changed in Q3 2022?

The efficiency ratio improved to 59.19% in Q3 2022, down from 65.10% in the previous quarter.