The Freedom Bank of Virginia Reports Record Earnings and the Board Approves Formation of Bank Holding Company

Rhea-AI Summary

The Freedom Bank of Virginia (OTCQX: FDVA) reported a net income of $2,626,381 ($0.36 per diluted share) for Q2 2021, up from $2,468,211 ($0.34) in Q1 2021 and $1,525,525 ($0.21) in Q2 2020. Year-to-date net income reached $5,094,592 ($0.69 per diluted share), a significant increase from $2,375,331 ($0.33) in 2020.

Key highlights include a 22.06% organic loan growth (excluding PPP loans) and a lowered cost of funds at 0.42%. The Board announced plans to form a new bank holding company for enhanced capital access. Non-interest income decreased by 25.10% due to lower mortgage activity, while asset quality improved with non-performing assets at 0.11%.

Positive

• Net income increased by 72.16% year-over-year.
• Organic loan growth of 22.06% in Q2 2021.
• Cost of funds decreased to 0.42%, improving profitability.
• Return on Average Assets (ROAA) and Return on Average Equity (ROAE) improved significantly.

Negative

• Non-interest income decreased by 25.10% from the linked quarter.
• Total deposits decreased by $5.01 million or 0.80% in Q2 2021.

FAIRFAX, Va., July 29, 2021 /PRNewswire/ -- The Freedom Bank of Virginia (OTCQX: FDVA), (the "Bank" or "Freedom") today announced net income of $2,626,381, or $0.36 per diluted share, for the three months ended June 30, 2021. This compares to net income of $2,468,211 or $0.34 per diluted share, for the linked quarter and net income of $1,525,525 or $0.21 per diluted share for the three months ending June 30, 2020. Net income for the first six months of 2021 was $5,094,592 or $0.69 per diluted share compared to net income of $2,375,331 or $0.33 per diluted share for the first six months of 2020. The Bank is also pleased to announce that the Board of Directors has approved the formation of a new bank holding company, subject to regulatory approval.

Joseph J. Thomas, President and CEO, commented, "I am proud of our team for delivering another quarter of record earnings with diluted EPS for the second quarter of 2021 higher by 71.43% compared to the same period in 2020. In particular, the 22.06% (annualized) organic loan growth (excluding PPP loans) achieved in the second quarter of 2021 is evidence of our momentum as the economy opens up and we return to work in person. The Bank was able to combat the compression in loan yields by continuing to improve our deposit mix, which reduced the cost of funds for the second quarter to 42 basis points. We celebrated Freedom Bank's 20th Anniversary on July 23 and the formation of the new holding company will put the Bank in the best position going forward to respond to evolving market conditions with more capital alternatives and will allow us to take advantage of future opportunities as they arise."

Second Quarter 2021 Highlights include:

• Net income for the second quarter was $2,626,381 or $0.36 per diluted share compared to net income of $2,468,211 or $0.34 per diluted share in the linked quarter and net income of $1,525,525 or $0.21 per diluted share for the three months ended June 30, 2020. The 72.16% increase in net income across calendar quarters was primarily due to an increase in earning assets and an expansion in net interest margin compared to the prior calendar quarter;
• Pre-tax, pre-provision net income increased by 34.16% to $3,431,336 for the second quarter compared to pre-tax, pre-provision net income of $2,557,622 for the same period in 2020;
• Return on Average Assets ("ROAA") was 1.24% for the quarter ended June 30, 2021 compared to 1.26% for the linked quarter and 0.92% for the three months ended June 30, 2020. ROAA for the first six months of 2021 was 1.25% compared to 0.82% for the same period in 2020;
• Return on Average Equity ("ROAE") was 13.65% for the three months ended June 30, 2021 compared to 13.44% for the linked quarter and 9.24% for the three months ended June 30, 2020. ROAE for the first six months of 2021 was 13.55% compared to 7.28% for the same period in 2020;
• Total assets were $837.07 million on June 30, 2021, an increase of $70.02 million or 9.13% from total assets on December 31, 2020;
• Loans held-for-investment (excluding PPP loans) increased by $26.16 million or 5.50% during the quarter, while PPP loan balances decreased by $27.0 million on loan forgiveness and mortgage loans held for sale decreased by $22.43 million, on a decline in mortgage activity;
• Cash balances at the Federal Reserve decreased by $27.87 million during the second quarter;
• Total deposits decreased by $5.01 million or by 0.80% in the second quarter and increased by $73.61 million or 13.42% in the first six months of 2021. Non-interest bearing demand deposits increased by $9.42 million from the linked quarter to $226.86 million and represented 36.47% of total deposits on June 30, 2021;
• The net interest margin decreased in the second quarter to 3.38%, lower by 17 basis points compared to the linked quarter and higher by 45 basis points compared to the same period in 2020. Excluding the additional income from forgiveness of PPP loans, the net interest margin would have been 3.13%. The decrease in the net interest margin across linked quarters was primarily due to lower yields on loans and investments, down by 13 basis points and 12 basis points respectively, partially offset by a 9 basis point reduction in funding costs. Loan payoff activity during the second quarter was the primary cause of the decrease in loan yields;
• The cost of funds was 0.42% for the second quarter, lower by 9 basis points compared to the linked quarter and lower by 46 basis points compared to the same period in 2020, as deposit and borrowing costs declined;
• Non-interest income decreased by 25.10% compared to the linked quarter, primarily due to lower mortgage revenue as higher rates caused mortgage activity to slow from the linked quarter;
• Non-interest expense decreased by 13.91% compared to the linked quarter and increased by 4.83% compared to the same period in 2020. The decrease in non-interest expense in linked quarters was primarily due to lower performance related costs: specifically, commissions paid to mortgage loan officers and mortgage settlement costs;
• The Efficiency Ratio was 62.38% for the quarter ended June 30, 2021, compared to 67.91% for the linked quarter and 67.97% for the same period in 2020;
• Asset quality improved with the ratio of non-performing assets to total assets at 0.11% on June 30, 2021 compared to 0.41% on December 31, 2020;
• 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 Bank recognized a $191,000 provision for loan losses during the second quarter and the ratio of the allowance for loan and lease losses to loans held-for-investment was 0.96% (or 1.15% excluding PPP loans, which carry a full faith and guarantee of the US Government) compared to 0.92% in the linked quarter (or 1.16% excluding PPP loans);
• The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 10.56%, Common Equity Tier 1 ratio of 12.90%, Tier 1 Risk Based Capital ratio of 12.90% and a Total Capital ratio of 13.86%.

Pre-tax, Pre-Provision Income

Pre-tax, pre-provision net income increased by 34.16% to $3,431,336 for the second quarter compared to pre-tax, pre-provision net income of $2,557,622 for the same period in 2020;

Reconciliation of Pre-Tax, Pre-Provision Income
	(Unaudited)		(Unaudited)
	For the three		For the three
	months ended		months ended
	June 30, 2021		June 30, 2020
Net Income	$             2,626,381		$             1,525,525
Income Tax Expense	613,955		327,097
Provision	191,000		705,000
Pre-tax, Pre-provision Income	$             3,431,336		$             2,557,622

Paycheck Protection Program ("PPP") Activity

In the second quarter of 2020, the Bank processed and funded 510 PPP loans (referred to as 2020 PPP loans), with balances of $106.37 million. The interest rate on these 2020 PPP loans was 1% and the term varied from two to five years. The SBA also paid processing fees which were deferred over the term of the loans. The loans were fully guaranteed and could be forgiven in whole or in part by the SBA.

In December of 2020, Congress approved a renewal of the PPP loan program with different rules and requirements for small businesses to receive loans, referred to as Round two PPP loans. These 2021 PPP loans were also fully guaranteed and may be forgiven in whole or in part by the SBA. The interest rate on the loans was 1% and the term was five years. As with 2020 PPP loans, the SBA paid processing fees which are being deferred over the term of the loans. The Bank originated $53.89 million of Round two PPP loans during 2021.

Beginning in January of 2021, the bank began to process loan forgiveness applications from borrowers of 2020 PPP loans. As of June 30, 2021, the SBA had forgiven 354 of these PPP loans with balances of $55.08 million, and the bank had recognized income from acceleration of processing fees of $1.09 million.

Net Interest Income

The Bank recorded net interest income of $6.83 million for the second quarter of 2021, an increase of 2.37% compared to the linked quarter, and 44.72% higher than the same period in 2020. The net interest margin in the second quarter of 2021 was 3.38%, lower by 17 basis points compared to the linked quarter and higher by 45 basis points compared to the same period in 2020. Income from PPP loan forgiveness during the second quarter was $513,543 (from $30.25 million of PPP loans forgiven by the SBA), compared to PPP loan forgiveness income of $576,748 (from $24.83 million of PPP loans forgiven by the SBA) during the first quarter of 2021. Excluding the additional income from forgiveness of PPP loans, the net interest margin in the second quarter would have been 3.13%.

The following factors contributed to the changes in net interest margin during the second quarter of 2021 compared to the linked quarter:

• While average loan balances and investments increased during the second quarter, the increase in average deposits was far greater and average cash balances surged during the quarter, pressuring yields on average earning assets.
• Yields on average earning assets decreased by 24 basis points to 3.78% compared to 4.02% in the linked quarter, primarily due to lower yields on loans and investment securities.
• Loan yields decreased by 13 basis points to 4.48% from 4.61% in the linked quarter, while yields on investment securities decreased by 12 basis points to 2.22% from 2.34% in the linked quarter.
• Cost of funds decreased by 9 basis points to 0.42%, from 0.51% in the linked quarter, on continued declines in deposit and borrowing costs.
• Excluding the additional income from PPP loan forgiveness would have reduced the net interest margin by 25 basis points.

Non-interest Income

Non-interest income was $2.29 million for the second quarter, lower by 25.10% compared to the linked quarter and lower by 29.81% compared to the same period in 2020. The decline in non-interest income compared to the previous quarter and calendar quarter was largely due to lower mortgage gain-on-sale and fee revenue, stemming from a decline in mortgage activity.

Total Revenue

Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was less than the linked quarter, primarily due to lower non-interest income, and higher by 14.23% compared to the same period in 2020.

Non-interest Expenses

Non-interest expenses in the second quarter of 2021 decreased by 13.91% compared to the linked quarter and increased by 4.83% compared to the same period in 2020. The decline in non-interest expenses in the second quarter compared to the linked quarter was largely due to lower costs related to mortgage commissions and mortgage settlements.

The Efficiency Ratio was 62.38% for the quarter ended June 30, 2021, compared to 67.91% for the prior quarter and 67.97% for the same period in 2020.

Income Taxes

The bank's effective tax rate during the quarter was 18.95% compared to an effective tax rate of 21.83% in the fourth quarter of 2020. The lower effective tax rate was largely due to application of tax credits received from an investment in low income housing tax credits. The bank expects to receive additional tax credits from this investment in 2021.

Asset Quality

Non-accrual loans were $879,089 or 0.15% of loans held-for-investment at the end of the second quarter of 2021, compared to $2.48 million or 0.41% of loans held-for-investment at the end of the linked quarter. There were no troubled debt restructurings ("TDRs") as of June 30, 2021. On June 30, 2021, 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, 2021. 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 $879,089 or 0.11% of total assets at June 30, 2021 compared to $2.48 million or 0.28% of total assets, at the end of the linked quarter.

In 2020, in accordance with the spirit and provisions of the CARES Act, the Bank allowed borrowers who had been impacted by the COVID-19 pandemic to defer loan payments for six months. All of those borrowers had resumed loan payments and there were no loans on payment deferrals as of June 30, 2021.

Following an assessment of the collectability of the loans held-for-investment at the end of the first quarter, it was determined that a $191,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Bank booked a provision of $64,000 in the first quarter of 2021. The Bank's ALLL ratio was 0.96% of loans held-for-investment (or 1.15% of loans held-for investment excluding PPP loans) as of June 30, 2021 compared to an ALLL ratio of 0.92% at March 31, 2021 (or 1.16% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets at June 30, 2021 were $837.07 million compared to $871.04 million on March 31, 2021. Changes in major asset categories during linked quarters were as follows:

• Cash balances at the Federal Reserve decreased by $27.87 million
• Available for sale investment balances increased by $14.27 million
• PPP loan balances decreased by $27.02 million on loan forgiveness by the SBA
• Other loans held-for investment grew by $26.16 million
• Mortgage loans held-for-sale declined by $22.43 million

Total Liabilities

Total liabilities at June 30, 2021 were $758.07 million compared to total liabilities of $795.41 million on March 31, 2021. Total deposits were $622.10 million compared to total deposits of $627.12 million on March 31, 2021. Non-interest bearing demand deposits increased by $9.42 million during the quarter, and comprised 36.47% of total deposits at the end of the quarter, compared to 35.19% of total deposits on December 31, 2020. Federal Home Loan Bank advances declined by $2.75 million during the quarter, while PPP Liquidity Facility term advances decreased by $24.92 million, in line with PPP loan forgiveness.

Stockholders' Equity and Capital

Stockholders' equity at June 30, 2021 was $78.99 million compared to $75.63 million on March 31, 2021. Additional paid-in capital was $59.46 million on June 30, 2021 compared to $59.35 million on March 31, 2021. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, increased by $623,126 on net unrealized gains during the second quarter of 2021.  Total shares issued and outstanding were 7,305,581 on June 30, 2021 compared to 7,307,915 shares on March 31, 2021. The tangible book value of the Bank's common stock at June 30, 2021 was $10.81 per share compared to $10.35 per share on March 31 2021 and $9.33 per share on June 30, 2020.

As of June 30, 2021 of the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized banks. The Bank's capital ratios on June 30, 2021 and March 31, 2021 were as follows:

	June 30, 2021	March 31, 2021
Total Capital Ratio	13.86%	13.84%
Tier 1 Capital Ratio	12.90%	12.88%
Common Equity
Tier 1 Capital Ratio	12.90%	12.88%
Leverage Ratio	10.56%	10.95%

Bank Holding Company

Applications will be filed with the appropriate regulators and, if approved, the Bank would become a subsidiary of the newly-formed bank holding company to be named Freedom Financial Holdings, Inc. The Board of Directors believe that forming a holding company now provides more efficient access to capital markets if the need arises, creates flexibility in the overall capital management for our organization, and broadens the nature of non-bank activities that can be conducted.

Current shareholders of the Bank would become shareholders of the newly-formed bank holding company and current shareholders will have the same rights and ownership percentage in the new holding company as they presently have in the bank. The Bank's Board of Directors believes this new corporate structure will provide added financial and operational flexibility for the Bank at a time when the Board is focused on continued growth and expansion of the Bank.

The holding company formation will not impact the Bank's operations; the Bank will continue to provide its full range of financial services comprised of retail banking, commercial banking, and mortgage products. The Bank's headquarters will remain in Fairfax, VA as will the newly-formed holding company.

About Freedom Bank

Freedom Bank is a community-oriented bank with locations in Fairfax, Reston, Chantilly, Vienna, and Manassas, 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; general economic and financial market conditions, in the United States generally and particularly in the markets in which the Bank operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth, including as a result of COVID-19;  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, 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 Bank's borrowers to satisfy their obligations to the Bank, on the value of collateral securing loans, on the demand for the Bank's loans or its other products and services, on incidents of cyberattack and fraud, on the Bank's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Bank's business operations and on financial markets and economic growth. 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.

 

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

 

THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED BALANCE SHEETS
	(Unaudited)		(Unaudited)		(Audited)
	June 30,		March 31,		December 31,
	2021		2021		2020
ASSETS
Cash and Due from Banks	$            2,445,822		$            2,070,355		$            1,792,660
Interest Bearing Deposits with Banks	47,583,608		75,456,515		25,543,295
Securities Available-for-Sale	113,476,021		99,205,646		97,188,125
Securities Held-to-Maturity	16,071,231		16,102,737		16,132,367
Restricted Stock Investments	3,135,150		3,243,650		3,607,800
Loans Held for Sale	25,035,561		47,468,542		45,047,711
PPP Loans Held for Investment	96,521,227		123,536,745		101,215,376
Other Loans Held for Investment	501,568,684		475,410,582		449,211,475
Allowance for Loan Losses	(5,765,021)		(5,534,832)		(5,454,925)
Net Loans	592,324,890		593,412,495		544,971,926
Bank Premises and Equipment, net	1,221,283		1,249,420		1,298,409
Accrued Interest Receivable	2,650,012		2,762,987		2,868,868
Deferred Tax Asset	1,094,904		949,565		1,154,078
Bank-Owned Life Insurance	20,037,218		17,161,100		17,035,214
Right of Use Asset, net	3,180,647		3,421,073		3,258,817
Other Assets	8,814,083		8,540,665		7,145,687
Total Assets	837,070,430		871,044,750		767,044,957
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand Deposits
Non-interest Bearing	$       226,861,750		$       217,441,663		$       192,987,984
Interest Bearing	190,881,615		206,798,973		176,424,255
Savings Deposits	4,376,920		3,864,523		2,962,303
Time Deposits	199,982,659		199,011,687		176,114,292
Total Deposits	622,102,944		627,116,846		548,488,834
Federal Home Loan Bank Advances	24,178,571		26,928,571		30,071,429
PPP Liquidity Facility Advances	98,138,367		123,053,517		101,951,020
Accrued Interest Payable	377,023		432,554		480,816
Lease Liability	3,284,393		3,512,888		3,347,075
Other Liabilities	9,992,518		14,365,904		9,247,507
Total Liabilities	758,073,816		795,410,280		693,586,681
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized;
0 Shares Issued and Outstanding, June 30, 2021, March 31, 2021
and December 31, 2020	-		-		-
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:
6,632,581, 6,634,915 and 6,610,647 Shares Issued and Outstanding
at June 30, 2021, March 31, 2021 and December 31, 2020 respectively
(Includes 95,471, 97,805 and 100,002 Unvested Shares at June 30, 2021,
March 31, 2021 and December 31, 2020, respectively)	65,371		65,371		65,106
Non-Voting Common Stock:
673,000 Shares Issued and Outstanding June 30, 2021,
March 31, 2021 and December 31, 2020	6,730		6,730		6,730
Additional Paid-in Capital	59,464,489		59,351,852		59,223,538
Accumulated Other Comprehensive Income, Net	1,543,183		920,057		1,340,654
Retained Earnings	17,916,841		15,290,459		12,822,248
Total Stockholders' Equity	78,996,614		75,634,469		73,458,276
Total Liabilities and Stockholders' Equity	837,070,430		871,044,750		767,044,957

 

THE FREEDOM BANK OF VIRGINIA
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, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Interest Income
Interest and Fees on Loans		$              6,951,964		$                  5,508,680		$                13,864,350		$                10,544,324
Interest on Investment Securities		655,996		500,293		1,292,738		858,235
Interest on Deposits with Other Banks		15,170		13,001		24,002		91,239
Total Interest Income		7,623,130		6,021,974		15,181,090		11,493,798
Interest Expense
Interest on Deposits		582,997		1,095,532		1,258,821		2,491,491
Interest on Borrowings		212,703		208,765		425,626		366,284
Total Interest Expense		795,700		1,304,297		1,684,447		2,857,775
Net Interest Income		6,827,430		4,717,677		13,496,643		8,636,023
Provision for Loan Losses		(191,000)		(705,000)		(255,000)		(1,254,000)
Net Interest Income After
Provision for Loan Losses		6,636,430		4,012,677		13,241,643		7,382,023
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue		2,022,153		2,805,338		4,834,339		4,923,204
Service Charges and Other Income		100,153		34,155		158,855		73,230
Gain on Sale of Securities		1,726		-		14,610		25,608
Servicing Income		42,847		-		94,490		-
Swap Fee Income		-		299,762		-		387,262
Increase in Cash Surrender Value of Bank-
owned Life Insurance		126,117		127,496		252,003		229,494
Total Non-interest Income		2,292,996		3,266,751		5,354,297		5,638,798
Non-Interest Expenses
Officer and Employee Compensation
and Benefits		3,760,697		3,488,369		8,422,931		6,689,090
Occupancy Expense		306,521		300,634		596,910		593,428
Equipment and Depreciation Expense		159,420		147,910		315,336		331,932
Insurance Expense		65,356		51,263		122,412		103,597
Professional Fees		359,159		325,545		650,593		606,941
Data and Item Processing		311,000		285,942		578,783		460,076
Advertising		82,605		36,732		155,683		95,535
Franchise Taxes and State Assessment Fees		192,508		178,812		377,937		354,682
Mortgage Fees and Settlements		274,231		454,866		737,651		676,240
Other Operating Expense		177,593		156,733		338,954		305,223
Total Non-interest Expenses		5,689,090		5,426,806		12,297,190		10,216,744
Income Before Income Taxes		3,240,336		1,852,622		6,298,750		2,804,077
Income Tax Expense		613,955		327,097		1,204,158		428,746
Net Income		$                  2,626,381		$                  1,525,525		$                      5,094,592		$                  2,375,331
Earnings per Common Share - Basic		$                           0.36		$                           0.21		$                               0.70		$                           0.33
Earnings per Common Share - Diluted		$                           0.36		$                           0.21		$                               0.69		$                            0.33
Weighted-Average Common Shares
Outstanding - Basic		7,306,710		7,238,751		7,300,953		7,233,136
Weighted-Average Common Shares
Outstanding - Diluted		7,354,389		7,267,773		7,344,697		7,294,600

 

THE FREEDOM BANK OF VIRGINIA
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
	June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020
Interest Income
Interest and Fees on Loans	$         6,951,964		$         6,912,386		$      5,931,405		$      5,657,929		$      5,508,680
Interest on Investment Securities	655,996		636,742		630,449		799,976		500,293
Interest on Deposits with Other Banks	15,170		8,831		10,083		8,236		13,001
Total Interest Income	7,623,130		7,557,959		6,571,937		6,466,141		6,021,974
Interest Expense
Interest on Deposits	582,997		675,824		827,780		919,326		1,095,532
Interest on Borrowings	212,703		212,923		226,724		231,700		208,765
Total Interest Expense	795,700		888,747		1,054,504		1,151,026		1,304,297
Net Interest Income	6,827,430		6,669,212		5,517,433		5,315,115		4,717,677
Provision for Loan Losses	(191,000)		(64,000)		(238,000)		-		(705,000)
Net Interest Income after
Provision for Loan Losses	6,636,430		6,605,212		5,279,433		5,315,115		4,012,677
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue	2,022,153		2,822,186		4,283,961		4,742,574		2,805,338
Service Charges and Other Income	100,153		48,702		30,535		14,802		34,155
Gains on Sale of Securities	1,726		12,885		3,921		17,174		-
Servicing Income	42,847		51,643		-		-		-
Swap Fee Income	-		-		270,450		-		299,762
Increase in Cash Surrender Value of Bank-
owned Life Insurance	126,117		125,886		132,555		277,164		127,496
Total Non-interest Income	2,292,996		3,061,302		4,721,422		5,051,714		3,266,751
Revenue	$             9,120,426		$             9,730,514		$       10,238,855		$       10,366,829		$          7,984,428
Non-Interest Expenses
Officer and Employee Compensation
and Benefits	3,760,697		4,662,235		4,479,310		5,065,021		3,488,369
Occupancy Expense	306,521		290,389		294,600		306,291		300,634
Equipment and Depreciation Expense	159,420		155,916		227,758		175,684		147,910
Insurance Expense	65,356		57,056		49,008		43,836		51,263
Professional Fees	359,159		291,434		417,497		274,505		325,545
Data and Item Processing	311,000		267,783		322,373		230,152		285,942
Advertising	82,605		73,078		83,559		99,508		36,732
Franchise Taxes and State Assessment Fees	192,508		185,429		185,379		185,404		178,812
Mortgage Fees and Settlements	274,231		463,419		675,218		600,592		454,866
Other Operating Expense	177,593		161,361		178,287		194,777		156,733
Total Non-interest Expenses	5,689,090		6,608,100		6,912,989		7,175,770		5,426,806
Income before Income Taxes	3,240,336		3,058,414		3,087,866		3,191,059		1,852,622
Income Tax Expense	613,955		590,203		674,091		615,689		327,097
Net Income	$             2,626,381		$             2,468,211		$          2,413,775		$          2,575,370		$          1,525,525
Earnings per Common Share - Basic	$                      0.36		$                      0.34		$                   0.33		$                   0.36		$                   0.21
Earnings per Common Share - Diluted	$                      0.36		$                      0.34		$                   0.33		$                   0.35		$                   0.21
Weighted-Average Common Shares
Outstanding - Basic	7,306,710		7,295,190		7,252,552		7,234,294		7,238,751
Weighted-Average Common Shares
Outstanding - Diluted	7,354,389		7,334,463		7,312,247		7,277,112		7,267,773

 

Average Balances, Income and Expenses, Yields and Rates
(Unaudited)
	Three Months Ended						Three Months Ended
	June 30, 2021						March 31, 2021
	Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield
Assets
Cash	$              64,848,200		$       15,170		0.09%		$              42,563,835		$          8,831		0.08%
Investments (Tax Exempt)	23,292,663		223,691				24,057,819		152,583
Investments (Taxable)	103,971,494		479,280				91,675,593		516,202
Total Investments	127,264,157		702,971		2.22%		115,733,412		668,785		2.34%
Total Loans	622,826,541		$  6,951,964		4.48%		607,880,043		$   6,912,386		4.61%
Earning Assets	814,938,898		7,670,105		3.78%		766,177,290		7,590,002		4.02%
Assets	$            846,402,419						$            794,829,492
Liabilities
Interest Checking	$              34,272,772		10,907		0.13%		$              32,270,173		15,629		0.20%
Money Market	164,337,737		63,989		0.16%		148,969,677		62,497		0.17%
Savings	4,195,416		1,078		0.10%		3,301,845		814		0.10%
Time Deposits	197,180,571		507,023		1.03%		172,994,520		596,885		1.40%
Interest Bearing Deposits	399,986,496		582,997		0.58%		357,536,215		675,825		0.77%
Borrowings	$            138,398,143		212,703		0.62%		$            134,120,845		212,923		0.64%
Interest Bearing Liabilities	538,384,639		795,700		0.59%		491,657,060		888,748		0.73%
Non Interest Bearing Deposits	$            217,927,934						$            215,148,589
Cost of Funds					0.42%						0.51%
Net Interest Margin1			$  6,874,405		3.38%				$  6,701,254		3.55%
Shareholders Equity	$              77,178,196						$              74,480,607
1Net 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, 2021		Income /				June 30, 2020		Income /					June 30, 2021		Income /				June 30, 2020		Income /
	Average Balance		Expense		Yield		Average Balance		Expense		Yield			Average Balance		Expense		Yield		Average Balance		Expense		Yield
Assets
Cash	$              64,848,200		$         15,170		0.09%		$              59,558,556		$         13,001		0.09%			$              53,767,576		$         24,002		0.09%		$              42,238,834		$         91,238		0.43%
Investments (Tax Exempt)	23,292,663		223,691				5,953,752		48,657					23,673,128		451,599				5,247,401		87,069
Investments (Taxable)	103,971,494		479,280				65,890,906		399,846					97,857,510		935,975				58,796,151		789,451
Total Investments	127,264,157		702,971		2.22%		71,844,658		448,503		2.51%			121,530,638		1,387,574		2.30%		64,043,552		876,520		2.75%
Total Loans	622,826,541		6,951,964		4.48%		510,763,192		5,521,293		4.35%			615,394,581		13,864,350		4.54%		457,790,870		10,569,579		4.64%
Earning Assets	814,938,898		7,670,105		3.78%		642,166,406		5,982,797		3.75%			790,692,795		15,275,926		3.90%		564,073,256		11,537,337		4.11%
Assets	$            846,402,419						$            665,767,229							$            820,758,422						$            585,307,453
Liabilities
Interest Checking	$              34,272,772		10,907		0.13%		$              23,143,536		13,029		0.23%			$              29,739,959		$         26,536		0.18%		$              22,817,658		30,066		0.26%
Money Market	164,337,737		63,989		0.16%		129,569,263		139,111		0.43%			155,132,593		126,485		0.16%		113,649,817		419,559		0.74%
Savings	4,195,416		1,078		0.10%		2,533,676		703		0.11%			3,751,099		1,892		0.10%		2,457,956		1,802		0.15%
Time Deposits	197,180,571		507,023		1.03%		183,220,441		942,690		2.07%			185,927,578		1,103,908		1.20%		189,372,476		2,040,065		2.17%
Interest Bearing Deposits	399,986,496		582,997		0.58%		338,466,916		1,095,533		1.30%			374,551,229		1,258,821		0.68%		328,297,907		2,491,492		1.53%
Borrowings	138,398,143		212,703		0.62%		110,132,851		208,765		0.76%			136,271,310		425,626		0.63%		75,104,477		366,284		0.98%
Interest Bearing Liabilities	538,384,639		795,700		0.59%		448,599,767		1,304,298		1.17%			510,822,539		1,684,447		0.66%		403,402,384		2,857,776		1.42%
Non Interest Bearing Deposits	$            217,927,934						$            145,370,721							$            216,545,940						$            110,990,006
Cost of Funds					0.42%						0.88%							0.47%						1.12%
Net Interest Margin1			$   6,874,405		3.38%				$   4,678,499		2.93%					$ 13,591,479		3.47%				$   8,679,562		3.09%
Shareholders Equity	$              77,178,196						$              66,403,194							$              75,836,853						$              65,635,866
ROAA	1.24%						0.92%							1.25%						0.82%
ROAE	13.65%						9.24%							13.55%						7.28%
1Net 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, 2021	March 31, 2021	December 31, 2020	September 30, 2020	June 30, 2020
Loans held-for-investmenI to Deposits	96.14%	95.51%	100.35%	94.34%	105.31%
Income Statement Ratios (Quarterly)
Return on Average Assets (ROAA)	1.24%	1.26%	1.28%	1.45%	0.92%
Return on Average Equity (ROAE)	13.65%	13.44%	13.43%	14.89%	9.24%
Efficiency Ratio	62.38%	67.91%	67.52%	69.22%	67.97%
Net Interest Margin1	3.38%	3.55%	3.06%	3.13%	2.93%
Yield on Average Earning Assets	3.78%	4.02%	3.64%	3.81%	3.75%
Yield on Securities	2.22%	2.34%	2.30%	3.32%	2.51%
Yield on Loans	4.48%	4.61%	4.14%	4.10%	4.35%
Cost of Funds	0.42%	0.51%	0.63%	0.73%	0.88%
Noninterest income to Total Revenue	25.14%	31.46%	46.11%	48.73%	40.91%
Per Share Data
Tangible Book Value	$10.81	$10.35	$10.09	$9.75	$9.33
Share Price Data
Closing Price	$11.98	$10.90	$9.10	$7.20	$7.50
Book Value Multiple	111%	105%	90%	74%	80%
Common Stock Data
Outstanding Shares at End of Period	7,305,581	7,307,915	7,283,647	7,233,751	7,238,751
Weighted Average shares outstanding, basic	7,306,710	7,295,190	7,252,552	7,234,294	7,238,751
Weighted Average shares outstanding, diluted	7,354,389	7,334,463	7,312,247	7,277,112	7,267,773
Capital Ratios
Tier 1 Leverage ratio	10.56%	10.95%	11.20%	11.57%	11.23%
Common Equity Tier 1 ratio	12.90%	12.88%	13.21%	14.10%	13.90%
Tier 1 Risk Based Capital ratio	12.90%	12.88%	13.21%	14.10%	13.90%
Total Risk Based Capital ratio	13.86%	13.84%	14.21%	15.17%	14.99%
Credit Quality
Net Charge-offs to Average Loans	0.00%	0.00%	0.00%	0.00%	0.02%
Total Non-performing Loans to loans held-for-investment	0.15%	0.41%	0.58%	1.06%	0.77%
Total Non-performing Assets to Total Assets	0.11%	0.28%	0.41%	0.49%	0.57%
Nonaccrual Loans to loans held-for-investment	0.15%	0.41%	0.58%	0.76%	0.76%
Provision for Loan and Lease Losses	$191,000	$64,000	$238,000	$0	$705,000
Allowance for Loan and Lease Losses to loans held-for-investment	0.96%	0.92%	0.99%	1.04%	1.02%
Allowance for Loan and Lease Losses to loans held-for-investment (ex PPP loans)	1.15%	1.16%	1.21%	1.32%	1.28%
1Net 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 Bank of Virginia

FAQ

What was Freedom Bank of Virginia's net income for Q2 2021?

Freedom Bank of Virginia reported a net income of $2,626,381 for Q2 2021.

How much did the diluted EPS increase for Freedom Bank of Virginia in Q2 2021?

The diluted EPS for Freedom Bank of Virginia increased to $0.36 in Q2 2021.

What is the organic loan growth percentage for Freedom Bank of Virginia in Q2 2021?

Freedom Bank of Virginia achieved an organic loan growth of 22.06% in Q2 2021.

What are the main highlights from Freedom Bank of Virginia's Q2 2021 earnings release?

Key highlights include a 72.16% increase in net income year-over-year and a cost of funds of 0.42%.

What changes are being made regarding Freedom Bank of Virginia's corporate structure?

The Board has approved the formation of a new bank holding company, pending regulatory approval.