The Freedom Bank of Virginia Reports Record Earnings for the Third Quarter of 2021

Rhea-AI Summary

The Freedom Bank of Virginia (OTCQX: FDVA) reported a net income of $2.89 million or $0.39 per diluted share for Q3 2021, up from $2.63 million or $0.36 per diluted share in Q2 2021. Year-to-date net income increased to $7.98 million, compared to $4.95 million in the previous year. Key highlights include a 14.18% return on equity and a 10.37% growth in total assets to $846.6 million. The bank's net interest margin rose to 3.43%, with total deposits increasing by 8.58% during the quarter.

Positive

• Net income increased by 10.04% from linked quarter and 12.25% year-over-year.
• Pre-tax, pre-provision profit grew 21.66% year-over-year.
• Total assets reached $846.6 million, up 10.37% year-to-date.
• Return on equity rose to 14.18%, demonstrating effective capital management.
• Tangible book value per share increased by 14.26% over the past year.

Negative

• Non-interest income decreased by 48.40% compared to Q3 2020.
• Non-interest bearing demand deposits dropped by $10.47 million from last quarter.

FAIRFAX, Va., Oct. 29, 2021 /PRNewswire/ -- The Freedom Bank of Virginia (OTCQX: FDVA), (the "Bank" or "Freedom") today announced net income of $2,890,281, or $0.39 per diluted share, for the three months ended September 30, 2021. This compares to net income of $2,626,381 or $0.36 per diluted share, for the linked quarter and net income of $2,575,370 or $0.35 per diluted share for the three months ending September 30, 2020. Net income for the first nine months of 2021 was $7,984,873 or $1.09 per diluted share compared to net income of $4,950,701 or $0.68 per diluted share for the first nine months of 2020.

Joseph J. Thomas, President and CEO, commented, "The strength of our client franchise and diversity of business lines helped drive another quarter of record earnings with 21.66% growth in pre-tax, pre-provision profit over the comparable quarter in 2020.  We achieved this growth even while total fee-based revenue normalized to 26.78% of total revenue in the third quarter, down from 48.73% of total revenue during the previous year when mortgage banking volume was surging.  Return on equity was 14.18% driven by continued reduction in cost of funds to 37 basis points and improvement in efficiency ratio to 59.57% in the third quarter.   This strong profitability has enabled Freedom Bank to increase tangible book value per share by 14.26% over the past 12 months to $11.14.  I am grateful to the entrepreneurs and small businesses that continue to select Freedom as their lead bank and proud of my teammates who are helping these clients in the ways they wish to be served, in-person or on-line."

Third Quarter 2021 Highlights include:

• Net income for the third quarter was $2,890,281 or $0.39 per diluted share compared to net income of $2,626,381 or $0.36 per diluted share in the linked quarter and net income of $2,575,370 or $0.35 per diluted share for the three months ended September 30, 2020;
• Pre-tax, pre-provision net income increased by 13.14% to $3,882,322 for the third quarter compared to pre-tax, pre-provision net income of $3,431,336 in the linked quarter and by 21.66% to $3,191,059 for the same period in 2020;
• Return on Average Assets ("ROAA") was 1.35% for the quarter ended September 30, 2021 compared to 1.24% for the linked quarter and 1.45% for the three months ended September 30, 2020. ROAA for the first nine months of 2021 was 1.29% compared to 1.06% for the same period in 2020;
• Return on Average Equity ("ROAE") was 14.18% for the three months ended September 30, 2021 compared to 13.65% for the linked quarter and 14.89% for the three months ended September 30, 2020. ROAE for the first nine months of 2021 was 13.77% compared to 9.91% for the same period in 2020;
• Total assets were $846.6 million on September 30, 2021, an increase of $79.55 million or 10.37% from total assets on December 31, 2020;
• Loans held-for-investment (excluding PPP loans) increased by $11.10 million or 2.21% during the quarter, while PPP loan balances decreased by $38.71 million on loan forgiveness and mortgage loans held for sale decreased by $2.84 million, on a decline in mortgage activity;
• Cash balances at the Federal Reserve increased by $14.17 million during the third quarter;
• Total deposits increased by $53.39 million or by 8.58% in the third quarter and increased by $127.01 million or 23.16% in the first nine months of 2021. Non-interest bearing demand deposits decreased by $10.47 million from the linked quarter to $216.39 million and represented 32.01% of total deposits on September 30, 2021;
• The net interest margin increased in the third quarter to 3.43%, higher by 5 basis points compared to the linked quarter and higher by 30 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 2.93%. The increase in the net interest margin across linked quarters was primarily due to higher yields on loans and a 5 basis point reduction in funding costs. Higher cash balances during the quarter weighed on yields on earning assets and the net interest margin;
• The cost of funds was 0.37% for the third quarter, lower by 5 basis points compared to the linked quarter and lower by 36 basis points compared to the same period in 2020, as deposit and borrowing costs declined;
• Non-interest income increased by 13.68% compared to the linked quarter and decreased by 25.535 compared to the same period in 2020. The increase in linked quarters was primarily due to higher gain-on sale revenue from SBA loans, partially offset by lower mortgage revenue as higher rates caused mortgage activity to slow from the linked quarter. The decrease in non-interest income in calendar quarters was due to lower mortgage revenue stemming from a slowdown in mortgage activity in 2021 compared to the prior year;
• Non-interest expense was flat compared to the linked quarter and decreased by 20.29% compared to the same period in 2020. The decrease in non-interest expense in calendar quarters was primarily due to lower performance related costs: specifically, commissions paid to mortgage loan officers and mortgage settlement costs;
• The Efficiency Ratio was 59.57% for the quarter ended September 30, 2021, compared to 62.38% for the linked quarter and 69.22% for the same period in 2020;
• Asset quality improved with the ratio of non-performing assets to total assets at 0.10% on September 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 $229,000 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 1.05% (or 1.17% excluding PPP loans, which carry a full faith and guarantee of the US Government) compared to 0.96% 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 10.47%, Common Equity Tier 1 ratio of 12.73%, Tier 1 Risk Based Capital ratio of 12.73% and a Total Capital ratio of 13.68%.

Pre-tax, Pre-Provision Net Income

Pre-tax, pre-provision net income increased by 13.14% to $3,882,322 for the third quarter compared to pre-tax, pre-provision net income of $3,431,336 in the linked quarter, primarily due to an increase in non-interest income from sales of SBA loans.

Pre-tax, pre-provision net income is a non-GAAP financial measure that the Bank views as an important metric to assess its performance.  The following table provides a reconciliation of this measure to net income, the most directly comparable financial measure in accordance with GAAP. 

Reconciliation of Pre-Tax, Pre-Provision Net Income
	(Unaudited)		(Unaudited)
	For the three		For the three
	months ended		months ended
	September 30, 2021		September 30, 2020
Net Income	$             2,890,281		$             2,575,370
Income Tax Expense	763,041		615,689
Provision	229,000		-
Pre-tax, Pre-provision Net Income	$             3,882,322		$             3,191,059

  

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 and round two PPP loans. As of September 30, 2021, the SBA had forgiven 494 of these PPP loans with balances of $83.00 million, and the bank had recognized income from acceleration of processing fees of $1.76 million.

Net Interest Income

The Bank recorded net interest income of $6.99 million for the third quarter of 2021, an increase of 2.46% compared to the linked quarter, and 31.61% higher than the same period in 2020. The net interest margin in the third quarter of 2021 was 3.43%, higher by 5 basis points compared to the linked quarter and higher by 30 basis points compared to the same period in 2020. Income from PPP loan forgiveness during the third quarter was $667,746 (from $27.92 million of PPP loans forgiven by the SBA), compared to PPP loan forgiveness income of $513,543 (from $30.25 million of PPP loans forgiven by the SBA) during the second quarter of 2021. Excluding the additional income from forgiveness of PPP loans, the net interest margin in the third quarter would have been 2.93%.

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

• Yields on average earning assets declined by 1 basis point to 3.77% compared to 3.78% in the linked quarter, as higher yields on loans and investment securities were offset by a surge in average cash balances from strong deposit growth during the quarter.
• Loan yields increased by 7 basis points to 4.55% from 4.48% in the linked quarter, while yields on investment securities increased by 1 basis points to 2.23% from 2.22% in the linked quarter.
• Cost of funds decreased by 5 basis points to 0.37%, from 0.42% 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 50 basis points.

Non-interest Income

Non-interest income was $2.61 million for the third quarter, higher by 13.68% compared to the linked quarter and lower by 48.40% compared to the same period in 2020. The higher non-interest income across linked quarters was primarily due to an increase in SBA gain-on-sale revenue, 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.

Total Revenue

Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was higher by 5.28% compared to the linked quarter, primarily due to higher net interest and non-interest income, and lower by 7.38% compared to the same period in 2020.

Non-interest Expenses

Non-interest expenses in the third quarter of 2021 were flat compared to the linked quarter and decreased by 20.29% compared to the same period in 2020. The decline in non-interest expenses in the third quarter compared to the calendar quarter was largely due to lower costs related to mortgage commissions and mortgage settlements.

The Efficiency Ratio was 59.57% for the quarter ended September 30, 2021, compared to 62.38% for the prior quarter and 69.22% for the same period in 2020.

Asset Quality

Non-accrual loans were $879,078 or 0.15% of loans held-for-investment at the end of the third quarter of 2021, compared to $879,089 or 0.15% of loans held-for-investment at the end of the linked quarter. There were no troubled debt restructurings ("TDRs") as of September 30, 2021. On September 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 September 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 $879,078 or 0.10% of total assets at June 30, 2021 compared to $879,089 or 0.11% 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 September 30, 2021.

Following an assessment of the collectability of the loans held-for-investment at the end of the third quarter, it was determined that a $229,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Bank booked a provision of $191,000 in the second quarter of 2021. The Bank's ALLL ratio was 1.05% of loans held-for-investment (or 1.17% of loans held-for investment excluding PPP loans) as of September 30, 2021 compared to an ALLL ratio of 0.96% at June 30, 2021 (or 1.15% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets at September 30, 2021 were $846.60 million compared to $837.07 million on June 30, 2021. Changes in major asset categories during linked quarters were as follows:

• Cash balances at the Federal Reserve increased by $14.17 million
• Available for sale investment balances increased by $23.78 million
• PPP loan balances decreased by $38.71 million on loan forgiveness by the SBA
• Other loans held-for investment grew by $11.10 million
• Mortgage loans held-for-sale declined by $2.84 million

Total Liabilities

Total liabilities at September 30, 2021 were $765.15 million compared to total liabilities of $758.07 million on June  30, 2021. Total deposits were $675.50 million compared to total deposits of $622.10 million on June 30, 2021. Non-interest bearing demand deposits decreased by $10.47 million during the quarter, and comprised 32.03% of total deposits at the end of the quarter, compared to 35.19% of total deposits on December 31, 2020. Other interest bearing demand deposits increased by $69.42 million during the quarter. Federal Home Loan Bank advances declined by $5.14 million during the quarter, while PPP Liquidity Facility term advances decreased by $40.28 million, in line with PPP loan forgiveness.

Stockholders' Equity and Capital

Stockholders' equity at September 30, 2021 was $81.45 million compared to $78.99 million on June 30, 2021. Additional paid-in capital was $59.56 million on September 30, 2021 compared to $59.46 million on June 30, 2021. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, decreased by $530,890 on net unrealized losses during the third quarter of 2021.  Total shares issued and outstanding were 7,312,565 on September 30, 2021 compared to 7,305,581 shares on June 30, 2021. The tangible book value of the Bank's common stock at September 30, 2021 was $11.14 per share compared to $10.81 per share on June 30, 2021 and $9.75 per share on September 30, 2020.

As of September 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 September 30, 2021 and June 30, 2021 were as follows:

	September 30, 2021	June 30, 2021
Total Capital Ratio	13.68%	13.86%
Tier 1 Capital Ratio	12.73%	12.90%
Common Equity
Tier 1 Capital Ratio	12.73%	12.90%
Leverage Ratio	10.47%	10.56%

Bank Holding Company

The Bank has received all required regulatory approvals to form a new holding company that will be named Freedom Financial Holdings, Inc. The Board of Directors believes 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.

When the reorganization is completed, 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 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. 

 

THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED BALANCE SHEETS
	(Unaudited)		(Unaudited)		(Audited)
	September 30,		June 30,		December 31,
	2021		2021		2020
ASSETS
Cash and Due from Banks	$                 2,430,918		$            2,445,822		$            1,792,660
Interest Bearing Deposits with Banks	61,753,387		47,583,608		25,543,295
Securities Available-for-Sale	137,253,597		113,476,021		97,188,125
Securities Held-to-Maturity	18,497,540		16,071,231		16,132,367
Restricted Stock Investments	2,951,550		3,135,150		3,607,800
Loans Held for Sale	22,191,469		25,035,561		45,047,711
PPP Loans Held for Investment	57,809,131		96,521,227		101,215,376
Other Loans Held for Investment	512,670,067		501,568,684		449,211,475
Allowance for Loan Losses	(6,011,021)		(5,765,021)		(5,454,925)
Net Loans	564,468,177		592,324,890		544,971,926
Bank Premises and Equipment, net	1,182,250		1,221,283		1,298,409
Accrued Interest Receivable	2,304,786		2,650,012		2,868,868
Deferred Tax Asset	1,223,546		1,094,904		1,154,078
Bank-Owned Life Insurance	20,428,825		20,037,218		17,035,214
Right of Use Asset, net	2,943,456		3,180,647		3,258,817
Other Assets	8,972,651		8,814,083		7,145,687
Total Assets	$                 846,602,152		837,070,430		767,044,957
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand Deposits
Non-interest Bearing	216,387,250		$       226,861,750		$       192,987,984
Interest Bearing	260,304,062		190,881,615		176,424,255
Savings Deposits	4,780,274		4,376,920		2,962,303
Time Deposits	194,024,810		199,982,659		176,114,292
Total Deposits	675,496,396		622,102,944		548,488,834
Federal Home Loan Bank Advances	19,035,714		24,178,571		30,071,429
PPP Liquidity Facility Advances	57,857,132		98,138,367		101,951,020
Accrued Interest Payable	268,170		377,023		480,816
Lease Liability	3,060,286		3,284,393		3,347,075
Other Liabilities	9,429,531		9,992,518		9,247,507
Total Liabilities	765,147,229		758,073,816		693,586,681
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized;
0 Shares Issued and Outstanding, September 30, 2021, June 30, 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:
6,639,565, 6,632,581 and 6,610,647 Shares Issued and Outstanding
at September 30, 2021, June 30, 2021 and December 31, 2020 respectively
(Includes 102,455, 95,471 and 100,002 Unvested Shares at September 30, 2021
June 30, 2021 and December 31, 2020, respectively)	65,371		65,371		65,106
Non-Voting Common Stock:
673,000 Shares Issued and Outstanding September 30, 2021,
June 30, 2021 and December 31, 2020	6,730		6,730		6,730
Additional Paid-in Capital	59,563,407		59,464,489		59,223,538
Accumulated Other Comprehensive Income, Net	1,012,293		1,543,183		1,340,654
Retained Earnings	20,807,122		17,916,841		12,822,248
Total Stockholders' Equity	81,454,923		78,996,614		73,458,276
Total Liabilities and Stockholders' Equity	$                  846,602,152		837,070,430		767,044,957

 

THE FREEDOM BANK OF VIRGINIA
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
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Interest Income
Interest and Fees on Loans		$              6,914,453		$                  5,657,930		$                20,778,804		$                    16,202,254
Interest on Investment Securities		750,570		799,976		2,043,308		1,658,211
Interest on Deposits with Other Banks		26,994		8,236		50,996		99,474
Total Interest Income		7,692,017		6,466,141		22,873,108		17,959,939
Interest Expense
Interest on Deposits		546,168		919,326		1,804,989		3,410,817
Interest on Borrowings		150,599		231,700		576,226		597,984
Total Interest Expense		696,767		1,151,026		2,381,215		4,008,801
Net Interest Income		6,995,249		5,315,115		20,491,893		13,951,138
Provision for Loan Losses		(229,000)		-		(484,000)		(1,254,000)
Net Interest Income After
Provision for Loan Losses		6,766,249		5,315,115		20,007,893		12,697,138
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue		1,995,535		4,742,574		6,829,874		9,666,023
SBA Gain-on-Sale Revenue		371,172		-		437,825		-
Service Charges and Other Income		67,374		14,802		159,576		87,787
Gain on Sale of Securities		(13,493)		17,174		1,117		42,782
Servicing Income		44,443		-		138,934		-
Swap Fee Income		-		-		-		387,262
Increase in Cash Surrender Value of Bank-
owned Life Insurance		141,608		277,164		393,611		506,658
Total Non-interest Income		2,606,640		5,051,714		7,960,937		10,690,512
Non-Interest Expenses
Officer and Employee Compensation
and Benefits		3,862,969		5,065,021		12,285,901		11,754,111
Occupancy Expense		318,109		306,291		915,018		899,719
Equipment and Depreciation Expense		176,379		175,684		491,715		507,616
Insurance Expense		70,814		43,836		193,227		147,433
Professional Fees		243,678		274,505		894,270		881,446
Data and Item Processing		303,444		230,152		882,227		690,228
Advertising		92,806		99,508		248,489		195,043
Franchise Taxes and State Assessment Fees		200,048		185,404		577,986		540,086
Mortgage Fees and Settlements		230,582		600,592		968,232		1,276,831
Other Operating Expense		220,739		194,776		559,693		499,998
Total Non-interest Expenses		5,719,568		7,175,770		18,016,758		17,392,513
Income Before Income Taxes		3,653,322		3,191,059		9,952,072		5,995,136
Income Tax Expense		763,041		615,689		1,967,199		1,044,435
Net Income		$                  2,890,281		$                  2,575,370		$                      7,984,873		$                      4,950,701
Earnings per Common Share - Basic		$                             0.39		$                             0.36		$                                1.09		$                                0.68
Earnings per Common Share - Diluted		$                             0.39		$                             0.35		$                                1.09		$                                0.68
Weighted-Average Common Shares
Outstanding - Basic		7,341,635		7,234,294		7,310,007		7,233,525
Weighted-Average Common Shares
Outstanding - Diluted		7,395,062		7,277,112		7,357,383		7,292,827

 

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
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
Interest Income
Interest and Fees on Loans	$         6,914,453		$         6,951,964		$         6,912,386		$      5,931,405		$      5,657,929
Interest on Investment Securities	750,570		655,996		636,742		630,449		799,976
Interest on Deposits with Other Banks	26,994		15,170		8,831		10,083		8,236
Total Interest Income	7,692,017		7,623,130		7,557,959		6,571,937		6,466,141
Interest Expense
Interest on Deposits	546,168		582,997		675,824		827,780		919,326
Interest on Borrowings	150,599		212,703		212,923		226,724		231,700
Total Interest Expense	696,767		795,700		888,747		1,054,504		1,151,026
Net Interest Income	6,995,249		6,827,430		6,669,212		5,517,433		5,315,115
Provision for Loan Losses	(229,000)		(191,000)		(64,000)		(238,000)		-
Net Interest Income after
Provision for Loan Losses	6,766,249		6,636,430		6,605,212		5,279,433		5,315,115
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue	1,995,535		2,012,153		2,822,186		4,283,961		4,742,574
SBA Gain-on-Sale Revenue	371,172		66,652
Service Charges and Other Income	67,374		43,501		48,702		30,535		14,802
Gains on Sale of Securities	(13,493)		1,726		12,885		3,921		17,174
Servicing Income	44,443		42,847		51,643		-		-
Swap Fee Income	-		-		-		270,450		-
Increase in Cash Surrender Value of Bank-
owned Life Insurance	141,608		126,117		125,886		132,555		277,164
Total Non-interest Income	2,606,640		2,292,996		3,061,302		4,721,422		5,051,714
Revenue	$             9,601,889		$             9,120,426		$             9,730,514		$       10,238,855		$       10,366,829
Non-Interest Expenses
Officer and Employee Compensation
and Benefits	3,862,969		3,760,697		4,662,235		4,479,310		5,065,021
Occupancy Expense	318,109		306,521		290,389		294,600		306,291
Equipment and Depreciation Expense	176,379		159,420		155,916		227,758		175,684
Insurance Expense	70,814		65,356		57,056		49,008		43,836
Professional Fees	243,678		359,159		291,434		417,497		274,505
Data and Item Processing	303,444		311,000		267,783		322,373		230,152
Advertising	92,806		82,605		73,078		83,559		99,508
Franchise Taxes and State Assessment Fees	200,048		192,508		185,429		185,379		185,404
Mortgage Fees and Settlements	230,582		274,231		463,419		675,218		600,592
Other Operating Expense	220,739		177,593		161,361		178,287		194,777
Total Non-interest Expenses	5,719,567		5,689,090		6,608,100		6,912,989		7,175,770
Income before Income Taxes	3,653,322		3,240,336		3,058,414		3,087,866		3,191,059
Income Tax Expense	763,041		613,955		590,203		674,091		615,689
Net Income	$             2,890,281		$             2,626,381		$             2,468,211		$          2,413,775		$          2,575,370
Earnings per Common Share - Basic	$                       0.39		$                       0.36		$                       0.34		$                    0.33		$                    0.36
Earnings per Common Share - Diluted	$                       0.39		$                       0.36		$                       0.34		$                    0.33		$                    0.35
Weighted-Average Common Shares
Outstanding - Basic	7,341,635		7,306,710		7,295,190		7,252,552		7,234,294
Weighted-Average Common Shares
Outstanding - Diluted	7,395,062		7,354,389		7,334,463		7,312,247		7,277,112

 

Average Balances, Income and Expenses, Yields and Rates
(Unaudited)
	Three Months Ended						Three Months Ended
	September 30, 2021						June 30, 2021
	Average Balance		Income/ Expense		Yield		Average Balance		Income/ Expense		Yield
Assets
Cash	$              71,114,495		$       26,994		0.15%		$              64,848,200		$       15,170		0.09%
Investments (Tax Exempt)	27,138,446		177,809				23,292,663		223,691
Investments (Taxable)	113,180,210		610,101				103,971,494		479,280
Total Investments	140,318,656		787,910		2.23%		127,264,157		702,971		2.22%
Total Loans	602,948,952		$6,914,454		4.55%		622,826,541		$6,951,964		4.48%
Earning Assets	814,382,103		7,729,357		3.77%		814,938,898		7,670,105		3.78%
Assets	$            847,472,317						$            846,402,419
Liabilities
Interest Checking	$              36,659,322		12,240		0.13%		$              34,272,772		10,907		0.13%
Money Market	189,055,851		80,347		0.17%		164,337,737		63,989		0.16%
Savings	4,147,591		1,170		0.11%		4,195,416		1,078		0.10%
Time Deposits	197,133,663		452,411		0.91%		197,180,571		507,023		1.03%
Interest Bearing Deposits	426,996,426		546,168		0.51%		399,986,496		582,997		0.58%
Borrowings	$            101,033,443		150,599		0.59%		$            138,398,143		212,703		0.62%
Interest Bearing Liabilities	528,029,869		696,767		0.52%		538,384,639		795,700		0.59%
Non Interest Bearing Deposits	$            226,514,808						$            217,927,934
Cost of Funds					0.37%						0.42%
Net Interest Margin1			$  7,032,590		3.43%				$  6,874,405		3.38%
Shareholders Equity	$              80,866,605						$              77,178,196
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							Nine Months Ended						Nine Months Ended
	September 30, 2021		Income /				September 30, 2020		Income /					September 30, 2021		Income /				September 30, 2020		Income /
	Average Balance		Expense		Yield		Average Balance		Expense		Yield			Average Balance		Expense		Yield		Average Balance		Expense		Yield
Assets
Cash	$              71,114,495		$         26,994		0.15%		$              29,769,485		$           8,236		0.11%			$              59,613,424		50,996		0.11%		$              38,052,045		99,474		0.35%
Investments (Tax Exempt)	27,138,446		177,809				11,434,264		250,016					24,840,927		478,487				7,324,742		337,085
Investments (Taxable)	113,180,210		610,101				90,668,376		602,463					103,021,204		1,665,303				69,497,774		1,391,913
Total Investments	140,318,655		787,910		2.23%		102,102,640		852,479		3.32%			127,862,131		2,143,791		2.24%		76,822,516		1,728,999		3.01%
Total Loans	602,948,952		6,914,454		4.55%		549,575,996		5,657,929		4.10%			611,199,952		20,778,804		4.55%		488,609,233		16,202,254		4.43%
Earning Assets	814,382,103		7,729,357		3.77%		681,448,121		6,518,644		3.81%			798,675,507		22,973,590		3.85%		603,483,794		18,030,726		3.99%
Assets	$            847,472,317						$            705,290,352							$            829,760,907						$            625,595,893
Liabilities
Interest Checking	$              36,659,322		12,240		0.13%		$              27,902,031		11,914		0.17%			$              34,416,833		38,776		0.15%		$              24,524,820		41,980		0.23%
Money Market	189,055,851		80,347		0.17%		132,371,367		93,750		0.28%			167,601,257		206,832		0.16%		$            119,935,885		513,309		0.57%
Savings	4,147,591		1,170		0.11%		3,055,994		761		0.10%			3,884,715		3,062		0.11%		2,658,757		2,563		0.13%
Time Deposits	197,133,663		452,411		0.91%		178,221,780		812,901		1.82%			189,703,988		$1,556,319		1.10%		185,628,465		2,852,969		2.05%
Interest Bearing Deposits	426,996,426		546,168		0.51%		341,551,172		919,326		1.07%			395,606,793		1,804,989		0.61%		332,747,926		3,410,820		1.37%
Borrowings	101,033,443		150,599		0.59%		136,793,181		231,700		0.67%			124,396,278		576,226		0.62%		95,817,473		597,984		0.83%
Interest Bearing Liabilities	528,029,869		696,767		0.52%		478,344,353		1,151,026		0.96%			520,003,071		2,381,215		0.61%		428,565,399		4,008,804		1.25%
Non Interest Bearing Deposits	$            226,514,808						$            151,878,149							$            219,905,412						$            124,718,871
Cost of Funds					0.37%						0.73%							0.43%						0.97%
Net Interest Margin1			$   7,032,590		3.43%				$   5,367,618		3.13%					$ 20,592,375		3.45%				$ 14,021,922		3.10%
Shareholders Equity	$              80,866,605						$              68,801,586							$              77,531,861						$              66,698,809
ROAA	1.35%						1.45%							1.29%						1.06%
ROAE	14.18%						14.89%							13.77%						9.91%
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	September 30, 2021	June 30, 2021	March 31, 2021	December 31, 2020	September 30, 2020
Loans held-for-investment to Deposits	84.45%	96.14%	95.51%	100.35%	94.34%
Income Statement Ratios (Quarterly)
Return on Average Assets (ROAA)	1.35%	1.24%	1.26%	1.28%	1.45%
Return on Average Equity (ROAE)	14.18%	13.65%	13.44%	13.43%	14.89%
Efficiency Ratio	59.57%	62.38%	67.91%	67.52%	69.22%
Net Interest Margin1	3.43%	3.38%	3.55%	3.06%	3.13%
Yield on Average Earning Assets	3.77%	3.78%	4.02%	3.64%	3.81%
Yield on Securities	2.23%	2.22%	2.34%	2.30%	3.32%
Yield on Loans	4.55%	4.48%	4.61%	4.14%	4.10%
Cost of Funds	0.37%	0.42%	0.51%	0.63%	0.73%
Noninterest income to Total Revenue	27.15%	25.14%	31.46%	46.11%	48.73%
Per Share Data
Tangible Book Value	$11.14	$10.81	$10.35	$10.09	$9.75
Share Price Data
Closing Price	$12.55	$11.98	$10.90	$9.10	$7.20
Book Value Multiple	113%	111%	105%	90%	74%
Common Stock Data
Outstanding Shares at End of Period	7,312,565	7,305,581	7,307,915	7,283,647	7,233,751
Weighted Average shares outstanding, basic	7,341,635	7,306,710	7,295,190	7,252,552	7,234,294
Weighted Average shares outstanding, diluted	7,395,062	7,354,389	7,334,463	7,312,247	7,277,112
Capital Ratios
Tier 1 Leverage ratio	10.47%	10.56%	10.95%	11.20%	11.57%
Common Equity Tier 1 ratio	12.73%	12.90%	12.88%	13.21%	14.10%
Tier 1 Risk Based Capital ratio	12.73%	12.90%	12.88%	13.21%	14.10%
Total Risk Based Capital ratio	13.68%	13.86%	13.84%	14.21%	15.17%
Credit Quality
Net Charge-offs to Average Loans	0.00%	0.00%	0.00%	0.00%	0.00%
Total Non-performing Loans to loans held-for-investment	0.15%	0.15%	0.41%	0.58%	1.06%
Total Non-performing Assets to Total Assets	0.10%	0.11%	0.28%	0.41%	0.49%
Nonaccrual Loans to loans held-for-investment	0.15%	0.15%	0.41%	0.58%	0.76%
Provision for Loan and Lease Losses	$229,000	$191,000	$64,000	$238,000	$0
Allowance for Loan and Lease Losses to loans held-for-investment	1.05%	0.96%	0.92%	0.99%	1.04%
Allowance for Loan and Lease Losses to loans held-for-investment (ex PPP loans)	1.17%	1.15%	1.16%	1.21%	1.32%
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

 

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

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SOURCE The Freedom Bank of Virginia

FAQ

What were the earnings results for Freedom Bank (FDVA) in Q3 2021?

In Q3 2021, Freedom Bank reported a net income of $2.89 million, or $0.39 per diluted share.

How did Freedom Bank's total assets change in 2021?

Total assets increased by 10.37% to $846.6 million as of September 30, 2021.

What is the return on equity for Freedom Bank (FDVA) for Q3 2021?

Return on equity was 14.18% for the third quarter of 2021.

What were the key highlights from Freedom Bank's Q3 2021 press release?

Key highlights include a 21.66% growth in pre-tax, pre-provision profit and a 3.43% net interest margin.