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The Freedom Bank of Virginia Announces Earnings for the Fourth Quarter and Full Year 2020

FAIRFAX, VA / ACCESSWIRE / January 29, 2021 / The Freedom Bank of Virginia (OTCQX:FDVA), (the "Bank" or "Freedom") today announced net income of $2,413,775, or $0.33 per diluted share, for the three months ended December 31, 2020. This compares to net income of $2,575,370 or $0.35 per diluted share, for the prior quarter and net income of $747,808 or $0.10 per diluted share for the three months ending December 31, 2019. The Bank reported net income of $7,364,476 or $1.01 per diluted share for the full year 2020 compared to net income of $2,705,217 or $0.37 per diluted share for the full year 2019.

Joseph J. Thomas, President and CEO, commented, "I am very proud of my colleagues at Freedom who delivered exceptional outcomes for clients in 2020 during the challenging national health and economic environment crisis and in the process enabled our company to produce record financial results. The Bank increased full year 2020 net income by 172.23% to $7.36 million, increased residential mortgage originations by 171.46% to $471.8 million, increased total assets by 53.29% to $767.04 million, and grew tangible book value per share by 13.88% to $10.09 at December 31, 2020. The results of our two-year effort to implement a new strategic plan were on full display this year with a return on average assets of 1.12% and return on average equity of 10.84% that were achieved while we also increased loss reserves by $1.5 million and maintained strong capital levels, represented by a Common Equity Tier 1 Capital ratio of 13.21% at December 31, 2020."

Fourth Quarter and Full Year 2020 Highlights include:

  • Net income for the fourth quarter was $2,413,775 or $0.33 per diluted share compared to net income of $2,575,370 or $0.35 per diluted share in the prior quarter and net income of $747,808 or $0.10 per diluted share for the three months ended December 31, 2019. The increase in net income in calendar quarters was primarily due to an increase in non-interest income in 2020, from higher mortgage revenues, swap fees and BOLI income, as well as an increase in earning assets from the prior year;
  • Net income for the full year 2020 increased by 172.23% compared to the full year 2019. Net income was $7,364,476 or $1.01 per diluted shares, compared to net income of $2,705,217 or $0.37 per diluted share for the same period in 2019. The increase in net income in 2020 was driven by higher non-interest income as well as an increase in earning assets;
  • Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was flat compared to the prior quarter, and higher by 94.09% compared to the same period in 2019. Total revenue was $34.88 million for the full year 2020 compared to $21.53 million for the full year 2019, representing a 62.01% increase compared to the prior year;
  • Return on Average Assets ("ROAA") was 1.28% for the quarter ended December 31, 2020 compared to 1.45% for the prior quarter and 0.59% for the three months ended December 31, 2019. ROAA was 1.12% for the full year 2020 compared to 0.55% for the prior year;
  • Return on Average Equity ("ROAE") was 13.43% for the three months ended December 31, 2020 compared to 14.89% for the prior quarter and 4.66% for the three months ended December 31, 2019. ROAE was 10.84% for the full year 2020 compared to 4.40% for the full year 2019;
  • Total assets were $767.04 million on December 31, 2020, an increase of $266.65 million from December 31, 2019;
  • Total loans increased by $23.33 million or by 4.08% during the quarter, while loans held-for-investment increased by $45.85 million or by 9.09% during the quarter. Mortgage loans held-for-sale decreased by $22.52 million while PPP loan balances decreased by $6.14 million, offset by an increase of $51.99 million in other loans held-for-investment during the quarter;
  • Loans held-for-investment (excluding PPP loans) grew by 14.32% in 2020;
  • Investment securities increased by $3.08 million during the fourth quarter and by $63.47 million in 2020;
  • Total deposits increased by $13.62 million or by 2.55% in the fourth quarter and by $153.28 million in 2020. Non-interest bearing demand deposits increased by $16.77 million to $192.99 million and represented 35.19% of total deposits on December 31, 2020;
  • The net interest margin decreased in the fourth quarter to 3.06%, lower by seven basis points compared to the previous quarter and lower by 27 basis points compared to the same period in 2019. The decrease in the net interest margin across linked quarters was primarily due to lower yields on investments, partially offset by higher loan yields and a reduction in the cost of funds. Excluding PPP loans, the net interest margin would have been higher by 2 basis points to 3.08% during the fourth quarter;
  • The cost of funds was 0.63% for the fourth quarter, lower by 10 basis points compared to the previous quarter and lower by 91 basis points compared to the same period in 2019, as deposit and borrowing costs continued to decline across the board;
  • Mortgage loan originations for the full year 2020 were $471.8 million compared to $173.8 million in the prior year, representing an increase of 171.46%;
  • Non-interest income decreased by 6.54% compared to the previous quarter on lower mortgage revenue stemming from a seasonal decline in mortgage activity, partially offset by an increase in swap fee income during the fourth quarter. Non-interest income increased by 280.85% compared to the same period in 2019, primarily due to higher revenue from the sale of mortgage loans and an expansion in gain-on-sale margins, supplemented by an increase in swap fee income and higher income from Bank Owned Life Insurance;
  • Non-interest expense decreased by 3.66% compared to the previous quarter and increased by 59.62% compared to the same period in 2019. The increase in non-interest expense in calendar quarters was primarily due to higher performance related costs: specifically, commissions paid to mortgage loan officers and mortgage settlement costs, as well as an increase in performance based incentive accruals. Excluding these costs, non-interest expense in the fourth quarter of 2020 increased by 12.26% compared to the same period in 2019;
  • The Efficiency Ratio was 67.52% for the quarter ended December 31, 2020, compared to 69.22% for the prior quarter and 82.10% for the same period in 2019;
  • Asset quality remained strong with the ratio of non-performing assets to total assets at 0.41% on December 31, 2020 compared to 0.49% on September 30, 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 $238,000 provision for loan losses during the fourth quarter and the ratio of the allowance for loan and lease losses to loans held-for-investment was 0.99% (or 1.21% excluding PPP loans, which carry a full faith and guarantee by the US Government) compared to 1.04% in the previous quarter (or 1.32% excluding PPP loans). The Bank recognized a provision for loan losses of $1.49 million in the full year 2020 compared to a provision of $194,500 in the full year 2019;
  • Loan payment deferrals related to COVID-19 continue to decline steadily. As of December 31, 2020, 13 loans for a total of $13.92 million were on payment deferrals, all of which are scheduled to end in the first quarter of 2021. This compares to 90 loans totaling $73.07 million on payment deferral on September 30, 2020 and 96 loans or $89.35 million on payment deferrals on June 30, 2020;
  • The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 11.20%, Common Equity Tier 1 ratio of 13.21%, Tier 1 Risk Based Capital ratio of 13.21% and a Total Capital ratio of 14.21%.

Revenue

Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was flat compared to the prior quarter, and higher by 94.09% compared to the same period in 2019. Total revenue was $34.88 million for the full year 2020 compared to $21.53 million for the full year 2019, representing a 62.01% increase compared to the prior year.

Net Interest Income

The Bank recorded net interest income of $5.52 million for the fourth quarter of 2020, an increase of 3.81% compared to the previous quarter, and 36.72% higher than the same period in 2019. The net interest margin in the fourth quarter of 2020 was 3.06%, lower by seven basis points compared to the previous quarter and lower by 27 basis points compared to the same period in 2019. Excluding the impact of lower yielding PPP loans, loan yields would have been higher by 27 basis points, while the net interest margin would have been higher by two basis points to 3.08%.

The Bank's net interest margin was 3.09% for the full year 2020 compared to 3.48% for the prior year. For the full year 2020, loan yields declined by 99 basis points from the prior year, affected by lower yielding PPP loans and loan growth at lower loan yields. Excluding the impact of PPP loans, loan yields in 2020 would have been 29 basis points higher, while the net interest margin would have been higher by five basis points. Yields on investment securities increased in 2020, higher by eight basis points compared to the prior year.

The following factors contributed to the changes in net interest margin during the fourth quarter of 2020 compared to the previous quarter:

  • Yields on average earning assets decreased by 17 basis points to 3.64% compared to 3.81% in the previous quarter, primarily due to lower yields on investment securities, partially offset by higher loan yields.
  • Loan yields increased by 4 basis points to 4.14% from 4.10% in the previous quarter, while yields on investment securities decreased by 102 basis points to 2.30% from 3.32% in the previous quarter. The increase in loan yields was largely due to the acceleration of deferred fees resulting from the PPP loans that were forgiven in the fourth quarter. Payoff activity in residential mortgage backed securities and calls of corporate bonds were the principal driver for the decrease in investment yields.
  • Cost of funds decreased by 10 basis points to 0.63%, from 0.73% in the previous quarter, as declines in deposit costs continued, primarily in the money market and time deposit categories.

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

  • Loan yields decreased by 106 basis points to 4.14% from 5.20% in the fourth quarter of 2019, while yields on investment securities decreased by two basis points to 2.30%, from 2.32% in the same period in 2019.
  • Cost of funds decreased by 91 basis points to 0.63%, from 1.54% in the fourth quarter of 2019, primarily due to higher non-interest bearing deposits and lower costs for borrowings and interest bearing deposits.

Non-interest Income

Non-interest income was $4.72 million for the fourth quarter, lower by 6.54% compared to the previous quarter and higher by 280.85% compared to the same period in 2019. The decline in non-interest income compared to the previous quarter was largely due to lower mortgage gain-on-sale and fee revenue, stemming from a decline in mortgage originations in the fourth quarter of 2020, partially offset by an increase in swap fee income during the fourth quarter.

An increase in mortgage loan origination activity and an expansion in gain-on-sale margins was the primary reason for the higher non-interest income in 2020, compared to the prior year, supplemented by an increase in swap fee income and higher income from Bank Owned Life Insurance. Mortgage originations for the full year 2020 were $471.8 million compared to $173.8 million in the prior year, representing an increase of 171.46%.

Non-interest Expenses

Non-interest expenses in the fourth quarter of 2020 decreased by 3.66% compared to the previous quarter and increased by 59.62% compared to the same period in 2019. The decline in non-interest expenses in the fourth quarter compared to the previous quarter was largely due to lower compensation expenses, mostly driven by lower commission expense. The increase in non-interest expenses in the fourth quarter of 2020 compared to the same period in 2019 was largely due to higher performance based costs, principally commission expense, mortgage settlement costs and an increase in performance based incentive accruals. Excluding these performance based costs, non-interest expenses in the fourth quarter of 2020 would have been 12.26% higher compared to the same period in 2019. Higher loan and deposit activity in 2020 compared to the prior year also led to increases in data processing costs and contract underwriting fees.

Additional categories of non-interest expenses that changed in the fourth quarter of 2020 were the following:

  • Professional fees were higher by 52.09% in the fourth quarter of 2020 compared to the previous quarter. This was largely due to an increase in fees paid to contract underwriters.
  • Data processing expenses in the fourth quarter were higher by 40.07% compared to the previous quarter, primarily due to an increase in loan and deposit activity in the fourth quarter.

The Efficiency Ratio was 67.52% for the quarter ended December 31, 2020, compared to 69.22% for the prior quarter and 82.10% for the same period in 2019.

The Efficiency ratio for the full year 2020 was 69.68% compared to 84.34% for the full year 2019.

Asset Quality

Non-accrual loans were $3.18 million or 0.57% of total loans at the end of the fourth quarter of 2020, compared to $3.69 million or 0.64% of total loans at the end of the prior quarter. There were no troubled debt restructurings ("TDRs") as of December 31, 2020. On December 31, 2020, 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 December 31, 2020. 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 $3.18 million or 0.41% of total assets at December 31, 2020 compared to $3.69 million or 0.49% of total assets, at the end of the previous quarter.

Loan payment deferrals related to COVID-19 continue to decline steadily. As of December 31, 2020, 13 loans for a total of $13.92 million were on payment deferrals, all of which are scheduled to end in the first quarter of 2021. This compares to 90 loans totaling $73.07 million on payment deferral on September 30, 2020 and 96 loans or $89.35 million on payment deferrals on June 30, 2020.

Following an assessment of the collectability of the loans held-for-investment at the end of the fourth quarter, it was determined that a $238,000 provision for loan losses was necessary. The Bank booked no provision in the third quarter of 2020. The Bank's ALLL ratio was 0.99% of loans held-for-investment (or 1.21% of loans held-for investment excluding PPP loans) as of December 31, 2020 compared to an ALLL ratio of 1.04% at September 30, 2020 (or 1.32% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets at December 31, 2020 were $767.04 million compared to $751.58 million on September 30, 2020. Changes in major asset categories during linked quarters were as follows:

  • Mortgage loans held-for-sale declined by $22.52 million.
  • Loans held-for-investment increased by $45.85 million, including a decline in PPP loan balances of $6.14 million, driven by forgiveness by the SBA and by curtailments and an increase of $51.99 million in other loans held-for-investment.

Total Liabilities

Total liabilities at December 31, 2020 were $693.59 million compared to total liabilities of $681.05 million on September 30, 2020. Total deposits were $548.49 million compared to total deposits of $534.87 million on September 30, 2020. The primary reason for the increase in deposits compared to the prior quarter was an increase in non-interest bearing deposits. Non-interest bearing demand deposits increased by $16.77 million during the quarter, and comprised 35.19% of total deposits at the end of the quarter, compared to 32.95% of total deposits on September 30, 2020, and 20.41% of total deposits on December 31, 2019. Federal Home Loan Bank advances declined slightly during the quarter, while PPP Liquidity Facility term advances decreased as some PPP loans were forgiven in the fourth quarter and the associated advances were paid off.

Stockholders' Equity and Capital

Stockholders' equity at December 31, 2020 was $73.46 million compared to $70.53 million on September 30, 2020. Additional paid in capital was $59.22 million on December 31, 2020 compared to $58.84 million on September 30, 2020. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, increased by $127,819 on unrealized gains during the fourth quarter of 2020. Total shares issued and outstanding were 7,283,647 on December 31 30, 2020 compared to 7,233,751 shares on September 30, 2020, and 7,211,046 shares on December 31, 2019. The tangible book value of the Bank's common stock at December 31, 2020 was $10.09 per share compared to $9.75 per share on September 30, 2020 and $8.86 per share on December 31, 2019.

As of December 31, 2020 of the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized banks. The Bank's capital ratios on December 31, 2020 and December 31, 2019 were as follows:

   December 31, 2020    December 31, 2019 
Total Capital Ratio    14.21%    16.24%
Tier 1 Capital Ratio    13.21%    15.26%
Common Equity               
Tier 1 Capital Ratio    13.21%    15.26%
Leverage Ratio    11.20%    12.80%
                

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) 
  December 31,  September 30,  December 31, 
  2020  2020  2019 
ASSETS         
Cash and Due from Banks $1,792,660  $2,623,863  $927,322 
Interest Bearing Deposits with Banks  25,543,295   39,353,716   24,735,085 
Securities Available-for-Sale  97,188,125   93,792,624   49,854,912 
Securities Held-to-Maturity  16,132,167   16,450,629   - 
Restricted Stock Investments  3,607,800   3,607,800   3,752,750 
Loans Held for Sale  45,047,711   67,565,018   11,656,802 
PPP Loans Held for Investment  101,215,376   107,351,052   - 
Other Loans Held for Investment  449,211,475   397,224,188   392,941,874 
Allowance for Loan Losses  (5,454,924)  (5,228,192)  (4,121,693)
Net Loans  544,971,927   499,347,048   388,820,181 
Bank Premises and Equipment, net  1,298,545   1,343,532   1,480,535 
Accrued Interest Receivable  2,868,868   3,522,658   1,278,037 
Deferred Tax Asset  1,154,078   702,684   857,698 
Bank-Owned Life Insurance  17,035,214   16,902,659   12,783,605 
Right of Use Asset, net  3,258,817   3,323,564   2,928,546 
Other Assets  7,168,469   3,043,264   1,317,201 
Total Assets  767,044,957   751,579,059   500,392,674 
LIABILITIES AND STOCKHOLDERS' EQUITY            
Liabilities            
Deposits            
Demand Deposits            
Non-interest Bearing $192,987,984  $176,221,554  $80,630,053 
Interest Bearing  176,424,255   179,147,383   112,605,618 
Savings Deposits  2,962,303   2,819,368   2,153,939 
Time Deposits  176,114,292   176,678,969   199,821,006 
Total Deposits  548,488,834   534,867,274   395,210,616 
Federal Home Loan Bank Advances  30,071,429   31,071,429   35,857,143 
PPP Liquidity Facility Advances  101,951,020   107,351,042   - 
Accrued Interest Payable  480,816   484,775   433,586 
Lease Liability  3,347,075   3,401,335   2,981,132 
Other Liabilities  9,247,507   3,874,727   1,883,782 
Total Liabilities  693,586,681   681,050,583   436,366,259 
Stockholders' Equity            
Preferred stock, $0.01 par value, 5,000,000 shares authorized;            
0 Shares Issued and Outstanding, 2020 and 2019          - 
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:            
6,613,980, 6,560,751 and 6,548,046 Shares Issued and Outstanding            
at December 31, 2020, September 30, 2020 and December 31, 2019, respectively            
(Includes xx, 113,335 and 120,500 Unvested Shares at December 31, 2020,            
September 30, 2020 and December 31, 2019, respectively)  65,106   64,474   64,275 
Non-Voting Common Stock:            
673,000 Shares Issued and Outstanding December 31, 2020,            
September 30, 2020, and December 31, 2019  6,730   6,730   6,730 
Additional Paid-in Capital  59,223,538   58,835,965   58,526,913 
Accumulated Other Comprehensive Income (Loss), Net  1,340,653   1,212,834   (29,274)
Retained Earnings  12,822,249   10,408,473   5,457,771 
Total Stockholders' Equity  73,458,276   70,528,476   64,026,415 
Total Liabilities and Stockholders' Equity  767,044,957   751,579,059   500,392,674 
             
THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED STATEMENTS OF OPERATIONS
 
  (Unaudited)  (Unaudited)  (Unaudited)  (Audited) 
  For the three  For the three  For the twelve  For the twelve 
  months ended  months ended  months ended  months ended 
  December 31, 2020  December 31, 2019  December 31, 2020  December 31, 2019 
Interest Income            
Interest and Fees on Loans $5,931,405  $5,345,417  $22,133,659  $21,113,850 
Interest on Investment Securities  630,449   278,164   2,288,660   1,369,822 
Interest on Deposits with Other Banks  10,083   88,239   109,557   391,377 
Total Interest Income  6,571,937   5,711,820   24,531,875   22,875,048 
Interest Expense                
Interest on Deposits  827,779   1,513,662   4,238,596   6,207,144 
Interest on Borrowings  226,724   162,502   824,708   545,141 
Total Interest Expense  1,054,504   1,676,164   5,063,305   6,752,285 
                 
Net Interest Income  5,517,433   4,035,657   19,468,571   16,122,764 
Provision for Loan Losses  (238,000)  -   (1,492,000)  (194,500)
Net Interest Income After                
Provision for Loan Losses  5,279,433   4,035,657   17,976,571   15,928,264 
Non-Interest Income                
Mortgage Loan Gain-on-Sale and Fee Revenue  4,283,961   1,097,693   13,949,739   4,763,651 
Service Charges and Other Income  30,535   45,300   118,567   156,468 
Gain on Sale of Securities  3,921   -   46,703   105,722 
Swap Fee Income  270,450   -   657,712   - 
Increase in Cash Surrender Value of Bank-                
owned Life Insurance  132,555   96,727   639,213   382,288 
Total Non-interest Income  4,721,422   1,239,720   15,411,934   5,408,128 
Non-Interest Expenses                
Officer and Employee Compensation                
and Benefits  4,479,310   2,637,977   16,233,421   11,347,119 
Occupancy Expense  294,600   293,058   1,194,320   1,142,845 
Equipment and Depreciation Expense  227,758   261,871   735,374   891,384 
Insurance Expense  49,008   18,760   196,442   118,226 
Professional Fees  417,497   279,567   1,298,943   1,106,208 
Data and Item Processing  322,373   178,416   1,012,601   839,167 
Advertising  83,559   113,194   278,602   336,282 
Franchise Taxes and State Assessment Fees  185,379   175,920   725,466   629,989 
Mortgage Fees and Settlements  675,218   200,192   1,952,049   843,191 
Other Operating Expense  178,286   172,034   678,284   905,544 
Total Non-interest Expenses  6,912,989   4,330,988   24,305,502   18,159,954 
Income Before Income Taxes  3,087,866   944,389   9,083,002   3,176,438 
Income Tax Expense  674,091   196,581   1,718,526   471,221 
Net Income $2,413,775  $747,808  $7,364,476  $2,705,217 
Earnings per Common Share - Basic $0.33  $0.10  $1.02  $0.38 
Earnings per Common Share - Diluted $0.33  $0.10  $1.01  $0.37 
Weighted-Average Common Shares                
Outstanding - Basic  7,252,552   7,212,568   7,247,895   7,144,052 
Weighted-Average Common Shares                 
Outstanding - Diluted  7,312,247   7,272,228   7,309,011   7,226,571 
                 
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 
  December 31, 2020  September 30, 2020  June 30, 2020  March 31, 2020  December 31, 2019 
Interest Income               
Interest and Fees on Loans $5,931,405  $5,657,929  $5,508,679  $5,035,645  $5,345,417 
Interest on Investment Securities  630,449   799,976   500,293   357,942   278,164 
Interest on Deposits with Other Banks  10,083   8,236   13,001   78,237   88,239 
Total Interest Income  6,571,937   6,466,140   6,021,974   5,471,824   5,711,820 
                     
Interest Expense                    
Interest on Deposits  827,779   919,326   1,095,532   1,395,959   1,513,662 
Interest on Borrowings  226,724   231,700   208,765   157,519   162,502 
Total Interest Expense  1,054,504   1,151,026   1,304,297   1,553,478   1,676,164 
                     
Net Interest Income  5,517,433   5,315,115   4,717,677   3,918,346   4,035,657 
Provision for Loan Losses  (238,000)  -   (705,000)  (549,000)  - 
Net Interest Income after                    
Provision for Loan Losses  5,279,433   5,315,115   4,012,677   3,369,346   4,035,657 
Non-Interest Income                    
Mortgage Loan Gain-on-Sale and Fee Revenue  4,283,961   4,742,574   2,805,571   2,117,878   1,098,656 
Service Charges and Other Income  30,535   14,802   33,923   39,062   44,337 
Gains on Sale of Securities  3,921   17,174   -   25,608   - 
Swap Fee Income  270,450   -   299,762   87,500   - 
Increase in Cash Surrender Value of Bank-                    
owned Life Insurance  132,555   277,164   127,496   101,998   96,727 
Total Non-interest Income  4,721,422   5,051,714   3,266,751   2,372,047   1,239,720 
                     
                     
Revenue $10,238,855  $10,366,829  $7,984,428  $6,290,393  $5,275,377 
                     
Non-Interest Expenses                    
Officer and Employee Compensation                    
and Benefits  4,479,310   5,065,021   3,488,369   3,200,721   2,637,977 
Occupancy Expense  294,600   306,291   300,634   292,794   293,058 
Equipment and Depreciation Expense  227,758   175,684   147,910   184,022   261,871 
Insurance Expense  49,008   43,836   51,263   52,335   10,760 
Professional Fees  417,497   274,505   325,545   281,396   278,594 
Data and Item Processing  322,373   230,152   285,942   174,135   178,416 
Advertising  83,559   99,508   36,732   58,804   113,194 
Franchise Taxes and State Assessment Fees  185,379   185,404   178,812   175,870   175,920 
Mortgage Fees and Settlements  675,218   600,592   454,866   221,374   200,192 
Other Operating Expense  178,286   194,777   156,734   148,487   181,005 
                     
Total Non-interest Expenses  6,912,989   7,175,770   5,426,806   4,789,937   4,330,987 
Income before Income Taxes  3,087,866   3,191,059   1,852,622   951,455   944,389 
                     
Income Tax Expense  674,091   615,689   327,097   101,649   196,581 
                     
Net Income $2,413,775  $2,575,370  $1,525,525  $849,806  $747,808 
Earnings per Common Share - Basic $0.33  $0.36  $0.21  $0.12  $0.10 
Earnings per Common Share - Diluted $0.33  $0.35  $0.21  $0.11  $0.10 
Weighted-Average Common Shares                    
Outstanding - Basic  7,252,552   7,234,294   7,238,751   7,348,022   7,212,568 
Weighted-Average Common Shares                     
Outstanding - Diluted  7,312,247   7,277,112   7,267,773   7,435,490   7,272,228 
                     
Average Balances, Income and Expenses, Yields and Rates                  
(Unaudited)                  
                   
  Three Months Ended        Three Months Ended       
  December 31, 2020        September 30, 2020       
  Average Balance  Income/Expense  Yield  Average Balance  Income/Expense  Yield 
Assets                  
Cash $38,217,380  $10,083   0.10% $29,769,485  $8,236   0.11%
                         
Investments (Tax Exempt)  23,815,369   151,564       11,434,264   250,016     
Investments (Taxable)  90,609,147   510,714       90,668,376   602,463     
Total Investments  114,424,516   662,277   2.30%  102,102,640   852,479   3.32%
                         
Total Loans  569,936,960   5,931,405   4.14%  549,575,996   5,657,929   4.10%
                         
Earning Assets  722,578,856   6,603,765   3.64%  681,448,121   6,518,643   3.81%
                         
                         
                         
Assets $747,427,986          $705,290,352         
                         
Liabilities                        
Interest Checking $39,206,072   15,165   0.15% $27,902,031   11,914   0.17%
Money Market  138,196,830   74,468   0.21%  132,371,367   93,750   0.28%
Savings  2,836,001   717   0.10%  3,055,994   761   0.10%
Time Deposits  175,514,471   737,430   1.67%  178,221,780   812,901   1.82%
Interest Bearing Deposits  355,753,374   827,779   0.93%  341,551,172   919,326   1.07%
                         
Borrowings $135,328,997   226,724   0.67% $136,793,181   231,700   0.67%
                         
Interest Bearing Liabilities  491,082,371   1,054,504   0.85%  478,344,353   1,151,026   0.96%
                         
Non Interest Bearing Deposits $177,583,960          $151,878,149         
                         
Cost of Funds          0.63%          0.73%
                         
Net Interest Margin1     $5,549,261   3.06%     $5,367,618   3.13%
Shareholders Equity $71,511,341          $68,801,586         
                         
1 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank's net yield on its earning assets 
                         
Average Balances, Income and Expenses, Yields and Rates                                    
(Unaudited)                                    
  Three Months Ended        Three Months Ended        Twelve Months Ended        Twelve Months Ended       
  December 31, 2020  Income /     December 30, 2019  Income /     December 31, 2020  Income /     December 31, 2019  Income /    
  Average Balance  Expense  Yield  Average Balance  Expense  Yield  Average Balance  Expense  Yield  Average Balance  Expense  Yield 
Assets                                    
Cash $38,217,380  $10,083   0.10% $25,022,661  $88,239   1.40% $38,093,605  $109,557   0.29% $20,003,596  $391,377   1.96%
                                                 
Investments (Tax Exempt)  23,815,369   151,564       4,494,698   38,432       11,469,927   488,649       4,499,634   158,468     
Investments (Taxable)  90,609,147   510,714       44,496,212   248,253       74,804,458   1,902,627       47,663,086   1,244,632     
Total Investments  114,424,516   662,277   2.30%  48,990,910   286,685   2.32%  86,274,385   2,391,276   2.77%  52,162,719   1,403,100   2.69%
                                                 
Total Loans  569,936,960   5,931,405   4.14%  408,994,969   5,358,279   5.20%  509,063,258   22,133,659   4.35%  400,154,420   21,348,535   5.34%
                                                 
Earning Assets  722,578,856   6,603,765   3.64%  483,008,540   5,733,203   4.71%  633,431,248   24,634,491   3.89%  472,320,736   23,143,013   4.90%
                                                 
Assets $747,427,986          $500,326,991          $656,218,698          $490,210,976         
                                                 
Liabilities                                                
Interest Checking $39,206,072   15,165   0.15% $14,182,818   14,869   0.42% $28,215,189  $57,146   0.20% $9,727,525  $14,868   0.15%
Money Market  138,196,830   74,468   0.21%  88,443,141   292,962   1.31%  124,526,068   587,777   0.47%  101,933,400   1,403,266   1.38%
Savings  2,836,001   717   0.10%  2,272,908   1,146   0.20%  2,703,310   3,279   0.12%  2,527,243   5,041   0.20%
Time Deposits  175,514,471   737,430   1.67%  201,332,510   1,204,685   1.40%  183,086,149   3,590,396   1.96%  200,361,882   4,750,313   2.37%
Interest Bearing Deposits  355,753,374   827,779   0.93%  306,231,377   1,513,662   1.96%  338,530,716   4,238,597   1.25%  314,550,050   6,173,489   1.96%
                                                 
Borrowings  135,328,997   226,724   0.67%  39,890,991   162,502   1.62% $105,749,331   824,708   0.78% $29,106,124  $545,140   1.87%
                                                 
Interest Bearing Liabilities  491,082,371   1,054,504   0.85%  346,122,368   1,676,164   1.92%  444,280,048   5,063,305   1.14%  343,656,175   6,718,629   1.96%
                                                 
Non Interest Bearing Deposits $177,583,960          $84,845,763          $138,007,364          $78,699,921         
                                                 
Cost of Funds          0.63%          1.54%          0.87%          1.59%
                                                 
Net Interest Margin1     $5,549,261   3.06%     $4,057,039   3.33%     $19,571,187   3.09%     $16,424,384   3.48%
Shareholders Equity $71,511,341          $63,634,670          $67,908,517          $61,518,809         
ROAA  1.28%          0.59%          1.12%          0.55%        
ROAE  13.43%          4.66%          10.84%          4.40%        
                                                 
1 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank's net yield on its earning assets 
                                                 
Selected Financial Data by Quarter Ended:                        
(Unaudited)                        
Balance Sheet Ratios  December 31,
2020
    September 30,
2020
    June 30,
2020
    March 31,
2020
    December 31,
2019
 
Loans to Deposits    108.57%    106.97%    111.85%    104.68%    102.38%
Income Statement Ratios (Quarterly)                                       
Return on Average Assets (ROAA)    1.28%    1.45%    0.92%    0.68%    0.59%
Return on Average Equity (ROAE)    13.43%    14.89%    9.24%    5.27%    4.66%
Efficiency Ratio    67.52%    69.22%    67.97%    76.15%    82.10%
Net Interest Margin1    3.06%    3.13%    2.93%    3.26%    3.33%
Yield on Average Earning Assets    3.64%    3.81%    3.75%    4.55%    4.71%
Yield on Securities    2.30%    3.32%    2.51%    2.62%    2.32%
Yield on Loans    4.14%    4.10%    4.35%    5.02%    5.20%
Cost of Funds    0.63%    0.73%    0.88%    1.44%    1.54%
Noninterest income to Total Revenue    46.11%    48.73%    40.91%    37.71%    23.50%
Per Share Data                                       
Tangible Book Value  10.09    9.75    9.33    9.02    8.86 
Share Price Data                                       
Closing Price  9.10    7.20    7.50    5.80    10.45 
Book Value Multiple    90%    74%    79%    64%    118%
Common Stock Data                                       
Outstanding Shares at End of Period    7,283,647      7,233,751      7,238,751      7,238,751      7,221,046 
Weighted Average shares outstanding, basic    7,252,552      7,234,294      7,238,751      7,348,022      7,212,568 
Weighted Average shares outstanding, diluted    7,312,247      7,277,112      7,267,773      7,435,490      7,272,228 
Capital Ratios                                       
Tier 1 Leverage ratio    11.20%    11.57%    11.23%    12.88%    12.80%
Common Equity Tier 1 ratio    13.21%    14.10%    13.90%    14.35%    15.26%
Tier 1 Risk Based Capital ratio    13.21%    14.10%    13.90%    14.35%    15.26%
Total Risk Based Capital ratio    14.21%    15.17%    14.99%    15.38%    16.24%
Credit Quality                                       
Net Charge-offs to Average Loans    0.00%    0.00%    0.02%    0.00%    0.09%
Total Non-performing Loans to Total Loans    0.61%    0.64%    0.73%    0.53%    1.54%
Total Non-performing Assets to Total Assets    0.48%    0.49%    0.57%    0.43%    1.24%
Nonaccrual Loans to Total Loans    0.61%    0.64%    0.71%    0.50%    0.42%
Provision for Loan and Lease Losses  238,000    0    705,000    549,000    0 
Allowance for Loan and Lease Losses to loans held-for-investment    0.99%    1.04%    1.02%    1.16%    1.05%
Allowance for Loan and Lease Losses to loans held-for-investment (ex PPP loans)    1.21%    1.32%    1.28%    1.16%    1.05%
                                        

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

Contact:

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

SOURCE: The Freedom Bank of Virginia



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https://www.accesswire.com/626689/The-Freedom-Bank-of-Virginia-Announces-Earnings-for-the-Fourth-Quarter-and-Full-Year-2020

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