The Freedom Bank of Virginia Announces Earnings For the Third Quarter of 2019

FAIRFAX, VA / ACCESSWIRE / October 30, 2019 / The Freedom Bank of Virginia (OTCQX:FDVA), (the “Bank” or “Freedom”) today announced net income of $932,348, or $0.13 per diluted share, for the quarter ended September 30, 2019.

Joseph J. Thomas, President and CEO, commented “Freedom is beginning to demonstrate the rebranding of our innovative bank, the resolve of our committed colleagues and the respect of our valued clients, as evidenced in the 83% increase in our third quarter net income compared to the prior quarter and the improvement in the quarterly ROAA to 0.75%. This has been driven by 16.8% annualized growth in loans in the third quarter, an increase in the net Interest margin to 3.51%, a 24 basis point increase over the second quarter, and a 31.1% increase in non-interest income in the third quarter compared to the prior quarter due to strong mortgage revenue. We have also remained vigilant on expense management as our efficiency ratio improved to 81.4% in the quarter and through the first nine months of 2019 compared to the same period in 2018, we have shed $902 thousand in non-interest expenses. Despite the market head winds and intense competitive conditions, our strategy is gaining traction as we crested $500 million in total assets at the end of the third quarter”

Third Quarter 2019 Highlights include:

  • Net income for the quarter was $932,348 or $0.13 per diluted share compared to $509,075 or $0.07 per diluted share for the second quarter of 2019, and a loss of $832,409 or a loss of $0.12 per diluted share, for the quarter ended September 30, 2018. Net income for the nine months ended September 30, 2019 was $1,957,409 or $0.27 per diluted share compared to $176,027 or $0.03 per diluted share for the nine months ended September 30, 2018;
  • Return on Average Assets (“ROAA”) was 0.75% for the quarter ended September 30, 2019 compared to 0.42% for the second quarter of 2019 and -0.64% for the quarter ended September 30, 2018. ROAA was 0.54% for the nine months ended September 30, 2019 compared to 0.05% for the nine months ended September 30, 2018;
  • Return on Average Equity (“ROAE”) was 5.96% for the quarter ended September 30, 2019 compared to 3.36% for the second quarter of 2019 and -5.74% for the quarter ended September 30, 2018. ROAE was 4.30% for the nine months ended September 30, 2019 compared to 0.42% for the nine months ended September 30, 2018;
  • Total assets were $507.4 million on September 30, 2019, higher by $28.57 million or by 5.97% compared to December 31, 2018;
  • Total loans grew by $16.99 million or by 4.21% during the quarter. Loans held-for-investment increased by $11.75 million or by 3.02%, while loans held-for-sale increased by $5.24 million or by 37.21% in the third quarter;
  • Available-for-sale Securities decreased by $2.01 million or by 4.28% during the quarter;
  • Total deposits decreased by $1.76 million or by 0.44% in the third quarter;
  • Non-interest bearing demand deposits decreased slightly by $833,469 during the quarter to $80.92 million, and comprised 20.40% of total deposits at September 30, 2019;
  • Net interest income increased by 11.58% during the quarter on strong loan growth and an expansion in net interest margin;
  • The net interest margin expanded by 24 basis points to 3.51% compared to the previous quarter, on higher loan yields and a reduction in funding costs;
  • Non-interest income was strong and increased by 31.14% compared to the previous quarter, primarily due to higher revenue from the sale of mortgage loans during the third quarter, on an increase in the volume of closed loans;
  • Expense control remained strong during the quarter and for the first nine months of 2019. Non-interest expenses increased by 11.96% compared to the previous quarter, primarily due to commissions paid to mortgage loan officers and expenses related to mortgage closings, and decreased by 6.13% compared to the same period in 2018 on lower compensation costs and professional fees. Non-interest expenses for the nine months ended September 30, 2019 were lower by $902,171 or by 6.12% compared to non-interest expenses for the same period in 2018;
  • The Efficiency Ratio was 81.39% for the quarter ended September 30, 2019 compared to 84.97% for the previous quarter and 125.33% for the same period in 2018;
  • The Bank recognized a provision for loan losses of $47,000 during the third quarter. The allowance for loan and lease losses (“ALLL”) was 1.12% of loans held-for-investment at September 30, 2019 compared to 1.16% of loans held-for-investment at December 31, 2018;
  • Asset quality remains strong with the ratio of non-performing assets to total assets at 0.55% as of September 30, 2019 compared to a ratio of 0.69% as of December 31, 2018;
  • Capital ratios continue to be strong, and above regulatory minimums for well-capitalized banks: Total Risk Based Capital ratio of 15.84%, Tier 1 Risk Based Capital ratio of 14.79%, Common Equity Tier 1 ratio of 14.79% and Tier 1 Leverage ratio of 12.80% at September 30, 2019.

Net Interest Income

The Bank recorded net interest income of $4.21 million for the third quarter of 2019, an increase of 11.58% compared to the previous quarter and lower by 5.79% compared to the same period in 2018. The net interest margin in the third quarter of 2019 was 3.51%, higher by 24 basis points compared to the previous quarter, and lower by 3 basis points compared to the same period in 2018.

The following factors contributed to the changes in net interest margin during the third quarter of 2019 compared to the previous quarter:

  • Yields on average earning assets increased by 22 basis points to 4.98% compared to 4.76% in the previous quarter, primarily due to an increase in loan yields during the third quarter, stemming from loan growth and recognition of default interest related to a loan recovery during the quarter. The additional yield related to the loan recovery was approximately 10 basis points.
  • Loan yields increased by 19 basis points to 5.36% from 5.17% in the previous quarter, while yields on investment securities decreased by 1 basis point to 2.79%, from 2.80% in the previous quarter.
  • Cost of funds decreased by 2 basis points to 1.64%, from 1.66% in the previous quarter, primarily due to lower costs related to borrowings and a reduction in higher cost money market deposit balances.

The following factors contributed to the changes in net interest margin during the third quarter of 2019 compared to the same period in 2018:

  • Yields on average earning assets increased by 27 basis points to 4.98% compared to 4.71% in the quarter ended September 30, 2018.
  • Loan yields increased by 16 basis points to 5.36% from 5.20% in the quarter ended September 30, 2018, while yields on investment securities increased by 5 basis points to 2.79%, from 2.74% in the quarter ended September 30, 2018.
  • Cost of funds increased by 33 basis points to 1.64%, from 1.31% in the quarter ended September 30, 2018, primarily due to higher costs related to time deposits.

Non-interest Income

Non-interest income was $1.84 million for the third quarter, higher by 31.14% compared to the previous quarter. Non-interest income in the third quarter of 2018 was a loss of $284,723, primarily due to extraordinary pre-tax losses of $1.2 million from the sale of debt securities during the quarter. If those losses were to be excluded, non-interest income for the third quarter of 2018 would have been $896,385. The principal contributors to the increase in non-interest income was higher gain-on-sale revenue from mortgage loans.

  • Total revenue from the gain on sale of mortgage loans in the third quarter of 2019 increased by 45.75% compared to the previous quarter, and by 101.12% compared to the same period in 2018. The increase in gain-on-sale revenue was driven by the higher volume of mortgage originations during the third quarter of 2019.

Non-interest Expenses

Non-interest expenses increased by 11.96% compared to the previous quarter and decreased by 6.13% compared to the same period in 2018. Non-interest expenses decreased by 6.12% for the first nine months of 2019 compared to the same period in 2018.

Principal categories of non-interest expenses that changed in the third quarter of 2019 were the following:

  • Compensation costs increased by 12.99% compared to the previous quarter, primarily due to an increase in commissions paid to mortgage loan officers on the higher volume of closed loans and an increase in incentive accruals. Excluding commissions paid to mortgage loan officers, compensation costs increased by 6.4% compared to the previous quarter. Compensation costs decreased by 2.76% compared to the same period in 2018.
  • Professional fees were higher by 22.17% compared to the second quarter of 2019, primarily due to contract underwriting fees incurred during the quarter and lower by 51.14% compared to the same period in 2018.
  • Insurance expense was reduced due to credits provided by the FDIC on deposit insurance assessments to small banks (those with total consolidated assets of less than $10 billion). The assessment regulations provide that after the reserve ratio for the insurance fund reaches 1.38% (and provided that it remains at least 1.38%), the FDIC will automatically apply small bank credits to reduce small banks’ regular deposit insurance assessments up to the full amount of their assessments or the full amount of their credits, whichever is less. The reserve ratio reached 1.40 on June 30, 2019. Therefore, credits were first applied on the September 30, 2019 invoice. Credits will be applied until exhausted.

Income Taxes

Income tax expense was $145,115 in the third quarter of 2019, equivalent to an effective tax rate of 13.47% compared to a tax benefit of $226,718 for the same period in 2018.

Asset Quality

Non-accrual loans were $2.18 million or 0.53% of total loans at the end of the third quarter of 2019, compared to $3.05 million or 0.76% of total loans at the end of the prior quarter. As of both September 30, 2019 and June 30, 2019, there were no troubled debt restructurings (“TDRs”) not on nonaccrual. On September 30, 2019 there were $598,863 of loans that were 90 days or more past due and not on no-accrual, equivalent to 0.14% of total loans, compared to $148,321 of loans that were 90 days or more past due and not on non-accrual, equivalent to 0.04% of total loans on June 30, 2019. Additionally, there was no other real estate owned (“OREO”) on the balance sheet on September 30, 2019 or June 30, 2019. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and not on non-accrual, loans that were TDRs but not on non-accrual, and OREO assets) were $2.78 million or 0.55% of total assets at September 30, 2019 compared to $3.19 million or 0.65% of total assets, at the end of the previous quarter.

The Bank recognized a provision for loan and lease losses of $47,000 during the third quarter, compared to a provision of $147,500 in the prior quarter. The Bank’s ALLL was 1.12% of loans held-for-investment at September 30, 2019, compared to 1.14% of loans held-for-investment at June 30, 2019.

Total Assets

Total assets at September 30, 2019 were $507.39 million compared to $489.91 million on June 30, 2019. Changes in major asset categories during linked quarters were as follows:

  • Cash balances and deposits with other banks decreased by $2.34 million during the quarter.
  • The available-for-sale securities portfolio decreased by $2.01 million compared to June 30, 2019.
  • Loans held-for-investment increased by $11.75 million during the quarter.
  • Loans held-for-sale increased by $5.24 million during the quarter.

Total Liabilities

Total liabilities at September 30, 2019 were $444.20 million, compared to total liabilities of $428.66 million on June 30, 2019. Total deposits were $396.65 million on September 30, 2019 compared to total deposits of $398.41 million on June 30, 2019. On a linked quarter basis, interest bearing demand deposits declined by $2.00 million, with the bulk of the decline occurring in higher cost money market balances. Non-interest bearing demand deposits decreased slightly during the quarter by $833,469 on seasonal activity to $80.92 million, but comprised 20.40% of total deposits at the end of the quarter, compared to 16.72% of total deposits on December 31, 2018. Federal Home Loan Bank advances increased by $17.01 million during the quarter, as the bank took advantage of the decline in wholesale borrowing rates to supplement liquidity and fund the strong loan growth during the quarter.

Stockholders’ Equity and Capital

Stockholders’ equity at September 30, 2019 was $63.19 million compared to $61.25 million on June 30, 2019. Additional paid in capital at September 30, 2019 was $58.45 million compared to $57.66 million on June 30, 2019. Accumulated Other Comprehensive Income (“AOCI”), which generally comprises unrealized gains and losses on available-for-sale securities on the balance sheet, increased by $205,339 on lower unrealized losses during the quarter and has increased by $1.08 million since December 31, 2018. Total shares issued and outstanding were 7,211,046 on September 30, 2019 compared to 6,981,602 on December 31, 2018. The book value of the Bank’s common stock at September 30, 2019 was $8.76 per share compared to $8.47 per share on December 31, 2018.

As of September 30, 2019, all 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, 2019 and December 31, 2018 were as follows:

 
  September 30, 2019     December 31, 2018  
Total Capital Ratio
    15.84%       15.85%  
Tier 1 Capital Ratio
    14.79%       14.73%  
Common Equity
Tier 1 Capital Ratio
    14.79%       14.73%  
Leverage Ratio
    12.80%       12.15%  
 
               

About Freedom Bank

Freedom Bank is a community-oriented bank with locations in Fairfax, Reston, Chantilly and Vienna, 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, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, 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, and acquisition or loss of key production personnel. 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,  
 
  2019     2019     2018  
ASSETS
                 
Cash and Due from Banks
  $ 890,654     $ 1,451,117     $ 1,270,559  
Interest Bearing Deposits with Banks
    20,590,246       17,686,061       14,376,684  
Securities Available-for-Sale
    44,984,633       46,997,845       48,204,339  
Restricted Stock Investments
    4,013,750       3,277,800       3,076,000  
Loans Held for Sale
    19,338,243       14,094,057       4,415,520  
Loans Held for Investment
    400,817,788       389,069,949       394,080,457  
Allowance for Loan Losses
    (4,502,835 )     (4,435,737 )     (4,572,393 )
Net Loans
    396,314,953       384,634,112       389,508,064  
Bank Premises and Equipment, net
    1,547,008       1,618,940       1,748,935  
Other Real Estate Owned
                 
Accrued Interest Receivable
    1,252,014       1,368,964       1,229,534  
Deferred Tax Asset
    779,577       864,642       1,247,513  
Bank-Owned Life Insurance
    12,686,878       12,589,855       12,401,317  
Other Assets
    4,989,323       5,322,137       1,336,522  
Total Assets
    507,387,279       489,905,630     $ 478,814,987  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                       
Liabilities
                       
Deposits
                       
Demand deposits
                       
Non-interest bearing
  $ 80,916,899     $ 81,750,368     $ 67,012,857  
Interest bearing
    110,200,698       112,197,896       128,403,358  
Savings deposits
    2,726,046       2,544,341       3,023,239  
Time deposits
    202,808,547       201,914,936       202,292,311  
Total Deposits
    396,652,190       398,407,541       400,731,765  
Federal Home Loan Bank advances
    41,857,143       24,850,000       17,142,857  
Other Liabilities
    4,808,531       4,768,419       1,607,491  
Accrued interest payable
    882,971       630,123       218,537  
Total Liabilities
    444,200,835       428,656,083       419,700,650  
Stockholders’ Equity
                       
Preferred stock, $0.01 par value, 5,000,000 shares authorized;
                       
0 shares issued and outstanding, 2019 and 2018
                 
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:
                       
6,538,046, 6,449,102 and 6,423,602 shares issued and outstanding
                       
at September 30, June 30, 2019 and December 31, 2018, respectively
                       
(includes 125,500, 125,500 and 115,000 unvested shares at September 30,                        
June 30, 2019 and December 31, 2018 respectively)
    64,175       63,236       63,086  
Non-Voting Common Stock:
                       
673,000 shares issued and outstanding September 30, June 30, 2019
                       
and December 31 2018
    6,730       6,730       6,730  
Additional paid-in capital
    58,453,416       57,655,145       57,416,068  
Accumulated other comprehensive loss, net
    (47,841 )     (253,180 )     (1,124,101 )
Retained earnings
    4,709,964       3,777,616       2,752,554  
Total Stockholders’ Equity
    63,186,444       61,249,547       59,114,337  
Total Liabilities and Stockholders’ Equity
  $ 507,387,279     $ 489,905,630     $ 478,814,987  
                         

THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED STATEMENTS OF OPERATIONS

                         
 
  For the quarter ended     For the quarter ended     For the nine months ended     For the nine months ended  
 
  September 30,     September 30,     September 30,     September 30,  
 
  2019     2018     2019     2018  
Interest Income
                       
Interest and fees on loans
  $ 5,541,462     $ 5,401,115     $ 15,768,433     $ 15,787,709  
Interest on investment securities
    343,288       498,506       1,091,658       1,402,539  
Interest on Federal funds sold
    82,831       60,077       303,138       309,696  
Total Interest Income
    5,967,581       5,959,698       17,163,229       17,499,944  
Interest Expense
                               
Interest on deposits
    1,585,209       1,389,640       4,693,482       3,895,193  
Interest on borrowings
    174,810       103,954       382,639       232,892  
Total Interest Expense
    1,760,019       1,493,595       5,076,121       4,128,084  
 
                               
Net Interest Income
    4,207,563       4,466,104       12,087,108       13,371,860  
Provision for Loan Losses
    47,000             194,500        
Net Interest Income after
                    11,892,608       13,371,860  
Provision for Loan Losses
    4,160,563       4,466,104                  
Non-Interest Income
                               
Gain on sale of mortgage loans
    1,702,767       846,654       3,665,958       2,500,123  
Service charges and other income
    36,275       36,079       111,168       144,696  
Gain(Loss) on sale of securities
          (1,181,108 )     105,722       (1,181,108 )
Increase in cash surrender value of bank-
                               
owned life insurance
    97,022       13,653       285,561       40,774  
Total Non-interest Income
    1,836,064       (284,723 )     4,168,409       1,504,485  
Non-Interest Expenses
                               
Officer and employee compensation
                               
and benefits
    3,064,244       3,151,301       8,709,142       8,829,772  
Occupancy expense
    285,798       277,941       849,787       829,021  
Equipment and depreciation expense
    216,275       166,368       629,513       492,236  
Insurance expense
    (26,872 )     97,320       166,666       423,632  
Professional fees
    297,947       609,798       827,614       1,566,031  
Data and item processing
    256,535       365,946       696,156       937,722  
Business development
    63,543       47,320       223,088       188,005  
Franchise taxes
    154,265       141,887       394,868       411,352  
Mortgage fees and settlements
    312,346       137,423       642,999       403,059  
Other operating expense
    295,082       245,204       689,132       650,306  
Total Non-interest Expenses
    4,919,163       5,240,508       13,828,965       14,731,136  
Income before Income Taxes
    1,077,463       (1,059,127 )     2,232,050       145,209  
Income Tax Expense
    145,115       (226,718 )     274,640       (30,818 )
Net Income
  $ 932,348     $ (832,409 )   $ 1,957,409     $ 176,027  
Earnings per Common Share – Basic
  $ 0.13     $ (0.12 )   $ 0.27     $ 0.03  
Earnings per Common Share – Diluted
  $ 0.13     $ (0.12 )   $ 0.27     $ 0.03  
Weighted-Average Common Shares
                               
Outstanding – Basic
    7,150,649       6,873,123       7,118,545       6,637,619  
Weighted-Average Common Shares
                               
Outstanding – Diluted
    7,194,786       6,873,123       7,161,862       6,995,540  
                                 

THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED STATEMENTS OF OPERATIONS

                               
 
  For the quarter ended     For the quarter ended     For the quarter ended     For the quarter ended     For the quarter ended  
 
  September 30,     June 30,     March 31,     December 31,     September 30,  
 
  2019     2019     2019     2018     2018  
Interest Income
                             
Interest and fees on loans
  $ 5,541,462     $ 5,022,252     $ 5,204,718     $ 5,320,254     $ 5,401,115  
Interest on investment securities
    343,288       381,352       367,017       337,702       498,506  
Interest on Federal funds sold and Other
    82,831       94,979       125,328       174,693       60,077  
Total Interest Income
    5,967,581       5,498,583       5,697,063       5,832,649       5,959,698  
 
                                       
Interest Expense
                                       
Interest on deposits
    1,585,209       1,606,953       1,501,319       1,457,042       1,389,640  
Interest on borrowings
    174,810       120,696       87,132       89,481       103,954  
Total Interest Expense
    1,760,019       1,727,649       1,588,451       1,546,523       1,493,594  
 
                                       
Net Interest Income
    4,207,562       3,770,934       4,108,612       4,286,126       4,466,104  
Provision for Loan Losses
    47,000       147,500             406,000        
Net Interest Income after
                                       
Provision for Loan Losses
    4,160,562       3,623,434       4,108,612       3,880,126       4,466,104  
Non-Interest Income
                                       
Gain on sale of mortgage loans
    1,702,767       1,168,251       794,939       668,073       846,654  
Service charges and other income
    36,275       32,462       42,431       43,196       36,079  
Gains on sale of securities
          103,034       2,688             (1,181,108 )
Increase in cash surrender value of bank-
                                       
owned life insurance
    97,022       96,324       92,215       22,396       13,652  
Total Non-interest Income
    1,836,064       1,400,071       932,273       733,665       (284,723 )
 
                                       
Non-Interest Expenses
                                       
Officer and employee compensation
                                       
and benefits
    3,064,244       2,711,906       2,932,993       2,824,480       3,151,301  
Occupancy expense
    285,798       288,213       275,776       269,963       277,941  
Equipment and depreciation expense
    216,275       277,717       185,521       172,048       166,369  
Insurance expense
    (26,872 )     77,984       77,984       78,345       97,320  
Professional fees
    297,947       243,880       323,358       478,838       609,798  
Data and item processing
    256,535       187,073       252,547       312,108       365,946  
Business development
    63,543       124,276       35,269       57,289       47,320  
Franchise taxes
    154,265       98,717       141,887       141,886       141,887  
Mortgage fees and settlements
    312,346       198,771       131,881       95,353       137,423  
Other operating expense
    295,082       185,124       158,927       179,851       245,202  
 
                                       
Total Non-interest Expenses
    4,919,163       4,393,661       4,516,143       4,610,161       5,240,508  
Income before Income Taxes
    1,077,463       629,844       524,742       3,630       (1,059,127 )
 
                                       
Income Tax Expense
    145,115       120,769       8,756       (11,605 )     (226,718 )
 
                                       
Net Income
  $ 932,348     $ 509,075     $ 515,986     $ 15,235     $ (832,409 )
Earnings per Common Share – Basic
  $ 0.13     $ 0.07     $ 0.07     $ 0.00     $ (0.12 )
Earnings per Common Share – Diluted
  $ 0.13     $ 0.07     $ 0.07     $ 0.00     $ (0.12 )
Weighted-Average Common Shares
                                       
Outstanding – Basic
    7,150,649       7,114,190       7,097,635       7,085,636       6,873,123  
Weighted-Average Common Shares
                                       
Outstanding – Diluted
    7,194,786       7,177,984       7,173,656       7,207,759       6,873,123  
                                         

Average Balances, Income and Expenses, Yields and Rates
(Unaudited)

 
  Three Months Ended                 Three Months Ended              
 
  September 30, 2019                 June 30, 2019              
 
  Average Balance     Income/Expense     Yield     Average Balance     Income/Expense     Yield  
Assets
                                   
Cash
  $ 16,053,908     $ 82,831       2.05 %   $ 19,212,889     $ 94,979       1.98 %
 
                                               
Investments (Tax Exempt)
  $ 4,481,837     $ 38,451             $ 4,380,278     $ 38,468          
Investments (Taxable)
  $ 45,525,802     $ 312,913             $ 51,397,468     $ 350,962          
Total Investments
  $ 50,007,639     $ 351,364       2.79 %   $ 55,777,746     $ 389,430       2.80 %
 
                                               
Loans (Tax Exempt)
  $ 4,590,156     $ 61,620             $ 4,618,618     $ 61,329          
Loans (Taxable)
  $ 406,752,716     $ 5,492,782             $ 385,967,635     $ 4,973,795          
Total Loans
  $ 411,342,872     $ 5,554,402       5.36 %   $ 390,586,253     $ 5,035,124       5.17 %
 
                                               
Earning Assets
  $ 477,404,419     $ 5,988,597       4.98 %   $ 465,576,888     $ 5,519,533       4.76 %
 
                                               
 
                                               
 
                                               
Assets
  $ 494,059,141                     $ 483,716,025                  
 
                                               
Liabilities
                                               
Interest Checking
  $ 10,544,633     $ 14,341       0.54 %   $ 7,006,451     $ 9,307       0.53 %
Money Market
  $ 94,166,514     $ 328,272       1.38 %   $ 108,817,738     $ 386,793       1.43 %
Savings
  $ 2,538,392     $ 1,280       0.20 %   $ 2,411,698     $ 1,202       0.20 %
Time Deposits
  $ 202,523,113     $ 1,241,316       2.43 %   $ 201,531,076     $ 1,209,651       2.38 %
Interest Bearing Deposits
  $ 309,772,652     $ 1,585,209       2.03 %   $ 319,766,963     $ 1,606,953       2.02 %
 
                                               
FHLB Borrowings
  $ 37,231,599     $ 174,811       1.86 %   $ 21,830,769     $ 120,696       2.22 %
 
                                               
Interest Bearing Liabilities
  $ 347,004,251     $ 1,760,020       2.01 %   $ 341,597,732     $ 1,727,649       2.03 %
 
                                               
Non Interest Bearing Deposits
  $ 79,607,547                     $ 76,077,226                  
 
                                               
Cost of Funds
    1.64 %                     1.66 %                
 
                                               
Net Interest Margin1
  $ 4,228,577               3.51 %           $ 3,791,884       3.27 %
Shareholders Equity
  $ 62,102,356                     $ 60,715,800                  
 
                                               

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                 Nine Months Ended                 Nine Months Ended              
 
  September 30, 2019                 September 30, 2018                 September 30, 2019                 September 30, 2018              
 
  Average Balance     Income/
Expense
    Yield     Average Balance     Income/
Expense
    Yield     Average Balance     Income/
Expense
    Yield     Average Balance     Income/
Expense
    Yield  
Assets
                                                                       
Cash
  $ 16,053,908     $ 82,831       2.05 %   $ 14,848,329     $ 60,076       1.61 %   $ 19,636,069     $ 303,137       2.06 %   $ 26,009,340     $ 309,231       1.59 %
 
                                                                                               
Investments (Tax Exempt)
  $ 4,481,837     $ 38,451             $ 28,631,429     $ 223,778             $ 4,501,297     $ 120,037             $ 29,339,457     $ 691,900          
Investments (Taxable)
  $ 45,525,802     $ 312,913             $ 50,389,824     $ 321,721             $ 48,730,310     $ 996,829             $ 48,387,847     $ 855,939          
Total Investments
  $ 50,007,639     $ 351,364       2.79 %   $ 79,021,253     $ 545,499       2.74 %   $ 53,231,607     $ 1,116,866       2.81 %   $ 77,727,304     $ 1,547,839       2.66 %
 
                                                                                               
Loans (Tax Exempt)
  $ 4,590,156     $ 61,620             $ 0     $ 0             $ 3,290,195     $ 135,134             $ 0     $ 0          
Loans (Taxable)
  $ 406,752,716     $ 5,492,782             $ 412,337,461     $ 5,401,108             $ 393,884,993     $ 15,661,677             $ 407,885,664     $ 15,787,690          
Total Loans
  $ 411,342,872     $ 5,554,402       5.36 %   $ 412,337,461     $ 5,401,108       5.20 %   $ 397,175,188     $ 15,796,811       5.32 %   $ 407,885,664     $ 15,787,690       5.18 %
 
                                                                                               
Earning Assets
  $ 477,404,419     $ 5,988,597       4.98 %   $ 506,207,043     $ 6,006,683       4.71 %   $ 470,042,864     $ 17,216,814       4.90 %   $ 511,622,308     $ 17,644,760       4.61 %
 
                                                                                               
Assets
  $ 494,059,141                     $ 512,317,206                     $ 486,801,916                     $ 516,988,189                  
 
                                                                                               
Liabilities
                                                                                               
Interest Checking
  $ 10,544,633     $ 14,341       0.54 %   $ 5,873,454     $ 8,077       0.55 %   $ 8,174,820     $ 32,813       0.54 %   $ 6,165,752     $ 23,628       0.51 %
Money Market
  $ 94,166,514     $ 328,272       1.38 %   $ 163,557,757     $ 550,806       1.34 %   $ 106,461,251     $ 1,110,304       1.40 %   $ 172,696,987     $ 1,588,667       1.23 %
Savings
  $ 2,538,392     $ 1,280       0.20 %   $ 2,149,103     $ 1,094       0.20 %   $ 2,612,952     $ 3,893       0.20 %   $ 2,173,756     $ 3,357       0.21 %
Time Deposits
  $ 202,523,113     $ 1,241,316       2.43 %   $ 188,938,817     $ 829,606       1.74 %   $ 201,292,978     $ 3,546,469       2.36 %   $ 192,820,100     $ 2,279,540       1.58 %
Interest Bearing Deposits
  $ 309,772,652     $ 1,585,209       2.03 %   $ 360,519,131     $ 1,389,583       1.53 %   $ 318,542,001     $ 4,693,479       1.97 %   $ 373,856,595     $ 3,895,192       1.39 %
 
                                                                                               
FHLB Borrowings
  $ 37,231,599     $ 174,811       1.86 %   $ 19,948,758     $ 103,954       2.07 %   $ 25,471,664     $ 382,638       2.01 %   $ 15,141,681     $ 232,891       2.06 %
 
                                                                                               
Interest Bearing Liabilities
  $ 347,004,251     $ 1,760,020       2.01 %   $ 380,467,889     $ 1,493,593       1.56 %   $ 344,013,665     $ 5,076,117       1.97 %   $ 388,998,276     $ 4,128,083       1.42 %
 
                                                                                               
Non Interest Bearing Deposits
  $ 79,607,547                     $ 72,823,900                     $ 76,628,794                     $ 67,272,743                  
 
                                                                                               
Cost of Funds
    1.64 %                     1.31 %                     1.61 %                     1.21 %                
 
                                                                                               
Net Interest Margin1
          $ 4,228,577       3.51 %           $ 4,513,090       3.54 %           $ 12,140,697       3.45 %           $ 13,516,677       3.53 %
Shareholders Equity
  $ 62,102,356                     $ 57,543,960                     $ 60,805,772                     $ 55,592,217                  
ROAA
    0.75 %                     -0.64 %                     0.54 %                     0.05 %                
ROAE
    5.96 %                     -5.74 %                     4.30 %                     0.42 %                
 
                                                                                               

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
  September 30, 2019     June
30, 2019
    March 31, 2019     December 31, 2018     September 30, 2018  
Loans to Deposits
    105.93 %     101.19 %     98.18 %     99.44 %     93.64 %
Income Statement Ratios
                                       
Return on Average Assets (ROAA)
    0.75 %     0.42 %     0.43 %     0.01 %     -0.64 %
Return on Average Equity (ROAE)
    5.96 %     3.36 %     3.51 %     0.10 %     -5.74 %
Efficiency Ratio
    81.39 %     84.97 %     89.59 %     91.84 %     125.33 %
Net Interest Margin1
    3.51 %     3.27 %     3.60 %     3.49 %     3.54 %
Yield on Average Earning Assets
    4.98 %     4.76 %     4.99 %     4.74 %     4.71 %
Yield on Securities
    2.79 %     2.80 %     2.83 %     2.67 %     2.74 %
Yield on Loans
    5.36 %     5.17 %     5.42 %     5.22 %     5.20 %
Cost of Funds
    1.64 %     1.66 %     1.54 %     1.41 %     1.31 %
Per Share Data
                                       
Tangible Book Value
  $ 8.76     $ 8.60     $ 8.48     $ 8.47     $ 8.36  
Share Price Data
                                       
Closing Price
  $ 9.95     $ 9.98     $ 10.00     $ 10.23     $ 12.12  
Book Value Multiple
    114 %     116 %     116 %     121 %     145 %
Common Stock Data
                                       
Outstanding Shares at End of Period
    7,211,046       7,122,102       7,112,102       6,981,602       6,950,165  
Weighted Average shares outstanding, basic
    7,150,649       7,114,190       7,097,635       7,085,636       6,873,123  
Weighted Average shares outstanding, diluted
    7,194,786       7,177,984       7,173,656       7,207,759       6,873,123  
Capital Ratios
                                       
Tier 1 Leverage ratio
    12.80 %     12.71 %     12.61 %     12.16 %     11.66 %
Common Equity Tier 1 ratio
    14.79 %     14.91 %     15.28 %     14.73 %     14.46 %
Tier 1 Risk Based Capital ratio
    14.79 %     14.91 %     15.28 %     14.73 %     14.46 %
Total Risk Based Capital ratio
    15.84 %     15.98 %     16.42 %     15.85 %     15.50 %
Credit Quality
                                       
Net Charge-offs to Average Loans
    0.00 %     0.06 %     0.02 %     0.03 %     0.01 %
Total Non-performing Loans to Total Loans
    0.67 %     0.79 %     0.80 %     0.83 %     1.45 %
Total Non-performing Assets to Total Assets
    0.55 %     0.65 %     0.64 %     0.69 %     1.38 %
Nonaccrual Loans to Total Loans
    0.53 %     0.76 %     0.65 %     0.71 %     1.07 %
Allowance for Loan and Lease Losses to loans held-for-investment
    1.12 %     1.14 %     1.19 %     1.16 %     1.06 %
 
                                       

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: Freedom Bank of VA

View source version on accesswire.com:
https://www.accesswire.com/564588/The-Freedom-Bank-of-Virginia-Announces-Earnings-For-the-Third-Quarter-of-2019

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