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The Freedom Bank of Virginia Announces Earnings for the Third Quarter of 2020

FAIRFAX, VA / ACCESSWIRE / October 30, 2020 / The Freedom Bank of Virginia (OTCQX:FDVA), (the "Bank" or "Freedom") today announced net income of $2,575,370, or $0.35 per diluted share, for the three months ended September 30, 2020. This compares to net income of $1,525,525 or $0.21 per diluted share, for the prior quarter and net income of $932,348 or $0.13 per diluted share for the three months ending September 30, 2019. The Bank reported net income of $4,950,701 or $0.68 per diluted share for the nine months ended September 30, 2020 compared to net income of $1,957,409 or $0.27 per diluted share for the nine months ended September 30, 2019.

Joseph J. Thomas, President and CEO, commented "Despite the challenging headwinds of COVID-19 and the adverse economic environment, Freedom Bank was able to push forward with third quarter Return on Average Assets of 1.45% and Return on Average Equity of 14.89%, resulting in an 17.91% annualized increase in our tangible book value per share to $9.75 in the third quarter. Stronger earnings were driven by a 54.64% increase in non-interest revenue tied to the success of our mortgage division as well as disciplined control on deposit and overhead costs. The Bank's third quarter efficiency ratio of 69.22% compares to an efficiency ratio of 81.39% for the comparable period in 2019. Our asset quality remains pristine with total non-performing assets down again to $3.69 million or 0.49% of total assets at September 30, 2020 and we did not require any addition to our reserve for loan losses, which was 1.32% to loans held-for-investment, excluding PPP loans as of September 30, 2020. We also opened a new Sales Office in Manassas to expand the bank's foot print into Prince William County and our team continues to work tirelessly on behalf of clients, serving to build our core client portfolio of entrepreneurs and small businesses."

Third Quarter Highlights include:

  • Net income increased by 68.82% compared to the prior quarter and by 176.22% compared to the same period in 2019. Net income for the third quarter was $2,575,370 or $0.35 per diluted share compared to net income of $1,525,505 or $0.21 per diluted share in the prior quarter and net income of $932,348 or $0.13 per diluted share for the three months ended September 30, 2019;
  • Net income for the first nine months of 2020 increased by 152.92% compared to the same period in 2019. Net income was $4,950,701 or $0.68 per diluted shares, compared to net income of $1,957,409 or $0.27 per diluted share for the same period in 2019;
  • Return on Average Assets ("ROAA") was 1.45% for the quarter ended September 30, 2020 compared to 0.92% for the prior quarter and 0.75% for the three months ended September 30, 2019;
  • Return on Average Equity ("ROAE") was 14.89% for the three months ended September 30, 2020 compared to 9.24% for the prior quarter and 6.34% for the three months ended September 30, 2019;
  • Total assets were $751.58 million on September 30, 2020, an increase of $251.19 million from December 31, 2019;
  • Total loans increased by $26.43 million or by 4.84% during the quarter, , while loans held-for-inve4stment declined by $9.25 million or by 1.79% during the quarter. Mortgage loans held-for-sale increased by $35.67 million or by 111.86% while PPP loan balances increased by $2.76 million, offset by a decrease of $12.01 million in other loans held-for-investment during the quarter;
  • Loan payment deferrals related to COVID-19 continue to decline steadily. In the second quarter of 2020, in accordance with the spirit and provisions of the CARES Act, the Bank allowed borrowers who had been impacted by the COVD-19 pandemic, to defer loan payments for six months. . Based upon a review of earnings releases, it appears that many other banks chose, instead, to provide shorter payment deferrals of up to 3 months to similarly impacted borrowers. As a result, the payment deferrals granted in the second quarter had longer terms that end in the fourth quarter of 2020. During the third quarter of 2020, 15 of the loans that had been granted payment deferrals in the prior quarter had resumed contractual payments, while 9 additional loans were granted payment deferrals in the third quarter. Interest continues accruing during the deferral period. As of September 30, 2020, 90 loans for a total of $73.07 million were on payment deferrals, all of which will end in the fourth quarter. This compares to 96 loans or $89.35 million on June 30, 2020;
  • Investment securities increased by $21.52 million during the third quarter;
  • Total deposits increased by $46.97 million or by 9.63% in the third quarter. Non-interest bearing demand deposits increased by $22.39 million to $176.22 million and represented 32.95% of total deposits at the end of the quarter;
  • The net interest margin increased in the third quarter to 3.13%, higher by 20 basis points compared to the previous quarter and lower by 39 basis points compared to the same period in 2019. The improvement in the net interest margin across linked quarters was primarily due to a reduction in the cost of funds, accompanied by higher yields on earning assets. Excluding PPP loans, the net interest margin would have been higher by 9 basis points to 3.22% during the third quarter;
  • The cost of funds was 0.73% for the third quarter, lower by 15 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 continue to decline across the board;
  • Non-interest income increased by 54.64% compared to the previous quarter and increased by 175.14% compared to the same period in 2019, primarily due to higher revenue from the sale of mortgage loans and higher income from Bank Owned Life Insurance;
  • Revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, increased by 29.84% compared to the prior quarter, and by 71.53% compared to the same period in 2019;
  • Non-interest expense increased by 32.23% compared to the previous quarter and increased by 45.87% compared to the same period in 2019, primarily due to higher performance based compensation and mortgage costs: specifically, an increase in commissions paid to mortgage loan officers and mortgage settlement costs as well as higher accruals for performance based compensation. Excluding these costs, non-interest expense in the third quarter of 2020 increased by $340,160 or by 9.06%, compared to the previous quarter and increased by 6.06% compared to the same period in 2019;
  • The Efficiency Ratio was 69.22% for the quarter ended September 30, 2020, compared to 67.97% for the prior quarter and 81.39% for the same period in 2019;
  • As a result of a decline in loans held-for-investment during the quarter and an assessment of the risks in the held-for-investment loan portfolio, the Bank did not recognize any provision for loan losses during the third quarter and the ratio of the allowance for loan and lease losses to loans held-for-investment increased to 1.04% (or 1.32% excluding PPP loans, which carry a full faith and guarantee by the US Government) compared to 1.02% in the previous quarter (or 1.28% excluding PPP loans);
  • The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 11.57%, Common Equity Tier 1 ratio of 14.10%, Tier 1 Risk Based Capital ratio of 14.10% and a Total Capital ratio of 15.17%.

Net Interest Income

The Bank recorded net interest income of $5.32 million for the third quarter of 2020, an increase of 12.66% compared to the previous quarter, and 26.32% higher than the same period in 2019. The net interest margin in the third quarter of 2020 was 3.13%, higher by 20 basis points compared to the previous quarter and lower by 39 basis points compared to the same period in 2019. Excluding PPP loans, the net interest margin would have been higher by 9 basis points to 3.22% during the third quarter.

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

  • Yields on average earning assets increased by 6 basis points to 3.81% compared to 3.75% in the previous quarter, primarily due to higher yields on investment securities, partially offset by lower loan yields.
  • Loan yields decreased by 25 basis points to 4.10% from 4.35% in the previous quarter, while yields on investment securities increased by 81 basis points to 3.32% from 2.51% in the previous quarter. Loan growth in the third quarter was largely concentrated in lower yielding residential mortgage loans held-for-sale and PPP loans, with a decrease in other loans held-for-investment as a result of payoff activity.
  • Cost of funds decreased by 15 basis points to 0.73%, from 0.88% in the previous quarter, primarily due to declines in deposit and borrowing costs across the board.

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

  • Loan yields decreased by 126 basis points to 4.10% from 5.36% in the third quarter of 2019, while yields on investment securities increased by 53 basis points to 3.32%, from 2.79% in the same period in 2019.
  • Cost of funds decreased by 91 basis points to 0.73%, from 1.64% in the third quarter of 2019, primarily due to higher non-interest bearing deposits and lower costs related to borrowings and interest bearing deposits.

Non-interest Income

Non-interest income was $5.05 million for the third quarter, higher by 54.64% compared to the previous quarter and higher by 175.14% compared to the same period in 2019. The principal contributor to the increase in non-interest income in the third quarter of 2020 compared to the previous quarter was higher gain-on-sale and fee revenue from mortgage loans, stemming from an increase in mortgage refinancing activity. Other factors that contributed to the increase in non-interest income was higher income from Bank Owned Life Insurance.

Non-interest Expenses

Non-interest expenses in the third quarter of 2020 increased by 32.23% compared to the previous quarter and increased by 45.87% compared to the same period in 2019. The increase was largely driven by higher performance based compensation and mortgage costs: specifically, increased commissions paid to mortgage loan officers and an increase in mortgage settlement costs on higher closed loan volume during the quarter, as well as increased accruals for performance based compensation. Excluding these costs, non-interest expense in the third quarter of 2020 increased more modestly, by $340,160 or by 9.06%, compared to the previous quarter and increased by 6.06% compared to the same period in 2019.

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

  • Professional fees were lower by 15.68% in the third quarter of 2020 compared to the previous quarter.
  • Data processing expenses in the third quarter were lower by 19.51% compared to the previous quarter.
  • Advertising expenses in the third quarter of 2020 increased relative to the previous quarter on higher media advertising.

The Efficiency Ratio was 69.22% for the quarter ended September 30, 2020, compared to 67.97% for the prior quarter and 81.39% for the same period in 2019.

The Efficiency ratio for the first nine months of 2020 was 70.58% compared to 85.07% for the same period in 2019.

Asset Quality

Non-accrual loans were $3.69 million or 0.64% of total loans at the end of the third quarter of 2020, compared to $3.97 million or 0.71% of total loans at the end of the prior quarter. There were no troubled debt restructurings ("TDRs") as of September 30, 2020. On September 30, 2020, there were no loans that were 90 days or more past due and accruing compared to one loan with a book balance of $80,000 that was 90 days or more past due and accruing, equivalent to 0.01% of total loans on June 30, 2020. There was no Other Real Estate Owned ("OREO") on the balance sheet as of September 30, 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 $3.69 million or 0.49% of total assets at September 30, 2020 compared to $3.97 million or 0.57% of total assets, at the end of the previous quarter.

Loan payment deferrals related to COVID-19 continue to decline steadily. In the second quarter of 2020, in accordance with the spirit and provisions of the CARES Act, the Bank allowed borrowers who had been impacted by the COVD-19 pandemic, to defer loan payments for six months. Based upon a review of earnings releases, it appears that many other banks chose, instead, to provide shorter payment deferrals of up to 3 months to similarly impacted borrowers. As a result, the payment deferrals granted in the second quarter had longer terms that end in the fourth quarter of 2020. During the third quarter of 2020, 15 of the loans that had been granted payment deferrals in the prior quarter had resumed contractual payments, while 9 additional loans were granted payment deferrals in the third quarter. Interest continues accruing during the deferral period. As of September 30, 2020, 90 loans for a total of $73.07 million were on payment deferrals, all of which will end in the fourth quarter. This compares to 96 loans or $89.35 million on June 30, 2020.

  Limited COVID-19 At-Risk Industry Exposure  
Industry Total Outstanding  % of Total Loans  Total Deferred Principal Balance  Deferred Principal Balance as of % of Total Industry 
             
Retail $10,783,898   2% $1,516,941   14%
                 
Restaurants $5,138,705   1% $1,360,167   26%
                 
Fitness Centers $1,658,410   0% $1,566,906   94%
                 
Hotels $5,138,705   1% $4,738,705   92%
                 
Churches $17,986,460   3% $6,504,091   36%
                 
Subtotal - September 30, 2020 $40,706,177      $15,686,810     
                 

The table above shows the Bank's loans to certain industry sectors that are likely to be most impacted by the COVID-19 outbreak and therefore deemed higher risk. These industry sectors include retail, restaurants, fitness centers, hotels, and churches. As of September 30, 2020, the Bank had $40.71 million of outstanding loans to these industry sectors, representing 3.11% of loans held-for-investment (or 3.95% of loans held-for-investment excluding PPP loans). Loan deferrals were $15.69 million or 38.54% of outstanding loans to borrowers in these higher risk industry sectors.

Following an assessment of the collectability of the loans held-for-investment at the end of the third quarter, it was determined that no provision for loan losses was necessary. The Bank booked a provision of $705,000 in the second quarter of 2020. The Bank's ALLL ratio was 1.04% of loans held-for-investment (or 1.32% of loans held-for investment excluding PPP loans) as of September 30, 2020 compared to an ALLL ratio of 1.02% at June 30, 2020 (or 1.28% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets at September 30, 2020 were $751.58 million compared to $697.75 million on June 30, 2020. Changes in major asset categories during linked quarters were as follows:

  • Investment securities increased by $21.52 million, including $16.45 million in municipal bonds classified as held-to-maturity, as the bank deployed excess liquidity into investments.
  • Loans held-for-investment decreased by $9.25 million, including PPP loan growth of $2.76 million and a decrease in $12.01 million of other loans held-for-investment.

Total Liabilities

Total liabilities at September 30, 2020 were $681.05 million compared to total liabilities of $630.20 million on June 30, 2020. Total deposits were $534.87 million compared to total deposits of $487.90 million on June 30, 2020. On a linked quarter basis, interest bearing demand deposits increased by $28.67 million, with the bulk of the increase occurring in low cost interest checking and money market balances, while time deposits declined by $3.61 million. Non-interest bearing demand deposits increased during the quarter as well to $176.22 million, and comprised 32.95% of total deposits at the end of the quarter, compared to 31.53% of total deposits on June 30, 2020. The change in funding mix enables the Bank's cost of funds to benefit from lower interest rates. Federal Home Loan Bank advances declined slightly during the quarter, while PPP Liquidity Facility term advances increased as we funded the PPP loan growth that occurred in the third quarter.

Stockholders' Equity and Capital

Stockholders' equity at September 30, 2020 was $70.53 million compared to $67.55 million on June 30, 2020. Additional paid in capital at September 30, 2020 was $58.84 million on September 30, 2020 compared to $58.75 million on June 30, 2020. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities on the balance sheet, increased by $316,441 on unrealized gains during the third quarter of 2020. Total shares issued and outstanding were 7,233,751 on September 30, 2020 compared to 7,238,751 shares on June 30, 2020, and 7,211,046 shares on September 30, 2019. The tangible book value of the Bank's common stock at September 30, 2020 was $9.75 per share compared to $9.33 per share on June 30, 2020 and $8.76 per share on September 30, 2019.

As of September 30, 2020 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, 2020 and December 31, 2019 were as follows:

  September 30, 2020  December 31, 2019 
Total Capital Ratio  15.17%  16.24%
         
Tier 1 Capital Ratio  14.10%  15.26%
         
Common Equity        
Tier 1 Capital Ratio  14.10%  15.26%
         
Leverage Ratio  11.57%  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.

Contact:

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

THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED BALANCE SHEETS
 
 
          
  (Unaudited)  (Unaudited)  (Audited) 
  September 30,  June 30,  December 31, 
  2020  2020  2019 
ASSETS         
Cash and Due from Banks $2,623,863  $1,933,951  $927,322 
Interest Bearing Deposits with Banks  39,353,716   36,218,802   24,735,085 
Securities Available-for-Sale  93,792,624   88,728,158   49,854,912 
Securities Held-to-Maturity  16,450,629   -   - 
Restricted Stock Investments  3,607,800   3,601,050   3,752,750 
Loans Held for Sale  67,565,018   31,891,370   11,656,802 
PPP Loans Held for Investment  107,351,052   104,586,120   - 
Other Loans Held for Investment  397,224,188   409,237,515   392,941,874 
Allowance for Loan Losses  (5,228,192)  (5,225,692)  (4,121,693)
Net Loans  499,347,048   508,597,942   388,820,181 
Bank Premises and Equipment, net  1,343,532   1,387,197   1,480,535 
Accrued Interest Receivable  3,522,658   2,433,838   1,278,037 
Deferred Tax Asset  702,684   897,958   857,698 
Bank-Owned Life Insurance  16,902,659   17,013,098   12,783,605 
Right of Use Asset, net  3,323,564   3,113,817   2,928,546 
Other Assets  3,043,264   1,931,795   1,317,201 
Total Assets  751,579,059   697,748,977   500,392,674 
LIABILITIES AND STOCKHOLDERS' EQUITY            
Liabilities            
Deposits            
Demand Deposits            
Non-interest Bearing $176,221,554  $153,835,083  $80,630,053 
Interest Bearing  179,147,383   150,476,495   112,605,618 
Savings Deposits  2,819,368   3,295,441   2,153,939 
Time Deposits  176,678,969   180,291,039   199,821,006 
Total Deposits  534,867,274   487,898,058   395,210,616 
Federal Home Loan Bank Advances  31,071,429   31,214,286   35,857,143 
PPP Liquidity Facility Advances  107,351,042   104,687,489   - 
Accrued Interest Payable  484,775   339,766   433,586 
Lease Liability  3,401,335   3,182,552   2,981,132 
Other Liabilities  4,359,502   2,874,217   1,883,782 
Total Liabilities  681,050,583   630,196,367   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:            
6,560,751, 6,565,751, and 6,548,046 Shares Issued and Outstanding            
at September 30, 2020, June 30, 2020, and December 31, 2019, respectively            
(Includes 113,335, 118,335, and 120,500 Unvested Shares at September 30, 2020            
June 30, 2020, and December 31, 2019, respectively)  64,474   64,474   64,275 
Non-Voting Common Stock:            
673,000 Shares Issued and Outstanding September 30, 2020, June 30, 2020            
and December 31, 2019  6,730   6,730   6,730 
Additional Paid-in Capital  58,835,965   58,751,910   58,526,913 
Accumulated Other Comprehensive Income (Loss), Net  1,212,834   896,393   (29,274)
Retained Earnings  10,408,473   7,833,103   5,457,771 
Total Stockholders' Equity  70,528,476   67,552,610   64,026,415 
Total Liabilities and Stockholders' Equity  751,579,059   697,748,977   500,392,674 
             
 
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, 2020  September 30, 2019  September 30, 2020  September 30, 2019 
Interest Income            
Interest and Fees on Loans $5,657,929  $5,541,462  $16,202,254  $15,768,433 
Interest on Investment Securities  799,976   343,288   1,658,211   1,091,658 
Interest on Deposits with Other Banks  8,236   82,831   99,474   303,138 
Total Interest Income  6,466,140   5,967,581   17,959,939   17,163,229 
Interest Expense                
Interest on Deposits  919,326   1,585,209   3,410,817   4,693,482 
Interest on Borrowings  231,700   174,810   597,984   382,639 
Total Interest Expense  1,151,026   1,760,019   4,008,801   5,076,121 
                 
Net Interest Income  5,315,115   4,207,562   13,951,138   12,087,108 
Provision for Loan Losses  -   (47,000)  (1,254,000)  (194,500)
Net Interest Income After                
Provision for Loan Losses  5,315,115   4,160,562   12,697,138   11,892,608 
Non-Interest Income                
Mortgage Loan Gain-on-Sale and Fee Revenue  4,742,574   1,702,779   9,666,023   3,666,236 
Service Charges and Other Income  14,802   36,262   87,787   110,890 
Gain on Sale of Securities  17,174   -   42,782   105,722 
Swap Fee Income  -   -   387,262   - 
Increase in Cash Surrender Value of Bank-                
owned Life Insurance  277,164   97,022   506,658   285,561 
Total Non-interest Income  5,051,714   1,836,064   10,690,512   4,168,409 
Non-Interest Expenses                
Officer and Employee Compensation                
and Benefits  5,065,021   3,064,244   11,754,111   8,709,142 
Occupancy Expense  306,291   285,798   899,719   849,787 
Equipment and Depreciation Expense  175,684   216,275   507,616   629,513 
Insurance Expense  43,836   (48,502)  147,433   107,466 
Professional Fees  274,505   297,947   881,446   827,614 
Data and Item Processing  230,152   245,178   690,228   660,751 
Advertising  99,508   63,543   195,043   223,088 
Franchise Taxes and State Assessment Fees  185,404   175,895   540,086   454,069 
Mortgage Fees and Settlements  600,592   312,346   1,276,831   642,999 
Other Operating Expense  194,777   306,439   499,998   724,539 
Total Non-interest Expenses  7,175,770   4,919,163   17,392,513   13,828,968 
Income Before Income Taxes  3,191,059   1,077,463   5,995,136   2,232,049 
Income Tax Expense  615,689   145,115   1,044,435   274,640 
Net Income $2,575,370  $932,348  $4,950,701  $1,957,409 
Earnings per Common Share - Basic $0.36  $0.13  $0.68  $0.27 
Earnings per Common Share - Diluted $0.35  $0.13  $0.68  $0.27 
Weighted-Average Common Shares                
Outstanding - Basic  7,234,294   7,150,649   7,233,525   7,118,545 
Weighted-Average Common Shares                 
Outstanding - Diluted  7,277,112   7,194,786   7,292,827   7,161,862 
                 
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, 2020  June 30, 2020  March 31, 2020  December 31, 2019  September 30, 2019 
Interest Income               
Interest and Fees on Loans $5,657,929  $5,508,679  $5,035,645  $5,345,417  $5,541,462 
Interest on Investment Securities  799,976   500,293   357,942   278,164   343,288 
Interest on Deposits with Other Banks  8,236   13,001   78,237   88,239   82,831 
Total Interest Income  6,466,140   6,021,974   5,471,824   5,711,820   5,967,581 
                     
Interest Expense                    
Interest on Deposits  919,326   1,095,532   1,395,959   1,513,662   1,585,209 
Interest on Borrowings  231,700   208,765   157,519   162,502   174,810 
Total Interest Expense  1,151,026   1,304,297   1,553,478   1,676,164   1,760,019 
                     
Net Interest Income  5,315,115   4,717,677   3,918,346   4,035,657   4,207,562 
Provision for Loan Losses  -   (705,000)  (549,000)  -   (47,000)
Net Interest Income after                    
Provision for Loan Losses  5,315,115   4,012,677   3,369,346   4,035,657   4,160,562 
Non-Interest Income                    
Mortgage Loan Gain-on-Sale and Fee Revenue  4,742,574   2,805,571   2,117,878   1,098,656   1,702,779 
Service Charges and Other Income  14,802   33,923   39,062   44,337   36,262 
Gains on Sale of Securities  17,174   -   25,608   -   - 
Swap Fee Income  -   299,762   87,500   -   - 
Increase in Cash Surrender Value of Bank-                    
owned Life Insurance  277,164   127,496   101,998   96,727   97,022 
Total Non-interest Income  5,051,714   3,266,751   2,372,047   1,239,720   1,836,064 
                     
                     
Revenue $10,366,829  $7,984,428  $6,290,393  $5,275,377  $6,043,626 
                     
Non-Interest Expenses                    
Officer and Employee Compensation                    
and Benefits  5,065,021   3,488,369   3,200,721   2,637,977   3,064,244 
Occupancy Expense  306,291   300,634   292,794   293,058   285,798 
Equipment and Depreciation Expense  175,684   147,910   184,022   261,871   216,275 
Insurance Expense  43,836   51,263   52,335   10,760   (48,502)
Professional Fees  274,505   325,545   281,396   278,594   297,947 
Data and Item Processing  230,152   285,942   174,135   178,416   245,178 
Advertising  99,508   36,732   58,804   113,194   63,543 
Franchise Taxes and State Assessment Fees  185,404   178,812   175,870   175,920   175,895 
Mortgage Fees and Settlements  600,592   454,866   221,374   200,192   312,346 
Other Operating Expense  194,777   156,734   148,487   181,005   306,439 
                     
Total Non-interest Expenses  7,175,770   5,426,806   4,789,937   4,330,987   4,919,163 
Income before Income Taxes  3,191,059   1,852,622   951,455   944,389   1,077,463 
                     
Income Tax Expense  615,689   327,097   101,649   196,581   145,115 
                     
Net Income $2,575,370  $1,525,525  $849,806  $747,808  $932,348 
Earnings per Common Share - Basic $0.36  $0.21  $0.12  $0.10  $0.13 
Earnings per Common Share - Diluted $0.35  $0.21  $0.11  $0.10  $0.13 
Weighted-Average Common Shares                    
Outstanding - Basic  7,234,294   7,238,751   7,348,022   7,212,568   7,150,649 
Weighted-Average Common Shares                     
Outstanding - Diluted  7,277,112   7,267,773   7,435,490   7,272,228   7,194,786 
                     
Average Balances, Income and Expenses, Yields and Rates
(Unaudited)
                  
                   
  Three Months Ended        Three Months Ended       
  September 30, 2020        June 30,
2020
       
  Average Balance  Income/Expense  Yield  Average Balance  Income/Expense  Yield 
Assets                  
Cash $29,769,485  $8,236   0.11% $59,558,556  $13,001   0.09%
                         
Investments (Tax Exempt)  11,434,264   250,016       5,953,752   48,657     
Investments (Taxable)  90,668,376   602,463       65,890,906   399,846     
Total Investments  102,102,640   852,479   3.32%  71,844,658   448,503   2.51%
                         
Total Loans  549,575,996   5,657,929   4.10%  510,763,192   5,521,293   4.35%
                         
Earning Assets  681,448,121   6,518,643   3.81%  642,166,406   5,982,798   3.75%
                         
                         
                         
Assets $705,290,352          $665,767,229         
                         
Liabilities                        
Interest Checking $27,902,031   11,914   0.17% $23,143,536   13,029   0.23%
Money Market  132,371,367   93,750   0.28%  129,569,263   139,111   0.43%
Savings  3,055,994   761   0.10%  2,533,676   703   0.11%
Time Deposits  178,221,780   812,901   1.82%  183,220,441   942,690   2.07%
Interest Bearing Deposits  341,551,172   919,326   1.07%  338,466,916   1,095,533   1.30%
                         
Borrowings $136,793,181   231,700   0.67% $110,132,851   208,765   0.76%
                         
Interest Bearing Liabilities  478,344,353   1,151,026   0.96%  448,599,767   1,304,298   1.17%
                         
Non Interest Bearing Deposits $151,878,149          $145,370,721         
                         
Cost of Funds          0.73%          0.88%
                         
Net Interest Margin1     $5,367,618   3.13%     $4,678,500   2.93%
Shareholders Equity $68,801,586          $66,403,194         
                         
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, 2020  Income /     September 30, 2019  Income /     September 30, 2020  Income /     September 30, 2019  Income /    
  Average Balance  Expense  Yield  Average Balance  Expense  Yield  Average Balance  Expense  Yield  Average Balance  Expense  Yield 
Assets                                    
Cash $29,769,485  $8,236   0.11% $15,079,084  $82,831   2.18% $38,052,045  $99,474   0.35% $18,312,190   303,137   2.21%
                                                 
Investments (Tax Exempt)  11,434,264   250,016       4,481,837   38,451       7,324,742   337,085       4,501,297   120,037     
Investments (Taxable)  90,668,376   602,463       45,525,802   312,913       69,497,774   1,391,913       48,730,310   996,829     
Total Investments  102,102,640   852,479   3.32%  50,007,639   351,364   2.79%  76,822,516   1,728,998   3.01%  53,231,607   1,116,866   2.81%
                                                 
Total Loans  549,575,996   5,657,929   4.10%  411,342,872   5,554,402   5.36%  488,609,233  $16,202,254   4.43%  397,175,188  $15,796,811   5.32%
                                                 
Earning Assets  681,448,121   6,518,643   3.81%  476,429,595   5,988,597   4.99%  603,483,794   18,030,726   3.99%  468,718,985   17,216,814   4.91%
                                                 
Assets $705,290,352          $494,059,141          $625,595,893          $486,801,916         
                                                 
Liabilities                                                
Interest Checking $27,902,031   11,914   0.17% $10,751,175   15,460   0.57% $24,524,820   41,980   0.23% $8,244,424   33,932   0.55%
Money Market  132,371,367   93,750   0.28%  93,959,972   327,994   1.38%  119,935,885   513,309   0.57%  106,461,251   1,110,026   1.39%
Savings  3,055,994   761   0.10%  2,538,392   1,280   0.20%  2,658,757   2,563   0.13%  2,612,952   3,893   0.20%
Time Deposits  178,221,780   812,901   1.82%  202,523,113   1,240,475   2.43%  185,628,465   2,852,966   2.05%  201,223,374   3,545,628   2.36%
Interest Bearing Deposits  341,551,172   919,326   1.07%  309,772,652   1,585,209   2.03%  332,747,927   3,410,818   1.37%  318,542,001   4,693,479   1.97%
                                                 
Borrowings  136,793,181   231,700   0.67%  37,231,599   174,811   1.86% $95,817,473  $597,984   0.83%  25,471,664  $382,638   2.01%
                                                 
Interest Bearing Liabilities  478,344,353   1,151,026   0.96%  347,004,251   1,760,020   2.01%  428,565,400   4,008,802   1.25%  344,013,665   5,076,117   1.97%
                                                 
Non Interest Bearing Deposits $151,878,149          $79,607,547          $124,718,871          $76,628,794         
                                                 
Cost of Funds          0.73%          1.64%          0.97%          1.61%
                                                 
Net Interest Margin1     $5,367,618   3.13%     $4,228,577   3.52%     $14,021,924   3.10%     $12,140,696   3.46%
Shareholders Equity $68,801,586          $62,102,356          $66,698,809          $60,805,772         
ROAA  1.45%          0.75%          1.06%          0.54%        
ROAE  14.89%          5.96%          9.91%          4.30%        
                                                 
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, 2020
  June
30, 2020
  March
31, 2020
  December
31, 2019
  September 30, 2019 
Loans to Deposits  106.97%  111.85%  104.68%  102.38%  105.93%
Income Statement Ratios (Quarterly)                    
Return on Average Assets (ROAA)  1.45%  0.92%  0.68%  0.59%  0.75%
Return on Average Equity (ROAE)  14.89%  9.24%  5.27%  4.66%  5.96%
Efficiency Ratio  69.22%  67.97%  76.15%  82.10%  81.39%
Net Interest Margin1  3.13%  2.93%  3.26%  3.33%  3.52%
Yield on Average Earning Assets  3.81%  3.75%  4.55%  4.71%  4.99%
Yield on Securities  3.32%  2.51%  2.62%  2.32%  2.79%
Yield on Loans  4.10%  4.35%  5.02%  5.20%  5.36%
Cost of Funds  0.73%  0.88%  1.44%  1.54%  1.64%
Noninterest income to Total Revenue  48.73%  40.91%  37.71%  23.50%  30.38%
Per Share Data                    
Tangible Book Value $9.75  $9.33  $9.02  $8.86  $8.76 
Share Price Data                    
Closing Price $7.20  $7.50  $5.80  $10.45  $9.95 
Book Value Multiple  74%  79%  64%  118%  114%
Common Stock Data                    
Outstanding Shares at End of Period  7,233,751   7,238,751   7,238,751   7,221,046   7,211,046 
Weighted Average shares outstanding, basic  7,234,294   7,238,751   7,348,022   7,212,568   7,150,649 
Weighted Average shares outstanding, diluted  7,277,112   7,267,773   7,435,490   7,272,228   7,194,786 
Capital Ratios                    
Tier 1 Leverage ratio  11.57%  11.23%  12.88%  12.80%  12.80%
Common Equity Tier 1 ratio  14.10%  13.90%  14.35%  15.26%  14.79%
Tier 1 Risk Based Capital ratio  14.10%  13.90%  14.35%  15.26%  14.79%
Total Risk Based Capital ratio  15.17%  14.99%  15.38%  16.24%  15.84%
Credit Quality                    
Net Charge-offs to Average Loans  0.00%  0.02%  0.00%  0.09%  0.00%
Total Non-performing Loans to Total Loans  0.64%  0.73%  0.53%  1.54%  0.67%
Total Non-performing Assets to Total Assets  0.49%  0.57%  0.43%  1.24%  0.55%
Nonaccrual Loans to Total Loans  0.64%  0.71%  0.50%  0.42%  0.53%
Provision for Loan and Lease Losses $0  $705,000  $549,000  $0  $47,000 
Allowance for Loan and Lease Losses to loans held-for-investment  1.04%  1.02%  1.16%  1.05%  1.12%
Allowance for Loan and Lease Losses to loans held-for-investment (ex PPP loans)  1.32%  1.28%  1.16%  1.05%  1.12%
                     
       

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

SOURCE: Freedom Bank of VA



View source version on accesswire.com:
https://www.accesswire.com/613478/The-Freedom-Bank-of-Virginia-Announces-Earnings-for-the-Third-Quarter-of-2020

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