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 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



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

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