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Freedom Bank Reports Record Net Income for Third Quarter and First Nine Months

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FAIRFAX, Va.--(BUSINESS WIRE)--

The Freedom Bank of Virginia (OTCQX:FDVA) earned a record net income of $719,205 for the third quarter ending September 30, 2016. This was up $186,213 (34.9%) from $532,992 earned for the same period one year earlier. Increased profitability resulted from continued improvement in interest income from loans and investments which increased $1,048,969 (24.0%). Non interest income, primarily generated through the gain on sale of mortgages, increased $756,702 (121%) from the prior year. While maintaining asset quality, increased loan volume required a loan loss provision of $515,500, up from $139,000 the prior year. Earnings per share were $0.12 for the quarter, unchanged from the prior year due to the higher share count from the bank's successful stock offering in December 2015.

For the nine months ending September 30, 2016, net income was $1,785,080. This was up $654,707 (57.9%) from the prior year. Net income in the first nine months of 2016 already exceeds total net income for all of 2015. Banking and mortgage banking operations produced the strong results. Interest income from loans and investments increased $2,559,965 (20.7%) and additional non interest income from the gain on sale of mortgages was up $1,653,053 (101.6%) from the prior year. Strong loan growth in 2016 necessitated a larger provision for loan losses in 2016 to $925,500, up from $609,000 the prior year. Earnings per share through the third quarter of 2016 were $0.29 per share, up from $0.26 per share in 2015.

CEO Craig Underhill stated, "Positive operating leverage is fueling earnings growth. The upward trend in earnings per share continues even with the higher share count from our successful stock offering at the end of 2015. We have the capital to grow the bank and we are executing our plan to achieve scale for earning per share growth to enhance shareholder value."

Total assets increased $103,934,364 (26.6%) to $494,027,493 at September 30, 2016 compared to September 30, 2015. The highest yielding asset of Loans Receivable grew $76,097,431 organically (23.7%) to $396,819,026 at September 30, 2016. Loans held for sale were $13,825,894, up from $6,141,110 the prior year. Investment Securities held for sale were $46,196,986, up 31.4% from $35,149,994 a year earlier.

Asset quality remains strong with non-performing assets comprising 0.22% of total assets at September 30, 2016. They were 0.09% of total assets at September 30, 2015. Past due loan balances still accruing interest were $0 at September 30, 2016 compared to $122,797.96 or 0.04% of total loans the prior year. Both of these metrics are far superior to national peers.

Large asset growth was funded by deposit growth, Federal Home Loan Bank advances and additional equity compared with the prior year. Non interest checking balances were $66,056,888 at September 30, 2016, up 14.2% from $57,859,877 a year earlier. Interest bearing checking account balances were $105,056,440, a $16,842,806 (19.1%) increase from $88,213,624 the prior year. Certificates of deposits were $241,037,751, up 17.6% from $205,050,631 a year earlier. Total deposits were $414,299,769 at September 30, 2016, versus $354,008,080 a year earlier.

Capital increased to $51,158,971 at September 30, 2016, a 55.6% improvement over the $32,881,109 level at September 30, 2015. Book value per share was $8.30 at September 30, 2016 and $7.68 at September 30, 2015.

Freedom Bank is a community-oriented, locally-owned bank with locations in Fairfax, Reston and Vienna, Virginia. For information about Freedom Bank's deposit and loan services, visit the Bank's website at www.freedombankva.com.

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, and acquisition or loss of key production personnel. Other risks that can affect the Bank are detailed from time to time in our quarterly and annual reports filed with the Federal Financial Institutions Examination Council. We caution readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and we 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.

 
The Freedom Bank of Virginia
Statements of Financial Condition

(UNAUDITED)

 
 

September 30, 2016

  September 30, 2015
   
ASSETS
Cash and due from banks $ 4,905,564 $ 4,782,417
Federal funds sold 24,107,000 17,053,000
Interest Bearing Balances with Banks 1,031,321 1,027,212
Investment securities available for sale, at fair value 46,196,986 35,149,994
FHLB and Federal Reserve Bank stock 2,995,900 1,423,550
Loans held for sale 13,825,894 6,141,110
Loans receivable 396,819,026 320,721,595
Allowance for possible loan losses   (4,100,459 )   (3,069,920 )
Net Loans 392,718,567 317,651,675
Premises and equipment, net 713,768 772,910
Accrued interest and other receivables 1,028,948 927,824
Deferred Tax Asset 1,604,000 1,320,000
Other assets 2,632,761 1,636,949
Bank Owned Life Insurance   2,266,784     2,206,488  
 
Total Assets $ 494,027,493   $ 390,093,129  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits:
Non-interest bearing deposits $ 66,056,888 $ 57,859,877
Interest Checking 105,056,440 88,213,634
Savings deposits 2,148,690 2,883,938
Time deposits   241,037,751     205,050,631  

Total Deposits

414,299,769 354,008,080
 
Fed Funds Purchased and FHLB advances 26,714,286 2,000,000
Other accrued expenses 1,685,113 1,097,054
Accrued interest payable   169,354     106,886  

Total Liabilities

  442,868,522     357,212,020  
 
Stockholders' Equity:
 

Common stock of $0.01 par value with 25,000,000 shares authorized, 6,166,454 shares issued and outstanding at September 30, 2016

 

Common stock of $3.16 par value with 15,000,000 shares authorized, 4,279,349 shares issued and outstanding September 30, 2015

Voting Common Stock 55,377 13,509,682

5,537,747 and 4,279,349 shares issued and outstanding September 30, 2016 and September 30, 2015

Non-Voting Common Stock 6,287 -
628,707 shares issued and outstanding September 30, 2016
 
Additional paid-in capital 47,774,866 18,643,656
Accumulated other comprehensive income 94,876 (126,518 )
Retained earnings (deficit)   3,227,565     854,289  
 

Total Stockholders' Equity

  51,158,971     32,881,109  
 
Total Liabilities and Stockholders' Equity $ 494,027,493   $ 390,093,129  
The Notes to Financial Statements are an integral part of these statements.
 
 
The Freedom Bank of Virginia
Statements of Operations
(UNAUDITED)
 
  For the three months ended     For the nine months ended
September 30, September 30,
2016   2015 2016   2015
Interest Income    
Interest and fees on loans $ 5,127,745 $ 4,194,268 $ 13,984,388 $ 11,848,047
Interest on investment securities 288,447 168,017 908,254 475,388
Interest on Federal funds sold   362   5,300   8,084   17,326
Total Interest Income 5,416,554 4,367,585 14,900,726 12,340,761
 
Interest Expense
Interest on deposits 942,623 784,283 2,624,278 2,184,852
Interest on borrowed funds   32,130   754   81,450   754
Total Interest Expense 974,753 785,037 2,705,728 2,185,606
 
Net Interest Income 4,441,801 3,582,548 12,194,998 10,155,155
 
Provision for Possible Loan Losses   515,500   139,000   925,500   609,000
 

Net Interest Income after Provision for Possible Loan Losses

3,926,301 3,443,548 11,269,498 9,546,155
 
Other Income
Gain on sale of mortgage loans 1,333,657 533,145 3,078,286 1,394,950
Service charges and other income 35,188 78,739 157,372 186,823
Increase in cash surrender value of bank-owned life insurance   14,829   15,088   45,089   45,921
Total Other Income 1,383,674 626,972 3,280,747 1,627,694
 
Operating Expenses
Officers and employee compensation and benefits 2,969,295 2,131,969 8,156,757 6,170,959
Occupancy expense 250,340 220,368 730,523 619,458
Equipment and depreciation expense 150,177 111,717 403,804 337,700
Insurance expense 78,579 73,235 236,644 211,912
Professional fees 227,682 196,939 693,501 650,337
Data and item processing 221,129 228,043 690,145 686,225
Business development 36,128 50,703 150,809 146,297
Franchise tax 107,070 89,081 278,718 230,567
Other operating expenses   181,270   160,473   504,864   407,521
Total Operating Expenses   4,221,670   3,262,528   11,845,765   9,460,976
 
Income before Income Taxes 1,088,305 807,992 2,704,480 1,712,873
Provision for Income Taxes   369,100   275,000   919,400   582,500
 
Net Income $ 719,205 $ 532,992 $ 1,785,080 $ 1,130,373
 
The Notes to Financial Statements are an integral part of these statements.
 

The Freedom Bank of Virginia
Craig S. Underhill
President & Chief Executive Officer
703-242-5300
cunderhill@freedombankva.com

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