Market Overview

The Freedom Bank of Virginia Announces Earnings for the First Quarter of 2018


The Freedom Bank of Virginia (OTCQX:FDVA), (the "Bank" or "Freedom"),
today reported net income of $308,207, or $0.05 per diluted share, for
the first quarter of 2018.

Highlights for the First Quarter:

  • Net income was $308,207, or $0.05 per diluted share for the first
    quarter of 2018;
  • Total assets were $511.2 million at March 31, 2018, a decrease of
    $21.9 million or 4.1% from December 31, 2017;
  • Loans receivable declined by $10.9 million from December 31, 2017, as
    the Bank systematically reduced exposure to non-owner occupied
    Commercial Real Estate loans;
  • Deposits decreased by $21.5 million during the quarter or 4.62% to
    $444.5 million at March 31, 2018, with most of the reduction occurring
    in time deposits. The decline in time deposits was in listed deposits
    which decreased by $6.6 million or 43.1% during the first quarter and
    in other time deposits that the Bank elected not to retain for
    relationship reasons;
  • Asset quality remained strong with the ratio of non performing assets
    to total assets at 0.13% as of March 31, 2018, compared to a ratio of
    0.17% as of December 31, 2017;
  • Capital ratios were strong during the first quarter, and above
    regulatory minimums for well-capitalized banks, with increases in the
    Common Equity Tier 1 Capital ratio, the Tier 1 Capital ratio (based on
    risk weighted assets), and the Total Capital ratio, compared to
    December 31, 2017.

CEO Craig Underhill said, "In the first quarter, the Bank implemented a
strategy to bolster its senior management team through the addition of
experienced community bank professionals who will help us to enhance
core deposit generation and business banking capabilities, and position
us for stronger growth."

Total Revenue

Interest income was $5.66 million in the first quarter of 2018, while
interest expense was $1.32 million during the same period. Net interest
income (before a provision for loan losses) was $4.34 million in the
first quarter of 2018. The Bank had a reduction in loans during the
quarter, primarily in the area of commercial real estate ("CRE"), as
part of an effort to systematically reduce the risk in the loan
portfolio and reduce exposure to non-owner occupied CRE loans. The Bank
also made some changes to its Prime Money Market Product, designed to
reduce sensitivity of those deposit rates to the Prime rate.

Non-interest income in the first quarter was $680,394 and total revenue
(comprising net interest income and non-interest income) was $5.02
million during the same period. Most of the Bank's non-interest income
is obtained from its mortgage operations. Mortgage revenue was adversely
impacted by a tighter inventory of homes in Northern Virginia, which
reduced the number of loan applications.

Non-interest Expense

Non-interest expense for the first quarter of 2018 was $4.63 million.
Expenses during the first quarter were impacted by higher fees incurred
for professional services, as well as additional investments in software
and control infrastructure. We expect the fees for professional services
to decline over the course of 2018.

Asset Quality

Asset quality continued to be strong: non-accrual loans were $557,347 or
0.14% of total loans as of March 31, 2018, compared to $666,125 or 0.17%
of total loans as of December 31, 2017 and troubled debt restructurings
("TDRs") were $97,895 or 0.02% of total loans as of March 31, 2018,
compared to $220,068 or 0.06% of total loans as of December 31, 2017. On
March 31, 2018 and on December 31, 2017, there were no loans that were
more than 90 days past due that were not on non-accrual and there were
no OREO assets on the balance sheet. Total non-performing assets
(defined as the sum of loans greater than 90 days past due, non-accrual
loans, TDR's and OREO) were $655,242 or 0.13% of total assets as of
March 31, 2018, compared to $886,193 or 0.17% of total assets at
December 31, 2017.

The Bank's allowance for loan and lease losses ("ALLL") was $4.51
million or 1.14% of total loans at March 31, 2018, compared to $4.56
million or 1.12% of total loans at December 31, 2017.

Total Assets

Total assets at March 31, 2018 were $511.2 million, compared to $533.1
million at December 31, 2017, a decrease of $21.9 million during the
quarter. Changes in major asset categories were as follows:

Cash and due from banks, Federal Funds sold and interest bearing
balances with other banks decreased by $4.97 million compared to
December 31, 2017, while available-for-sale securities balances
decreased by $2.92 million compared to December 31, 2017, as the Bank
reduced exposure to wholesale time deposits. Additionally, total loans
declined by $10.9 million as the Bank systematically reduced its
exposure to CRE loans during the first quarter of 2018.

Total Liabilities

Total liabilities at March 31, 2018 were $456.3 million, a decrease of
$21.5 million compared to December 31, 2017. Deposits declined by $21.5
million during the first quarter of 2018 to $444.5 million as of March
31, 2018. Demand deposits decreased slightly by $837,311, savings
deposits were flat, while time deposits declined by $20.7 million. The
decrease in time deposits resulted from the Bank's decision to pay off
higher cost time deposits at maturity, including $6.6 million of listed
deposits. The reduction in deposits during the quarter was related to
the Bank's decision to reduce the risk in the funding base.

Stockholders' Equity and Capital

Stockholders' equity at March 31, 2018 was $54.8 million, compared to
$55.3 million at December 31, 2017. Additional paid in capital at March
31, 2018 was $53.3 million compared to $53.2 million at December 31,
2017. Accumulated other comprehensive income declined by $806,969 during
the quarter, as a result of increased unrealized losses on
available-for-sale securities, stemming from higher interest rates. The
Bank does not intend to sell these securities and expects to hold them
to maturity and therefore does not consider any of the securities to be
other-than-temporarily impaired. The book value of the Bank's common
stock at March 31, 2018 was $8.40 per share versus $8.47 per share at
December 31, 2017.

As of March 31, 2018, all of the Bank's capital ratios were well above
regulatory minimum capital ratios for well capitalized banks. The Bank's
capital ratios as of March 31, 2018 and December 31, 2017 were as

March 31, 2018 December 31, 2017
Total Capital Ratio 14.99% 14.41%
Tier 1 Capital Ratio 13.87% 13.32%
Common Equity
Tier 1 Capital Ratio 13.87% 13.32%
Leverage Ratio 10.64% 10.19%

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 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

(Unaudited) (Audited)
March 31, December 31,
2018 2017
Cash and Due from Banks $ 1,200,020 $ 1,164,368
Interest Bearing Deposits with Banks 29,053,211 33,936,870
Federal Funds Sold - 127,000
Securities Available-for-Sale 59,067,895 61,989,669
Securities Held-to-Maturity 14,529,382 14,869,181
Restricted Stock Investments 2,533,500 2,533,500
Loans Held for Sale 5,045,282 7,772,501
Loans Receivable 396,454,473 407,332,772
Allowance for Loan Losses   (4,507,545 )   (4,562,370 )
Net Loans 391,946,928 402,770,402
Bank Premises and Equipment, net 1,806,182 1,595,575
Accrued Interest Receivable 1,533,355 1,643,427
Deferred Tax Asset 822,110 974,614
Bank-Owned Life Insurance 2,351,683 2,338,146
Other Assets   1,302,340     1,407,079  
Total Assets $ 511,191,888   $ 533,122,332  
Demand deposits
Non-interest bearing $ 69,129,363 $ 69,942,247
Interest bearing 184,246,985 184,271,412
Savings deposits 2,269,649 2,273,760
Time deposits   188,825,421     209,493,201  
Total Deposits 444,471,418 465,980,620
Federal Home Loan Bank advances 10,285,714 10,428,571
Other accrued expenses 1,432,216 1,256,202
Accrued interest payable   166,118     162,749  
Total Liabilities   456,355,466     477,828,142  
Stockholders' Equity

Preferred stock, $0.01 par value, 5,000,000 shares authorized; 0
shares issued and outstanding, 2017 and 2016

- -
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:

5,866,765 shares issued and outstanding at March 31, 2018 and
December 31, 2017

58,668 58,668
Non-Voting Common Stock:

660,143 shares issued and outstanding at March 31, 2018 and
December 31, 2017

6,601 6,601
Additional paid-in capital 53,282,243 53,241,342
Accumulated other comprehensive loss, net (1,380,667 ) (573,698 )
Retained earnings   2,869,577     2,561,277  
Total Stockholders' Equity   54,836,422     55,294,190  
Total Liabilities and Stockholders' Equity $ 511,191,888   $ 533,122,332  
Interest Income
Interest and fees on loans $ 5,062,087
Interest on investment securities 596,889
Interest on Federal funds sold   466
Total Interest Income 5,659,442
Interest Expense
Interest on deposits 1,273,775
Interest on borrowings   45,426
Total Interest Expense 1,319,201
Net Interest Income 4,340,241
Provision for Loan Losses   -
Net Interest Income after
Provision for Loan Losses   4,340,241
Non-Interest Income
Gain on sale of mortgage loans 576,275
Service charges and other income 90,582

Increase in cash surrender value of bank-owned life insurance

Total Non-interest Income   680,394
Non-Interest Expenses

Officer and employee compensation and benefits

Occupancy expense 273,113
Equipment and depreciation expense 141,569
Insurance expense 81,496
Professional fees 631,522
Data and item processing 277,357
Business development 70,577
Franchise taxes 131,156
Mortgage fees and settlements 125,480
Other operating expense   205,289
Total Non-interest Expenses   4,630,829
Income before Income Taxes 389,806
Income Tax Expense   81,600
Net Income $ 308,206
Earnings per Common Share - Basic $ 0.05
Earnings per Common Share - Diluted $ 0.05
Weighted-Average Common Shares
Outstanding - Basic   6,526,908
Weighted-Average Common Shares
Outstanding - Diluted   6,847,521

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