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Freedom Financial Holdings Announces Earnings for Fourth Quarter and Full Year 2021 and Approves Stock Repurchase

FAIRFAX, Va. (Jan. 28, 2022) Freedom Financial Holdings (OTCQX: FDVA), (the "Company" or "Freedom"), the holding company for The Freedom Bank of Virginia (the "Bank") today announced net income of $2,743,088, or $0.37 per diluted share, for the three months ended December 31, 2021. This compares to net income of $2,890,281 or $0.39 per diluted share, for the linked quarter and net income of $2,413,775 or $0.33 per diluted share for the three months ending December 31, 2020. Net income for the full year   2021 was $10,727,961 or $1.44 per diluted share compared to net income of $7,364,477 or $1.01 per diluted share for the full year 2020. 

Joseph J. Thomas, President and CEO, commented, "We accomplished many milestones as a company in 2021, including celebrating our 20th anniversary, forming a new holding company, issuing $20 million in subordinated debt, and reporting record full-year earnings per share of $1.44, a 45.67% increase compared to full year 2020 results. Our talented team of bankers was able to deliver organic loan growth (excluding PPP loans) of 26.89% while also reducing cost of funds to 0.40% for the full year 2021 compared to 0.87% in 2020. With solid expense control driving efficiency ratio down to 62.62%, the company achieved ROAA and ROAE for the full year 2021 of 1.27% and 13.60%, respectively, compared to 1.12% and 10.84% for the full year 2020. On the heels of these results, the Company's board has authorized a stock repurchase of up to 250,000 shares as a strategic means of deploying our new capital. We remain confident in our future growth and earning potential, and I am excited to enter 2022 focused on serving our clients with abundant talent and leading technology." 

Fourth Quarter and Full Year 2021 Highlights include: 

  • On November 1, 2021, the Company completed the reorganization in which Freedom Financial Holdings, Inc. became the parent bank holding company of the Bank;
  • On November 18, 2021, the Company issued $20 million of subordinated debt through a Private Placement, with the proceeds to be used for general corporate purposes, which include working capital and the funding of organic growth; or to fund possible future acquisitions;
  • Net income for the fourth quarter was $2,743,088 or $0.37 per diluted share compared to net income of $2,890,281 or $0.39 per diluted share in the linked quarter and net income of $2,413,775 or $0.33 per diluted share for the three months ending December 31, 2020;
  • Net income for the full year 2021 increased by 45.67% compared to the full year 2020. Net income was $10,727,961 or $1.44 per diluted share compared to net income of $7,364,477 or $1.01 per diluted share for the full year 2020. The increase in net income in 2021 was driven by higher net interest income as well as an increase in earning assets;
  • Pre-tax, pre-provision net income, which is a non-GAAP measure, decreased by 5.76% to $3,658,435 for the fourth quarter compared to pre-tax, pre-provision net income of $3,882,322 in the linked quarter and increased by 9.99% to $3,325,866 for the same period in 2020;
  • Return on Average Assets ("ROAA") was 1.22% for the quarter ended December 31, 2021 compared to 1.35% for the linked quarter and 1.28% for the three months ended December 31, 2020. ROAA for the full year 2021 was 1.27% compared to 1.12% for the full year 2020;
  • Return on Average Equity ("ROAE") was 13.11% for the three months ended December 31, 2021 compared to 14.18% for the linked quarter and 13.43% for the three months ended December 31, 2020. ROAE for the full year 2021 was 13.60% compared to 10.84% for the full year 2020;
  • Total assets were $876.85 million on December 31, 2021, an increase of $109.80 million or 14.31% from total assets on December 31, 2020;
  • Loans held-for-investment (excluding PPP loans) increased by $57.34 million or 11.19% during the quarter and by $120.80 million or 26.89% for the full year 2021 on strong portfolio loan growth;
  • PPP loan balances decreased by $25.45 million during the fourth quarter on loan forgiveness and mortgage loans held for sale decreased by $8.89 million during the same period, on a decline in mortgage activity;
  • Cash balances at the Federal Reserve decreased by $30.06 million during the fourth quarter;
  • Available for sale investment securities increased by $34.28 million during the fourth quarter and by $74.34 million in 2021;
  • Total deposits increased by $26.20 million or by 3.88% in the fourth quarter and increased by $153.20 million or 27.93% for the full year 2021. Non-interest bearing demand deposits increased by $5.78 million from the linked quarter to $222.17 million and were higher by $29.18 million for the full year 2021 and represented 31.66% of total deposits on December 31, 2021;
  • The net interest margin increased in the fourth quarter to 3.74%, higher by 31 basis points compared to the linked quarter and higher by 68 basis points compared to the same period in 2020. Excluding PPP loans, the net interest margin would have been 3.49%. The increase in the net interest margin across linked quarters was primarily due to higher yields on loans and a 4 basis point reduction in funding costs;
  • The cost of funds was 0.33% for the fourth quarter, lower by 4 basis points compared to the linked quarter and lower by 30 basis points compared to the same period in 2020, as deposit costs declined, partially offset by an increase in borrowing costs related to the issuance of subordinated debt in the fourth quarter of 2021;
  • Cost of funds was 0.40% for the full year 2021 compared to 0.87% for the full year 2020, primarily due to reduced deposit expense and higher non-interest bearing deposit balances in 2021;
  • Non-interest income decreased by 32.39% compared to the linked quarter and decreased by 62.67% compared to the same period in 2020.  Non-interest income in the full year 2021 was lower by 36.91% compared to the prior year. The decrease in non-interest income in 2021 was primarily due to lower mortgage revenue stemming from a slowdown in mortgage activity in 2021 compared to the prior year, partially offset by revenue from SBA loan sales in 2021;
  • Non-interest expense in the fourth quarter increased by 7.14% compared to the linked quarter and decreased by 11.35% compared to the same period in 2020. The increase in non-interest expense for linked quarters was primarily due to legal costs related to the formation of the bank holding company, which was completed in the fourth quarter of 2021. The decrease in non-interest expense in calendar quarters was primarily due to lower performance related costs: specifically, commissions paid to mortgage loan officers and mortgage settlement costs;
  • The Efficiency Ratio was 62.62% for the quarter ended December 31, 2021, compared to 59.57% for the linked quarter and 67.52% for the same period in 2020. The efficiency ratio for the full year 2021 was 63.14% compared to 69.68% for the full year 2020;
  • Non-accrual loans increased in the fourth quarter causing the ratio of non-performing assets to total assets to increase to 1.01% on December 31, 2021 compared to 0.41% on December 31, 2020. The increase in non-accrual loans in the fourth quarter was entirely due to a single relationship on which the bank is adequately collatralized and as a result we did not recognize any impairment. We are actively pursuing a workout on this relationship;
  • 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 Company recognized a $355,000 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 1.08% (or 1.14% excluding PPP loans, which carry a full faith and guarantee of the US Government) compared to 1.05% in the linked quarter (or 1.17% excluding PPP loans);
  • The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 11.85%, Common Equity Tier 1 ratio of 14.49%, Tier 1 Risk Based Capital ratio of 14.49% and a Total Capital ratio of 15.42%.

Stock Repurchase Program

The Board of Directors has approved a repurchase program of up to 250,000 shares of the Company's common stock, which represented 3.79% of the 6,589,757 million voting shares that were outstanding as of December 31, 2021. The funding for this stock repurchase will come from cash currently at the holding company sourced from the $20 million subordinated debt issue in the fourth quarter of 2021 and, as necessary, an upstream dividend from the Bank. Shares will be purchased in accordance with the SEC's Rule 10b-18.

Pre-tax, Pre-Provision Net Income

Pre-tax, pre-provision net income, which is a non-GAAP measure decreased by 5.76% to $3,658,435 for the fourth quarter of 2021 compared to pre-tax, pre-provision net income of $3,882,322 in the linked quarter, primarily due to a decrease in non-interest income in the fourth quarter and increased by 9.99% compared to $3,325,866 for the fourth quarter of 2020.

Pre-tax, pre-provision net income is a non-GAAP financial measure that the Bank views as an important metric to assess its performance. The following table provides a reconciliation of this measure to net income, the most directly comparable financial measure in accordance with GAAP.


Reconciliation of Pre-Tax, Pre-Provision Net Income



(Unaudited)


(Unaudited)


(Unaudited)


For the three


For the three


For the three


months ended


months ended


months ended


December 31, 2021


September 30, 2021


December 31, 2020







After-tax Income

$

2,743,088


$

2,890,281


$

2,413,775

Income Taxes

560,347


763,041


674,091

Provision for Loan Losses

355,000


229,000


238,000







Pre-tax, Pre-provision Net Income

$

3,658,435


$

3,882,322


$

3,325,866


Paycheck Protection Program ("PPP") Activity

In the second quarter of 2020, the Company processed and funded 510 PPP loans (referred to as 2020 PPP loans), with balances of $106.37 million. The interest rate on these 2020 PPP loans was 1% and the term varied from two to five years. The SBA also paid processing fees which were deferred over the term of the loans. The loans were fully guaranteed and could be forgiven in whole or in part by the SBA.

In December of 2020, Congress approved a renewal of the PPP loan program with different rules and requirements for small businesses to receive loans, referred to as round two PPP loans. These 2021 PPP loans were also fully guaranteed and may be forgiven in whole or in part by the SBA. The interest rate on the loans was 1% and the term was five years. As with 2020 PPP loans, the SBA paid processing fees which are being deferred over the term of the loans. The Company originated $53.89 million of round two PPP loans during 2021.

Beginning in January of 2021, the Company began to process loan forgiveness applications from borrowers of 2020 PPP loans and round two PPP loans. As of December 31, 2021, the SBA had forgiven 638 of these PPP loans with balances of $102.75 million, and the Company had recognized income from acceleration of processing fees of $2.51 million.

Net Interest Income

The Company recorded net interest income of $8.02 million for the fourth quarter of 2021, an increase of 14.71% compared to the linked quarter, and 45.43% higher than the same period in 2020. The net interest margin in the fourth quarter of 2021 was 3.74%, higher by 31 basis points compared to the linked quarter and higher by 68 basis points compared to the same period in 2020. Income from PPP loan forgiveness during the fourth quarter was $755,510(from $19.75 million of PPP loans forgiven by the SBA), compared to PPP loan forgiveness income of $667,746 (from $27.92 million of PPP loans forgiven by the SBA) during the third quarter of 2021. Excluding the PPP loans, the net interest margin in the fourth quarter would have been 3.49%.

The following factors contributed to the changes in net interest margin during the fourth quarter of 2021 compared to the linked quarter:

  • Yields on average earning assets increased by 28 basis points to 4.05% compared to 3.77% in the linked quarter, driven by higher yields on loans and investment during the quarter.
  • Loan yields increased by 56 basis points to 5.11% from 4.55% in the linked quarter, while yields on investment securities increased by 31 basis points to 2.54% from 2.23% in the linked quarter.
  • Cost of funds decreased by 4 basis points to 0.33%, from 0.37% in the linked quarter, on continued declines in deposit costs, partially offset by higher borrowing costs related to the issuance of subordinated debt in the fourth quarter.
  • Excluding PPP loans would have reduced the net interest margin by 25 basis points.

Non-interest Income

Non-interest income was $1.76 million for the fourth quarter, lower by 32.39% compared to the linked quarter and lower by 62.67% compared to the same period in 2020. The lower non-interest income across linked quarters was primarily due to lower mortgage and SBA gain-on-sale revenue, while the decline in non-interest income compared to the calendar quarter was largely due to lower mortgage gain-on-sale and fee revenue, stemming from a decline in mortgage activity.

Total Revenue

Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was higher by 1.92% compared to the linked quarter, primarily due to higher net interest income, and lower by 4.42% compared to the same period in 2020.

Non-interest Expenses

Non-interest expenses in the fourth quarter of 2021 were higher by 7.14% compared to the linked quarter and decreased by 11.35% compared to the same period in 2020. The increase in non-interest expenses in the fourth quarter compared to the prior quarter was largely due to costs related to the formation of the holding company, which was completed in the fourth quarter of 2021.

The Efficiency Ratio was 62.62% for the quarter ended December 31, 2021, compared to 59.57% for the prior quarter and 67.52% for the same period in 2020.

Asset Quality

Non-accrual loans increased to $8,890,960 or 1.48% of loans held-for-investment as of December 31, 2021, compared to $879,078 or 0.15% of loans held-for-investment at the end of the linked quarter. The increase in non-accrual loans in the fourth quarter was entirely due to a single relationship on which the bank is adequately secured and as a result we did not recognize any impairment. We are actively pursuing a workout on this relationship. There were no troubled debt restructurings ("TDRs") as of December 31, 2021. On December 31, 2021, 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, 2021. 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 $879,089 or 0.10% of total assets at September 30, 2021 compared to $8,890,960 or 1.01% of assets, at the end of the linked quarter.

In 2020, in accordance with the spirit and provisions of the CARES Act, the Company allowed borrowers who had been impacted by the COVID-19 pandemic to defer loan payments for six months. All of those borrowers had resumed loan payments and there were no loans on payment deferrals as of December 31, 2021.

Following an assessment of the collectability of the loans held-for-investment at the end of the fourth quarter, it was determined that a $355,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Company booked a provision of $229,000 in the third quarter of 2021. The Company's ALLL ratio was 1.08% of loans held-for-investment (or 1.14% of loans held-for investment excluding PPP loans) as of December 31, 2021 compared to an ALLL ratio of 1.05% at September 30, 2021 (or 1.17% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets at December 31, 2021 were $876.85 million compared to $846.60 million on September 30, 2021. Changes in major asset categories during linked quarters were as follows:

  • Cash balances at the Federal Reserve decreased by $30.06 million
  • Available for sale investment balances increased by $34.28 million
  • PPP loan balances decreased by $25.45 million on loan forgiveness by the SBA
  • Other loans held-for investment grew by $57.34 million
  • Mortgage loans held-for-sale declined by $8.89 million

Total Liabilities

Total liabilities at December 31, 2021 were $792.69 million compared to total liabilities of $765.15 million on September 30, 2021. Total deposits were $701.69 million compared to total deposits of $675.50 million on September 30, 2021. Non-interest bearing demand deposits increased by $5.78 million during the quarter, and comprised 31.66% of total deposits at the end of the quarter, compared to 35.19% of total deposits on December 31, 2020. Other interest bearing demand deposits increased by $40.06 million, while time deposits declined by $20.70 million during the quarter. Federal Home Loan Bank advances increased by $10.00 million during the quarter, while PPP Liquidity Facility term advances decreased by $25.80 million, in line with PPP loan forgiveness. The Company issued subordinated debt during the fourth quarter of 2021. The subordinated debt balance, net of issuance costs, was $19.62 million on December 31, 2021.

Stockholders' Equity and Capital

Stockholders' equity at December 31, 2021 was $84.16 million compared to $81.45 million on September 30, 2021. Additional paid-in capital was $59.88 million on December 31, 2021 compared to $59.56 million on September 30, 2021. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, decreased by $361,021 on net unrealized losses during the fourth quarter of 2021. Retained earnings were $23.55 million on December 31, 2021 compared to $20.81 million at the end of the prior quarter. Total shares issued and outstanding were 7,262,757 on December 31, 2021 compared to 7,312,565 shares on September 30, 2021. The tangible book value of the Company's common stock at December 31, 2021 was $11.59 per share compared to $11.14 per share on September 30, 2021 and $10.09 per share on December 31, 2020.

As of December 31, 2021 of the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized bank holding companies. The Bank's capital ratios on December 31, 2021 and September 30, 2021 were as follows:


December 31, 2021

September 30, 2021




Total Capital Ratio

15.42%

13.68%




Tier 1 Capital Ratio 

14.49%

12.73%

Common Equity



Tier 1 Capital Ratio

14.49%

12.73%




Leverage Ratio

11.85%

10.47%

About Freedom Financial Holdings, Inc.

Freedom Financial Holdings, Inc. is the holding company of The Freedom Bank of Virginia, a community bank with locations in Fairfax, Reston, Chantilly, Vienna, and Manassas, Virginia. The Freedom Bank of Virginia also has a mortgage division headquartered in Chantilly. For information about deposit, loan and other services, visit the 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 Company 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 Company's borrowers to satisfy their obligations to the Company, on the value of collateral securing loans, on the demand for the Company's loans or its other products and services, on incidents of cyberattack and fraud, on the Company's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Company's business operations and on financial markets and economic growth. The Company 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 Company 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.


FREEDOM FINANCIAL HOLDINGS

CONSOLIDATED BALANCE SHEETS



(Unaudited)

December 31,

2021

(Unaudited)

September 30,

2021

(Audited)

December 31,

2020

ASSETS




Cash and Due from Banks

$

2,536,450

$

2,430,918

$

1,792,660

Interest Bearing Deposits with Banks

31,696,892

61,753,387

25,543,295

Securities Available-for-Sale

171,532,394

137,253,597

97,188,125

Securities Held-to-Maturity

18,012,874

18,497,540

16,132,367

Restricted Stock Investments

3,321,250

2,951,550

3,607,800

Loans Held for Sale

13,297,125

22,191,469

45,047,711

PPP Loans Held for Investment 

32,355,450

57,809,131

101,215,376

Other Loans Held for Investment 

570,013,870

512,670,067

449,211,475

Allowance for Loan Losses

(6,486,120)

(6,011,021)

(5,454,925)

Net Loans

595,883,200

564,468,177

544,971,926

Bank Premises and Equipment, net

1,139,204

1,182,250

1,298,409

Accrued Interest Receivable

2,466,712

2,304,786

2,868,868

Deferred Tax Asset

1,804,238

1,223,546

1,154,078

Bank-Owned Life Insurance

24,579,879

20,428,825

17,035,214

Right of Use Asset, net

2,704,888

2,943,456

3,258,817

Other Assets

7,870,617

8,972,651

7,145,687

Total Assets

$

876,845,723

$

846,602,152

767,044,957

LIABILITIES AND STOCKHOLDERS' EQUITY








Deposits




Demand Deposits




Non-interest Bearing

222,167,095

216,387,250

$

192,987,984

Interest Bearing

300,361,978

260,304,062

176,424,255

Savings Deposits

5,841,800

4,780,274

2,962,303

Time Deposits

173,322,527

194,024,810

176,114,292

Total Deposits

701,693,400

675,496,396

548,488,834

Federal Home Loan Bank Advances

29,035,714

19,035,714

30,071,429

PPP Liquidity Facility Advances

32,055,915

57,857,132

101,951,020

Subordinated Debt (Net of Issuance Costs)

19,616,869

-

-

Accrued Interest Payable

294,237

268,170

480,816

Lease Liability

2,823,885

3,060,286

3,347,075

Other Liabilities

7,166,978

9,429,531

9,247,507

Total Liabilities

$

792,686,998

765,147,229

693,586,681

Stockholders' Equity




Preferred stock, $0.01 par value, 5,000,000 shares authorized;




0 Shares Issued and Outstanding, December 31, 2021, September 30, 2021, 




and December 31, 2020



-

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:




          6,589,757, 6,639,565, and 6,610,647 Shares Issued and Outstanding




    at December 31, 2021, September 30, 2021, and December 31, 2020 respectively




    (Includes 106,171, 102,455, and 100,002 Unvested Shares at December 31, 2021,  




September 30, 2021 and December 31, 2020, respectively)

65,898

65,371

65,106

Non-Voting Common Stock:




673,000 Shares Issued and Outstanding December 31, 2021, September 30, 2021, 




 and December 31, 2020

6,730

6,730

6,730

Additional Paid-in Capital

59,884,615

59,563,407

59,223,538

Accumulated Other Comprehensive Income, Net

651,272

1,012,293

1,340,654

Retained Earnings

23,550,210

20,807,122

12,822,248

Total Stockholders' Equity

84,158,725

81,454,923

73,458,276

Total Liabilities and Stockholders' Equity

$

876,845,723

$

846,602,152

767,044,957


FREEDOM FINANCIAL HOLDINGS


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, 2021


December 31, 2020


December 31, 2021


December 31, 2020

Interest Income









Interest and Fees on Loans


$

7,556,406


$

5,931,405


$

28,335,210


$

22,133,659

Interest on Investment Securities


1,092,427


630,449


3,135,735


2,288,660

Interest on Deposits with Other Banks


35,908


10,083


86,903


109,557

Total Interest Income


8,684,741


6,571,937


31,557,848


24,531,876

Interest Expense









Interest on Deposits


470,791


827,779


2,275,780


4,238,596

Interest on Borrowings


189,834


226,724


766,060


824,708

Total Interest Expense


660,625


1,054,503


3,041,840


5,063,304










Net Interest Income


8,024,116


5,517,433


28,516,009


19,468,571

Provision for Loan Losses


(355,000)


(238,000)


(839,000)


(1,492,000)

Net Interest Income After









Provision for Loan Losses


7,669,116


5,279,433


27,677,009


17,976,571

Non-Interest Income









Mortgage Loan Gain-on-Sale and Fee Revenue

1,456,195


4,283,961


8,286,068


13,949,984

 SBA Gain-on-Sale Revenue


-


-


437,825


-

Service Charges and Other Income


95,335


30,535


254,911


118,322

Gain on Sale of Securities


6,315


3,921


7,432


46,703

 Servicing Income


53,479


-


192,413


-

Swap Fee Income


-


270,450


-


657,712

Increase in Cash Surrender Value of Bank-









owned Life Insurance


151,054


132,555


544,665


639,213

Total Non-interest Income


1,762,378


4,721,422


9,723,314


15,411,934

Non-Interest Expenses









Officer and Employee Compensation









and Benefits


4,055,344


4,479,310


16,341,245


16,233,421

Occupancy Expense


317,038


294,601


1,232,056


1,194,320

Equipment and Depreciation Expense


170,335


227,758


662,050


735,374

Insurance Expense


74,357


49,008


267,583


196,442

Professional Fees


470,786


417,497


1,365,057


1,298,943

Data and Item Processing


299,120


322,373


1,181,347


1,012,601

Advertising  


80,569


83,559


329,059


278,602

Franchise Taxes and State Assessment Fees


200,084


185,379


778,069


725,466

Mortgage Fees and Settlements


172,967


675,218


1,141,200


1,952,049

Other Operating Expense


287,459


178,286


847,150


678,284

Total Non-interest Expenses


6,128,059


6,912,989


24,144,816


24,305,502

Income Before Income Taxes


3,303,435


3,087,867


13,255,507


9,083,004

Income Tax Expense


560,347


674,091


2,527,546


1,718,526

Net Income


$

2,743,088


$

2,413,776


$

10,727,961


$

7,364,478

Earnings per Common Share - Basic


$

0.37


$

0.33


$

1.46


$

1.02

Earnings per Common Share - Diluted


$

0.37


$

0.33


$

1.44


$

1.01

Weighted-Average Common Shares









Outstanding - Basic


7,336,016


7,252,552


7,352,237


7,247,895

Weighted-Average Common Shares 









Outstanding - Diluted


7,438,268


7,312,247


7,449,683


7,309,011


FREEDOM FINANCIAL HOLDINGS

CONSOLIDATED STATEMENTS OF OPERATIONS  













(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


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, 2021


September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020

Interest Income










Interest and Fees on Loans

$

7,556,406


$

6,914,453


$

6,951,964


$

6,912,386


$

5,931,405

Interest on Investment Securities

1,092,427


750,570


655,996


636,742


630,449

Interest on Deposits with Other Banks  

35,908


26,994


15,170


8,831


10,083

Total Interest Income

8,684,741


7,692,017


7,623,130


7,557,959


6,571,937











Interest Expense










Interest on Deposits

470,791


546,168


582,997


675,824


827,780

Interest on Borrowings

189,834


150,599


212,703


212,923


226,724

Total Interest Expense

660,625


696,767


795,700


888,747


1,054,504











Net Interest Income

8,024,116


6,995,249


6,827,430


6,669,212


5,517,433

Provision for Loan Losses

(355,000)


(229,000)


(191,000)


(64,000)


(238,000)

Net Interest Income after










Provision for Loan Losses

7,669,116


6,766,249


6,636,430


6,605,212


5,279,433

Non-Interest Income










Mortgage Loan Gain-on-Sale and Fee Revenue

1,456,195


1,995,535


2,012,153


2,822,186


4,283,961

 SBA Gain-on-Sale Revenue

-


371,172


66,652





Service Charges and Other Income

95,335


67,374


43,501


48,702


30,535

Gains on Sale of Securities

6,315


(13,493)


1,726


12,885


3,921

Servicing Income

53,479


44,443


42,847


51,643


-

Swap Fee Income

-


-


-


-


270,450

Increase in Cash Surrender Value of Bank-










owned Life Insurance

151,054


141,608


126,117


125,886


132,555

Total Non-interest Income

1,762,378


2,606,639


2,292,996


3,061,302


4,721,422





















Revenue

$

9,786,494


$

9,601,889


$

9,120,426


$

9,730,514


$

10,238,855











Non-Interest Expenses










Officer and Employee Compensation










and Benefits

4,055,344


3,862,969


3,760,697


4,662,235


4,479,310

Occupancy Expense

317,038


318,109


306,521


290,389


294,600

Equipment and Depreciation Expense

170,335


176,379


159,420


155,916


227,758

Insurance Expense

74,357


70,814


65,356


57,056


49,008

Professional Fees

470,786


243,678


359,159


291,434


417,497

Data and Item Processing

299,120


303,444


311,000


267,783


322,373

Advertising

80,569


92,806


82,605


73,078


83,559

Franchise Taxes and State Assessment Fees

200,084


200,048


192,508


185,429


185,379

Mortgage Fees and Settlements

172,967


230,582


274,231


463,419


675,218

Other Operating Expense

287,459


220,739


177,593


161,361


178,287











Total Non-interest Expenses

6,128,059


5,719,568


5,689,090


6,608,100


6,912,989

Income before Income Taxes

3,303,435


3,653,322


3,240,336


3,058,414


3,087,866











Income Tax Expense

560,347


763,041


613,955


590,203


674,091











Net Income

$

2,743,088


$

2,890,281


$

2,626,381


$

2,468,211


$

2,413,775

Earnings per Common Share - Basic

$

0.37


$

0.39


$

0.36


$

0.34


$

0.33

Earnings per Common Share - Diluted

$

0.37


$

0.39


$

0.36


$

0.34


$

0.33

Weighted-Average Common Shares










Outstanding - Basic

7,336,016


7,341,635


7,306,710


7,295,190


7,252,552

Weighted-Average Common Shares 










Outstanding - Diluted

7,438,268


7,395,062


7,354,389


7,334,463


7,312,247












Average Balances, Income and Expenses, Yields and Rates





























(Unaudited)





























































Three Months Ended






Three Months Ended






Three Months Ended






Three Months Ended






Three Months Ended






December 31, 2021






September 30, 2021






June 30, 2021






March 31, 2021






December 31, 2020






Average Balance


Income/

Expense


Yield


Average Balance


Income/

Expense


Yield


Average Balance


Income/

Expense


Yield


Average Balance


Income/ Expense


Yield


Average Balance


Income/

Expense


Yield

Assets






























Cash

$

91,458,843


$

35,908


0.16%


$

71,114,495


$

26,994


0.15%


$

64,848,200


$

15,170


0.09%


$

42,563,835


$

8,831


0.08%


$

38,217,380


$

10,083


0.10%































Investments (Tax Exempt)

23,460,432


190,195




27,138,446


177,809




23,292,663


223,691




24,057,819


152,583




23,815,369


151,564



Investments (Taxable)

153,582,906


942,173




113,180,210


610,101




103,971,494


479,280




91,675,593


516,202




90,609,147


510,714



Total Investments

177,043,338


1,132,368


2.54%


140,318,656


787,910


2.23%


127,264,157


702,971


2.22%


115,733,412


668,785


2.34%


114,424,516


662,278


2.30%































Total Loans 

586,725,477


7,556,406


5.11%


602,948,952


$6,914,454


4.55%


622,826,541


$

6,951,964


4.48%


607,880,043


$

6,912,386


4.61%


569,936,960


5,931,405


4.14%































Earning Assets

855,227,658


8,724,682


4.05%


814,382,103


7,729,358


3.77%


814,938,898


7,670,105


3.78%


766,177,290


7,590,002


4.02%


722,578,856


6,603,766


3.64%



























































































Assets

$

891,226,178






$

847,472,317






$

846,402,419






$

794,829,492






$

747,427,986



































Liabilities






























Interest Checking

$

88,172,651


38,893


0.18%


$

36,659,322


12,240


0.13%


$

34,272,772


10,907


0.13%


$

32,270,173


15,629


0.20%


$

39,206,072


15,165


0.15%

Money Market

202,560,648


85,450


0.17%


189,055,851


80,347


0.17%


164,337,737


63,989


0.16%


148,969,677


62,497


0.17%


138,196,830


74,468


0.21%

Savings

5,336,531


1,431


0.11%


4,147,591


1,170


0.11%


4,195,416


1,078


0.10%


3,301,845


814


0.10%


2,836,001


717


0.10%

Time Deposits 

187,240,613


345,016


0.73%


197,133,663


452,411


0.91%


197,180,571


507,023


1.03%


172,994,520


596,885


1.40%


175,514,471


737,430


1.67%

Interest Bearing Deposits

483,310,443


470,790


0.38%


426,996,427


546,168


0.51%


399,986,496


582,997


0.58%


357,536,215


675,825


0.77%


355,753,374


827,780


0.93%































Borrowings

$

81,399,848


189,834


0.93%


$

101,033,443


150,599


0.59%


$

138,398,143


212,703


0.62%


$

134,120,845


212,923


0.64%


$

135,328,997


226,724


0.67%































Interest Bearing Liabilities

564,710,291


660,624


0.46%


528,029,870


696,767


0.52%


538,384,639


795,700


0.59%


491,657,060


888,748


0.73%


491,082,371


1,054,504


0.85%































Non Interest Bearing Deposits

$

231,181,073






$

226,514,808






$

217,927,934






$

215,148,589






$

177,583,960



































Cost of Funds





0.33%






0.37%






0.42%






0.51%






0.63%































Net Interest Margin1



$

8,064,057


3.74%




$

7,032,590


3.43%




$

6,874,405


3.38%




$

6,701,254


3.55%




$

5,549,262


3.06%

Shareholders Equity

$

82,994,140






$

80,866,605






$

77,178,196






$

74,480,607






$

71,511,341



































1Net 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, 2021


Income /




December 30, 2020


Income /





December 31, 2021


Income /




December 30, 2020


Income /




Average Balance


Expense


Yield


Average Balance


Expense


Yield



Average Balance


Expense


Yield


Average Balance


Expense


Yield

Assets

























Cash

$

91,458,843


$

35,908


0.16%


$

38,217,380


$

10,083


0.10%



$

67,640,215


$

86,903


0.13%


$

38,093,605


$

109,557


0.29%


























Investments (Tax Exempt)

23,460,432


190,195




23,815,369


151,564





24,492,967


668,682




11,469,927


488,649



Investments (Taxable)

153,582,906


942,173




90,609,147


510,714





115,765,523


2,607,476




74,804,458


1,902,627



Total Investments

177,043,338


1,132,368


2.54%


114,424,516


662,278


2.30%



140,258,490


3,276,158


2.34%


86,274,385


2,391,276


2.77%


























Total Loans 

586,725,477


7,556,406


5.11%


569,936,960


5,931,405


4.14%



605,029,296


28,335,210


4.68%


435,139,660


22,133,688


4.35%


























Earning Assets

855,227,658


8,724,682


4.05%


722,578,856


6,603,766


3.64%



812,928,001


31,698,271


3.90%


633,431,247


24,634,521


3.89%


























Assets

$

891,226,178






$

747,427,986







$

845,256,803






$

656,218,698






























Liabilities

























Interest Checking

$

88,172,651


38,893


0.18%


$

39,206,072


15,165


0.15%



$

47,966,245


77,669


0.16%


$

28,215,189


57,146


0.20%

Money Market

202,560,648


85,450


0.17%


138,196,830


74,468


0.21%



176,412,939


292,283


0.17%


124,526,068


587,777


0.47%

Savings

5,336,531


1,431


0.11%


2,836,001


717


0.10%



4,250,652


4,494


0.11%


2,703,310


3,279


0.12%

Time Deposits 

187,240,613


345,016


0.73%


175,514,471


737,430


1.67%



189,083,082


1,901,335


1.01%


183,086,149


3,590,396


1.96%

Interest Bearing Deposits

483,310,443


470,790


0.38%


355,753,374


827,780


0.93%



417,712,918


2,275,781


0.54%


338,530,716


4,238,597


1.25%


























Borrowings

81,399,848


189,834


0.93%


135,328,997


226,724


0.67%



113,558,822


766,060


0.67%


105,749,331


824,708


0.78%


























Interest Bearing Liabilities

564,710,291


660,624


0.46%


491,082,371


1,054,504


0.85%



531,271,740


3,041,841


0.57%


444,280,048


5,063,305


1.14%


























Non Interest Bearing Deposits

$

231,181,073






$

177,583,960







$

222,747,496






$

138,007,364






























Cost of Funds





0.33%






0.63%







0.40%






0.87%


























Net Interest Margin1



$

8,064,057


3.74%




$

5,549,262


3.06%





$

28,656,431


3.53%




$

19,571,217


3.09%

Shareholders Equity

$

82,994,140






$

71,511,341







$

78,908,655






$

67,908,517





ROAA

1.22%






1.28%







1.27%






1.12%





ROAE

13.11%






13.43%







13.60%






10.84%






























1Net 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, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Loans held-for-investment to Deposits 

85.85%

84.45%

96.14%

95.51%

100.35%

Income Statement Ratios (Quarterly)






Return on Average Assets (ROAA)

1.22%

1.35%

1.24%

1.26%

1.28%

Return on Average Equity (ROAE)

13.11%

14.18%

13.65%

13.44%

13.43%

Efficiency Ratio

62.62%

59.57%

62.38%

67.91%

67.52%

Net Interest Margin1

3.74%

3.43%

3.38%

3.55%

3.06%

Yield on Average Earning Assets

4.05%

3.77%

3.78%

4.02%

3.64%

Yield on Securities

2.54%

2.23%

2.22%

2.34%

2.30%

Yield on Loans

5.11%

4.55%

4.48%

4.61%

4.14%

Cost of Funds

0.33%

0.37%

0.42%

0.51%

0.63%

Noninterest income to Total Revenue

18.01%

27.15%

25.14%

31.46%

46.11%

Per Share Data






Tangible Book Value

$11.59

$11.14

$10.81

$10.35

$10.09

Share Price Data






Closing Price

$13.37

$12.55

$11.98

$10.90

$9.10

Book Value Multiple

115%

113%

111%

105%

90%

Common Stock Data






Outstanding Shares at End of Period

7,262,757

7,312,565

7,305,581

7,307,915

7,283,647

Weighted Average shares outstanding, basic

7,336,016

7,341,635

7,306,710

7,295,190

7,252,552

Weighted Average shares outstanding, diluted

7,438,268

7,395,062

7,354,389

7,334,463

7,312,247

Capital Ratios






Tier 1 Leverage ratio

11.85%

10.47%

10.56%

10.95%

11.20%

Common Equity Tier 1 ratio

14.49%

12.73%

12.90%

12.88%

13.21%

Tier 1 Risk Based Capital ratio

14.49%

12.73%

12.90%

12.88%

13.21%

Total Risk Based Capital ratio

15.42%

13.68%

13.86%

13.84%

14.21%

Credit Quality






Net Charge-offs to Average Loans

-0.02%

0.00%

0.00%

0.00%

0.00%

Total Non-performing Loans to loans held-for-investment

1.48%

0.15%

0.15%

0.41%

0.58%

Total Non-performing Assets to Total Assets

1.01%

0.10%

0.11%

0.28%

0.41%

Nonaccrual Loans to loans held-for-investment

1.48%

0.15%

0.15%

0.41%

0.58%

Provision for Loan and Lease Losses

$355,000

$229,000

$191,000

$64,000

$238,000

Allowance for Loan and Lease Losses to loans held-for-investment

1.08%

1.05%

0.96%

0.92%

0.99%

Allowance for Loan and Lease Losses to loans held-for-investment (ex PPP loans)

1.14%

1.17%

1.15%

1.16%

1.21%







1Net 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
Phone: 703-667-4161
Email : jthomas@freedom.bank


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Member FDIC

10555 Main Street, Ste 100
Fairfax, VA 22030
(703) 667-4167
Map & Hours

502 Maple Avenue West
Vienna, VA 22180
(703) 667-4170
Map & Hours

11700 Plaza America Dr Ste 110
Reston, VA 20190
(703) 663-2300
Map & Hours

4500 Daly Drive Suite 240
Chantilly, VA 20151
(571) 395-4000
Map & Hours

4211 Pleasant Valley Road
Chantilly, VA 20151
(703) 766-6400
Map & Hours

10611 BaIls Ford Road Ste 110
Manassas, VA 20109
703-349-2210
Map & Hours

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