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The Freedom Bank of Virginia Announces Earnings for the Fourth Quarter and Full Year 2019

FAIRFAX, Va. (January 31, 2020) – The Freedom Bank of Virginia (OTCQX: FDVA), (the “Bank” or “Freedom”) today announced net income of $2,705,217 or $0.37 per diluted share for the year ended December 31, 2019 and net income of $747,808, or $0.10 per diluted share, for the three months ended December 31, 2019.

Joseph J. Thomas, President and CEO, commented “We are pleased with the success of our efforts to reposition the company’s brand, re-invest in technology and new products, and return to solid levels of profitability in 2019. We grew assets by 4.51% during the year to $500.39 million and achieved a ROA of 0.55% for 2019 compared to 0.04% last year. Non-interest expenses were down $1.2 million in the year which helped improve our efficiency ratio. We also took steps to improve asset quality and non-accrual loans were cut in half to $1.70 million or 0.42% of total loans at December 31, 2019. We also strengthened capital ratios with Tier One Capital Ratio of 15.3% at year-end which, along with strong reserves and diversified loan mix, give us a large runway for growth and improved profitability in 2020.”

Full Year 2019 Highlights include:

  • Net income for the twelve months ended December 31, 2019 was $2,705,217 or $0.37 per diluted share compared to $191,277 or $0.03 per diluted share for the twelve months ended December 31, 2018;
  • ROAA was 0.55% for the twelve months ended December 31, 2019 compared to 0.04% for the twelve months ended December 31, 2018;
  • ROAE was 4.40% for the twelve months ended December 31, 2019 compared to 0.34% for the twelve months ended December 31, 2018;
  • Total assets were $500.39 million on December 31, 2019, higher by $21.58 million or by 4.51% compared to December 31, 2018;
  • Total loans increased by $6.10 million or by 1.53% during 2019;
  • Total deposits decreased by $5.52 million or by 1.38% during 2019. Non-interest bearing demand deposits jumped to comprise 20.40% of total deposits at December 31, 2019 compared to 16.72% of total deposits at December 31, 2018;
  • Net interest income for all of 2019 was lower by 8.69% compared to 2018. The net interest margin in 2019 was 3.47%, lower by 5 basis points compared to 2018;
  • Yields on average earning assets increased by 26 basis points to 4.90% in 2019 compared to 4.64% in 2018.
  • Non-interest expenses for the twelve months ended December 31, 2019 were lower by $1.18 million or by 6.11% compared to non-interest expenses for the same period in 2018;
  • Efficiency Ratio was 84.34% for the full year 2019, improved from 97.21% for the prior year;
  • The allowance for loan and lease losses (“ALLL”) was 1.05% of loans held-for-investment at December 31, 2019 compared to 1.16% of loans held-for-investment at December 31, 2018;
  • Asset quality remains strong with the ratio of non-performing assets to total assets at 1.24% as of December 31, 2019 compared to a ratio of 0.69% as of December 31, 2018;
  • Capital ratios continue to be strong, and above regulatory minimums for well-capitalized banks: Total Risk Based Capital ratio of 16.24%, Tier 1 Risk Based Capital ratio of 15.26%, Common Equity Tier 1 ratio of 15.26% and Tier 1 Leverage ratio of 12.80% at December 31, 2019.

Fourth Quarter Highlights include:

  • Net income for the fourth quarter was $747,808 or $0.10 per diluted share compared to $932,348 or $0.13 per diluted share for the third quarter of 2019, and net income of $15,250 or $0.00 per diluted share, for the three months ended December 31, 2018;
  • Return on Average Assets (“ROAA”) was 0.59% for the quarter ended December 31, 2019 compared to 0.75% for the prior quarter and 0.01% for the three months ended December 31, 2018;
  • Return on Average Equity (“ROAE”) was 4.66% for the three months ended December 31, 2019 compared to 5.96% for the prior quarter and 0.10% for the three months ended December 31, 2018;
  • Total loans declined by $15.56 million or by 3.70% during the quarter. Loans held-for-investment decreased by $7.89 million or by 1.96%, while loans held-for-sale decreased by $7.68 million or by 39.72% in the fourth quarter;
  • Available-for-sale Securities increased by $4.87 million or by 10.83% during the quarter;
  • Total deposits decreased by $1.44 million or by 0.36% in the fourth quarter. Non-interest bearing demand deposits were relatively flat during the quarter at $80.63 million;
  • The net interest margin declined by 19 basis points to 3.33% compared to the previous quarter, on lower earning asset yields, partially offset by a reduction in the cost of funds;
  • The cost of funds declined by 10 basis points in the fourth quarter of 2019, largely due to lower funding costs for borrowings, time deposits and money market deposits;
  • Non-interest income decreased by 32.48% compared to the previous quarter, primarily due to lower revenue from the sale of mortgage loans during the fourth quarter, stemming from a seasonal decline in mortgage activity resulting in a lower volume of closed loans;
  • Non-interest expenses decreased by 11.96% compared to the previous quarter, primarily due to lower compensation costs;
  • The Efficiency Ratio was 82.10% for the quarter ended December 31, 2019, relatively flat compared to 81.39% for the previous quarter;
  • The Bank recognized no provision for loan losses during the fourth quarter.

Net Interest Income

The Bank recorded net interest income of $4.04 million for the fourth quarter of 2019, a decrease of 4.09% compared to the previous quarter. Net interest income for all of 2019 was lower by 8.69% compared to 2018. The net interest margin in the fourth quarter of 2019 was 3.33%, lower by 19 basis points compared to the previous quarter. The net interest margin in 2019 was 3.47%, lower by 5 basis points compared to 2018.

Page 12 of the earnings release includes a rate-volume analysis that illustrates the changes to net interest income in the fourth quarter of 2019 relative to the prior quarter and changes in net interest income in 2019 compared to 2018. The following factors contributed to the changes in net interest margin during the fourth quarter of 2019 compared to the previous quarter:

  • Yields on average earning assets decreased by 28 basis points to 4.71% compared to 4.99% in the previous quarter, primarily due to a decrease in loan and investment yields during the fourth quarter, stemming from higher cash balances, loan payoffs and refinancing activity as well as a reduction in the interest rate on excess reserves at the Federal Reserve Bank of Richmond, the 1-month LIBOR rate and the Prime rate during the fourth quarter. Loan yields in the previous quarter were also higher, in part due to recognition of default interest related to a loan recovery during the quarter. The additional yield related to the loan recovery in the third quarter was approximately 10 basis points.
  • Loan yields decreased by 16 basis points to 5.20% from 5.36% in the previous quarter, while yields on investment securities decreased by 47 basis point to 2.32%, from 2.79% in the previous quarter. Investment yields were lower primarily due to increased premium amortization and a decline in the 1-month LIBOR and the Prime rate.
  • Cost of funds decreased by 10 basis points to 1.54%, from 1.64% in the previous quarter, primarily due to lower costs related to borrowings and time deposits as well as a reduction in higher cost money market deposit balances.

The following factors contributed to the changes in net interest margin during 2019 compared to 2018:

  • Loan yields increased by 15 basis points to 5.34% from 5.19% in 2018, while yields on investment securities increased by 3 basis points to 2.69%, from 2.66% in 2018.
  • Cost of funds increased by 35 basis points to 1.60%, from 1.25% in 2018, primarily due to higher costs related to time deposits.

Non-interest Income

Non-interest income was $1.24 million for the fourth quarter, lower by 32.48% compared to the previous quarter. Non-interest income in the fourth quarter of 2018 was $733,665. The principal contributors to the decrease in non-interest income in the fourth quarter of 2019 compared to the previous quarter was lower gain-on-sale revenue from mortgage loans, stemming from a seasonal decline in mortgage activity resulting in a lower volume of closed loans.

Non-interest income was $5.41 million for the full year 2019 compared to $2.24 million in 2018. The Bank realized $1.18 million of losses on the sale of securities in the third quarter of 2018. Excluding those losses, adjusted non-interest income for the full year 2018 would have been $3.42 million. The increase in non-interest income was driven by higher gain-on-sale revenue from mortgage loans. Gain-on-sale revenue from mortgage loans in 2019 was $4.76 million in 2019 compared to $3.17 million in 2018.

Non-interest Expenses

The Company continued to exercise strong expense control in 2019. Non-interest expenses in the fourth quarter of 2019 decreased by 11.96% compared to the previous quarter and decreased by 6.06% compared to the same period in 2018.

Principal categories of non-interest expenses that changed in the fourth quarter of 2019 were the following:

  • Compensation costs decreased by 13.91% compared to the previous quarter, primarily due to a decline in commissions paid to mortgage loan officers on lower volume of closed loans and a reduction in salary expense.

Non-interest expenses decreased by 6.11% for the first twelve months of 2019 compared to the same period in 2018. Principal categories of non-interest expenses that changed in 2019 compared to 2018 were the following:

  • Compensation costs decreased by 2.64% in 2019 compared to the prior year. Compensation costs in 2018 included severance costs of $462,196, recognized in the third and fourth quarters of the year. The compensation costs in 2019 included $175,198 in severance expenses, recognized in the first quarter of 2019.
  • Professional fees were lower by 48.79% in 2019 compared to 2018, primarily due to a streamlining of vendor agreements, more efficient use of legal services and reduced director fees in 2019 as a result of the board restructuring that occurred in 2018.
  • Data processing expenses in 2019 were lower by 29.12% compared to the prior year, primarily due to re-negotiation of certain vendor agreements and more efficient utilization of data processing services in 2019.
  • Insurance expense was reduced due to credits provided by the FDIC in 2019 on deposit insurance assessments to small banks (those with total consolidated assets of less than $10 billion).

Asset Quality

Non-accrual loans were $1.70 million or 0.42% of total loans at the end of the fourth quarter of 2019, compared to $2.18 million or 0.53% of total loans at the end of the prior quarter. As of both December 31, 2019 and September 30, 2019, there were no troubled debt restructurings (“TDRs”). On December 31, 2019 there were $4.53 million of loans that were 90 days or more past due and accruing, equivalent to 1.11% of total loans, compared to $598,863 of loans that were 90 days or more past due and accruing, equivalent to 0.14% of total loans on September 30, 2019. The increase in loans that were more than 90 days past due and accruing was largely related to two credits. The loans are adequately secured and collectability of delinquent payments is highly likely as collections are in process. There was no Other Real Estate Owned (“OREO”) on the balance sheet on December 31, 2019 or September 30, 2019. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and accruing, loans that were TDRs but not on non-accrual, and OREO assets) were $6.23 million or 1.24% of total assets at December 31, 2019 compared to $2.78 million or 0.55% of total assets, at the end of the previous quarter.

Following an assessment of the collectability of the loans held-for-investment at the end of the fourth quarter, it was determined that the reserve for loan and lease losses was adequate and that an additional provision for loan and lease losses was not necessary. The Bank’s ALLL was 1.05% of loans held-for-investment at December 31, 2019, compared to 1.12% of loans held-for-investment at September 30, 2019.

Total Assets

Total assets at December 31, 2019 were $500.39 million compared to $507.39 million on September 30, 2019. Changes in major asset categories during linked quarters were as follows:

  • Cash balances and deposits with other banks increased by $4.18 million during the quarter.
  • The available-for-sale securities portfolio increased by $4.87 million compared to September 30, 2019.
  • Loans held-for-investment decreased by $7.88 million during the quarter.
  • Loans held-for-sale decreased by $7.68 million during the quarter.

Total Liabilities

Total liabilities at December 31, 2019 were $436.37 million, compared to total liabilities of $444.20 million on September 30, 2019. Total deposits were $395.21 million on December 31, 2019 compared to total deposits of $396.65 million on September 30, 2019. On a linked quarter basis, interest bearing demand deposits increased by $2.40 million, with the bulk of the increase occurring in low cost interest checking balances. Non-interest bearing demand deposits were flat during the quarter at $80.63 million, and comprised 20.40% of total deposits at the end of the quarter, compared to 16.72% of total deposits on December 31, 2018. Federal Home Loan Bank advances decreased by $6.00 million during the quarter, as the bank took advantage of strong balance sheet liquidity to reduce borrowing costs.

Stockholders’ Equity and Capital

Stockholders’ equity at December 31, 2019 was $64.03 million compared to $63.19 million on September 30, 2019. Additional paid in capital at December 31, 2019 was $58.53 million compared to $58.45 million on September 30, 2019. Accumulated Other Comprehensive Income (“AOCI”), which generally comprises unrealized gains and losses on available-for-sale securities on the balance sheet, increased by $18,566 on lower unrealized losses during the quarter and has increased by $1.09 million since December 31, 2018. Total shares issued and outstanding were 7,221,046 on December 31, 2019 compared to 6,981,602 on December 31, 2018. The book value of the Bank’s common stock at December 31, 2019 was $8.86 per share compared to $8.47 per share on December 31, 2018.

As of December 31, 2019, all 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, 2019 and December 31, 2018 were as follows:


Total Capital Ratio

December 31, 2019


16.24%

December 31, 2018


15.85%

Tier 1 Capital Ratio

15.26%

14.73%

Common Equity Tier 1 Capital Ratio


15.26%


14.73%

Leverage Ratio

12.80%

12.16%

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 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, 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, the adequacy or inadequacy of our allowance for loan and lease losses, and acquisition or loss of key production personnel. 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)

December 31,


(Unaudited)

September 30,


(Audited)

December 31,

2019


2019


2018

ASSETS






Cash and Due from Banks

$ 927,323


$ 890,654


$ 1,270,559

Interest Bearing Deposits with Banks

24,735,085


20,590,246


14,376,684

Securities Available-for-Sale

49,854,912


44,984,633


48,204,339

Restricted Stock Investments

3,752,750


4,013,750


3,076,000

Loans Held for Sale

11,656,802


19,338,243


4,415,520

Loans Held for Investment

392,941,874


400,817,788


394,080,457

Allowance for Loan Losses

(4,121,692)


(4,502,835)


(4,572,393)

Net Loans

388,820,181


396,314,953


389,508,064

Bank Premises and Equipment, net

1,480,535


1,547,008


1,748,935

Other Real Estate Owned

-


-


-

Accrued Interest Receivable

1,278,037


1,252,014


1,229,534

Deferred Tax Asset

904,010


779,577


1,247,513

Bank-Owned Life Insurance

12,783,605


12,686,878


12,401,317

Other Assets

4,199,435


4,989,323


1,336,522

Total Assets

$ 500,392,674


$ 507,387,279


$ 478,814,987

LIABILITIES AND STOCKHOLDERS' EQUITY








Liabilities

Deposits

Demand deposits


Non-interest bearing

$ 80,630,053


$ 80,916,899


$ 67,012,857

Interest bearing

112,605,618


110,200,698


128,403,358

Savings deposits

2,153,939


2,726,046


3,023,239

Time deposits

199,821,006


202,808,547


202,292,311

Total Deposits

395,210,616


396,652,190


400,731,765

Federal Home Loan Bank advances

35,857,143


41,857,143


17,142,857

Other Liabilities

4,864,913


4,808,531


1,607,491

Accrued interest payable

433,586


882,971


218,537

Total Liabilities

436,366,258


444,200,835


419,700,650

Stockholders' Equity






Preferred stock, $0.01 par value, 5,000,000 shares authorized; 0 shares issued and outstanding, 2019 and 2018


-



-



-

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:






6,548,046, 6,538,396 and 6,423,602 shares issued and outstanding at December 31, September 30, 2019 and December 31, 2018, respectively (includes 120,500, 120,500 and 115,000 unvested shares at December 31,
















September 30, 2019 and December 31, 2018 respectively)

64,275


64,175


63,086

Non-Voting Common Stock:






673,000 shares issued and outstanding December 31, September 30, 2019






and December 31 2018

6,730


6,730


6,730

Additional paid-in capital

58,526,913


58,453,416


57,416,068

Accumulated other comprehensive loss, net

(29,275)


(47,841)


(1,124,101)

Retained earnings

5,457,772


4,709,964


2,752,554

Total Stockholders' Equity

64,026,416


63,186,444


59,114,337

Total Liabilities and Stockholders' Equity

$ 500,392,674


$ 507,387,279


$ 478,814,987



THE FREEDOM BANK OF VIRGINIA

CONSOLIDATED STATEMENTS OF OPERATIONS



(Unaudited)

For the three months ended


(Unaudited)

For the three months ended



(Unaudited)

For the twelve months ended




For the twelve months ended

December 31, 2019


December 31, 2018



December 31, 2019



December 31, 2018

Interest Income










Interest and fees on loans

$ 5,345,417


$ 5,320,269


$

21,113,850


$

21,107,977

Interest on investment securities

278,164


337,702



1,369,822



1,740,241

Interest on Federal funds sold

88,239


174,693



391,377



484,390

Total Interest Income

5,711,820


5,832,664



22,875,048



23,332,608

Interest Expense










Interest on deposits

1,513,662


1,457,042


6,207,144


5,352,235

Interest on borrowings

162,502


89,481


545,141


322,373

Total Interest Expense

1,676,164


1,546,524


6,752,285


5,674,608

Net Interest Income

4,035,657


4,286,140


16,122,764


17,658,000

Provision for Loan Losses

-


406,000


194,500


406,000

Net Interest Income after Provision for Loan Losses


4,035,657



3,880,140



15,928,264



17,252,000

Non-Interest Income








Gain on sale of mortgage loans

1,097,693


668,073


4,763,651


3,168,195

Service charges and other income

45,300


43,196


156,467


187,892

Gain(Loss) on sale of securities

-


-


105,722


(1,181,108)

Increase in cash surrender value of bank-owned life insurance








96,727


22,396


382,288


63,171

Total Non-interest Income

1,239,720


733,665


5,408,128


2,238,150

Non-Interest Expenses

Officer and employee compensation

and benefits


2,637,977



2,824,477



11,347,119



11,654,250

Occupancy expense


293,058



269,963



1,142,845



1,098,985

Equipment and depreciation expense


261,871



172,048



891,384



664,284

Insurance expense


10,760



78,345



118,226



438,813

Professional fees


278,594



460,078



1,037,660



2,026,109

Data and item processing


189,680



312,108



885,836



1,249,830

Advertising


113,194



57,289



336,282



245,294

Franchise taxes and State Assessment Fees


175,920



160,647



629,989



635,162

Mortgage fees and settlements


200,192



95,353



843,191



498,411

Other operating expense


169,743



179,851



927,423



830,157

Total Non-interest Expenses


4,330,988



4,610,159



18,159,953



19,341,296

Income before Income Taxes


944,389



3,645



3,176,438



148,854

Income Tax Expense


196,581



(11,605)



471,221



(42,423)

Net Income

$

747,808


$

15,250


$

2,705,217


$

191,277

Earnings per Common Share - Basic

$

0.10


$

0.00


$

0.38


$

0.03

Earnings per Common Share - Diluted

$

0.10


$

0.00


$

0.37


$

0.03

Weighted-Average Common Shares












Outstanding - Basic


7,212,568



7,085,636



7,144,052



6,751,251

Weighted-Average Common Shares













Outstanding - Diluted


7,272,228


7,207,759


7,226,571


6,948,844



THE FREEDOM BANK OF VIRGINIA

CONSOLIDATED STATEMENTS OF OPERATIONS



For the three

months ended


For the three

months ended


For the three

months ended



For the three

months ended



For the three

months ended

December 31, 2019


September 30, 2019


June 30, 2019



March 31, 2019



December 31, 2018

Interest Income












Interest and fees on loans

$ 5,345,417


$ 5,541,462


$ 5,022,252


$

5,204,718


$

5,320,254

Interest on investment securities

278,164


343,288


381,352



367,017



337,702

Interest on Federal funds sold and Other

88,239


82,831


94,979



125,328



174,693

Total Interest Income

5,711,820


5,967,581


5,498,583



5,697,063



5,832,649


Interest Expense












Interest on deposits

1,513,662


1,585,209


1,606,953


1,501,319


1,457,042

Interest on borrowings

162,502


174,810


120,696


87,132


89,481

Total Interest Expense

1,676,164


1,760,019


1,727,649


1,588,451


1,546,523

Net Interest Income

4,035,657


4,207,562


3,770,934


4,108,612


4,286,126

Provision for Loan Losses

-


47,000


147,500


-


406,000

Net Interest Income after

Provision for Loan Losses 4,035,657 4,160,562 3,623,434 4,108,612 3,880,126

Non-Interest Income


Gain on sale of mortgage loans

1,097,693


1,702,767


1,168,251


794,939


668,073

Service charges and other income

45,300


36,275


32,462


42,431


43,196

Gains on sale of securities

-


-


103,034


2,688


-

Increase in cash surrender value of bank-

owned life insurance


96,727



97,022



96,324



92,215



22,396

Total Non-interest Income

1,239,720


1,836,064


1,400,071


932,273


733,665


Non-Interest Expenses

Officer and employee compensation


and benefits

2,637,977

3,064,244

2,711,906

2,932,993

2,824,477

Occupancy expense

293,058

285,798

288,213

275,776

269,963

Equipment and depreciation expense

261,871

216,275

277,717

185,521

172,048

Insurance expense

10,760

(26,872)

77,984

77,984

78,345

Professional fees

278,594

297,947

243,880

323,358

460,078

Data and item processing

189,680

256,535

187,073

252,547

312,108

Advertising

113,194

63,543

124,276

35,269

57,289

Franchise taxes and State Assessment Fees

175,920

154,265

98,717

141,887

160,647

Mortgage fees and settlements

200,192

312,346

198,771

131,881

95,353

Other operating expense

169,743

295,082

185,124

158,927

179,851


Total Non-interest Expenses



4,330,988




4,919,163




4,393,661




4,516,143




4,610,159

Income before Income Taxes


944,389



1,077,463



629,844



524,742



3,645

Income Tax Expense


196,581



145,115



120,769



8,756



(11,605)


Net Income


$


747,808



$


932,348



$


509,075



$


515,986



$


15,250

Earnings per Common Share - Basic

$

0.10


$

0.13


$

0.07


$

0.07


$

0.00

Earnings per Common Share - Diluted

$

0.10


$

0.13


$

0.07


$

0.07


$

0.00

Weighted-Average Common Shares

Outstanding - Basic



7,212,568




7,150,649




7,114,190




7,097,635




7,085,636

Weighted-Average Common Shares

Average Balances, Income and Expenses, Yields and Rates (Unaudited)



Assets

Three Months Ended

December 31, 2019

Average Balance



Income/Expense



Yield


Three Months Ended

September 30, 2019

Average Balance



Income/Expense



Yield

Cash

$ 25,022,661


$ 88,239


1.40%


$ 15,079,084


$ 82,831


2.18%

Investments (Tax Exempt)

4,494,698


38,432




4,481,837


38,451



Investments (Taxable)

44,496,212


248,253




45,525,802


312,913



Total Investments

48,990,910


286,685


2.32%


50,007,639


351,364


2.79%

Loans (Tax Exempt)

4,561,638


61,239




4,590,156


61,620



Loans (Taxable)

404,433,331


5,297,040




406,752,716


5,492,782



Total Loans

408,994,969


5,358,279


5.20%


411,342,872


5,554,402


5.36%

Earning Assets

483,008,540


5,733,203


4.71%


476,429,595


5,988,597


4.99%


Assets


Liabilities

$ 500,326,991






$ 494,059,141


Interest Checking

$ 14,030,639


14,184


0.40%


$ 10,544,633


14,341


0.54%

Money Market

88,595,320


293,646


1.31%


94,166,514


328,272


1.38%

Savings

2,272,908


1,146


0.20%


2,538,392


1,280


0.20%

Time Deposits

201,332,511


1,204,686


2.37%


202,523,113


1,241,316


2.43%

Interest Bearing Deposits

306,231,378


1,513,662


1.96%


309,772,652


1,585,209


2.03%

FHLB Borrowings

39,890,991


162,502


1.62%


37,231,599


174,811


1.86%

Interest Bearing Liabilities

346,122,369


1,676,164


1.92%


347,004,251


1,760,020


2.01%

Non Interest Bearing Deposits

$ 84,845,763






$ 79,607,547





Cost of Funds





1.54%






1.64%

Net Interest Margin1 Shareholders Equity


$ 63,634,670



$ 4,057,039



3.33%



$ 62,102,356



$ 4,228,577



3.52%

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 December 31,2019 Average Balance


Income/ Expense


Yield


Three Months Ended December 31, 2018 Average Balance


Income/ Expense


Yield


Twelve Months Ended December 31, 2019Average Balance


Income/ Expense


Yield


Twelve Months Ended December 31, 2018 Average Balance


Income/ Expense

Yield


Assets

 


 


 


 


 


 


 


 


 


 


 


 

Cash

$ 25,022,661


$ 88,239


1.40%


$ 32,879,357


$ 174,693


2.11%


$ 20,003,596


$ 391,377


1.96%


$ 27,740,961


$ 484,390


1.75%


Investments (Tax Exempt)


4,494,698



38,432





4,501,710



44,124





4,499,634



158,468





23,078,984



736,023



Investments (Taxable)

44,496,212


248,253




47,114,408


302,844




47,663,085


1,244,632




48,066,870


1,158,783



Total Investments

48,990,910


286,685


2.32%


51,616,118


346,968


2.67%


52,162,719


1,403,100


2.69%


71,145,854


1,894,806


2.66%


Loans (Tax Exempt)


4,561,638



61,239





-



-





3,610,668



196,377





-



-



Loans (Taxable)

404,433,331


5,297,040




404,471,545


5,320,254




396,543,751


21,152,158




407,025,119


21,107,977



Total Loans

408,994,969


5,358,279


5.20%


404,471,545


5,320,254


5.22%


400,154,419


21,348,535


5.34%


407,025,119


21,107,977


5.19%

Earning Assets

483,008,540


5,733,203


4.71%


488,967,020


5,841,915


4.74%


472,320,734


23,143,013


4.90%


505,911,934


23,487,172


4.64%


Assets


$ 500,326,991







$ 495,545,951







$ 490,210,976







$ 511,583,623






Liabilities

Interest Checking


$ 14,030,639



14,184



0.40%



$ 6,493,346



25,092



1.53%



$ 9,650,807



46,997



0.49%



$ 6,214,429



48,720



0.78%

Money Market

88,595,320


293,646


1.31%


138,479,123


448,482


1.28%


102,010,117


1,404,792


1.38%


162,634,172


2,037,149


1.25%

Savings

2,272,908


1,146


0.20%


2,447,627


1,233


0.20%


2,527,243


5,041


0.20%


2,245,599


4,591


0.20%

Time Deposits

201,332,511


1,204,686


2.37%


199,890,149


982,234


1.95%


200,367,159


4,750,313


2.37%


195,288,881


3,261,775


1.67%

Interest Bearing Deposits

306,231,378


1,513,662


1.96%


347,310,244


1,457,041


1.66%


314,555,326


6,207,144


2.04%


366,383,081


5,352,235


1.46%


FHLB Borrowings


39,890,991



162,502



1.62%



17,211,379



89,460



2.06%



29,106,124



545,141



1.87%



16,154,649



322,373



2.00%

Interest Bearing Liabilities

346,122,369


1,676,164


1.92%


364,521,623


1,546,501


1.68%


343,661,450


6,752,285


1.96%


382,537,730


5,674,608


1.48%


Non Interest Bearing Deposits


$ 84,845,763







$ 70,149,557







$ 78,699,921







$ 70,057,877






Cost of Funds






1.54%







1.41%







1.60%







1.25%

Net Interest Margin1 Shareholders Equity


$ 63,634,670



$ 4,057,039



3.33%



$ 58,383,853



$ 4,295,414



3.49%



$ 61,518,809



$ 16,390,728



3.47%



$ 55,592,217



$ 17,812,564



3.52%

ROAA

0.59%






0.01%






0.55%






0.04%





ROAE

4.66%






0.10%






4.40%






0.34%






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

Rate Volume Analysis


Three Months Ended December 31, 2019 compared to

Three Months Ended September 30, 2019


Twelve Months Ended December 31, 2019 compared to

Twelve Months Ended December 31, 2018


Interest Income


Rate


Volume


Net Change


Rate


Volume


Net Change

Interest Bearing Deposits at Banks

($49,212)

$54,621

$5,409

$42,091

($135,104)

($93,013)

Investment Securities

($57,535)

($7,144)

($64,679)

$13,867

($505,572)

($491,705)

Loans

($164,419)

($31,704)

($196,123)

$596,867

($356,309)

$240,558

Earning Assets



($255,393)



($344,160)

Interest Expense Deposits







Interest Checking

($4,898)

$4,741

($157)

($28,664)

$26,941

($1,723)

Money Market

($15,882)

($18,743)

($34,625)

$126,018

($759,374)

($633,356)

Savings

($0)

($134)

($134)

($128)

$576

$448

Time Deposits

($27,934)

($8,696)

($36,630)

$1,435,184

$54,353

$1,489,537

FHLB Borrowings

($24,795)

$12,486

($12,309)

($35,685)

$258,452

$222,767

Interest Paying Liabilities



($83,855)



$1,077,673

Net Interest Income



($171,538)



($1,421,833)

Selected Financial Data by Quarter Ended:

(Unaudited)

Balance Sheet Ratios December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018

Loans to Deposits

102.38%

105.93%

101.19%

98.18%

99.44%

Income Statement Ratios (Quarterly)






Return on Average Assets (ROAA)

0.59%

0.75%

0.42%

0.43%

0.01%

Return on Average Equity (ROAE)

4.66%

5.96%

3.36%

3.51%

0.10%

Efficiency Ratio

82.10%

81.39%

84.97%

89.59%

91.84%

Net Interest Margin1

3.33%

3.52%

3.27%

3.60%

3.49%

Yield on Average Earning Assets

4.71%

4.99%

4.76%

4.99%

4.74%

Yield on Securities

2.32%

2.79%

2.80%

2.83%

2.67%

Yield on Loans

5.20%

5.36%

5.17%

5.42%

5.22%

Cost of Funds

1.54%

1.64%

1.66%

1.54%

1.41%

Noninterest income to Total Revenue

23.50%

30.38%

27.08%

18.49%

14.62%

Per Share Data






Tangible Book Value

$8.86

$8.76

$8.60

$8.48

$8.47

Share Price Data






Closing Price

$10.45

$9.95

$9.98

$10.00

$10.23

Book Value Multiple

118%

114%

116%

116%

121%

Common Stock Data






Outstanding Shares at End of Period

7,221,046

7,211,046

7,122,102

7,112,102

7,096,602

Weighted Average shares outstanding, basic

7,212,568

7,150,649

7,114,190

7,097,635

7,085,636

Weighted Average shares outstanding, diluted

7,272,228

7,194,786

7,177,984

7,173,656

7,207,759

Capital Ratios






Tier 1 Leverage ratio

12.80%

12.80%

12.71%

12.61%

12.16%

Common Equity Tier 1 ratio

15.26%

14.79%

14.91%

15.28%

14.73%

Tier 1 Risk Based Capital ratio

15.26%

14.79%

14.91%

15.28%

14.73%

Total Risk Based Capital ratio

16.24%

15.84%

15.98%

16.42%

15.85%

Credit Quality






Net Charge-offs to Average Loans

0.09%

0.00%

0.06%

0.02%

0.03%

Total Non-performing Loans to Total Loans

1.54%

0.67%

0.79%

0.80%

0.83%

Total Non-performing Assets to Total Assets

1.24%

0.55%

0.65%

0.64%

0.69%

Nonaccrual Loans to Total Loans

0.42%

0.53%

0.76%

0.65%

0.71%

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

1.05%

1.12%

1.14%

1.19%

1.16%


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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10555 Main Street, Ste 100
Fairfax, VA 22030
(703) 242-5300
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502 Maple Avenue West
Vienna, VA 22180
(703) 667-4170
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11700 Plaza America Dr Ste 110
Reston, VA 20190
(703) 663-2300
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(571) 395-4000
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(703) 766-6400
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