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The Freedom Bank of Virginia Announces Earnings for the Fourth Quarter and Full Year 2020

FAIRFAX, Va. (January 29, 2021) – The Freedom Bank of Virginia (OTCQX: FDVA), (the “Bank” or “Freedom”) today announced net income of $2,413,775, or $0.33 per diluted share, for the three months ended December 31, 2020. This compares to net income of $2,575,370 or $0.35 per diluted share, for the prior quarter and net income of $747,808 or $0.10 per diluted share for the three months ending December 31, 2019. The Bank reported net income of $7,364,476 or $1.01 per diluted share for the full year 2020 compared to net income of $2,705,217 or $0.37 per diluted share for the full year 2019.

Joseph J. Thomas, President and CEO, commented, “I am very proud of my colleagues at Freedom who delivered exceptional outcomes for clients in 2020 during the challenging national health and economic environment crisis and in the process enabled our company to produce record financial results. The Bank increased full year 2020 net income by 172.23% to $7.36 million, increased residential mortgage originations by 172% to $471.8 million, increased total assets by 53.29% to $767.04 million, and grew tangible book value per share by 13.88% to $10.09 at December 31, 2020. The results of our two-year effort to implement a new strategic plan were in full display this year with a return on average assets of 1.12% and return on average equity of 10.84% that were achieved while we also increased loss reserves by $1.5 million and maintained strong capital levels, represented by a Common Equity Tier 1 Capital ratio of 13.21% at December 31, 2020.”

Fourth Quarter and Full Year 2020 Highlights include:

  • Net income for the fourth quarter was $2,413,775 or $0.33 per diluted share compared to net income of $2,575,370 or $0.35 per diluted share in the prior quarter and net income of $747,808 or $0.10 per diluted share for the three months ended December 31, 2019. The increase in net income in calendar quarters was primarily due to an increase in non-interest income in 2020, from higher mortgage revenues, swap fees and BOLI income, as well as an increase in earning assets from the prior year;
  • Net income for the full year 2020 increased by 172.23% compared to the full year 2019. Net income was $7,634,476 or $1.01 per diluted shares, compared to net income of $2,705,217 or $0.37 per diluted share for the same period in 2019. The increase in net income in 2020 was driven by higher non-interest income as well as an increase in earning assets;
  • Total revenue, defined as the sum of net interest income, before provision for loan losses, and noninterest income, was flat compared to the prior quarter, and higher by 94.09% compared to the same period in 2019. Total revenue was $34.88 million for the full year 2020 compared to $21.53 million for the full year 2019, representing a 62.01% increase compared to the prior year;
  • Return on Average Assets (“ROAA”) was 1.28% for the quarter ended December 31, 2020 compared to 1.45% for the prior quarter and 0.59% for the three months ended December 31, 2019. ROAA was 1.12% for the full year 2020 compared to 0.55% for the prior year;
  • Return on Average Equity (“ROAE”) was 13.43% for the three months ended December 31, 2020 compared to 14.89% for the prior quarter and 4.66% for the three months ended December 31, 2019. ROAE was 10.84% for the full year 2020 compared to 4.40% for the full year 2019;
  • Total assets were $767.04 million on December 31, 2020, an increase of $266.65 million from December 31, 2019;
  • Total loans increased by $23.33 million or by 4.08% during the quarter, while loans held-for-investment increased by $45.85 million or by 9.09% during the quarter. Mortgage loans held-for-sale decreased by $22.52 million while PPP loan balances decreased by $6.14 million, offset by an increase of $51.99 million in other loans held-for-investment during the quarter;
  • Loans held-for-investment (excluding PPP loans) grew by 14.32% in 2020;
  • Investment securities increased by $3.08 million during the fourth quarter and by $63.47 million in 2020;
  • Total deposits increased by $13.62 million or by 2.55% in the fourth quarter and by $153.28 million in 2020. Non-interest bearing demand deposits increased by $16.77 million to $192.99 million and represented 35.19% of total deposits on December 31, 2020;
  • The net interest margin decreased in the fourth quarter to 3.06%, lower by seven basis points compared to the previous quarter and lower by 27 basis points compared to the same period in 2019. The decrease in the net interest margin across linked quarters was primarily due to lower yields on investments, partially offset by higher loan yields and a reduction in the cost of funds. Excluding PPP loans, the net interest margin would have been higher by 2 basis points to 3.08% during the fourth quarter;
  • The cost of funds was 0.63% for the fourth quarter, lower by 10 basis points compared to the previous quarter and lower by 91 basis points compared to the same period in 2019, as deposit and borrowing costs continued to decline across the board;
  • Mortgage loan originations for the full year 2020 were $471.8 million compared to $173.8 million in the prior year, representing an increase of 171.46%;
  • Non-interest income decreased by 6.54% compared to the previous quarter on lower mortgage revenue stemming from a seasonal decline in mortgage activity, partially offset by an increase in swap fee income during the fourth quarter. Non-interest income increased by 280.85% compared to the same period in 2019, primarily due to higher revenue from the sale of mortgage loans and an expansion in gain-on-sale margins, supplemented by an increase in swap fee income and higher income from Bank Owned Life Insurance;
  • Non-interest expense decreased by 3.66% compared to the previous quarter and increased by 59.62% compared to the same period in 2019. The increase in non-interest expense in calendar quarters was primarily due to higher performance related costs: specifically, commissions paid to mortgage loan officers and mortgage settlement costs, as well as an increase in performance based incentive accruals. Excluding these costs, non-interest expense in the fourth quarter of 2020 increased by 12.26% compared to the same period in 2019;
  • The Efficiency Ratio was 67.52% for the quarter ended December 31, 2020, compared to 69.22% for the prior quarter and 82.10% for the same period in 2019;
  • Asset quality remained strong with the ratio of non-performing assets to total assets at 0.41% on December 31, 2020 compared to 0.49% on September 30, 2020;
  • As a result of an increase in loans held-for-investment during the quarter and an assessment of the risks in the held-for-investment loan portfolio, the Bank recognized a $238,000 provision for loan losses during the fourth quarter and the ratio of the allowance for loan and lease losses to loans held-for-investment was 0.99% (or 1.21% excluding PPP loans, which carry a full faith and guarantee by the US Government) compared to 1.04% in the previous quarter (or 1.32% excluding PPP loans). The Bank recognized a provision for loan losses of $1.49 million in the full year 2020 compared to a provision of $194,500 in the full year 2019;
  • Loan payment deferrals related to COVID-19 continue to decline steadily. As of December 31, 2020, 13 loans for a total of $13.92 million were on payment deferrals, all of which are scheduled to end in the first quarter of 2021. This compares to 90 loans totaling $73.07 million on payment deferral on September 30, 2020 and 96 loans or $89.35 million on payment deferrals on June 30, 2020;
  • The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 11.20%, Common Equity Tier 1 ratio of 13.21%, Tier 1 Risk Based Capital ratio of 13.21% and a Total Capital ratio of 14.21%.


Revenue

Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was flat compared to the prior quarter, and higher by 94.09% compared to the same period in 2019. Total revenue was $34.88 million for the full year 2020 compared to $21.53 million for the full year 2019, representing a 62.01% increase compared to the prior year.

Net Interest Income

The Bank recorded net interest income of $5.52 million for the fourth quarter of 2020, an increase of 3.81% compared to the previous quarter, and 36.72% higher than the same period in 2019. The net interest margin in the fourth quarter of 2020 was 3.06%, lower by seven basis points compared to the previous quarter and lower by 27 basis points compared to the same period in 2019. Excluding the impact of lower yielding PPP loans, loan yields would have been higher by 27 basis points, while the net interest margin would have been higher by two basis points to 3.08%.

The Bank’s net interest margin was 3.09% for the full year 2020 compared to 3.48% for the prior year. For the full year 2020, loan yields declined by 99 basis points from the prior year, affected by lower yielding PPP loans and loan growth at lower loan yields. Excluding the impact of PPP loans, loan yields in 2020 would have been 29 basis points higher, while the net interest margin would have been higher by five basis points. Yields on investment securities increased in 2020, higher by eight basis points compared to the prior year.

The following factors contributed to the changes in net interest margin during the fourth quarter of 2020 compared to the previous quarter:

  • Yields on average earning assets decreased by 17 basis points to 3.64% compared to 3.81% in the previous quarter, primarily due to lower yields on investment securities, partially offset by higher loan yields.
  • Loan yields increased by 4 basis points to 4.14% from 4.10% in the previous quarter, while yields on investment securities decreased by 102 basis points to 2.30% from 3.32% in the previous quarter. The increase in loan yields was largely due to the acceleration of deferred fees resulting from the PPP loans that were forgiven in the fourth quarter. Payoff activity in residential mortgage backed securities and calls of corporate bonds were the principal driver for the decrease in investment yields.
  • Cost of funds decreased by 10 basis points to 0.63%, from 0.73% in the previous quarter, as declines in deposit costs continued, primarily in the money market and time deposit categories.

The following factors contributed to the changes in net interest margin during the fourth quarter compared to the same period in 2019:

  • Loan yields decreased by 106 basis points to 4.14% from 5.20% in the fourth quarter of 2019, while yields on investment securities decreased by two basis points to 2.30%, from 2.32% in the same period in 2019.
  • Cost of funds decreased by 91 basis points to 0.63%, from 1.54% in the fourth quarter of 2019, primarily due to higher non-interest bearing deposits and lower costs for borrowings and interest bearing deposits.

Non-interest Income

Non-interest income was $4.72 million for the fourth quarter, lower by 6.54% compared to the previous quarter and higher by 280.85% compared to the same period in 2019. The decline in non-interest income compared to the previous quarter was largely due to lower mortgage gain-on-sale and fee revenue, stemming from a decline in mortgage originations in the fourth quarter of 2020, partially offset by an increase in swap fee income during the fourth quarter.

An increase in mortgage loan origination activity and an expansion in gain-on-sale margins was the primary reason for the higher non-interest income in 2020, compared to the prior year, supplemented by an increase in swap fee income and higher income from Bank Owned Life Insurance. Mortgage originations for the full year 2020 were $471.8 million compared to $173.8 million in the prior year, representing an increase of 171.5%.

Non-interest Expenses

Non-interest expenses in the fourth quarter of 2020 decreased by 3.66% compared to the previous quarter and increased by 59.62% compared to the same period in 2019. The decline in non-interest expenses in the fourth quarter compared to the previous quarter was largely due to lower compensation expenses, mostly driven by lower commission expense. The increase in non-interest expenses in the fourth quarter of 2020 compared to the same period in 2019 was largely due to higher performance based costs, principally commission expense, mortgage settlement costs and an increase in performance based incentive accruals. Excluding these performance based costs, non-interest expenses in the fourth quarter of 2020 would have been 12.26% higher compared to the same period in 2019. Higher loan and deposit activity in 2020 compared to the prior year also led to increases in data processing costs and contract underwriting fees.

Additional categories of non-interest expenses that changed in the fourth quarter of 2020 were the following:

  • Professional fees were higher by 52.09% in the fourth quarter of 2020 compared to the previous quarter. This was largely due to an increase in fees paid to contract underwriters.
  • Data processing expenses in the fourth quarter were higher by 40.07% compared to the previous quarter, primarily due to an increase in loan activity in the fourth quarter.

The Efficiency Ratio was 67.52% for the quarter ended December 31, 2020, compared to 69.22% for the prior quarter and 82.10% for the same period in 2019.

The Efficiency ratio for the full year 2020 was 69.68% compared to 84.34% for the full year 2019.

Asset Quality

Non-accrual loans were $3.18 million or 0.57% of total loans at the end of the fourth quarter of 2020, compared to $3.69 million or 0.64% of total loans at the end of the prior quarter. There were no troubled debt restructurings (“TDRs”) as of December 31, 2020. On December 31, 2020, there were no loans that were 90 days or more past due and accruing. There was no Other Real Estate Owned (“OREO”) on the balance sheet as of December 31, 2020. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and accruing, loans that are TDRs but not on non-accrual, and OREO assets) were $3.18 million or 0.41% of total assets at December 31, 2020 compared to $3.69 million or 0.49% of total assets, at the end of the previous quarter.

Loan payment deferrals related to COVID-19 continue to decline steadily. As of December 31, 2020, 13 loans for a total of $13.92 million were on payment deferrals, all of which are scheduled to end in the first quarter of 2021. This compares to 90 loans totaling $73.07 million on payment deferral on September 30, 2020 and 96 loans or $89.35 million on payment deferrals on June 30, 2020.

Following an assessment of the collectability of the loans held-for-investment at the end of the fourth quarter, it was determined that a $238,000 provision for loan losses was necessary. The Bank booked no provision in the third quarter of 2020. The Bank’s ALLL ratio was 0.99% of loans held-for-investment (or 1.21% of loans held-for investment excluding PPP loans) as of December 31, 2020 compared to an ALLL ratio of 1.04% at September 30, 2020 (or 1.32% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets at December 31, 2020 were $767.04 million compared to $751.58 million on September 30, 2020. Changes in major asset categories during linked quarters were as follows:

  • Mortgage loans held-for-sale declined by $22.52 million.
  • Loans held-for-investment increased by $45.85 million, including a decline in PPP loan balances of $6.14 million, driven by forgiveness by the SBA and by curtailments and an increase of $51.99 million in other loans held-for-investment.

Total Liabilities

Total liabilities at December 31, 2020 were $693.59 million compared to total liabilities of $681.05 million on September 30, 2020. Total deposits were $548.49 million compared to total deposits of $534.87 million on September 30, 2020. The primary reason for the increase in deposits compared to the prior quarter was an increase in non-interest bearing deposits. Non-interest bearing demand deposits increased by $16.77 million during the quarter, and comprised 35.19% of total deposits at the end of the quarter, compared to 32.95% of total deposits on September 30, 2020, and 20.41% of total deposits on December 31, 2019. Federal Home Loan Bank advances declined slightly during the quarter, while PPP Liquidity Facility term advances decreased as some PPP loans were forgiven in the fourth quarter and the associated advances were paid off.

Stockholders’ Equity and Capital

Stockholders’ equity at December 31, 2020 was $73.46 million compared to $70.53 million on September 30, 2020. Additional paid in capital was $59.22 million on December 31, 2020 compared to $58.84 million on September 30, 2020. Accumulated Other Comprehensive Income (“AOCI”), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, increased by $127,819 on unrealized gains during the fourth quarter of 2020. Total shares issued and outstanding were 7,283,647 on December 31 30, 2020 compared to 7,233,751 shares on September 30, 2020, and 7,211,046 shares on December 31, 2019. The tangible book value of the Bank’s common stock at December 31, 2020 was $10.09 per share compared to $9.75 per share on September 30, 2020 and $8.86 per share on December 31, 2019.

As of December 31, 2020 of the Bank’s capital ratios were well above regulatory minimum capital ratios for wellcapitalized banks. The Bank’s capital ratios on December 31, 2020 and December 31, 2019 were as follows:


 
  December 31, 2020     December 31, 2019  
Total Capital Ratio
    14.21 %     16.24 %
Tier 1 Capital Ratio
    13.21 %     15.26 %
Common Equity
               
Tier 1 Capital Ratio
    13.21 %     15.26 %
Leverage Ratio
    11.20 %     12.80 %
 
               

About Freedom Bank

Freedom Bank is a community-oriented bank with locations in Fairfax, Reston, Chantilly, Vienna and Manassas, Virginia. Freedom Bank also has a mortgage division headquartered in Chantilly. For information about Freedom Bank’s deposit and loan services, visit the Bank’s website at www.freedom.bank

Forward Looking Statements

This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing; general economic and financial market conditions, in the United States generally and particularly in the markets in which the Bank operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth, including as a result of COVID-19; maintenance and development of well-established and valued client relationships and referral source relationships; the adequacy or inadequacy of our allowance for loan and lease losses; acquisition or loss of key production personnel; and the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (such as COVID-19), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Bank's borrowers to satisfy their obligations to the Bank, on the value of collateral securing loans, on the demand for the Bank's loans or its other products and services, on incidents of cyberattack and fraud, on the Bank’s liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Bank's business operations and on financial markets and economic growth. The Bank cautions readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and the Bank may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance. Some of the financial tables in this document reflect classifications to accounts to improve consistency in financial reporting


THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED BALANCE SHEETS
 
 
                 
 
  (Unaudited)     (Unaudited)     (Audited)  
 
  December 31,     September 30,     December 31,  
 
  2020     2020     2019  
ASSETS
                 
Cash and Due from Banks
  $ 1,792,660     $ 2,623,863     $ 927,322  
Interest Bearing Deposits with Banks
    25,543,295       39,353,716       24,735,085  
Securities Available-for-Sale
    97,188,125       93,792,624       49,854,912  
Securities Held-to-Maturity
    16,132,167       16,450,629       -  
Restricted Stock Investments
    3,607,800       3,607,800       3,752,750  
Loans Held for Sale
    45,047,711       67,565,018       11,656,802  
PPP Loans Held for Investment
    101,215,376       107,351,052       -  
Other Loans Held for Investment
    449,211,475       397,224,188       392,941,874  
Allowance for Loan Losses
    (5,454,924 )     (5,228,192 )     (4,121,693 )
Net Loans
    544,971,927       499,347,048       388,820,181  
Bank Premises and Equipment, net
    1,298,545       1,343,532       1,480,535  
Accrued Interest Receivable
    2,868,868       3,522,658       1,278,037  
Deferred Tax Asset
    1,154,078       702,684       857,698  
Bank-Owned Life Insurance
    17,035,214       16,902,659       12,783,605  
Right of Use Asset, net
    3,258,817       3,323,564       2,928,546  
Other Assets
    7,168,469       3,043,264       1,317,201  
Total Assets
    767,044,957       751,579,059       500,392,674  
LIABILITIES AND STOCKHOLDERS' EQUITY
                       
Liabilities
                       
Deposits
                       
Demand Deposits
                       
Non-interest Bearing
  $ 192,987,984     $ 176,221,554     $ 80,630,053  
Interest Bearing
    176,424,255       179,147,383       112,605,618  
Savings Deposits
    2,962,303       2,819,368       2,153,939  
Time Deposits
    176,114,292       176,678,969       199,821,006  
Total Deposits
    548,488,834       534,867,274       395,210,616  
Federal Home Loan Bank Advances
    30,071,429       31,071,429       35,857,143  
PPP Liquidity Facility Advances
    101,951,020       107,351,042       -  
Accrued Interest Payable
    480,816       484,775       433,586  
Lease Liability
    3,347,075       3,401,335       2,981,132  
Other Liabilities
    9,247,507       3,874,727       1,883,782  
Total Liabilities
    693,586,681       681,050,583       436,366,259  
Stockholders' Equity
                       
Preferred stock, $0.01 par value, 5,000,000 shares authorized;
                       
0 Shares Issued and Outstanding, 2020 and 2019
                    -  
Common Stock, $0.01 Par Value, 25,000,000 Shares:
                       
23,000,000 Shares Voting and 2,000,000 Shares Non-voting.
                       
Voting Common Stock:
                       
6,613,980, 6,560,751 and 6,548,046 Shares Issued and Outstanding
                       
at December 31, 2020, September 30, 2020 and December 31, 2019, respectively
                       
(Includes xx, 113,335 and 120,500 Unvested Shares at December 31, 2020,
                       
September 30, 2020 and December 31, 2019, respectively)
    65,106       64,474       64,275  
Non-Voting Common Stock:
                       
673,000 Shares Issued and Outstanding December 31, 2020,
                       
September 30, 2020, and December 31, 2019
    6,730       6,730       6,730  
Additional Paid-in Capital
    59,223,538       58,835,965       58,526,913  
Accumulated Other Comprehensive Income (Loss), Net
    1,340,653       1,212,834       (29,274 )
Retained Earnings
    12,822,249       10,408,473       5,457,771  
Total Stockholders' Equity
    73,458,276       70,528,476       64,026,415  
Total Liabilities and Stockholders' Equity
    767,044,957       751,579,059       500,392,674  
 
                       

THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
  (Unaudited)     (Unaudited)     (Unaudited)     (Audited)  
 
  For the three     For the three     For the twelve     For the twelve  
 
  months ended     months ended     months ended     months ended  
 
  December 31, 2020     December 31, 2019     December 31, 2020     December 31, 2019  
Interest Income
                       
Interest and Fees on Loans
  $ 5,931,405     $ 5,345,417     $ 22,133,659     $ 21,113,850  
Interest on Investment Securities
    630,449       278,164       2,288,660       1,369,822  
Interest on Deposits with Other Banks
    10,083       88,239       109,557       391,377  
Total Interest Income
    6,571,937       5,711,820       24,531,875       22,875,048  
Interest Expense
                               
Interest on Deposits
    827,779       1,513,662       4,238,596       6,207,144  
Interest on Borrowings
    226,724       162,502       824,708       545,141  
Total Interest Expense
    1,054,504       1,676,164       5,063,305       6,752,285  
 
                               
Net Interest Income
    5,517,433       4,035,657       19,468,571       16,122,764  
Provision for Loan Losses
    (238,000 )     -       (1,492,000 )     (194,500 )
Net Interest Income After
                               
Provision for Loan Losses
    5,279,433       4,035,657       17,976,571       15,928,264  
Non-Interest Income
                               
Mortgage Loan Gain-on-Sale and Fee Revenue
    4,283,961       1,097,693       13,949,739       4,763,651  
Service Charges and Other Income
    30,535       45,300       118,567       156,468  
Gain on Sale of Securities
    3,921       -       46,703       105,722  
Swap Fee Income
    270,450       -       657,712       -  
Increase in Cash Surrender Value of Bank-
                               
owned Life Insurance
    132,555       96,727       639,213       382,288  
Total Non-interest Income
    4,721,422       1,239,720       15,411,934       5,408,128  
Non-Interest Expenses
                               
Officer and Employee Compensation
                               
and Benefits
    4,479,310       2,637,977       16,233,421       11,347,119  
Occupancy Expense
    294,600       293,058       1,194,320       1,142,845  
Equipment and Depreciation Expense
    227,758       261,871       735,374       891,384  
Insurance Expense
    49,008       18,760       196,442       118,226  
Professional Fees
    417,497       279,567       1,298,943       1,106,208  
Data and Item Processing
    322,373       178,416       1,012,601       839,167  
Advertising
    83,559       113,194       278,602       336,282  
Franchise Taxes and State Assessment Fees
    185,379       175,920       725,466       629,989  
Mortgage Fees and Settlements
    675,218       200,192       1,952,049       843,191  
Other Operating Expense
    178,286       172,034       678,284       905,544  
Total Non-interest Expenses
    6,912,989       4,330,988       24,305,502       18,159,954  
Income Before Income Taxes
    3,087,866       944,389       9,083,002       3,176,438  
Income Tax Expense
    674,091       196,581       1,718,526       471,221  
Net Income
  $ 2,413,775     $ 747,808     $ 7,364,476     $ 2,705,217  
Earnings per Common Share - Basic
  $ 0.33     $ 0.10     $ 1.02     $ 0.38  
Earnings per Common Share - Diluted
  $ 0.33     $ 0.10     $ 1.01     $ 0.37  
Weighted-Average Common Shares
                               
Outstanding - Basic
    7,252,552       7,212,568       7,247,895       7,144,052  
Weighted-Average Common Shares
                               
Outstanding - Diluted
    7,312,247       7,272,228       7,309,011       7,226,571  
 
                               

THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
                             
 
  For the three     For the three     For the three     For the three     For the three  
 
  months ended     months ended     months ended     months ended     months ended  
 
  December 31, 2020     September 30, 2020     June 30, 2020     March 31, 2020     December 31, 2019  
Interest Income
                             
Interest and Fees on Loans
  $ 5,931,405     $ 5,657,929     $ 5,508,679     $ 5,035,645     $ 5,345,417  
Interest on Investment Securities
    630,449       799,976       500,293       357,942       278,164  
Interest on Deposits with Other Banks
    10,083       8,236       13,001       78,237       88,239  
Total Interest Income
    6,571,937       6,466,140       6,021,974       5,471,824       5,711,820  
 
                                       
Interest Expense
                                       
Interest on Deposits
    827,779       919,326       1,095,532       1,395,959       1,513,662  
Interest on Borrowings
    226,724       231,700       208,765       157,519       162,502  
Total Interest Expense
    1,054,504       1,151,026       1,304,297       1,553,478       1,676,164  
 
                                       
Net Interest Income
    5,517,433       5,315,115       4,717,677       3,918,346       4,035,657  
Provision for Loan Losses
    (238,000 )     -       (705,000 )     (549,000 )     -  
Net Interest Income after
                                       
Provision for Loan Losses
    5,279,433       5,315,115       4,012,677       3,369,346       4,035,657  
Non-Interest Income
                                       
Mortgage Loan Gain-on-Sale and Fee Revenue
    4,283,961       4,742,574       2,805,571       2,117,878       1,098,656  
Service Charges and Other Income
    30,535       14,802       33,923       39,062       44,337  
Gains on Sale of Securities
    3,921       17,174       -       25,608       -  
Swap Fee Income
    270,450       -       299,762       87,500       -  
Increase in Cash Surrender Value of Bank-
                                       
owned Life Insurance
    132,555       277,164       127,496       101,998       96,727  
Total Non-interest Income
    4,721,422       5,051,714       3,266,751       2,372,047       1,239,720  
 
                                       
 
                                       
Revenue
  $ 10,238,855     $ 10,366,829     $ 7,984,428     $ 6,290,393     $ 5,275,377  
 
                                       
Non-Interest Expenses
                                       
Officer and Employee Compensation
                                       
and Benefits
    4,479,310       5,065,021       3,488,369       3,200,721       2,637,977  
Occupancy Expense
    294,600       306,291       300,634       292,794       293,058  
Equipment and Depreciation Expense
    227,758       175,684       147,910       184,022       261,871  
Insurance Expense
    49,008       43,836       51,263       52,335       10,760  
Professional Fees
    417,497       274,505       325,545       281,396       278,594  
Data and Item Processing
    322,373       230,152       285,942       174,135       178,416  
Advertising
    83,559       99,508       36,732       58,804       113,194  
Franchise Taxes and State Assessment Fees
    185,379       185,404       178,812       175,870       175,920  
Mortgage Fees and Settlements
    675,218       600,592       454,866       221,374       200,192  
Other Operating Expense
    178,286       194,777       156,734       148,487       181,005  
 
                                       
Total Non-interest Expenses
    6,912,989       7,175,770       5,426,806       4,789,937       4,330,987  
Income before Income Taxes
    3,087,866       3,191,059       1,852,622       951,455       944,389  
 
                                       
Income Tax Expense
    674,091       615,689       327,097       101,649       196,581  
 
                                       
Net Income
  $ 2,413,775     $ 2,575,370     $ 1,525,525     $ 849,806     $ 747,808  
Earnings per Common Share - Basic
  $ 0.33     $ 0.36     $ 0.21     $ 0.12     $ 0.10  
Earnings per Common Share - Diluted
  $ 0.33     $ 0.35     $ 0.21     $ 0.11     $ 0.10  
Weighted-Average Common Shares
                                       
Outstanding - Basic
    7,252,552       7,234,294       7,238,751       7,348,022       7,212,568  
Weighted-Average Common Shares
                                       
Outstanding - Diluted
    7,312,247       7,277,112       7,267,773       7,435,490       7,272,228  
 
                                       

Average Balances, Income and Expenses, Yields and Rates
                                   
(Unaudited)
                                   
 
                                   
 
  Three Months Ended                 Three Months Ended              
 
  December 31, 2020                 September 30, 2020              
 
  Average Balance     Income/Expense     Yield     Average Balance     Income/Expense     Yield  
Assets
                                   
Cash
  $ 38,217,380     $ 10,083       0.10 %   $ 29,769,485     $ 8,236       0.11 %
 
                                               
Investments (Tax Exempt)
    23,815,369       151,564               11,434,264       250,016          
Investments (Taxable)
    90,609,147       510,714               90,668,376       602,463          
Total Investments
    114,424,516       662,277       2.30 %     102,102,640       852,479       3.32 %
 
                                               
Total Loans
    569,936,960       5,931,405       4.14 %     549,575,996       5,657,929       4.10 %
 
                                               
Earning Assets
    722,578,856       6,603,765       3.64 %     681,448,121       6,518,643       3.81 %
 
                                               
 
                                               
 
                                               
Assets
  $ 747,427,986                     $ 705,290,352                  
 
                                               
Liabilities
                                               
Interest Checking
  $ 39,206,072       15,165       0.15 %   $ 27,902,031       11,914       0.17 %
Money Market
    138,196,830       74,468       0.21 %     132,371,367       93,750       0.28 %
Savings
    2,836,001       717       0.10 %     3,055,994       761       0.10 %
Time Deposits
    175,514,471       737,430       1.67 %     178,221,780       812,901       1.82 %
Interest Bearing Deposits
    355,753,374       827,779       0.93 %     341,551,172       919,326       1.07 %
 
                                               
Borrowings
  $ 135,328,997       226,724       0.67 %   $ 136,793,181       231,700       0.67 %
 
                                               
Interest Bearing Liabilities
    491,082,371       1,054,504       0.85 %     478,344,353       1,151,026       0.96 %
 
                                               
Non Interest Bearing Deposits
  $ 177,583,960                     $ 151,878,149                  
 
                                               
Cost of Funds
                    0.63 %                     0.73 %
 
                                               
Net Interest Margin1
          $ 5,549,261       3.06 %           $ 5,367,618       3.13 %
Shareholders Equity
  $ 71,511,341                     $ 68,801,586                  
 
                                               
1 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank's net yield on its earning assets  
 
                                               

Average Balances, Income and Expenses, Yields and Rates
                                                                       
(Unaudited)
                                                                       
 
  Three Months Ended                 Three Months Ended                 Twelve Months Ended                 Twelve Months Ended              
 
  December 31, 2020     Income /           December 30, 2019     Income /           December 31, 2020     Income /           December 31, 2019     Income /        
 
  Average Balance     Expense     Yield     Average Balance     Expense     Yield     Average Balance     Expense     Yield     Average Balance     Expense     Yield  
Assets
                                                                       
Cash
  $ 38,217,380     $ 10,083       0.10 %   $ 25,022,661     $ 88,239       1.40 %   $ 38,093,605     $ 109,557       0.29 %   $ 20,003,596     $ 391,377       1.96 %
 
                                                                                               
Investments (Tax Exempt)
    23,815,369       151,564               4,494,698       38,432               11,469,927       488,649               4,499,634       158,468          
Investments (Taxable)
    90,609,147       510,714               44,496,212       248,253               74,804,458       1,902,627               47,663,086       1,244,632          
Total Investments
    114,424,516       662,277       2.30 %     48,990,910       286,685       2.32 %     86,274,385       2,391,276       2.77 %     52,162,719       1,403,100       2.69 %
 
                                                                                               
Total Loans
    569,936,960       5,931,405       4.14 %     408,994,969       5,358,279       5.20 %     509,063,258       22,133,659       4.35 %     400,154,420       21,348,535       5.34 %
 
                                                                                               
Earning Assets
    722,578,856       6,603,765       3.64 %     483,008,540       5,733,203       4.71 %     633,431,248       24,634,491       3.89 %     472,320,736       23,143,013       4.90 %
 
                                                                                               
Assets
  $ 747,427,986                     $ 500,326,991                     $ 656,218,698                     $ 490,210,976                  
 
                                                                                               
Liabilities
                                                                                               
Interest Checking
  $ 39,206,072       15,165       0.15 %   $ 14,182,818       14,869       0.42 %   $ 28,215,189     $ 57,146       0.20 %   $ 9,727,525     $ 14,868       0.15 %
Money Market
    138,196,830       74,468       0.21 %     88,443,141       292,962       1.31 %     124,526,068       587,777       0.47 %     101,933,400       1,403,266       1.38 %
Savings
    2,836,001       717       0.10 %     2,272,908       1,146       0.20 %     2,703,310       3,279       0.12 %     2,527,243       5,041       0.20 %
Time Deposits
    175,514,471       737,430       1.67 %     201,332,510       1,204,685       1.40 %     183,086,149       3,590,396       1.96 %     200,361,882       4,750,313       2.37 %
Interest Bearing Deposits
    355,753,374       827,779       0.93 %     306,231,377       1,513,662       1.96 %     338,530,716       4,238,597       1.25 %     314,550,050       6,173,489       1.96 %
 
                                                                                               
Borrowings
    135,328,997       226,724       0.67 %     39,890,991       162,502       1.62 %   $ 105,749,331       824,708       0.78 %   $ 29,106,124     $ 545,140       1.87 %
 
                                                                                               
Interest Bearing Liabilities
    491,082,371       1,054,504       0.85 %     346,122,368       1,676,164       1.92 %     444,280,048       5,063,305       1.14 %     343,656,175       6,718,629       1.96 %
 
                                                                                               
Non Interest Bearing Deposits
  $ 177,583,960                     $ 84,845,763                     $ 138,007,364                     $ 78,699,921                  
 
                                                                                               
Cost of Funds
                    0.63 %                     1.54 %                     0.87 %                     1.59 %
 
                                                                                               
Net Interest Margin1
          $ 5,549,261       3.06 %           $ 4,057,039       3.33 %           $ 19,571,187       3.09 %           $ 16,424,384       3.48 %
Shareholders Equity
  $ 71,511,341                     $ 63,634,670                     $ 67,908,517                     $ 61,518,809                  
ROAA
    1.28 %                     0.59 %                     1.12 %                     0.55 %                
ROAE
    13.43 %                     4.66 %                     10.84 %                     4.40 %                
 
                                                                                               
1 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank's net yield on its earning assets  
 
                                                                                               

Selected Financial Data by Quarter Ended:
                             
(Unaudited)
                             
Balance Sheet Ratios
  December 31,
2020
    September 30,
2020
    June 30,
2020
    March 31,
2020
    December 31,
2019
 
Loans to Deposits
    108.57 %     106.97 %     111.85 %     104.68 %     102.38 %
Income Statement Ratios (Quarterly)
                                       
Return on Average Assets (ROAA)
    1.28 %     1.45 %     0.92 %     0.68 %     0.59 %
Return on Average Equity (ROAE)
    13.43 %     14.89 %     9.24 %     5.27 %     4.66 %
Efficiency Ratio
    67.52 %     69.22 %     67.97 %     76.15 %     82.10 %
Net Interest Margin1
    3.06 %     3.13 %     2.93 %     3.26 %     3.33 %
Yield on Average Earning Assets
    3.64 %     3.81 %     3.75 %     4.55 %     4.71 %
Yield on Securities
    2.30 %     3.32 %     2.51 %     2.62 %     2.32 %
Yield on Loans
    4.14 %     4.10 %     4.35 %     5.02 %     5.20 %
Cost of Funds
    0.63 %     0.73 %     0.88 %     1.44 %     1.54 %
Noninterest income to Total Revenue
    46.11 %     48.73 %     40.91 %     37.71 %     23.50 %
Per Share Data
                                       
Tangible Book Value
  10.09     9.75     9.33     9.02     8.86  
Share Price Data
                                       
Closing Price
  9.10     7.20     7.50     5.80     10.45  
Book Value Multiple
    90 %     74 %     79 %     64 %     118 %
Common Stock Data
                                       
Outstanding Shares at End of Period
    7,283,647       7,233,751       7,238,751       7,238,751       7,221,046  
Weighted Average shares outstanding, basic
    7,252,552       7,234,294       7,238,751       7,348,022       7,212,568  
Weighted Average shares outstanding, diluted
    7,312,247       7,277,112       7,267,773       7,435,490       7,272,228  
Capital Ratios
                                       
Tier 1 Leverage ratio
    11.20 %     11.57 %     11.23 %     12.88 %     12.80 %
Common Equity Tier 1 ratio
    13.21 %     14.10 %     13.90 %     14.35 %     15.26 %
Tier 1 Risk Based Capital ratio
    13.21 %     14.10 %     13.90 %     14.35 %     15.26 %
Total Risk Based Capital ratio
    14.21 %     15.17 %     14.99 %     15.38 %     16.24 %
Credit Quality
                                       
Net Charge-offs to Average Loans
    0.00 %     0.00 %     0.02 %     0.00 %     0.09 %
Total Non-performing Loans to Total Loans
    0.61 %     0.64 %     0.73 %     0.53 %     1.54 %
Total Non-performing Assets to Total Assets
    0.48 %     0.49 %     0.57 %     0.43 %     1.24 %
Nonaccrual Loans to Total Loans
    0.61 %     0.64 %     0.71 %     0.50 %     0.42 %
Provision for Loan and Lease Losses
  238,000     0     705,000     549,000     0  
Allowance for Loan and Lease Losses to loans held-for-investment
    0.99 %     1.04 %     1.02 %     1.16 %     1.05 %
Allowance for Loan and Lease Losses to loans held-for-investment (ex PPP loans)
    1.21 %     1.32 %     1.28 %     1.16 %     1.05 %
 
                                       

Contact:

Joseph J. Thomas
President & Chief Executive Officer
Phone: 703-667-4161
Email: jthomas@freedom.bank



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