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The Freedom Bank of Virginia Reports Record Earnings for the Third Quarter of 2021

FAIRFAX, Va. (October 29, 2021) The Freedom Bank of Virginia  (OTCQX: FDVA), (the “Bank” or “Freedom”) today announced net income of $2,890,281, or $0.39 per diluted share, for the three months ended September 30, 2021. This compares to net income of $2,626,381 or $0.36 per diluted share, for the linked quarter and net income of $2,575,370 or $0.35 per diluted share for the three months ending September 30, 2020. Net income for the first nine months of 2021 was $7,984,873 or $1.09 per diluted share compared to net income of $4,950,701 or $0.68 per diluted share for the first nine months of 2020.

Joseph J. Thomas, President and CEO, commented, "The strength of our client franchise and diversity of business lines helped drive another quarter of record earnings with 21.66% growth in pre-tax, pre-provision profit over the comparable quarter in 2020. We achieved this growth even while total fee-based revenue normalized to 26.78% of total revenue in the third quarter, down from 48.73% of total revenue during the previous year when mortgage banking volume was surging. Return on equity was 14.18% driven by continued reduction in cost of funds to 37 basis points and improvement in efficiency ratio to 59.57% in the third quarter. This strong profitability has enabled Freedom Bank to increase tangible book value per share by 14.26% over the past 12 months to $11.14. I am grateful to the entrepreneurs and small businesses that continue to select Freedom as their lead bank and proud of my teammates who are helping these clients in the ways they wish to be served, in-person or on-line."

Third Quarter 2021 Highlights include:

  • Net income for the third quarter was $2,890,281 or $0.39 per diluted share compared to net income of $2,626,381 or $0.36 per diluted share in the linked quarter and net income of $2,575,370 or $0.35 per diluted share for the three months ended September 30, 2020;
  • Pre-tax, pre-provision net income increased by 13.14% to $3,882,322 for the third quarter compared to pre-tax, pre-provision net income of $3,431,336 in the linked quarter and by 21.66% to $3,191,059 for the same period in 2020;
  • Return on Average Assets ("ROAA") was 1.35% for the quarter ended September 30, 2021 compared to 1.24% for the linked quarter and 1.45% for the three months ended September 30, 2020. ROAA for the first nine months of 2021 was 1.29% compared to 1.06% for the same period in 2020;
  • Return on Average Equity ("ROAE") was 14.18% for the three months ended September 30, 2021 compared to 13.65% for the linked quarter and 14.89% for the three months ended September 30, 2020. ROAE for the first nine months of 2021 was 13.77% compared to 9.91% for the same period in 2020;
  • Total assets were $846.6 million on September 30, 2021, an increase of $79.55 million or 10.37% from total assets on December 31, 2020;
  • Loans held-for-investment (excluding PPP loans) increased by $11.10 million or 2.21% during the quarter, while PPP loan balances decreased by $38.71 million on loan forgiveness and mortgage loans held for sale decreased by $2.84 million, on a decline in mortgage activity;
  • Cash balances at the Federal Reserve increased by $14.17 million during the third quarter;
  • Total deposits increased by $53.39 million or by 8.58% in the third quarter and increased by $127.01 million or 23.16% in the first nine months of 2021. Non-interest bearing demand deposits decreased by $10.47 million from the linked quarter to $216.39 million and represented 32.01% of total deposits on September 30, 2021;
  • The net interest margin increased in the third quarter to 3.43%, higher by 5 basis points compared to the linked quarter and higher by 30 basis points compared to the same period in 2020. Excluding the additional income from forgiveness of PPP loans, the net interest margin would have been 2.93%. The increase in the net interest margin across linked quarters was primarily due to higher yields on loans and a 5 basis point reduction in funding costs. Higher cash balances during the quarter weighed on yields on earning assets and the net interest margin;
  • The cost of funds was 0.37% for the third quarter, lower by 5 basis points compared to the linked quarter and lower by 36 basis points compared to the same period in 2020, as deposit and borrowing costs declined;
  • Non-interest income increased by 13.68% compared to the linked quarter and decreased by 25.535 compared to the same period in 2020. The increase in linked quarters was primarily due to higher gain-on sale revenue from SBA loans, partially offset by lower mortgage revenue as higher rates caused mortgage activity to slow from the linked quarter. The decrease in non-interest income in calendar quarters was due to lower mortgage revenue stemming from a slowdown in mortgage activity in 2021 compared to the prior year;
  • Non-interest expense was flat compared to the linked quarter and decreased by 20.29% compared to the same period in 2020. 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 59.57% for the quarter ended September 30, 2021, compared to 62.38% for the linked quarter and 69.22% for the same period in 2020;
  • Asset quality improved with the ratio of non-performing assets to total assets at 0.10% on September 30, 2021 compared to 0.41% on December 31, 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 $229,000 provision for loan losses during the third quarter and the ratio of the allowance for loan and lease losses to loans held-for-investment was 1.05% (or 1.17% excluding PPP loans, which carry a full faith and guarantee of the US Government) compared to 0.96% in the linked quarter (or 1.15% excluding PPP loans);
  • The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 10.47%, Common Equity Tier 1 ratio of 12.73%, Tier 1 Risk Based Capital ratio of 12.73% and a Total Capital ratio of 13.68%.

Pre-tax, Pre-Provision Net Income

Pre-tax, pre-provision net income increased by 13.14% to $3,882,322 for the third quarter compared to pre-tax, pre-provision net income of $3,431,336 in the linked quarter, primarily due to an increase in non-interest income from sales of SBA loans.

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)


For the three


For the three


months ended


months ended


September 30, 2021


September 30, 2020





Net Income

$             2,890,281


$             2,575,370

Income Tax Expense

763,041


615,689

Provision

229,000


-





Pre-tax, Pre-provision Net Income

$             3,882,322


$             3,191,059

Paycheck Protection Program ("PPP") Activity

In the second quarter of 2020, the Bank 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 Bank originated $53.89 million of round two PPP loans during 2021.

Beginning in January of 2021, the bank began to process loan forgiveness applications from borrowers of 2020 PPP loans and round two PPP loans. As of September 30, 2021, the SBA had forgiven 494 of these PPP loans with balances of $83.00 million, and the bank had recognized income from acceleration of processing fees of $1.76 million.

Net Interest Income

The Bank recorded net interest income of $6.99 million for the third quarter of 2021, an increase of 2.46% compared to the linked quarter, and 31.61% higher than the same period in 2020. The net interest margin in the third quarter of 2021 was 3.43%, higher by 5 basis points compared to the linked quarter and higher by 30 basis points compared to the same period in 2020. Income from PPP loan forgiveness during the third quarter was $667,746 (from $27.92 million of PPP loans forgiven by the SBA), compared to PPP loan forgiveness income of $513,543 (from $30.25 million of PPP loans forgiven by the SBA) during the second quarter of 2021. Excluding the additional income from forgiveness of PPP loans, the net interest margin in the third quarter would have been 2.93%.

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

  • Yields on average earning assets declined by 1 basis point to 3.77% compared to 3.78% in the linked quarter, as higher yields on loans and investment securities were offset by a surge in average cash balances from strong deposit growth during the quarter.
  • Loan yields increased by 7 basis points to 4.55% from 4.48% in the linked quarter, while yields on investment securities increased by 1 basis points to 2.23% from 2.22% in the linked quarter.
  • Cost of funds decreased by 5 basis points to 0.37%, from 0.42% in the linked quarter, on continued declines in deposit and borrowing costs.
  • Excluding the additional income from PPP loan forgiveness would have reduced the net interest margin by 50 basis points.

Non-interest Income

Non-interest income was $2.61 million for the third quarter, higher by 13.68% compared to the linked quarter and lower by 48.40% compared to the same period in 2020. The higher non-interest income across linked quarters was primarily due to an increase in 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 5.28% compared to the linked quarter, primarily due to higher net interest and non-interest income, and lower by 7.38% compared to the same period in 2020.

Non-interest Expenses

Non-interest expenses in the third quarter of 2021 were flat compared to the linked quarter and decreased by 20.29% compared to the same period in 2020. The decline in non-interest expenses in the third quarter compared to the calendar quarter was largely due to lower costs related to mortgage commissions and mortgage settlements.

The Efficiency Ratio was 59.57% for the quarter ended September 30, 2021, compared to 62.38% for the prior quarter and 69.22% for the same period in 2020.

Asset Quality

Non-accrual loans were $879,078 or 0.15% of loans held-for-investment at the end of the third quarter of 2021, compared to $879,089 or 0.15% of loans held-for-investment at the end of the linked quarter. There were no troubled debt restructurings ("TDRs") as of September 30, 2021. On September 30, 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 September 30, 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 $879,078 or 0.10% of total assets at June 30, 2021 compared to $879,089 or 0.11% of total assets, at the end of the linked quarter.

In 2020, in accordance with the spirit and provisions of the CARES Act, the Bank 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 September 30, 2021.

Following an assessment of the collectability of the loans held-for-investment at the end of the third quarter, it was determined that a $229,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Bank booked a provision of $191,000 in the second quarter of 2021. The Bank's ALLL ratio was 1.05% of loans held-for-investment (or 1.17% of loans held-for investment excluding PPP loans) as of September 30, 2021 compared to an ALLL ratio of 0.96% at June 30, 2021 (or 1.15% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets at September 30, 2021 were $846.60 million compared to $837.07 million on June 30, 2021. Changes in major asset categories during linked quarters were as follows:

  • Cash balances at the Federal Reserve increased by $14.17 million
  • Available for sale investment balances increased by $23.78 million
  • PPP loan balances decreased by $38.71 million on loan forgiveness by the SBA
  • Other loans held-for investment grew by $11.10 million
  • Mortgage loans held-for-sale declined by $2.84 million

Total Liabilities

Total liabilities at September 30, 2021 were $765.15 million compared to total liabilities of $758.07 million on June 30, 2021. Total deposits were $675.50 million compared to total deposits of $622.10 million on June 30, 2021. Non-interest bearing demand deposits decreased by $10.47 million during the quarter, and comprised 32.03% 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 $69.42 million during the quarter. Federal Home Loan Bank advances declined by $5.14 million during the quarter, while PPP Liquidity Facility term advances decreased by $40.28 million, in line with PPP loan forgiveness.

Stockholders' Equity and Capital

Stockholders' equity at September 30, 2021 was $81.45 million compared to $78.99 million on June 30, 2021. Additional paid-in capital was $59.56 million on September 30, 2021 compared to $59.46 million on June 30, 2021. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, decreased by $530,890 on net unrealized losses during the third quarter of 2021. Total shares issued and outstanding were 7,312,565 on September 30, 2021 compared to 7,305,581 shares on June 30, 2021. The tangible book value of the Bank's common stock at September 30, 2021 was $11.14 per share compared to $10.81 per share on June 30, 2021 and $9.75 per share on September 30, 2020.

As of September 30, 2021 of the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized banks. The Bank's capital ratios on September 30, 2021 and June 30, 2021 were as follows:


September 30, 2021 

June 30, 2021      




Total Capital Ratio 

13.68%

13.86%




Tier 1 Capital Ratio  

12.73%

12.90%

Common Equity 



Tier 1 Capital Ratio 

12.73%

12.90%




Leverage Ratio 

10.47%

10.56%

Bank Holding Company

The Bank has received all required regulatory approvals to form a new holding company that will be named Freedom Financial Holdings, Inc. The Board of Directors believes that forming a holding company now provides more efficient access to capital markets if the need arises, creates flexibility in the overall capital management for our organization, and broadens the nature of non-bank activities that can be conducted.

When the reorganization is completed, current shareholders of the Bank would become shareholders of the newly-formed bank holding company and current shareholders will have the same rights and ownership percentage in the new holding company as they presently have in the bank.

The holding company formation will not impact the Bank's operations; the Bank will continue to provide its full range of financial services comprised of retail banking, commercial banking, and mortgage products. The Bank's headquarters will remain in Fairfax, VA as will the newly-formed holding company.

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)


September 30,


June 30,


December 31,


2021


2021


2020

ASSETS






Cash and Due from Banks

$                 2,430,918


$            2,445,822


$            1,792,660

Interest Bearing Deposits with Banks

61,753,387


47,583,608


25,543,295

Securities Available-for-Sale

137,253,597


113,476,021


97,188,125

Securities Held-to-Maturity

18,497,540


16,071,231


16,132,367

Restricted Stock Investments

2,951,550


3,135,150


3,607,800

Loans Held for Sale

22,191,469


25,035,561


45,047,711

PPP Loans Held for Investment 

57,809,131


96,521,227


101,215,376

Other Loans Held for Investment 

512,670,067


501,568,684


449,211,475

Allowance for Loan Losses

(6,011,021)


(5,765,021)


(5,454,925)

Net Loans

564,468,177


592,324,890


544,971,926

Bank Premises and Equipment, net

1,182,250


1,221,283


1,298,409

Accrued Interest Receivable

2,304,786


2,650,012


2,868,868

Deferred Tax Asset

1,223,546


1,094,904


1,154,078

Bank-Owned Life Insurance

20,428,825


20,037,218


17,035,214

Right of Use Asset, net

2,943,456


3,180,647


3,258,817

Other Assets

8,972,651


8,814,083


7,145,687

Total Assets

$                 846,602,152


837,070,430


767,044,957

LIABILITIES AND STOCKHOLDERS' EQUITY












Deposits






Demand Deposits






Non-interest Bearing

216,387,250


$       226,861,750


$       192,987,984

Interest Bearing

260,304,062


190,881,615


176,424,255

Savings Deposits

4,780,274


4,376,920


2,962,303

Time Deposits

194,024,810


199,982,659


176,114,292

Total Deposits

675,496,396


622,102,944


548,488,834

Federal Home Loan Bank Advances

19,035,714


24,178,571


30,071,429

PPP Liquidity Facility Advances

57,857,132


98,138,367


101,951,020

Accrued Interest Payable

268,170


377,023


480,816

Lease Liability

3,060,286


3,284,393


3,347,075

Other Liabilities

9,429,531


9,992,518


9,247,507

Total Liabilities

765,147,229


758,073,816


693,586,681

Stockholders' Equity






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






0 Shares Issued and Outstanding, September 30, 2021, June 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:






           6,639,565, 6,632,581 and 6,610,647 Shares Issued and Outstanding





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





    (Includes 102,455, 95,471 and 100,002 Unvested Shares at September 30, 2021 





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

65,371


65,371


65,106

Non-Voting Common Stock:






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






June 30, 2021 and December 31, 2020

6,730


6,730


6,730

Additional Paid-in Capital

59,563,407


59,464,489


59,223,538

Accumulated Other Comprehensive Income, Net

1,012,293


1,543,183


1,340,654

Retained Earnings

20,807,122


17,916,841


12,822,248

Total Stockholders' Equity

81,454,923


78,996,614


73,458,276

Total Liabilities and Stockholders' Equity

$                  846,602,152


837,070,430


767,044,957


THE FREEDOM BANK OF VIRGINIA

CONSOLIDATED STATEMENTS OF OPERATIONS  



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)



For the three


For the three


For the nine


For the nine



months ended


months ended


months ended


months ended



September 30, 2021


September 30, 2020


September 30, 2021


September 30, 2020

Interest Income









Interest and Fees on Loans


$              6,914,453


$                  5,657,930


$                20,778,804


$                    16,202,254

Interest on Investment Securities


750,570


799,976


2,043,308


1,658,211

Interest on Deposits with Other Banks

26,994


8,236


50,996


99,474

Total Interest Income


7,692,017


6,466,141


22,873,108


17,959,939

Interest Expense









Interest on Deposits


546,168


919,326


1,804,989


3,410,817

Interest on Borrowings


150,599


231,700


576,226


597,984

Total Interest Expense


696,767


1,151,026


2,381,215


4,008,801










Net Interest Income


6,995,249


5,315,115


20,491,893


13,951,138

Provision for Loan Losses


(229,000)


-


(484,000)


(1,254,000)

Net Interest Income After









Provision for Loan Losses

6,766,249


5,315,115


20,007,893


12,697,138

Non-Interest Income









Mortgage Loan Gain-on-Sale and Fee Revenue

1,995,535


4,742,574


6,829,874


9,666,023

 SBA Gain-on-Sale Revenue


371,172


-


437,825


-

Service Charges and Other Income

67,374


14,802


159,576


87,787

Gain on Sale of Securities


(13,493)


17,174


1,117


42,782

 Servicing Income


44,443


-


138,934


-

Swap Fee Income


-


-


-


387,262

Increase in Cash Surrender Value of Bank-







owned Life Insurance


141,608


277,164


393,611


506,658

Total Non-interest Income


2,606,640


5,051,714


7,960,937


10,690,512

Non-Interest Expenses









Officer and Employee Compensation








and Benefits


3,862,969


5,065,021


12,285,901


11,754,111

Occupancy Expense


318,109


306,291


915,018


899,719

Equipment and Depreciation Expense

176,379


175,684


491,715


507,616

Insurance Expense


70,814


43,836


193,227


147,433

Professional Fees


243,678


274,505


894,270


881,446

Data and Item Processing


303,444


230,152


882,227


690,228

Advertising  


92,806


99,508


248,489


195,043

Franchise Taxes and State Assessment Fees

200,048


185,404


577,986


540,086

Mortgage Fees and Settlements


230,582


600,592


968,232


1,276,831

Other Operating Expense


220,739


194,776


559,693


499,998

Total Non-interest Expenses

5,719,568


7,175,770


18,016,758


17,392,513

Income Before Income Taxes

3,653,322


3,191,059


9,952,072


5,995,136

Income Tax Expense


763,041


615,689


1,967,199


1,044,435

Net Income


$                  2,890,281


$                  2,575,370


$                      7,984,873


$                      4,950,701

Earnings per Common Share - Basic

$                             0.39


$                             0.36


$                                1.09


$                                0.68

Earnings per Common Share - Diluted

$                             0.39


$                             0.35


$                                1.09


$                                0.68

Weighted-Average Common Shares








Outstanding - Basic


7,341,635


7,234,294


7,310,007


7,233,525

Weighted-Average Common Shares 








Outstanding - Diluted


7,395,062


7,277,112


7,357,383


7,292,827


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


September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020

Interest Income










Interest and Fees on Loans

$         6,914,453


$         6,951,964


$         6,912,386


$      5,931,405


$      5,657,929

Interest on Investment Securities

750,570


655,996


636,742


630,449


799,976

Interest on Deposits with Other Banks  

26,994


15,170


8,831


10,083


8,236

Total Interest Income

7,692,017


7,623,130


7,557,959


6,571,937


6,466,141











Interest Expense










Interest on Deposits

546,168


582,997


675,824


827,780


919,326

Interest on Borrowings

150,599


212,703


212,923


226,724


231,700

Total Interest Expense

696,767


795,700


888,747


1,054,504


1,151,026











Net Interest Income

6,995,249


6,827,430


6,669,212


5,517,433


5,315,115

Provision for Loan Losses

(229,000)


(191,000)


(64,000)


(238,000)


-

Net Interest Income after










Provision for Loan Losses

6,766,249


6,636,430


6,605,212


5,279,433


5,315,115

Non-Interest Income










Mortgage Loan Gain-on-Sale and Fee Revenue

1,995,535


2,012,153


2,822,186


4,283,961


4,742,574

 SBA Gain-on-Sale Revenue

371,172


66,652







Service Charges and Other Income

67,374


43,501


48,702


30,535


14,802

Gains on Sale of Securities

(13,493)


1,726


12,885


3,921


17,174

Servicing Income

44,443


42,847


51,643


-


-

Swap Fee Income

-


-


-


270,450


-

Increase in Cash Surrender Value of Bank-










owned Life Insurance

141,608


126,117


125,886


132,555


277,164

Total Non-interest Income

2,606,640


2,292,996


3,061,302


4,721,422


5,051,714





















Revenue

$             9,601,889


$             9,120,426


$             9,730,514


$       10,238,855


$       10,366,829











Non-Interest Expenses










Officer and Employee Compensation










and Benefits

3,862,969


3,760,697


4,662,235


4,479,310


5,065,021

Occupancy Expense

318,109


306,521


290,389


294,600


306,291

Equipment and Depreciation Expense

176,379


159,420


155,916


227,758


175,684

Insurance Expense

70,814


65,356


57,056


49,008


43,836

Professional Fees

243,678


359,159


291,434


417,497


274,505

Data and Item Processing

303,444


311,000


267,783


322,373


230,152

Advertising

92,806


82,605


73,078


83,559


99,508

Franchise Taxes and State Assessment Fees

200,048


192,508


185,429


185,379


185,404

Mortgage Fees and Settlements

230,582


274,231


463,419


675,218


600,592

Other Operating Expense

220,739


177,593


161,361


178,287


194,777











Total Non-interest Expenses

5,719,567


5,689,090


6,608,100


6,912,989


7,175,770

Income before Income Taxes

3,653,322


3,240,336


3,058,414


3,087,866


3,191,059











Income Tax Expense

763,041


613,955


590,203


674,091


615,689











Net Income

$             2,890,281


$             2,626,381


$             2,468,211


$          2,413,775


$          2,575,370

Earnings per Common Share - Basic

$                       0.39


$                       0.36


$                       0.34


$                    0.33


$                    0.36

Earnings per Common Share - Diluted

$                       0.39


$                       0.36


$                       0.34


$                    0.33


$                    0.35

Weighted-Average Common Shares










Outstanding - Basic

7,341,635


7,306,710


7,295,190


7,252,552


7,234,294

Weighted-Average Common Shares 










Outstanding - Diluted

7,395,062


7,354,389


7,334,463


7,312,247


7,277,112


Average Balances, Income and Expenses, Yields and Rates





(Unaudited)

























Three Months Ended






Three Months Ended






September 30, 2021






June 30, 2021






Average Balance


Income/ Expense


Yield


Average Balance


Income/ Expense


Yield

Assets












Cash

$              71,114,495


$       26,994


0.15%


$              64,848,200


$       15,170


0.09%













Investments (Tax Exempt)

27,138,446


177,809




23,292,663


223,691



Investments (Taxable)

113,180,210


610,101




103,971,494


479,280



Total Investments

140,318,656


787,910


2.23%


127,264,157


702,971


2.22%













Total Loans 

602,948,952


$6,914,454


4.55%


622,826,541


$6,951,964


4.48%













Earning Assets

814,382,103


7,729,357


3.77%


814,938,898


7,670,105


3.78%





































Assets

$            847,472,317






$            846,402,419

















Liabilities












Interest Checking

$              36,659,322


12,240


0.13%


$              34,272,772


10,907


0.13%

Money Market

189,055,851


80,347


0.17%


164,337,737


63,989


0.16%

Savings

4,147,591


1,170


0.11%


4,195,416


1,078


0.10%

Time Deposits 

197,133,663


452,411


0.91%


197,180,571


507,023


1.03%

Interest Bearing Deposits

426,996,426


546,168


0.51%


399,986,496


582,997


0.58%













Borrowings

$            101,033,443


150,599


0.59%


$            138,398,143


212,703


0.62%













Interest Bearing Liabilities

528,029,869


696,767


0.52%


538,384,639


795,700


0.59%













Non Interest Bearing Deposits

$            226,514,808






$            217,927,934

















Cost of Funds





0.37%






0.42%













Net Interest Margin1



$  7,032,590


3.43%




$  6,874,405


3.38%

Shareholders Equity

$              80,866,605






$              77,178,196

















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







Nine Months Ended






Nine Months Ended







September 30, 2021


Income /




September 30, 2020


Income /





September 30, 2021


Income /




September 30, 2020


Income /





Average Balance


Expense


Yield


Average Balance


Expense


Yield



Average Balance


Expense


Yield


Average Balance


Expense


Yield


Assets


























Cash

$              71,114,495


$         26,994


0.15%


$              29,769,485


$           8,236


0.11%



$              59,613,424


50,996


0.11%


$              38,052,045


99,474


0.35%




























Investments (Tax Exempt)

27,138,446


177,809




11,434,264


250,016





24,840,927


478,487




7,324,742


337,085




Investments (Taxable)

113,180,210


610,101




90,668,376


602,463





103,021,204


1,665,303




69,497,774


1,391,913




Total Investments

140,318,655


787,910


2.23%


102,102,640


852,479


3.32%



127,862,131


2,143,791


2.24%


76,822,516


1,728,999


3.01%




























Total Loans 

602,948,952


6,914,454


4.55%


549,575,996


5,657,929


4.10%



611,199,952


20,778,804


4.55%


488,609,233


16,202,254


4.43%




























Earning Assets

814,382,103


7,729,357


3.77%


681,448,121


6,518,644


3.81%



798,675,507


22,973,590


3.85%


603,483,794


18,030,726


3.99%




























Assets

$            847,472,317






$            705,290,352







$            829,760,907






$            625,595,893
































Liabilities


























Interest Checking

$              36,659,322


12,240


0.13%


$              27,902,031


11,914


0.17%



$              34,416,833


38,776


0.15%


$              24,524,820


41,980


0.23%


Money Market

189,055,851


80,347


0.17%


132,371,367


93,750


0.28%



167,601,257


206,832


0.16%


$            119,935,885


513,309


0.57%


Savings

4,147,591


1,170


0.11%


3,055,994


761


0.10%



3,884,715


3,062


0.11%


2,658,757


2,563


0.13%


Time Deposits 

197,133,663


452,411


0.91%


178,221,780


812,901


1.82%



189,703,988


$1,556,319


1.10%


185,628,465


2,852,969


2.05%


Interest Bearing Deposits

426,996,426


546,168


0.51%


341,551,172


919,326


1.07%



395,606,793


1,804,989


0.61%


332,747,926


3,410,820


1.37%




























Borrowings

101,033,443


150,599


0.59%


136,793,181


231,700


0.67%



124,396,278


576,226


0.62%


95,817,473


597,984


0.83%




























Interest Bearing Liabilities

528,029,869


696,767


0.52%


478,344,353


1,151,026


0.96%



520,003,071


2,381,215


0.61%


428,565,399


4,008,804


1.25%




























Non Interest Bearing Deposits

$            226,514,808






$            151,878,149







$            219,905,412






$            124,718,871
































Cost of Funds





0.37%






0.73%







0.43%






0.97%




























Net Interest Margin1



$   7,032,590


3.43%




$   5,367,618


3.13%





$ 20,592,375


3.45%




$ 14,021,922


3.10%


Shareholders Equity

$              80,866,605






$              68,801,586







$              77,531,861






$              66,698,809






ROAA

1.35%






1.45%







1.29%






1.06%






ROAE

14.18%






14.89%







13.77%






9.91%
































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

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

September 30, 2020

Loans held-for-investment to Deposits 

84.45%

96.14%

95.51%

100.35%

94.34%

Income Statement Ratios (Quarterly)






Return on Average Assets (ROAA)

1.35%

1.24%

1.26%

1.28%

1.45%

Return on Average Equity (ROAE)

14.18%

13.65%

13.44%

13.43%

14.89%

Efficiency Ratio

59.57%

62.38%

67.91%

67.52%

69.22%

Net Interest Margin1

3.43%

3.38%

3.55%

3.06%

3.13%

Yield on Average Earning Assets

3.77%

3.78%

4.02%

3.64%

3.81%

Yield on Securities

2.23%

2.22%

2.34%

2.30%

3.32%

Yield on Loans

4.55%

4.48%

4.61%

4.14%

4.10%

Cost of Funds

0.37%

0.42%

0.51%

0.63%

0.73%

Noninterest income to Total Revenue

27.15%

25.14%

31.46%

46.11%

48.73%

Per Share Data






Tangible Book Value

$11.14

$10.81

$10.35

$10.09

$9.75

Share Price Data






Closing Price

$12.55

$11.98

$10.90

$9.10

$7.20

Book Value Multiple

113%

111%

105%

90%

74%

Common Stock Data






Outstanding Shares at End of Period

7,312,565

7,305,581

7,307,915

7,283,647

7,233,751

Weighted Average shares outstanding, basic

7,341,635

7,306,710

7,295,190

7,252,552

7,234,294

Weighted Average shares outstanding, diluted

7,395,062

7,354,389

7,334,463

7,312,247

7,277,112

Capital Ratios






Tier 1 Leverage ratio

10.47%

10.56%

10.95%

11.20%

11.57%

Common Equity Tier 1 ratio

12.73%

12.90%

12.88%

13.21%

14.10%

Tier 1 Risk Based Capital ratio

12.73%

12.90%

12.88%

13.21%

14.10%

Total Risk Based Capital ratio

13.68%

13.86%

13.84%

14.21%

15.17%

Credit Quality






Net Charge-offs to Average Loans

0.00%

0.00%

0.00%

0.00%

0.00%

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

0.15%

0.15%

0.41%

0.58%

1.06%

Total Non-performing Assets to Total Assets

0.10%

0.11%

0.28%

0.41%

0.49%

Nonaccrual Loans to loans held-for-investment

0.15%

0.15%

0.41%

0.58%

0.76%

Provision for Loan and Lease Losses

$229,000

$191,000

$64,000

$238,000

$0

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

1.05%

0.96%

0.92%

0.99%

1.04%

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

1.17%

1.15%

1.16%

1.21%

1.32%







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




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Fairfax, VA 22030
(703) 667-4167
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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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Chantilly, VA 20151
(703) 766-6400
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Manassas, VA 20109
703-349-2210
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