Freedom Bank Announces Record First Half Profits on Strong Loan Growth

Net Profit Up 47% through June 30, 2013 Compared with Prior Year

Loans Receivable Up 23% over Second Quarter 2012

FAIRFAX, Va.--()--Freedom Bank of Virginia (Bank) (Bulletin Board:FDVA.OB) earned a net profit before taxes of $826,309 for the first half of 2013 compared to a net profit for the first half of 2012 of $560,855, an increase of 47.33%. Net profit before taxes was $525,713 for the quarter ending June 30, 2013. This was more than double the $252,083 net profit before taxes for the quarter ending June 30, 2012 and was the seventeenth consecutive quarterly profit for the Bank. Income increased from higher interest earned on loan volumes and a decrease in the provision for loan losses due to continued improving asset quality. According to CEO Craig Underhill, “The Bank invested in additional lending staff in the fourth quarter of last year and the first quarter of this year and we are seeing results from that investment. Additionally, the Bank is reaping the benefits of an effective credit culture from reduced loan loss provisions.”

Total assets increased 23.36% to $254,805,078, up from $206,560,467 at June 30, 2012. This was the first time assets exceeded $250,000,000 for the Bank. Loans receivable increased to $193,071,420 from $157,026,486 at June 30, 2012, a $36,044,934 (22.95%) increase. In addition to loan growth, quality also continues to improve with non-accrual loans declining as a percentage of total loans from 1.42% at June 30, 2012 to 0.78% at June 30, 2013.

Solid loan growth allowed the Bank to invest less in lower yielding marketable securities. Investment securities decreased slightly to $29,475,848 from $31,584,026 during the same period the prior year. The growth in assets was funded by $44,948,996 growth in deposits (24.77%). Non interest checking increased $2,922,740 (8.38%) to $37,811,979. Interest checking account balances increased $14,295,619 (54.40%) to $40,573,863. Certificates of deposit growth was $27,854,242 (23.43%) to $146,719,225.

Capital continues to be strong, growing $1,289,294 (5.28%) over the same period in the prior year to $25,698,572. The rapid increase in longer term interest rates at the end of the second quarter negatively impacted all banks’ investment securities including Freedom Bank. The rise in rates caused the value of bonds being held to decline by $367,005. Since the Bank continues to own these bonds, there has not been a loss realized from the change, but accounting rules require the Bank to show this change in value as a reduction in its capital account. Book value per share was $8.95. Regulatory Capital minimums for Tier 1 Leverage Ratio, Risk Based Capital Tier 1, and Risk Based Capital Tier 2 were 5.0%, 6.0% and 10.0%, respectively, to be considered well capitalized. At June 30, 2013, the ratios for the Bank were 10.45%, 13.02% and 14.26%, respectively, all in the well capitalized category. The Bank continues its tradition of maintaining a robust capital base to serve the needs of its customers and stockholders.

About Freedom Bank

Freedom Bank is a community-oriented, locally-owned bank with locations in Fairfax and Vienna, Virginia. For information about Freedom Bank’s deposit and loan services, visit the Bank’s website at www.freedombankva.com.

This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. Other risks that can affect the Bank are detailed from time to time in our quarterly and annual reports filed with the Board of Governors of the Federal Reserve System. We caution readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and we may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance.

       
The Freedom Bank of Virginia
Statements of Financial Condition
UNAUDITED
June 30, 2013 June 30, 2012
   
ASSETS
Cash and due from banks $ 10,091,976 $ 2,871,644
Federal funds sold 14,798,000 8,776,000

Interest bearing balances with banks

1,018,023 1,012,820
Investment securities available for sale, at fair value 29,398,108 31,129,001
Investment securities held to maturity 77,740 455,025
Federal Reserve Bank stock 766,650 719,900
Loans held for sale 3,060,090 1,836,478
Loans receivable 193,071,420 157,026,486
Allowance for possible loan losses   (2,456,325 )   (2,119,622 )
Net Loans 190,615,095

154,906,864

Premises and equipment, net 237,632 215,502
Accrued interest and other receivables 875,489 643,367
Other assets 1,100,550 1,369,751
Bank Owned Life Insurance 2,072,864 2,012,115

Deferred tax asset

  692,861     612,000  
 
Total Assets $ 254,805,078   $ 206,560,467  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits:
Non-interest bearing deposits $ 37,811,979 $ 34,889,239

Interest checking

40,573,863 26,278,244
Savings deposits 1,321,531 1,445,136

Time deposits

  146,719,225     118,864,983  
Total Deposits 226,426,598 181,477,602
 
Other accrued expenses 2,595,661 601,522
Accrued interest payable   84,247     72,065  
Total Liabilities   229,106,506     182,151,189  
 
Stockholders' Equity:
Common stock, $4.17 par value. (5,000,000 shares authorized:
2,872,117 shares issued and outstanding June 30, 2013
2,846,117 shares issued and outstanding June 30, 2012) 11,967,248 11,858,828
Additional paid-in capital 16,303,442 16,213,270
Accumulated other comprehensive income (150,171 ) 216,834
Retained earnings (deficit)   (2,421,947 )   (3,879,654 )
 
Total Stockholders' Equity   25,698,572     24,409,278  
 
Total Liabilities and Stockholders' Equity $ 254,805,078   $ 206,560,467  
 
               
The Freedom Bank of Virginia
Statements of Operations
UNAUDITED
For the three months ended For the six months ended
June 30, June 30,
2013   2012 2013   2012
 
Interest Income
Interest and fees on loans $ 2,841,769 $ 2,317,251 $ 5,306,144 $ 4,616,034
Interest on investment securities 136,644 170,401 238,005 314,041
Interest on Federal funds sold   4,350   11,837   12,105   25,623
Total Interest Income 2,982,763 2,499,489 5,556,254 4,955,698
 
Interest Expense
Interest on deposits   477,355   516,163   960,197   1,038,092
 
Net Interest Income 2,505,408 1,983,326 4,596,057 3,917,606
 
Provision for Possible Loan Losses   88,500   305,000   158,500   571,000
 

Net interest income after

Provision for possible loan losses

2,416,908 1,678,326 4,437,557 3,346,606
 
Other Income
Service charges and other income 212,266 203,943 443,804 407,888
Increase in cash surrender value of bank-owned life insurance   14,442   12,115   29,689   12,115
Total Other Income 226,708 216,058 473,493 420,003
 
Operating Expenses
Officers and employee compensation and benefits 1,309,644 919,118 2,514,065 1,868,733
Occupancy expense 134,797 126,878 259,792 259,929
Equipment and depreciation expense 54,638 48,126 107,342 96,369
Insurance expense 52,907 44,191 104,436 85,580
Professional fees 136,655 141,686 276,192 226,993
Data and item processing 176,231 151,985 352,872 303,898
Business development 38,832 31,914 86,878 66,110
Franchise tax 61,023 56,447 120,684 106,787
Other operating expenses   153,176   121,956   262,480   191,355
Total Operating Expenses   2,117,903   1,642,301   4,084,741   3,205,754
 
Income before Income Taxes 525,713 252,083 826,309 560,855
Provision for Income Taxes   -   -   -   -
 
Net Income $ 525,713 $ 252,083 $ 826,309 $ 560,855
 
Net Income Per Common Share $ 0.18 $ 0.09 $ 0.29 $ 0.20
 
Net Income Per Diluted Share $ 0.18 $ 0.09 $ 0.29 $ 0.20
 

Contacts

Freedom Bank of Virginia
Craig S. Underhill, President & CEO
703-242-5300

Release Summary

Freedom Bank of VA Announces Record First Half Profits on Strong Loan Growth

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Contacts

Freedom Bank of Virginia
Craig S. Underhill, President & CEO
703-242-5300