Freedom Bank Has Record Pre-Tax Earnings for First Half of 2015

Mortgage Division Profitability Surges in 2nd Quarter

FAIRFAX, Va.--()--The Freedom Bank of Virginia (OTCQX:FDVA) continued its impressive record of growth through June 30, 2015 with total assets of $381,368,227, up (26.9%) from $300,555,167 a year earlier. Gains occurred across the bank’s major earning asset groups of marketable securities, loans held for sale and loans receivable. Marketable securities consisting of bonds increased to $32,520,056 up 72.8% from $18,823,922 a year earlier. Strong performance by the mortgage division increased loans available for sale at June 30, 2015 to $10,264,722, up from $459,000 the prior year. The bank’s highest yielding asset, loans receivable, grew to $306,080,492 at June 30, 2015, up 21.0% from $253,070,371 at June 30, 2014.

The bank continues maintaining high quality credit standards. Past due loans were only 0.04% at June 30, 2015 and non-performing assets for the bank were only 0.17%. Both of these measures of asset quality are superior to the bank’s peer group and better than national averages.

More loans generated total interest income of $7,973,176 at June 30, 2015, up 21.8% from $6,543,869 the prior year. Non interest income of $1,198,192 at June 30, 2015 increased $954,811 primarily due to an $885,485 increase in fees from mortgage banking operations from the prior year.

Richard Hutchison, Chief Mortgage Officer of Freedom Bank Mortgage, added, “We have assembled a great group of people here at Freedom Bank Mortgage, many of whom previously worked together. We look forward to continuing to build our team and are pleased we have been able to contribute to the bank’s overall profitability in a short period of time.”

Large increases in assets were funded by more deposits and capital. Non-interest bearing checking deposits were $53,421,966 at June 30, 2015 compared with $48,823,404 a year earlier. Interest bearing checking deposits were $75,990,493, up 51.5% from $50,145,053 the prior year. Certificates of Deposits increased to $215,697,857 at June 30, 2015 from $170,554,825 same period prior year. Capital increased to $32,163,397 at June 30, 2015, up $5,027,031(18.5%) from the $27,136,366 balance at June 30, 2014.

The bank earned a record pre-tax net income of $904,881 at June 30, 2015, up from $828,592 for the first half of 2014. Net income after tax was $597,381 at June 30, 2015. Freedom Bank earned a pre-tax net income of $688,857 for the quarter ended June 30, 2015 up (43.4%) from the $480,377 pre-tax net income for the same period the prior year. The bank incurred no income tax expense in 2014. Net income after taxes was $454,857 for the quarter ended June 30, 2015. This was the bank’s twenty-fifth consecutive quarterly net profit.

CEO Craig Underhill indicated, “The bank made a substantial investment in its mortgage division in the first quarter of 2015, which affected net income for that quarter. We began realizing a return on that investment in the second quarter. Strong mortgage banking revenue and loan production were the primary drivers increasing profitability.”

Freedom Bank is a community-oriented, locally-owned bank with locations in Fairfax, Vienna, and Reston 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 Federal Financial Institutions Examination Council. 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, 2015   June 30,2014
   
ASSETS
Cash and due from banks $ 7,433,050 $ 7,260,790
Federal funds sold 19,048,000 15,828,000
Interest Bearing Balances with Banks 1,026,177 1,022,092
Investment securities available for sale, at fair value 32,520,056 18,823,922
Investment securities held to maturity - 23,780
FHLB and Federal Reserve Bank stock 1,267,600 797,400
Loans held for sale 10,264,722 459,000
Loans receivable 306,080,492 253,070,371
Allowance for possible loan losses   (2,930,920 )   (2,695,357 )
Net Loans 303,149,572 250,375,014
Premises and equipment, net 808,779 251,582
Accrued interest and other receivables 909,014 743,942
Deferred Tax Asset 1,320,000 996,000
Other assets 1,429,857 1,844,427
Bank Owned Life Insurance   2,191,400     2,129,218  
 
Total Assets $ 381,368,227   $ 300,555,167  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits:
Non-interest bearing deposits $ 53,421,966 $ 48,823,404
Interest Checking 75,990,493 50,145,053
Savings deposits 2,855,498 2,870,723
Time deposits   215,697,857     170,554,825  
Total Deposits 347,965,814 272,394,005
 
Other accrued expenses 1,119,868 938,191
Accrued interest payable   119,148     86,605  
Total Liabilities   349,204,830     273,418,801  
 
Stockholders' Equity:
Common stock, $3.16 par value. (15,000,000 shares authorized:
4,279,349 shares issued and outstanding June 30, 2015
3,815,029 shares issued and outstanding June 30, 2014) 13,509,682 12,042,431
Additional paid-in capital 18,628,656 16,372,319
Accumulated other comprehensive income (296,237 ) (230,493 )
Retained earnings (deficit)   321,296     (1,047,891 )
 
Total Stockholders' Equity   32,163,397     27,136,366  
 
Total Liabilities and Stockholders' Equity $ 381,368,227   $ 300,555,167  
 
 
The Freedom Bank of Virginia
Statements of Operations
UNAUDITED
  For the three months ended   For the six months ended
June 30, June 30,
2015   2014 2015   2014
   
Interest Income
Interest and fees on loans $ 3,933,577 $ 3,255,751 $ 7,653,779 $ 6,274,996
Interest on investment securities 162,819 120,280 307,371 256,160
Interest on Federal funds sold   4,712   5,152   12,026   12,713
Total Interest Income 4,101,108 3,381,183 7,973,176 6,543,869
 
Interest Expense
Interest on deposits   720,220   546,780   1,400,569   1,075,866
 
Net Interest Income 3,380,888 2,834,403 6,572,607 5,468,003
 
Provision for Possible Loan Losses   170,000   135,000   470,000   235,000
 

Net Interest Income after Provision for Possible Loan Losses

3,210,888 2,699,403 6,102,607 5,233,003
 
Other Income
Service charges and other income 919,986 143,695 1,167,359 215,766
Increase in cash surrender value of bank-owned life insurance   15,259   13,911   30,833   27,615
Total Other Income 935,245 157,606 1,198,192 243,381
 
Operating Expenses
Officers and employee compensation and benefits 2,214,368 1,469,177 4,038,990 2,850,847
Occupancy expense 201,979 149,402 399,090 285,957
Equipment and depreciation expense 117,400 77,551 225,983 154,960
Insurance expense 68,802 54,143 138,677 109,612
Professional fees 221,690 191,533 453,398 421,038
Data and item processing 224,301 188,888 458,182 371,804
Business development 44,233 40,601 95,594 91,026
Franchise tax 75,571 64,470 141,486 128,218
Other operating expenses   288,932   140,867   444,518   234,330
Total Operating Expenses   3,457,276   2,376,632   6,395,918   4,647,792
 
Income before Income Taxes 688,857 480,377 904,881 828,592
Provision for Income Taxes   234,000   -   307,500   -
 
Net Income $ 454,857 $ 480,377 $ 597,381 $ 828,592
 
Net Income Per Common Share $ 0.11 $ 0.13 $ 0.14 $ 0.22
 

Contacts

The Freedom Bank of Virginia
Craig S. Underhill, Chief Executive Officer
703-242-5300
cunderhill@freedombankva.com

Contacts

The Freedom Bank of Virginia
Craig S. Underhill, Chief Executive Officer
703-242-5300
cunderhill@freedombankva.com