FAIRFAX, Va.--(BUSINESS WIRE)--The Freedom Bank of Virginia (OTCQX:FDVA) earned a record net income of $719,205 for the third quarter ending September 30, 2016. This was up $186,213 (34.9%) from $532,992 earned for the same period one year earlier. Increased profitability resulted from continued improvement in interest income from loans and investments which increased $1,048,969 (24.0%). Non interest income, primarily generated through the gain on sale of mortgages, increased $756,702 (121%) from the prior year. While maintaining asset quality, increased loan volume required a loan loss provision of $515,500, up from $139,000 the prior year. Earnings per share were $0.12 for the quarter, unchanged from the prior year due to the higher share count from the bank’s successful stock offering in December 2015.
For the nine months ending September 30, 2016, net income was $1,785,080. This was up $654,707 (57.9%) from the prior year. Net income in the first nine months of 2016 already exceeds total net income for all of 2015. Banking and mortgage banking operations produced the strong results. Interest income from loans and investments increased $2,559,965 (20.7%) and additional non interest income from the gain on sale of mortgages was up $1,653,053 (101.6%) from the prior year. Strong loan growth in 2016 necessitated a larger provision for loan losses in 2016 to $925,500, up from $609,000 the prior year. Earnings per share through the third quarter of 2016 were $0.29 per share, up from $0.26 per share in 2015.
CEO Craig Underhill stated, “Positive operating leverage is fueling earnings growth. The upward trend in earnings per share continues even with the higher share count from our successful stock offering at the end of 2015. We have the capital to grow the bank and we are executing our plan to achieve scale for earning per share growth to enhance shareholder value.”
Total assets increased $103,934,364 (26.6%) to $494,027,493 at September 30, 2016 compared to September 30, 2015. The highest yielding asset of Loans Receivable grew $76,097,431 organically (23.7%) to $396,819,026 at September 30, 2016. Loans held for sale were $13,825,894, up from $6,141,110 the prior year. Investment Securities held for sale were $46,196,986, up 31.4% from $35,149,994 a year earlier.
Asset quality remains strong with non-performing assets comprising 0.22% of total assets at September 30, 2016. They were 0.09% of total assets at September 30, 2015. Past due loan balances still accruing interest were $0 at September 30, 2016 compared to $122,797.96 or 0.04% of total loans the prior year. Both of these metrics are far superior to national peers.
Large asset growth was funded by deposit growth, Federal Home Loan Bank advances and additional equity compared with the prior year. Non interest checking balances were $66,056,888 at September 30, 2016, up 14.2% from $57,859,877 a year earlier. Interest bearing checking account balances were $105,056,440, a $16,842,806 (19.1%) increase from $88,213,624 the prior year. Certificates of deposits were $241,037,751, up 17.6% from $205,050,631 a year earlier. Total deposits were $414,299,769 at September 30, 2016, versus $354,008,080 a year earlier.
Capital increased to $51,158,971 at September 30, 2016, a 55.6% improvement over the $32,881,109 level at September 30, 2015. Book value per share was $8.30 at September 30, 2016 and $7.68 at September 30, 2015.
Freedom Bank is a community-oriented, locally-owned bank with locations in Fairfax, Reston 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 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 | ||||||||
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(UNAUDITED) |
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September 30, 2016 |
September 30, 2015 | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 4,905,564 | $ | 4,782,417 | ||||
| Federal funds sold | 24,107,000 | 17,053,000 | ||||||
| Interest Bearing Balances with Banks | 1,031,321 | 1,027,212 | ||||||
| Investment securities available for sale, at fair value | 46,196,986 | 35,149,994 | ||||||
| FHLB and Federal Reserve Bank stock | 2,995,900 | 1,423,550 | ||||||
| Loans held for sale | 13,825,894 | 6,141,110 | ||||||
| Loans receivable | 396,819,026 | 320,721,595 | ||||||
| Allowance for possible loan losses | (4,100,459 | ) | (3,069,920 | ) | ||||
| Net Loans | 392,718,567 | 317,651,675 | ||||||
| Premises and equipment, net | 713,768 | 772,910 | ||||||
| Accrued interest and other receivables | 1,028,948 | 927,824 | ||||||
| Deferred Tax Asset | 1,604,000 | 1,320,000 | ||||||
| Other assets | 2,632,761 | 1,636,949 | ||||||
| Bank Owned Life Insurance | 2,266,784 | 2,206,488 | ||||||
| Total Assets | $ | 494,027,493 | $ | 390,093,129 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Demand deposits: | ||||||||
| Non-interest bearing deposits | $ | 66,056,888 | $ | 57,859,877 | ||||
| Interest Checking | 105,056,440 | 88,213,634 | ||||||
| Savings deposits | 2,148,690 | 2,883,938 | ||||||
| Time deposits | 241,037,751 | 205,050,631 | ||||||
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Total Deposits |
414,299,769 | 354,008,080 | ||||||
| Fed Funds Purchased and FHLB advances | 26,714,286 | 2,000,000 | ||||||
| Other accrued expenses | 1,685,113 | 1,097,054 | ||||||
| Accrued interest payable | 169,354 | 106,886 | ||||||
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Total Liabilities |
442,868,522 | 357,212,020 | ||||||
| Stockholders' Equity: | ||||||||
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Common stock of $0.01 par value with 25,000,000 shares authorized, 6,166,454 shares issued and outstanding at September 30, 2016 |
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Common stock of $3.16 par value with 15,000,000 shares authorized, 4,279,349 shares issued and outstanding September 30, 2015 |
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| Voting Common Stock | 55,377 | 13,509,682 | ||||||
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5,537,747 and 4,279,349 shares issued and outstanding September 30, 2016 and September 30, 2015 |
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| Non-Voting Common Stock | 6,287 | - | ||||||
| 628,707 shares issued and outstanding September 30, 2016 | ||||||||
| Additional paid-in capital | 47,774,866 | 18,643,656 | ||||||
| Accumulated other comprehensive income | 94,876 | (126,518 | ) | |||||
| Retained earnings (deficit) | 3,227,565 | 854,289 | ||||||
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Total Stockholders' Equity |
51,158,971 | 32,881,109 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 494,027,493 | $ | 390,093,129 | ||||
| The Notes to Financial Statements are an integral part of these statements. | ||||||||
| The Freedom Bank of Virginia | |||||||||||||
| Statements of Operations | |||||||||||||
| (UNAUDITED) | |||||||||||||
| For the three months ended | For the nine months ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||
| Interest Income | |||||||||||||
| Interest and fees on loans | $ | 5,127,745 | $ | 4,194,268 | $ | 13,984,388 | $ | 11,848,047 | |||||
| Interest on investment securities | 288,447 | 168,017 | 908,254 | 475,388 | |||||||||
| Interest on Federal funds sold | 362 | 5,300 | 8,084 | 17,326 | |||||||||
| Total Interest Income | 5,416,554 | 4,367,585 | 14,900,726 | 12,340,761 | |||||||||
| Interest Expense | |||||||||||||
| Interest on deposits | 942,623 | 784,283 | 2,624,278 | 2,184,852 | |||||||||
| Interest on borrowed funds | 32,130 | 754 | 81,450 | 754 | |||||||||
| Total Interest Expense | 974,753 | 785,037 | 2,705,728 | 2,185,606 | |||||||||
| Net Interest Income | 4,441,801 | 3,582,548 | 12,194,998 | 10,155,155 | |||||||||
| Provision for Possible Loan Losses | 515,500 | 139,000 | 925,500 | 609,000 | |||||||||
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Net Interest Income after Provision for Possible Loan Losses |
3,926,301 | 3,443,548 | 11,269,498 | 9,546,155 | |||||||||
| Other Income | |||||||||||||
| Gain on sale of mortgage loans | 1,333,657 | 533,145 | 3,078,286 | 1,394,950 | |||||||||
| Service charges and other income | 35,188 | 78,739 | 157,372 | 186,823 | |||||||||
| Increase in cash surrender value of bank-owned life insurance | 14,829 | 15,088 | 45,089 | 45,921 | |||||||||
| Total Other Income | 1,383,674 | 626,972 | 3,280,747 | 1,627,694 | |||||||||
| Operating Expenses | |||||||||||||
| Officers and employee compensation and benefits | 2,969,295 | 2,131,969 | 8,156,757 | 6,170,959 | |||||||||
| Occupancy expense | 250,340 | 220,368 | 730,523 | 619,458 | |||||||||
| Equipment and depreciation expense | 150,177 | 111,717 | 403,804 | 337,700 | |||||||||
| Insurance expense | 78,579 | 73,235 | 236,644 | 211,912 | |||||||||
| Professional fees | 227,682 | 196,939 | 693,501 | 650,337 | |||||||||
| Data and item processing | 221,129 | 228,043 | 690,145 | 686,225 | |||||||||
| Business development | 36,128 | 50,703 | 150,809 | 146,297 | |||||||||
| Franchise tax | 107,070 | 89,081 | 278,718 | 230,567 | |||||||||
| Other operating expenses | 181,270 | 160,473 | 504,864 | 407,521 | |||||||||
| Total Operating Expenses | 4,221,670 | 3,262,528 | 11,845,765 | 9,460,976 | |||||||||
| Income before Income Taxes | 1,088,305 | 807,992 | 2,704,480 | 1,712,873 | |||||||||
| Provision for Income Taxes | 369,100 | 275,000 | 919,400 | 582,500 | |||||||||
| Net Income | $ | 719,205 | $ | 532,992 | $ | 1,785,080 | $ | 1,130,373 | |||||
| The Notes to Financial Statements are an integral part of these statements. | |||||||||||||
