Record Loan Growth Fuels Increasing Profits at Freedom Bank

FAIRFAX, Va.--()--Freedom Bank of Virginia (Bank) (OTC.QB:FDVA) reports strong financial performance for 2013. The Bank's expanded lending staff focused on growing customer relationships, providing the impetus to increase the Bank’s deposits and assets. Record loan growth and improved asset quality was the catalyst for increased net profits. The Bank finished the year with a record level of capital and continues with successful implementation of its growth plan while maintaining quarter after quarter profitability.

Chairman Richard Litman attributes the success to the leadership of CEO Craig Underhill, saying, "The Board is committed to supporting our CEO, who has been very effective in leading our management team in accomplishing our growth and profitability objectives, while maintaining the Bank as a well capitalized, efficiently operating enterprise providing value to our shareholders."

According to CEO Craig Underhill, “The Bank made a decision to expand lending staff in 2013 to accelerate top line revenue growth. That effort was successful with interest and fees on loans increasing $1,422,422 or 15.3% over the prior year. The increase in total revenue more than covered the investment in people and infrastructure, increasing the Bank’s net profit as well.” Net profit increased in 2013 primarily due to growth in interest income from loans and a reduction in contributions to the loan loss reserve due to improving asset quality. Net profit increased $179,519 (15.1%) to $1,371,772. Earnings per share were $0.40 at December 31, 2013, up from $0.35 per share at December 31, 2012.

Improving asset quality allowed the Bank to reduce contributions to the loan loss reserve by $390,700 during the year. This was due in part to recoveries on loans written down in prior years and partly due to improving performance of the entire loan portfolio. According to the Bank’s EVP and Senior Credit Officer, Bob Willey, “We were very pleased by our ability to improve the credit quality of the loan portfolio while generating strong loan growth to support the credit needs of our customers.” Charged-off loans, non-performing loans, and past due loans all improved at December 31, 2013 over the prior year end. Charge-offs were $488,975.40 in 2012 versus a net recovery of amounts previously written off of $53,041.35 in 2013. Non-performing loans as a percentage of loans declined from 1.21% at December 31, 2012 to 0.54% at December 2013. Past due loans were 0.01% at December 31, 2013, down from 0.23% the prior year.

Assets grew to $274,202,058 at December 31, 2013, up 14.9% from $238,642,144 the prior year. Deposits also grew 16.3% for the year. According to C. Kevin Curtis, EVP & Chief Lending Officer, “We are pleased our lenders successfully generated new deposit relationships while bringing new loan clients to the Bank.” Non-interest bearing deposits increased $4,134,307 (11.8%) to $39,085,416 at December 31, 2013. Interest checking accounts grew even faster, up $10,768,229(29.4%) to $47,370,151 at December 31, 2013. Much of this growth was due to the Bank’s strong penetration of the government contracting market, which has been a focus of the Bank for many years.

Stockholder’s equity rose to $26,118,724, which exceeded $26,000,000 for the first time at December 31, 2013 after exceeding $25,000,000 for the first time in 2012. Book value per share was $7.53 at December 31, 2013, up from $7.35 at December 31, 2012.

Capital continues to be a strength of the Bank. Regulatory capital minimums to be considered well capitalized for Tier 1 Leverage Ratio, Risk Based Capital Tier 1, and Risk Based Capital Tier 2 are 5.0%, 6.0% and 10.0% respectively. At 12/31/2013, the ratios for the Bank were 10.1%, 12.1% and 13.3% respectively, all in the well capitalized category. The Bank continues its tradition of maintaining a strong capital base to serve the needs of its customers and stockholders.

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 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
December 31, 2013 December 31, 2012
Cash and due from banks $ 8,171,072 $ 10,884,094
Federal funds sold 16,817,000 18,788,000
Interest Bearing Balances with Banks 1,020,078 1,016,006
Investment securities available for sale, at fair value 23,740,219 28,717,795
Investment securities held to maturity 44,679 348,616
Federal Reserve Bank stock 778,000 746,650
Loans held for sale 768,900 3,656,829
Loans receivable 220,164,884 171,901,847
Allowance for possible loan losses   (2,587,363 )   (2,236,822 )
Net Loans 217,577,521 169,665,025
Premises and equipment, net 292,375 199,500
Accrued interest and other receivables 697,327 607,276
Other assets 1,355,706 1,357,178
Bank Owned Life Insurance 2,101,603 2,048,175
Deferred Tax Asset   837,578     612,000  
Total Assets $ 274,202,058   $ 238,647,144  
Demand deposits:
Non-interest bearing deposits $ 39,085,416 $ 34,951,109
Interest Checking 47,370,151 36,601,864
Savings deposits 3,704,290 1,467,280
Time deposits   156,993,691     139,555,489  

Total Deposits

247,153,548 212,575,742
Other accrued expenses 852,477 732,466
Accrued interest payable   77,309     69,852  

Total Liabilities

  248,083,334     213,378,060  
Stockholders' Equity:
Common stock, $3.47 par value. (5,000,000 shares authorized:
3,468,149 shares issued and outstanding December 31, 2013
3,439,349 shares issued and outstanding December 31, 2012) 12,042,200 11,942,228
Additional paid-in capital 16,371,940 16,284,303
Accumulated other comprehensive income (418,932 ) 285,809
Retained earnings (deficit)   (1,876,484 )   (3,248,256 )

Total Stockholders' Equity

  26,118,724     25,264,084  
Total Liabilities and Stockholders' Equity $ 274,202,058   $ 238,642,144  
The Freedom Bank of Virginia
Statements of Operations
For the year ended
December 31,
2013   2012
Interest Income
Interest and fees on loans $ 10,728,017 $ 9,305,595
Interest on investment securities 498,274 574,361
Interest on Federal funds sold   32,757   40,993
Total Interest Income 11,259,048 9,920,949
Interest Expense
Interest on deposits   1,984,920   2,008,653
Net Interest Income 9,274,128 7,912,296
Provision for Possible Loan Losses   297,500   688,200
Net Interest Income after
Provision for Possible Loan Losses 8,976,628 7,224,096
Other Income
Service charges and other income 821,214 832,641
Increase in cash surrender value of bank-owned life insurance   58,428   43,175
Total Other Income 879,642 875,816
Operating Expenses
Officers and employee compensation and benefits 5,224,922 4,094,031
Occupancy expense 533,771 510,776
Equipment and depreciation expense 240,302 188,442
Insurance expense 213,319 179,105
Professional fees 636,913 548,748
Data and item processing 733,474 607,388
Business development 163,386 123,455
Franchise tax 248,180 226,110
Other operating expenses   490,231   429,604
Total Operating Expenses   8,484,498   6,907,659
Income before Income Taxes 1,371,772 1,192,253
Provision for Income Taxes   -   -
Net Income $ 1,371,772 $ 1,192,253
Net Income Per Common Share $ 0.40 $ 0.35
Net Income Per Diluted Share $ 0.40 $ 0.35


Freedom Bank of Virginia
Craig S. Underhill, President & CEO

Release Summary

Record Loan Growth Fuels Increasing Profits at Freedom Bank


Freedom Bank of Virginia
Craig S. Underhill, President & CEO