FDVA Freedom Financial Holdings Inc (QX)

Highs for Net Income, Assets, Loans and Capital as Bank Expands Footprint

Freedom Bank of Virginia (Bank) (OTC.QB:FDVA) achieved several objectives during the first half of 2014 setting all-time highs for net income, total assets, total loans and capital. The Bank earned record net income of $828,592 for the first half of 2014. Total assets exceeded $300 million at June 30, 2014, increasing 17.95% to $300,555,167 from $254,805,078 at June 30, 2013. Loans receivable at June 30, 2014 passed the $250 million mark, increasing to $253,070,371 from $193,071,420 at June 30, 2013. The Bank's capital increased $1,437,794 since June 30, 2013, exceeding $27 million for the first time. In addition to passing these milestones, the Bank opened its third location in Reston, Virginia.

According to the Chief Lending Officer, C. Kevin Curtis, “The Bank’s investment in additional lending staff over the past two years greatly accelerated loan growth over previous years. The 2013 rate was 22.95% and additional staff enhanced the growth rate to 31.08% at June 30, 2014.” CEO Craig S. Underhill added, “We remain committed to consistent growth in both assets and profits which are now at record levels.”

Freedom Bank emphasizes relationship banking so deposits increased proportionally with loans. Demand deposits improved $11,011,425 (29.12%) to $48,823,404 at June 30, 2014. Money market account deposits grew $9,571,190 (23.59%) to $50,145,053. Increased business deposits reduced the Bank’s reliance on higher cost certificates of deposit, which expanded $23,835,600 (16.25%) to $170,554,825 at June 30, 2014. Total liabilities increased $44,312,295 (19.34%) to $273,418,801 in 2014.

Capital continues to be strong expanding $1,437,794 (5.59%) to $27,136,366 at June 30, 2014. Book value per share was $7.11 at June 30, 2014, up from $6.78 the prior year. 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, 2014 the ratios for the Bank were 9.37%, 11.16% and 12.25% respectively, all in the well capitalized category.

Freedom Bank earned net income of $828,592 for the first half of 2014 compared to net income of $826,309 for the first half of 2013. Loan growth fueled a 17.77% rise in total interest income. While deposits grew 20.3% in 2014, interest expense increased only 12.05% due to large increases in non interest bearing deposits. Additional loans generated in the first half of 2014 required $76,500 more in provision expense for 2014. Operating expenses increased $563,051 (13.78%). More compensation for additional lenders, support personnel and staff for the third branch was the main factor. Also professional fees rose $144,846 (44.36%), required by escalating banking regulations and support for the Bank’s M&A subsidiary, FBV Capital Advisors, Inc. Net income for the second quarter of 2014 represented the Bank's twenty-first consecutive quarterly profit.

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 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, 2014 June 30, 2013     ASSETS Cash and due from banks $ 7,260,790 $ 10,091,976 Federal funds sold 15,828,000 14,798,000 Interest Bearing Balances with Banks 1,022,092 1,018,023 Investment securities available for sale, at fair value 18,823,922 29,398,108 Investment securities held to maturity 23,780 77,740 Federal Reserve Bank stock 797,400 766,650 Loans held for sale 459,000 3,060,090 Loans receivable 253,070,371 193,071,420 Allowance for possible loan losses   (2,695,357 )   (2,456,325 ) Net Loans 250,375,014 190,615,095 Premises and equipment, net 251,582 237,632 Accrued interest and other receivables 743,942 875,489 Other assets 1,844,427 1,100,550 Bank Owned Life Insurance 2,129,218 2,072,864 Deferred Tax Asset   996,000     692,861     Total Assets $ 300,555,167   $ 254,805,078     LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Demand deposits: Non-interest bearing deposits $ 48,823,404 $ 37,811,979 Interest Checking 50,145,053 40,573,863 Savings deposits 2,870,723 1,321,531 Time deposits   170,554,825     146,719,225  

Total Deposits

 

272,394,005 226,426,598   Other accrued expenses 938,191 2,595,661 Accrued interest payable   86,605     84,247  

Total Liabilities

 

  273,418,801     229,106,506     Stockholders' Equity: Common stock, $3.16 par value. (5,000,000 shares authorized: 3,815,029 shares issued and outstanding June 30, 2014 3,791,196 shares issued and outstanding June 30, 2013) 12,042,431 11,967,248 Additional paid-in capital 16,372,319 16,303,442 Accumulated other comprehensive income (230,493 ) (150,171 ) Retained earnings (deficit)   (1,047,891 )   (2,421,947 )  

Total Stockholders' Equity

 

  27,136,366     25,698,572     Total Liabilities and Stockholders' Equity $ 300,555,167   $ 254,805,078             The Freedom Bank of Virginia Statements of Operations UNAUDITED   For the three months ended For the six months ended June 30, June 30, 2014   2013 2014   2013   Interest Income Interest and fees on loans $ 3,255,751 $ 2,841,769 $ 6,274,996 $ 5,306,144 Interest on investment securities 120,280 136,644 256,160 238,005 Interest on Federal funds sold   5,152   4,350   12,713   12,105 Total Interest Income 3,381,183 2,982,763 6,543,869 5,556,254   Interest Expense Interest on deposits   546,780   477,355   1,075,866   960,197   Net Interest Income 2,834,403 2,505,408 5,468,003 4,596,057   Provision for Possible Loan Losses   135,000   88,500   235,000   158,500   Net Interest Income after Provision for Possible Loan Losses 2,699,403 2,416,908 5,233,003 4,437,557   Other Income Service charges and other income 143,695 212,266 215,766 443,804 Increase in cash surrender value of bank-owned life insurance   13,911   14,442   27,615   29,689 Total Other Income 157,606 226,708 243,381 473,493   Operating Expenses Officers and employee compensation and benefits 1,469,177 1,309,644 2,850,847 2,514,065 Occupancy expense 149,402 134,797 285,957 259,792 Equipment and depreciation expense 77,551 54,638 154,960 107,342 Insurance expense 54,143 52,907 109,612 104,436 Professional fees 191,533 136,655 421,038 276,192 Data and item processing 188,888 176,231 371,804 352,872 Business development 40,601 38,832 91,026 86,878 Franchise tax 64,470 61,023 128,218 120,684 Other operating expenses   140,867   153,176   234,330   262,480 Total Operating Expenses   2,376,632   2,117,903   4,647,792   4,084,741   Income before Income Taxes 480,377 525,713 828,592 826,309 Provision for Income Taxes   -   -   -   -   Net Income $ 480,377 $ 525,713 $ 828,592 $ 826,309   Net Income Per Common Share $ 0.13 $ 0.14 $ 0.22 $ 0.22   Net Income Per Diluted Share $ 0.13 $ 0.14 $ 0.22 $ 0.22  

Freedom Bank of VirginiaCraig S. Underhill, President & CEO703-242-5300