FDVA Freedom Financial Holdings Inc (QX)

Net Profit Rises on Strong Loan Growth

The Freedom Bank of Virginia (OTCQX: FDVA) showed strong performance in terms of profits, asset growth and capital generation through September 30, 2014.

Financial Highlights

Operations

• Net profit increased $70,355 or 5.7% over the prior year to $1,300,449 at September 30, 2014.
• Total interest income grew $1,693,345 or 20.3% to $10,031,375 through September 30, 2014 versus the prior year.
• Interest expense increased 11.7% to $1,647,259 at September 30, 2014, compared with $1,474,723 at September 30, 2014.
• The provision for loan losses rose from $158,500 at September 30, 2013 to $327,000 at September 30, 2014. The increase was attributable primarily to faster loan growth but also included some loan write offs in 2014.
• Net income after provision was $8,057,116 at September 30, 2014, up $1,352,309 or 20.2% from the prior year.
• Expenses through September 30, 2014 were $7,138,661, up $875,482 or 14% from September 30, 2013. Most of the increase was a $459,899 or 11.9% rise in salaries attributable to lenders and support staff responsible for increased loan volume.

Condition

• Loans Receivable increased 29.2% from $198,698,833 at September 30, 2013 to $256,760,042 at September 30, 2014.
• Total Assets increased 13.1% from $270,175,474 at September 30, 2013 to $305,265,372 at September 30, 2014.
• Asset quality remains strong with non-performing assets comprising 0.68% of total assets at September 30, 2014. This was a slight increase from 0.50% of total assets at September 30, 2013.
• Non-Interest Bearing Deposits increased $3,421,690 (7.5%) to $49,044,170 between September 30, 2013 and September 30, 2014.
• Interest Checking Deposits grew $5,256,268 (12.1%) to $48,833,260 between September 30, 2013 and September 30, 2014.
• Total deposits increased $32,656,934 (13.4%) to $276,207,160 between September 30, 2013 and September 30, 2014.
• Total capital rose $1,707,217 (6.6%) over the past year to $27,639,426 at September 30, 2014, up from $25,932,209 at September 30, 2013. The book value per share was $7.25 at September 30, 2014 up from $6.85 at September 30, 2013.

Capital continues to be strong, but the bank is starting to fully lever it in line with sound banking principles. 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. At September 30, 2014 the ratios for the bank were 9.21%, 11.20%, 12.22%. However, these were down from 10.03%, 12.90% and 14.11% at September 30, 2013. The bank recently announced a capital campaign to provide equity for continued growth. New capital will fund increased lending, branch expansion and mortgage banking activities.

According to CEO Craig Underhill, “The bank successfully invested in growth the past three years and these results reflect strong performance. These accomplishments have been rewarded by the market through the share price more than doubling during the past three years. New capital will allow Freedom to grow present business lines while expanding its footprint and emphasizing business lines with strong upside potential.”

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 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 (UNAUDITIED)   September 30, 2014   September 30, 2013       ASSETS Cash and due from banks $ 7,781,609 $ 14,745,000 Federal funds sold 8,832,000 24,807,000 Interest Bearing Balances with Banks 1,023,123 1,019,050 Investment securities available for sale, at fair value 25,500,079 27,458,728 Investment securities held to maturity 13,603 57,913 Federal Reserve Bank stock 814,100 771,000 Loans held for sale 797,000 - Loans receivable 256,760,042 198,698,833 Allowance for possible loan losses   (2,526,807 )   (2,456,325 ) Net Loans 254,233,235 196,242,508 Premises and equipment, net 508,046 232,061 Accrued interest and other receivables 728,175 639,818 Other Real Estate Owned

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Other assets 1,893,573 1,330,735 Bank Owned Life Insurance 2,144,829 2,087,182 Deferred Tax Asset   996,000     784,479     Total Assets $ 305,265,372   $ 270,175,474     LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Demand deposits: Non-interest bearing deposits $ 49,044,170 $ 45,622,480 Interest Checking 48,833,260 43,576,993 Savings deposits 1,676,798 1,423,875 Time deposits   176,652,932     152,926,878   Total Deposits 276,207,160 243,550,226   Other accrued expenses 1,322,380 583,912 Accrued interest payable   96,406     109,127   Total Liabilities   277,625,946     244,243,265     Stockholders' Equity: Common stock, $3.16 par value. (15,000,000 shares authorized: 3,815,029 shares issued and outstanding September 30, 2014 3,787,104 shares issued and outstanding September 30, 2013) 12,042,431 11,967,248 Additional paid-in capital 16,372,319 16,303,442 Accumulated other comprehensive income (199,290 ) (320,319 ) Retained earnings (deficit)   (576,034 )   (2,018,162 )   Total Stockholders' Equity   27,639,426     25,932,209     Total Liabilities and Stockholders' Equity $ 305,265,372   $ 270,175,474       The Freedom Bank of Virginia Statements of Operations (UNAUDITED)   For the three months ended   For the nine months ended September 30, September 30, 2014   2013   2014   2013 Interest Income     Interest and fees on loans $ 3,360,391 $ 2,651,167 $ 9,635,387 $ 7,957,311 Interest on investment securities 122,361 120,176 378,521 358,181 Interest on Federal funds sold   4,754   10,433   17,467   22,538 Total Interest Income 3,487,506 2,781,776 10,031,375 8,338,030   Interest Expense Interest on deposits   571,393   514,526   1,647,259   1,474,723   Net Interest Income 2,916,113 2,267,250 8,384,116 6,863,307   Provision for Possible Loan Losses   92,000   -   327,000   158,500  

Net Interest Income after Provision for Possible Loan Losses

2,824,113 2,267,250 8,057,116 6,704,807   Other Income Service charges and other income 123,002 300,654 338,768 744,458 Increase in cash surrender value of Bank-owned life insurance   15,611   14,318   43,226   44,007 Total Other Income 138,613 314,972 381,994 788,465   Operating Expenses Officers and employee compensation and benefits 1,487,218 1,364,101 4,338,065 3,878,166 Occupancy expense 154,875 137,609 440,832 397,401 Equipment and depreciation expense 97,273 61,061 252,233 168,403 Insurance expense 63,881 51,828 173,493 156,264 Professional fees 195,012 147,570 616,050 423,762 Data and item processing 221,110 188,294 592,914 541,166 Business development 55,873 42,247 146,899 129,125 Franchise tax 65,915 63,748 194,133 184,432 Other operating expenses   149,712   121,979   384,042   384,459 Total Operating Expenses   2,490,869   2,178,437   7,138,661   6,263,178   Income before Income Taxes 471,857 403,785 1,300,449 1,230,094 Provision for Income Taxes   -   -   -   -   Net Income $ 471,857 $ 403,785 $ 1,300,449 $ 1,230,094   Net Income Per Common Share $ 0.12 $ 0.11 $ 0.34 $ 0.32   Net Income Per Diluted Share $ 0.12 $ 0.11 $ 0.33 $ 0.32  

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