FDVA Freedom Financial Holdings Inc (QX)

Results Increase in Net Profit 15.8% from Prior Year

Fueled by growth in both loans and deposits over this quarter last year, The Freedom Bank of Virginia (Bank) (OTC.QB:FDVA) earned a net profit of $348,215 for the quarter ending March 31, 2014. This is a 15.8% increase over the March 31, 2013 net profit of $300,596, and its twentieth consecutive profitable quarter.

Total assets increased 22.4% to $293,553,695 at March 31, 2014, up from $239,780,059 at March 31, 2013. Asset growth was funded mainly through a $52,485,463 increase in deposits. More than half of the asset growth was funded through increased transaction accounts, which tend to be stable funding for banks. Non-interest checking account balances soared from $33,195,790 at March 31, 2013 to $49,192,423 at March 31, 2014, a $15,996,633 (48.2%) increase. Much of the rise in checking account balances was from the bank’s government contracting clients.

Interest bearing money market account balances grew $12,670,466 (33.3%) to $50,674,832 for the same period. Certificates of Deposit rose $23,192,997 (16.4%) to $164,201,126 at March 31, 2014. Although interest rates on deposits declined in 2014 from 2013, the increase in interest bearing deposits caused interest expense to rise $46,243 (9.6%) to $529,086.

According to CEO Craig Underhill, “The bank is improving asset quality while achieving strong loan growth.” Gross loans receivable increased $61,439,171 (33.5%) to $244,735,023 at March 31, 2014, up from $183,295,852 at March 31, 2013. Loan growth increased total interest income $589,195 (22.9%) in 2014 versus the prior year. Increased higher yielding loans allowed the bank to reduce investment securities by $10,187,507 (30.4%) to $23,297,947 from the prior year.

Freedom Bank’s loan quality continued improving during its impressive growth. Past due loans declined to 0.0% at March 31, 2014, down from 0.27% at March 31, 2013. Loans no longer accruing interest decreased to 0.49% of loans at March 31, 2014, down from 1.09% of loans at March 31, 2013. The Bank had no real estate owned at quarter end. However, the large increase in new loans required the bank to increase the provision for loan losses by $30,000 in 2014 over the prior year. Still, net interest income after provision for loan losses was up $512,951 or 25.4%. Reduced fees on mortgages sold led to a $161,010 (65.2%) drop in non-interest income. Non-operating expenses rose $304,322 (15.5%) led by a $177,250 (14.7%) increase in payroll due to additional lending staff, leaving net profit up 15.8%.

The Bank continues its tradition of maintaining a strong capital base to serve the needs of its customers and stockholders. Capital continues to increase, growing $1,025,301 (4.0%) over the same period in the prior year to $26,580,469. Regulatory Capital minimums 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, to be considered well capitalized. At March 31, 2014 the ratios for the Bank were 9.22%, 11.08% and 12.15% respectively, all in the well capitalized category.

Freedom Bank is a community-oriented, locally-owned bank with locations in Fairfax and Vienna, Virginia. Another banking center will open this year in 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  

 

March 31, 2014

March 31, 2013     ASSETS Cash and due from banks $ 5,022,619 $ 6,970,034 Federal funds sold 15,824,000 8,794,000 Interest Bearing Balances with Banks 1,021,073 1,017,009 Investment securities available for sale, at fair value 23,297,947 33,485,453 Investment securities held to maturity 35,399 292,997 Federal Reserve Bank stock 783,600 757,950 Loans held for sale 121,000 2,624,808 Loans receivable 244,735,023 183,295,852 Allowance for possible loan losses   (2,590,115 )   (2,305,040 ) Net Loans 242,144,908 180,990,812 Premises and equipment, net 276,405 204,595 Accrued interest and other receivables 671,251 697,770 Other assets 1,244,185 1,274,209 Bank Owned Life Insurance 2,115,308 2,058,422 Deferred Tax Asset   996,000     612,000     Total Assets $ 293,553,695   $ 239,780,059     LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Demand deposits: Non-interest bearing deposits $ 49,192,423 $ 33,195,790 Interest Checking 50,674,832 38,004,367 Savings deposits 1,839,060 1,213,692 Time deposits   164,201,126     141,008,129  

Total Deposits

265,907,441 213,421,978   Other accrued expenses 982,625 721,648 Accrued interest payable   83,160     81,265  

Total Liabilities

  266,973,226     214,224,891     Stockholders' Equity:

Common stock, $3.47 par value (5,000,000 shares authorized:

3,468,149 shares issued and outstanding March 31, 2014

3,439,340 shares issued and outstanding March 31, 2013)

12,042,200 11,942,228 Additional paid-in capital 16,371,940 16,284,302 Accumulated other comprehensive income (305,401 ) 276,297 Retained earnings (deficit)   (1,528,270 )   (2,947,659 )  

Total Stockholders' Equity

  26,580,469     25,555,168     Total Liabilities and Stockholders' Equity $ 293,553,695   $ 239,780,059       The Freedom Bank of Virginia Statements of Operations UNAUDITED     For the three months ended March 31, 2014   2013 Interest Income   Interest and fees on loans $ 3,019,245 $ 2,464,375 Interest on investment securities 135,880 101,361 Interest on Federal funds sold   7,561   7,755 Total Interest Income 3,162,686 2,573,491   Interest Expense Interest on deposits   529,086   482,842   Net Interest Income 2,633,600 2,090,649   Provision for Possible Loan Losses   100,000   70,000   Net Interest Income after Provision for Possible Loan Losses 2,533,600 2,020,649   Other Income Service charges and other income 72,071 231,538 Increase in cash surrender value of bank-owned life insurance   13,704   15,247 Total Other Income 85,775 246,785   Operating Expenses Officers and employee compensation and benefits 1,381,670 1,204,421 Occupancy expense 136,555 124,995 Equipment and depreciation expense 77,409 52,704 Insurance expense 55,469 51,529 Professional fees 229,505 139,537 Data and item processing 182,916 176,641 Business development 50,425 48,046 Franchise tax 63,748 59,661 Other operating expenses   93,463   109,304 Total Operating Expenses   2,271,160   1,966,838   Income before Income Taxes 348,215 300,596 Provision for Income Taxes   -   -   Net Income $ 348,215 $ 300,596   Net Income Per Common Share $ 0.10 $ 0.09   Net Income Per Diluted Share $ 0.10 $ 0.09  

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