FAIRFAX, VA / ACCESSWIRE / January 31, 2020 / The Freedom Bank of Virginia (OTCQX:FDVA), (the "Bank" or "Freedom") today announced net income of $2,705,217 or $0.37 per diluted share for the year ended December 31, 2019 and net income of $747,808, or $0.10 per diluted share, for the three months ended December 31, 2019.
Joseph J. Thomas, President and CEO, commented "We are pleased with the success of our efforts to reposition the company's brand, re-invest in technology and new products, and return to solid levels of profitability in 2019. We grew assets by 4.51% during the year to $500.39 million and achieved a ROA of 0.55% for 2019 compared to 0.04% last year. Non-interest expenses were down $1.2 million in the year which helped improve our efficiency ratio. We also took steps to improve asset quality and non-accrual loans were cut in half to $1.70 million or 0.42% of total loans at December 31, 2019. We also strengthened capital ratios with Tier One Capital Ratio of 15.3% at year-end which, along with strong reserves and diversified loan mix, give us a large runway for growth and improved profitability in 2020."
Full Year 2019 Highlights include:
- Net income for the twelve months ended December 31, 2019 was $2,705,217 or $0.37 per diluted share compared to $191,277 or $0.03 per diluted share for the twelve months ended December 31, 2018;
- ROAA was 0.55% for the twelve months ended December 31, 2019 compared to 0.04% for the twelve months ended December 31, 2018;
- ROAE was 4.40% for the twelve months ended December 31, 2019 compared to 0.34% for the twelve months ended December 31, 2018;
- Total assets were $500.39 million on December 31, 2019, higher by $21.58 million or by 4.51% compared to December 31, 2018;
- Total loans increased by $6.10 million or by 1.53% during 2019;
- Total deposits decreased by $5.52 million or by 1.38% during 2019. Non-interest bearing demand deposits jumped to comprise 20.40% of total deposits at December 31, 2019 compared to 16.72% of total deposits at December 31, 2018;
- Net interest income for all of 2019 was lower by 8.69% compared to 2018. The net interest margin in 2019 was 3.47%, lower by 5 basis points compared to 2018;
- Yields on average earning assets increased by 26 basis points to 4.90% in 2019 compared to 4.64% in 2018.
- Non-interest expenses for the twelve months ended December 31, 2019 were lower by $1.18 million or by 6.11% compared to non-interest expenses for the same period in 2018;
- Efficiency Ratio was 84.34% for the full year 2019, improved from 97.21% for the prior year;
- The allowance for loan and lease losses ("ALLL") was 1.05% of loans held-for-investment at December 31, 2019 compared to 1.16% of loans held-for-investment at December 31, 2018;
- Asset quality remains strong with the ratio of non-performing assets to total assets at 1.24% as of December 31, 2019 compared to a ratio of 0.69% as of December 31, 2018;
- Capital ratios continue to be strong, and above regulatory minimums for well-capitalized banks: Total Risk Based Capital ratio of 16.24%, Tier 1 Risk Based Capital ratio of 15.26%, Common Equity Tier 1 ratio of 15.26% and Tier 1 Leverage ratio of 12.80% at December 31, 2019.
Fourth Quarter Highlights include:
- Net income for the fourth quarter was $747,808 or $0.10 per diluted share compared to $932,348 or $0.13 per diluted share for the third quarter of 2019, and net income of $15,250 or $0.00 per diluted share, for the three months ended December 31, 2018;
- Return on Average Assets ("ROAA") was 0.59% for the quarter ended December 31, 2019 compared to 0.75% for the prior quarter and 0.01% for the three months ended December 31, 2018;
- Return on Average Equity ("ROAE") was 4.66% for the three months ended December 31, 2019 compared to 5.96% for the prior quarter and 0.10% for the three months ended December 31, 2018;
- Total loans declined by $15.56 million or by 3.70% during the quarter. Loans held-for-investment decreased by $7.88 million or by 1.96%, while loans held-for-sale decreased by $7.68 million or by 39.72% in the fourth quarter;
- Available-for-sale Securities increased by $4.87 million or by 10.83% during the quarter;
- Total deposits decreased by $1.44 million or by 0.36% in the fourth quarter. Non-interest bearing demand deposits were relatively flat during the quarter at $80.63 million;
- The net interest margin declined by 19 basis points to 3.33% compared to the previous quarter, on lower earning asset yields, partially offset by a reduction in the cost of funds;
- The cost of funds declined by 10 basis points in the fourth quarter of 2019, largely due to lower funding costs for borrowings, time deposits and money market deposits;
- Non-interest income decreased by 32.48% compared to the previous quarter, primarily due to lower revenue from the sale of mortgage loans during the fourth quarter, stemming from a seasonal decline in mortgage activity resulting in a lower volume of closed loans;
- Non-interest expenses decreased by 11.96% compared to the previous quarter, primarily due to lower compensation costs;
- The Efficiency Ratio was 82.10% for the quarter ended December 31, 2019, relatively flat compared to 81.39% for the previous quarter;
- The Bank recognized no provision for loan losses during the fourth quarter.
Net Interest Income
The Bank recorded net interest income of $4.04 million for the fourth quarter of 2019, a decrease of 4.09% compared to the previous quarter. Net interest income for all of 2019 was lower by 8.69% compared to 2018. The net interest margin in the fourth quarter of 2019 was 3.33%, lower by 19 basis points compared to the previous quarter. The net interest margin in 2019 was 3.47%, lower by 5 basis points compared to 2018.
Page 12 of the earnings release includes a rate-volume analysis that illustrates the changes to net interest income in the fourth quarter of 2019 relative to the prior quarter and changes in net interest income in 2019 compared to 2018. The following factors contributed to the changes in net interest margin during the fourth quarter of 2019 compared to the previous quarter:
- Yields on average earning assets decreased by 28 basis points to 4.71% compared to 4.99% in the previous quarter, primarily due to a decrease in loan and investment yields during the fourth quarter, stemming from higher cash balances, loan payoffs and refinancing activity as well as a reduction in the interest rate on excess reserves at the Federal Reserve Bank of Richmond, the 1-month LIBOR rate and the Prime rate during the fourth quarter. Loan yields in the previous quarter were also higher, in part due to recognition of default interest related to a loan recovery during the quarter. The additional yield related to the loan recovery in the third quarter was approximately 10 basis points.
- Loan yields decreased by 16 basis points to 5.20% from 5.36% in the previous quarter, while yields on investment securities decreased by 47 basis point to 2.32%, from 2.79% in the previous quarter. Investment yields were lower primarily due to increased premium amortization and a decline in the 1-month LIBOR and the Prime rate.
- Cost of funds decreased by 10 basis points to 1.54%, from 1.64% in the previous quarter, primarily due to lower costs related to borrowings and time deposits as well as a reduction in higher cost money market deposit balances.
The following factors contributed to the changes in net interest margin during 2019 compared to 2018:
- Loan yields increased by 15 basis points to 5.34% from 5.19% in 2018, while yields on investment securities increased by 3 basis points to 2.69%, from 2.66% in 2018.
- Cost of funds increased by 35 basis points to 1.60%, from 1.25% in 2018, primarily due to higher costs related to time deposits.
Non-interest Income
Non-interest income was $1.24 million for the fourth quarter, lower by 32.48% compared to the previous quarter. Non-interest income in the fourth quarter of 2018 was $733,665. The principal contributor to the decrease in non-interest income in the fourth quarter of 2019 compared to the previous quarter was lower gain-on-sale revenue from mortgage loans, stemming from a seasonal decline in mortgage activity resulting in a lower volume of closed loans.
Non-interest income was $5.41 million for the full year 2019 compared to $2.24 million in 2018. The Bank realized $1.18 million of losses on the sale of securities in the third quarter of 2018. Excluding those losses, adjusted non-interest income for the full year 2018 would have been $3.42 million. The increase in non-interest income was driven by higher gain-on-sale revenue from mortgage loans. Gain-on-sale revenue from mortgage loans in 2019 was $4.76 million in 2019 compared to $3.17 million in 2018.
Non-interest Expenses
The Company continued to exercise strong expense control in 2019. Non-interest expenses in the fourth quarter of 2019 decreased by 11.96% compared to the previous quarter and decreased by 6.06% compared to the same period in 2018.
Principal categories of non-interest expenses that changed in the fourth quarter of 2019 were the following:
- Compensation costs decreased by 13.91% compared to the previous quarter, primarily due to a decline in commissions paid to mortgage loan officers on lower volume of closed loans and a reduction in salary expense.
Non-interest expenses decreased by 6.11% for the first twelve months of 2019 compared to the same period in 2018. Principal categories of non-interest expenses that changed in 2019 compared to 2018 were the following:
- Compensation costs decreased by 2.64% in 2019 compared to the prior year. Compensation costs in 2018 included severance costs of $462,196, recognized in the third and fourth quarters of the year. The compensation costs in 2019 included $175,198 in severance expenses, recognized in the first quarter of 2019.
- Professional fees were lower by 48.79% in 2019 compared to 2018, primarily due to a streamlining of vendor agreements, more efficient use of legal services and reduced director fees in 2019 as a result of the board restructuring that occurred in 2018.
- Data processing expenses in 2019 were lower by 29.12% compared to the prior year, primarily due to re-negotiation of certain vendor agreements and more efficient utilization of data processing services in 2019.
- Insurance expense was reduced due to credits provided by the FDIC in 2019 on deposit insurance assessments to small banks (those with total consolidated assets of less than $10 billion).
Asset Quality
Non-accrual loans were $1.70 million or 0.42% of total loans at the end of the fourth quarter of 2019, compared to $2.18 million or 0.53% of total loans at the end of the prior quarter. As of both December 31, 2019 and September 30, 2019, there were no troubled debt restructurings ("TDRs"). On December 31, 2019 there were $4.53 million of loans that were 90 days or more past due and accruing, equivalent to 1.11% of total loans, compared to $598,863 of loans that were 90 days or more past due and accruing, equivalent to 0.14% of total loans on September 30, 2019. The increase in loans that were more than 90 days past due and accruing was largely related to two credits. The loans are adequately secured and collectability of delinquent payments is highly likely as collections are in process. There was no Other Real Estate Owned ("OREO") on the balance sheet on December 31, 2019 or September 30, 2019. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and accruing, loans that were TDRs but not on non-accrual, and OREO assets) were $6.23 million or 1.24% of total assets at December 31, 2019 compared to $2.78 million or 0.55% of total assets, at the end of the previous quarter.
Following an assessment of the collectability of the loans held-for-investment at the end of the fourth quarter, it was determined that the reserve for loan and lease losses was adequate and that an additional provision for loan and lease losses was not necessary. The Bank's ALLL was 1.05% of loans held-for-investment at December 31, 2019, compared to 1.12% of loans held-for-investment at September 30, 2019.
Total Assets
Total assets at December 31, 2019 were $500.39 million compared to $507.39 million on September 30, 2019. Changes in major asset categories during linked quarters were as follows:
- Cash balances and deposits with other banks increased by $4.18 million during the quarter.
- The available-for-sale securities portfolio increased by $4.87 million compared to September 30, 2019.
- Loans held-for-investment decreased by $7.88 million during the quarter.
- Loans held-for-sale decreased by $7.68 million during the quarter.
Total Liabilities
Total liabilities at December 31, 2019 were $436.37 million, compared to total liabilities of $444.20 million on September 30, 2019. Total deposits were $395.21 million on December 31, 2019 compared to total deposits of $396.65 million on September 30, 2019. On a linked quarter basis, interest bearing demand deposits increased by $2.40 million, with the bulk of the increase occurring in low cost interest checking balances. Non-interest bearing demand deposits were flat during the quarter at $80.63 million, and comprised 20.40% of total deposits at the end of the quarter, compared to 16.72% of total deposits on December 31, 2018. Federal Home Loan Bank advances decreased by $6.00 million during the quarter, as the bank took advantage of strong balance sheet liquidity to reduce borrowing costs.
Stockholders' Equity and Capital
Stockholders' equity at December 31, 2019 was $64.03 million compared to $63.19 million on September 30, 2019. Additional paid in capital at December 31, 2019 was $58.53 million compared to $58.45 million on September 30, 2019. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities on the balance sheet, increased by $18,566 on lower unrealized losses during the quarter and has increased by $1.09 million since December 31, 2018. Total shares issued and outstanding were 7,221,046 on December 31, 2019 compared to 6,981,602 on December 31, 2018. The book value of the Bank's common stock at December 31, 2019 was $8.86 per share compared to $8.47 per share on December 31, 2018.
As of December 31, 2019, all of the Bank's capital ratios were well above regulatory minimum capital ratios for well capitalized banks. The Bank's capital ratios on December 31, 2019 and December 31, 2018 were as follows:
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December 31, 2019 | December 31, 2018 | ||||||
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||||||||
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Total Capital Ratio
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16.24 | % | 15.85 | % | ||||
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||||||||
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Tier 1 Capital Ratio
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15.26 | % | 14.73 | % | ||||
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Common Equity
Tier 1 Capital Ratio
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15.26 | % | 14.73 | % | ||||
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Leverage Ratio
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12.80 | % | 12.16 | % | ||||
About Freedom Bank
Freedom Bank is a community-oriented bank with locations in Fairfax, Reston, Chantilly and Vienna, Virginia. Freedom Bank also has a mortgage division headquartered in Chantilly. For information about Freedom Bank's deposit and loan services, visit the Bank's website at www.freedom.bank
Forward Looking Statements
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, the adequacy or inadequacy of our allowance for loan and lease losses, and acquisition or loss of key production personnel. The Bank cautions readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and the Bank 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. Some of the financial tables in this document reflect classifications to accounts to improve consistency in financial reporting.
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THE FREEDOM BANK OF VIRGINIA
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CONSOLIDATED BALANCE SHEETS
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(Unaudited) | (Unaudited) | (Audited) | |||||||||
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December 31, | September 30, | December 31, | |||||||||
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2019 | 2019 | 2018 | |||||||||
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ASSETS
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||||||||||||
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Cash and Due from Banks
|
$ | 927,323 | $ | 890,654 | $ | 1,270,559 | ||||||
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Interest Bearing Deposits with Banks
|
24,735,085 | 20,590,246 | 14,376,684 | |||||||||
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Securities Available-for-Sale
|
49,854,912 | 44,984,633 | 48,204,339 | |||||||||
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Restricted Stock Investments
|
3,752,750 | 4,013,750 | 3,076,000 | |||||||||
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Loans Held for Sale
|
11,656,802 | 19,338,243 | 4,415,520 | |||||||||
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Loans Held for Investment
|
392,941,874 | 400,817,788 | 394,080,457 | |||||||||
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Allowance for Loan Losses
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(4,121,692 | ) | (4,502,835 | ) | (4,572,393 | ) | ||||||
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Net Loans
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388,820,181 | 396,314,953 | 389,508,064 | |||||||||
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Bank Premises and Equipment, net
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1,480,535 | 1,547,008 | 1,748,935 | |||||||||
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Other Real Estate Owned
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- | - | - | |||||||||
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Accrued Interest Receivable
|
1,278,037 | 1,252,014 | 1,229,534 | |||||||||
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Deferred Tax Asset
|
904,010 | 779,577 | 1,247,513 | |||||||||
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Bank-Owned Life Insurance
|
12,783,605 | 12,686,878 | 12,401,317 | |||||||||
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Other Assets
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4,199,435 | 4,989,323 | 1,336,522 | |||||||||
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Total Assets
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$ | 500,392,674 | $ | 507,387,279 | $ | 478,814,987 | ||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Liabilities
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Deposits
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||||||||||||
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Demand deposits
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||||||||||||
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Non-interest bearing
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$ | 80,630,053 | $ | 80,916,899 | $ | 67,012,857 | ||||||
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Interest bearing
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112,605,618 | 110,200,698 | 128,403,358 | |||||||||
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Savings deposits
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2,153,939 | 2,726,046 | 3,023,239 | |||||||||
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Time deposits
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199,821,006 | 202,808,547 | 202,292,311 | |||||||||
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Total Deposits
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395,210,616 | 396,652,190 | 400,731,765 | |||||||||
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Federal Home Loan Bank advances
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35,857,143 | 41,857,143 | 17,142,857 | |||||||||
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Other Liabilities
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4,864,913 | 4,808,531 | 1,607,491 | |||||||||
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Accrued interest payable
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433,586 | 882,971 | 218,537 | |||||||||
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Total Liabilities
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436,366,258 | 444,200,835 | 419,700,650 | |||||||||
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Stockholders' Equity
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||||||||||||
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Preferred stock, $0.01 par value, 5,000,000 shares authorized;
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0 shares issued and outstanding, 2019 and 2018
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- | - | - | |||||||||
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Common stock, $0.01 par value, 25,000,000 shares:
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23,000,000 shares voting and 2,000,000 shares non-voting.
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Voting Common Stock:
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6,548,046, 6,538,396 and 6,423,602 shares issued and outstanding
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at December 31, September 30, 2019 and December 31, 2018, respectively
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(includes 120,500, 120,500 and 115,000 unvested shares at December 31,
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September 30, 2019 and December 31, 2018 respectively)
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64,275 | 64,175 | 63,086 | |||||||||
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Non-Voting Common Stock:
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673,000 shares issued and outstanding December 31, September 30, 2019
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and December 31 2018
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6,730 | 6,730 | 6,730 | |||||||||
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Additional paid-in capital
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58,526,913 | 58,453,416 | 57,416,068 | |||||||||
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Accumulated other comprehensive loss, net
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(29,275 | ) | (47,841 | ) | (1,124,101 | ) | ||||||
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Retained earnings
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5,457,772 | 4,709,964 | 2,752,554 | |||||||||
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Total Stockholders' Equity
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64,026,416 | 63,186,444 | 59,114,337 | |||||||||
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Total Liabilities and Stockholders' Equity
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$ | 500,392,674 | $ | 507,387,279 | $ | 478,814,987 | ||||||
THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
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For the three | For the three | For the twelve | For the twelve | ||||||||||||
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months ended | months ended | months ended | months ended | ||||||||||||
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December 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | ||||||||||||
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Interest Income
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||||||||||||||||
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Interest and fees on loans
|
$ | 5,345,417 | $ | 5,320,269 | $ | 21,113,850 | $ | 21,107,977 | ||||||||
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Interest on investment securities
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278,164 | 337,702 | 1,369,822 | 1,740,241 | ||||||||||||
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Interest on Federal funds sold
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88,239 | 174,693 | 391,377 | 484,390 | ||||||||||||
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Total Interest Income
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5,711,820 | 5,832,664 | 22,875,048 | 23,332,608 | ||||||||||||
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Interest Expense
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||||||||||||||||
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Interest on deposits
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1,513,662 | 1,457,042 | 6,207,144 | 5,352,235 | ||||||||||||
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Interest on borrowings
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162,502 | 89,481 | 545,141 | 322,373 | ||||||||||||
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Total Interest Expense
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1,676,164 | 1,546,524 | 6,752,285 | 5,674,608 | ||||||||||||
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||||||||||||||||
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Net Interest Income
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4,035,657 | 4,286,140 | 16,122,764 | 17,658,000 | ||||||||||||
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Provision for Loan Losses
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- | 406,000 | 194,500 | 406,000 | ||||||||||||
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Net Interest Income after
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||||||||||||||||
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Provision for Loan Losses
|
4,035,657 | 3,880,140 | 15,928,264 | 17,252,000 | ||||||||||||
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Non-Interest Income
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||||||||||||||||
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Gain on sale of mortgage loans
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1,097,693 | 668,073 | 4,763,651 | 3,168,195 | ||||||||||||
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Service charges and other income
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45,300 | 43,196 | 156,467 | 187,892 | ||||||||||||
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Gain(Loss) on sale of securities
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- | - | 105,722 | (1,181,108 | ) | |||||||||||
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Increase in cash surrender value of bank-
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||||||||||||||||
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owned life insurance
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96,727 | 22,396 | 382,288 | 63,171 | ||||||||||||
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Total Non-interest Income
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1,239,720 | 733,665 | 5,408,128 | 2,238,150 | ||||||||||||
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Non-Interest Expenses
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Officer and employee compensation
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and benefits
|
2,637,977 | 2,824,477 | 11,347,119 | 11,654,250 | ||||||||||||
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Occupancy expense
|
293,058 | 269,963 | 1,142,845 | 1,098,985 | ||||||||||||
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Equipment and depreciation expense
|
261,871 | 172,048 | 891,384 | 664,284 | ||||||||||||
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Insurance expense
|
10,760 | 78,345 | 118,226 | 438,813 | ||||||||||||
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Professional fees
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278,594 | 460,078 | 1,037,660 | 2,026,109 | ||||||||||||
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Data and item processing
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189,680 | 312,108 | 885,836 | 1,249,830 | ||||||||||||
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Advertising
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113,194 | 57,289 | 336,282 | 245,294 | ||||||||||||
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Franchise taxes and State Assessment Fees
|
175,920 | 160,647 | 629,989 | 635,162 | ||||||||||||
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Mortgage fees and settlements
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200,192 | 95,353 | 843,191 | 498,411 | ||||||||||||
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Other operating expense
|
169,743 | 179,851 | 927,423 | 830,157 | ||||||||||||
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Total Non-interest Expenses
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4,330,988 | 4,610,159 | 18,159,953 | 19,341,296 | ||||||||||||
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Income before Income Taxes
|
944,389 | 3,645 | 3,176,438 | 148,854 | ||||||||||||
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Income Tax Expense
|
196,581 | (11,605 | ) | 471,221 | (42,423 | ) | ||||||||||
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Net Income
|
$ | 747,808 | $ | 15,250 | $ | 2,705,217 | $ | 191,277 | ||||||||
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Earnings per Common Share - Basic
|
$ | 0.10 | $ | 0.00 | $ | 0.38 | $ | 0.03 | ||||||||
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Earnings per Common Share - Diluted
|
$ | 0.10 | $ | 0.00 | $ | 0.37 | $ | 0.03 | ||||||||
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Weighted-Average Common Shares
|
||||||||||||||||
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Outstanding - Basic
|
7,212,568 | 7,085,636 | 7,144,052 | 6,751,251 | ||||||||||||
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Weighted-Average Common Shares
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||||||||||||||||
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Outstanding - Diluted
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7,272,228 | 7,207,759 | 7,226,571 | 6,948,844 | ||||||||||||
THE FREEDOM BANK OF VIRGINIA
CONSOLIDATED STATEMENTS OF OPERATIONS
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For the three | For the three | For the three | For the three | For the three | |||||||||||||||
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months ended | months ended | months ended | months ended | months ended | |||||||||||||||
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December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | |||||||||||||||
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Interest Income
|
||||||||||||||||||||
|
Interest and fees on loans
|
$ | 5,345,417 | $ | 5,541,462 | $ | 5,022,252 | $ | 5,204,718 | $ | 5,320,254 | ||||||||||
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Interest on investment securities
|
278,164 | 343,288 | 381,352 | 367,017 | 337,702 | |||||||||||||||
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Interest on Federal funds sold and Other
|
88,239 | 82,831 | 94,979 | 125,328 | 174,693 | |||||||||||||||
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Total Interest Income
|
5,711,820 | 5,967,581 | 5,498,583 | 5,697,063 | 5,832,649 | |||||||||||||||
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|
||||||||||||||||||||
|
Interest Expense
|
||||||||||||||||||||
|
Interest on deposits
|
1,513,662 | 1,585,209 | 1,606,953 | 1,501,319 | 1,457,042 | |||||||||||||||
|
Interest on borrowings
|
162,502 | 174,810 | 120,696 | 87,132 | 89,481 | |||||||||||||||
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Total Interest Expense
|
1,676,164 | 1,760,019 | 1,727,649 | 1,588,451 | 1,546,523 | |||||||||||||||
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|
||||||||||||||||||||
|
Net Interest Income
|
4,035,657 | 4,207,562 | 3,770,934 | 4,108,612 | 4,286,126 | |||||||||||||||
|
Provision for Loan Losses
|
- | 47,000 | 147,500 | - | 406,000 | |||||||||||||||
|
Net Interest Income after
|
||||||||||||||||||||
|
Provision for Loan Losses
|
4,035,657 | 4,160,562 | 3,623,434 | 4,108,612 | 3,880,126 | |||||||||||||||
|
Non-Interest Income
|
||||||||||||||||||||
|
Gain on sale of mortgage loans
|
1,097,693 | 1,702,767 | 1,168,251 | 794,939 | 668,073 | |||||||||||||||
|
Service charges and other income
|
45,300 | 36,275 | 32,462 | 42,431 | 43,196 | |||||||||||||||
|
Gains on sale of securities
|
- | - | 103,034 | 2,688 | - | |||||||||||||||
|
Increase in cash surrender value of bank-
|
||||||||||||||||||||
|
owned life insurance
|
96,727 | 97,022 | 96,324 | 92,215 | 22,396 | |||||||||||||||
|
Total Non-interest Income
|
1,239,720 | 1,836,064 | 1,400,071 | 932,273 | 733,665 | |||||||||||||||
|
|
||||||||||||||||||||
|
Non-Interest Expenses
|
||||||||||||||||||||
|
Officer and employee compensation
|
||||||||||||||||||||
|
and benefits
|
2,637,977 | 3,064,244 | 2,711,906 | 2,932,993 | 2,824,477 | |||||||||||||||
|
Occupancy expense
|
293,058 | 285,798 | 288,213 | 275,776 | 269,963 | |||||||||||||||
|
Equipment and depreciation expense
|
261,871 | 216,275 | 277,717 | 185,521 | 172,048 | |||||||||||||||
|
Insurance expense
|
10,760 | (26,872 | ) | 77,984 | 77,984 | 78,345 | ||||||||||||||
|
Professional fees
|
278,594 | 297,947 | 243,880 | 323,358 | 460,078 | |||||||||||||||
|
Data and item processing
|
189,680 | 256,535 | 187,073 | 252,547 | 312,108 | |||||||||||||||
|
Advertising
|
113,194 | 63,543 | 124,276 | 35,269 | 57,289 | |||||||||||||||
|
Franchise taxes and State Assessment Fees
|
175,920 | 154,265 | 98,717 | 141,887 | 160,647 | |||||||||||||||
|
Mortgage fees and settlements
|
200,192 | 312,346 | 198,771 | 131,881 | 95,353 | |||||||||||||||
|
Other operating expense
|
169,743 | 295,082 | 185,124 | 158,927 | 179,851 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total Non-interest Expenses
|
4,330,988 | 4,919,163 | 4,393,661 | 4,516,143 | 4,610,159 | |||||||||||||||
|
Income before Income Taxes
|
944,389 | 1,077,463 | 629,844 | 524,742 | 3,645 | |||||||||||||||
|
|
||||||||||||||||||||
|
Income Tax Expense
|
196,581 | 145,115 | 120,769 | 8,756 | (11,605 | ) | ||||||||||||||
|
|
||||||||||||||||||||
|
Net Income
|
$ | 747,808 | $ | 932,348 | $ | 509,075 | $ | 515,986 | $ | 15,250 | ||||||||||
|
Earnings per Common Share - Basic
|
$ | 0.10 | $ | 0.13 | $ | 0.07 | $ | 0.07 | $ | 0.00 | ||||||||||
|
Earnings per Common Share - Diluted
|
$ | 0.10 | $ | 0.13 | $ | 0.07 | $ | 0.07 | $ | 0.00 | ||||||||||
|
Weighted-Average Common Shares
|
||||||||||||||||||||
|
Outstanding - Basic
|
7,212,568 | 7,150,649 | 7,114,190 | 7,097,635 | 7,085,636 | |||||||||||||||
|
Weighted-Average Common Shares
|
||||||||||||||||||||
|
Outstanding - Diluted
|
7,272,228 | 7,194,786 | 7,177,984 | 7,173,656 | 7,207,759 | |||||||||||||||
|
Average Balances, Income and Expenses, Yields and Rates
|
|
|
(Unaudited)
|
|
|
|
Three Months Ended | Three Months Ended | ||||||||||||||||||||||
|
|
December 31, 2019 | September 30, 2019 | ||||||||||||||||||||||
|
|
Average Balance | Income/Expense | Yield | Average Balance | Income/Expense | Yield | ||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||
|
Cash
|
$ | 25,022,661 | $ | 88,239 | 1.40 | % | $ | 15,079,084 | $ | 82,831 | 2.18 | % | ||||||||||||
|
|
||||||||||||||||||||||||
|
Investments (Tax Exempt)
|
4,494,698 | 38,432 | 4,481,837 | 38,451 | ||||||||||||||||||||
|
Investments (Taxable)
|
44,496,212 | 248,253 | 45,525,802 | 312,913 | ||||||||||||||||||||
|
Total Investments
|
48,990,910 | 286,685 | 2.32 | % | 50,007,639 | 351,364 | 2.79 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Loans (Tax Exempt)
|
4,561,638 | 61,239 | 4,590,156 | 61,620 | ||||||||||||||||||||
|
Loans (Taxable)
|
404,433,331 | 5,297,040 | 406,752,716 | 5,492,782 | ||||||||||||||||||||
|
Total Loans
|
408,994,969 | 5,358,279 | 5.20 | % | 411,342,872 | 5,554,402 | 5.36 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Earning Assets
|
483,008,540 | 5,733,203 | 4.71 | % | 476,429,595 | 5,988,597 | 4.99 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Assets
|
$ | 500,326,991 | $ | 494,059,141 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||||||
|
Interest Checking
|
$ | 14,030,639 | 14,184 | 0.40 | % | $ | 10,544,633 | 14,341 | 0.54 | % | ||||||||||||||
|
Money Market
|
88,595,320 | 293,646 | 1.31 | % | 94,166,514 | 328,272 | 1.38 | % | ||||||||||||||||
|
Savings
|
2,272,908 | 1,146 | 0.20 | % | 2,538,392 | 1,280 | 0.20 | % | ||||||||||||||||
|
Time Deposits
|
201,332,511 | 1,204,686 | 2.37 | % | 202,523,113 | 1,241,316 | 2.43 | % | ||||||||||||||||
|
Interest Bearing Deposits
|
306,231,378 | 1,513,662 | 1.96 | % | 309,772,652 | 1,585,209 | 2.03 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
FHLB Borrowings
|
39,890,991 | 162,502 | 1.62 | % | 37,231,599 | 174,811 | 1.86 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Interest Bearing Liabilities
|
346,122,369 | 1,676,164 | 1.92 | % | 347,004,251 | 1,760,020 | 2.01 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Non Interest Bearing Deposits
|
$ | 84,845,763 | $ | 79,607,547 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Cost of Funds
|
1.54 | % | 1.64 | % | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net Interest Margin1
|
$ | 4,057,039 | 3.33 | % | $ | 4,228,577 | 3.52 | % | ||||||||||||||||
|
Shareholders Equity
|
$ | 63,634,670 | $ | 62,102,356 | ||||||||||||||||||||
1 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank's net yield on its earning assets
|
Average Balances, Income and Expenses, Yields and Rates
|
|
(Unaudited)
|
|
|
Three Months Ended | Three Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
|
|
December 31, 2019 | Income / | December 31, 2018 | Income / | December 31, 2019 | Income / | December 31, 2018 | Income / | ||||||||||||||||||||||||||||||||||||||||
|
|
Average Balance | Expense | Yield | Average Balance | Expense | Yield | Average Balance | Expense | Yield | Average Balance | Expense | Yield | ||||||||||||||||||||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Cash
|
$ | 25,022,661 | $ | 88,239 | 1.40 | % | $ | 32,879,357 | $ | 174,693 | 2.11 | % | $ | 20,003,596 | $ | 391,377 | 1.96 | % | $ | 27,740,961 | $ | 484,390 | 1.75 | % | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Investments (Tax Exempt)
|
4,494,698 | 38,432 | 4,501,710 | 44,124 | 4,499,634 | 158,468 | 23,078,984 | 736,023 | ||||||||||||||||||||||||||||||||||||||||
|
Investments (Taxable)
|
44,496,212 | 248,253 | 47,114,408 | 302,844 | 47,663,085 | 1,244,632 | 48,066,870 | 1,158,783 | ||||||||||||||||||||||||||||||||||||||||
|
Total Investments
|
48,990,910 | 286,685 | 2.32 | % | 51,616,118 | 346,968 | 2.67 | % | 52,162,719 | 1,403,100 | 2.69 | % | 71,145,854 | 1,894,806 | 2.66 | % | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Loans (Tax Exempt)
|
4,561,638 | 61,239 | - | - | 3,610,668 | 196,377 | - | - | ||||||||||||||||||||||||||||||||||||||||
|
Loans (Taxable)
|
404,433,331 | 5,297,040 | 404,471,545 | 5,320,254 | 396,543,751 | 21,152,158 | 407,025,119 | 21,107,977 | ||||||||||||||||||||||||||||||||||||||||
|
Total Loans
|
408,994,969 | 5,358,279 | 5.20 | % | 404,471,545 | 5,320,254 | 5.22 | % | 400,154,419 | 21,348,535 | 5.34 | % | 407,025,119 | 21,107,977 | 5.19 | % | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Earning Assets
|
483,008,540 | 5,733,203 | 4.71 | % | 488,967,020 | 5,841,915 | 4.74 | % | 472,320,734 | 23,143,013 | 4.90 | % | 505,911,934 | 23,487,172 | 4.64 | % | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Assets
|
$ | 500,326,991 | $ | 495,545,951 | $ | 490,210,976 | $ | 511,583,623 | ||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Interest Checking
|
$ | 14,030,639 | 14,184 | 0.40 | % | $ | 6,493,346 | 25,092 | 1.53 | % | $ | 9,650,807 | 46,997 | 0.49 | % | $ | 6,214,429 | 48,720 | 0.78 | % | ||||||||||||||||||||||||||||
|
Money Market
|
88,595,320 | 293,646 | 1.31 | % | 138,479,123 | 448,482 | 1.28 | % | 102,010,117 | 1,404,792 | 1.38 | % | 162,634,172 | 2,037,149 | 1.25 | % | ||||||||||||||||||||||||||||||||
|
Savings
|
2,272,908 | 1,146 | 0.20 | % | 2,447,627 | 1,233 | 0.20 | % | 2,527,243 | 5,041 | 0.20 | % | 2,245,599 | 4,591 | 0.20 | % | ||||||||||||||||||||||||||||||||
|
Time Deposits
|
201,332,511 | 1,204,686 | 2.37 | % | 199,890,149 | 982,234 | 1.95 | % | 200,367,159 | 4,750,313 | 2.37 | % | 195,288,881 | 3,261,775 | 1.67 | % | ||||||||||||||||||||||||||||||||
|
Interest Bearing Deposits
|
306,231,378 | 1,513,662 | 1.96 | % | 347,310,244 | 1,457,041 | 1.66 | % | 314,555,326 | 6,207,144 | 2.04 | % | 366,383,081 | 5,352,235 | 1.46 | % | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
FHLB Borrowings
|
39,890,991 | 162,502 | 1.62 | % | 17,211,379 | 89,460 | 2.06 | % | 29,106,124 | 545,141 | 1.87 | % | 16,154,649 | 322,373 | 2.00 | % | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Interest Bearing Liabilities
|
346,122,369 | 1,676,164 | 1.92 | % | 364,521,623 | 1,546,501 | 1.68 | % | 343,661,450 | 6,752,285 | 1.96 | % | 382,537,730 | 5,674,608 | 1.48 | % | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Non Interest Bearing Deposits
|
$ | 84,845,763 | $ | 70,149,557 | $ | 78,699,921 | $ | 70,057,877 | ||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Cost of Funds
|
1.54 | % | 1.41 | % | 1.60 | % | 1.25 | % | ||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Net Interest Margin1
|
$ | 4,057,039 | 3.33 | % | $ | 4,295,414 | 3.49 | % | $ | 16,390,728 | 3.47 | % | $ | 17,812,564 | 3.52 | % | ||||||||||||||||||||||||||||||||
|
Shareholders Equity
|
$ | 63,634,670 | $ | 58,383,853 | $ | 61,518,809 | $ | 55,592,217 | ||||||||||||||||||||||||||||||||||||||||
|
ROAA
|
0.59 | % | 0.01 | % | 0.55 | % | 0.04 | % | ||||||||||||||||||||||||||||||||||||||||
|
ROAE
|
4.66 | % | 0.10 | % | 4.40 | % | 0.34 | % | ||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
1 Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Bank's net yield on its earning assets
|
Rate Volume Analysis
|
|
|
Three Months Ended December 31, 2019 | Twelve Months Ended December 31, 2019 | ||||||||||||||||||||||
|
|
compared to | compared to | ||||||||||||||||||||||
|
|
Three Months Ended September 30, 2019 | Twelve Months Ended December 31, 2018 | ||||||||||||||||||||||
|
Interest Income
|
||||||||||||||||||||||||
|
|
Rate | Volume | Net Change | Rate | Volume | Net Change | ||||||||||||||||||
|
Interest Bearing Deposits at Banks
|
$ | (49,212 | ) | $ | 54,621 | $ | 5,409 | $ | 42,091 | $ | (135,104 | ) | $ | (93,013 | ) | |||||||||
|
Investment Securities
|
$ | (57,535 | ) | $ | (7,144 | ) | $ | (64,679 | ) | $ | 13,867 | $ | (505,572 | ) | $ | (491,705 | ) | |||||||
|
Loans
|
$ | (164,419 | ) | $ | (31,704 | ) | $ | (196,123 | ) | $ | 596,867 | $ | (356,309 | ) | $ | 240,558 | ||||||||
|
|
||||||||||||||||||||||||
|
Earning Assets
|
$ | (255,393 | ) | $ | (344,160 | ) | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Interest Expense
|
||||||||||||||||||||||||
|
Deposits
|
||||||||||||||||||||||||
|
Interest Checking
|
$ | (4,898 | ) | $ | 4,741 | $ | (157 | ) | $ | (28,664 | ) | $ | 26,941 | $ | (1,723 | ) | ||||||||
|
Money Market
|
$ | (15,882 | ) | $ | (18,743 | ) | $ | (34,625 | ) | $ | 126,018 | $ | (759,374 | ) | $ | (633,356 | ) | |||||||
|
Savings
|
$ | (0 | ) | $ | (134 | ) | $ | (134 | ) | $ | (128 | ) | $ | 576 | $ | 448 | ||||||||
|
Time Deposits
|
$ | (27,934 | ) | $ | (8,696 | ) | $ | (36,630 | ) | $ | 1,435,184 | $ | 54,353 | $ | 1,489,537 | |||||||||
|
|
||||||||||||||||||||||||
|
FHLB Borrowings
|
$ | (24,795 | ) | $ | 12,486 | $ | (12,309 | ) | $ | (35,685 | ) | $ | 258,452 | $ | 222,767 | |||||||||
|
|
||||||||||||||||||||||||
|
Interest Paying Liabilities
|
$ | (83,855 | ) | $ | 1,077,673 | |||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net Interest Income
|
$ | (171,538 | ) | $ | (1,421,833 | ) | ||||||||||||||||||
|
Selected Financial Data by Quarter Ended:
|
|
(Unaudited)
|
|
Balance Sheet Ratios
|
December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | |||||||||||||||
|
Loans to Deposits
|
102.38 | % | 105.93 | % | 101.19 | % | 98.18 | % | 99.44 | % | ||||||||||
|
Income Statement Ratios (Quarterly)
|
||||||||||||||||||||
|
Return on Average Assets (ROAA)
|
0.59 | % | 0.75 | % | 0.42 | % | 0.43 | % | 0.01 | % | ||||||||||
|
Return on Average Equity (ROAE)
|
4.66 | % | 5.96 | % | 3.36 | % | 3.51 | % | 0.10 | % | ||||||||||
|
Efficiency Ratio
|
82.10 | % | 81.39 | % | 84.97 | % | 89.59 | % | 91.84 | % | ||||||||||
|
Net Interest Margin1
|
3.33 | % | 3.52 | % | 3.27 | % | 3.60 | % | 3.49 | % | ||||||||||
|
Yield on Average Earning Assets
|
4.71 | % | 4.99 | % | 4.76 | % | 4.99 | % | 4.74 | % | ||||||||||
|
Yield on Securities
|
2.32 | % | 2.79 | % | 2.80 | % | 2.83 | % | 2.67 | % | ||||||||||
|
Yield on Loans
|
5.20 | % | 5.36 | % | 5.17 | % | 5.42 | % | 5.22 | % | ||||||||||
|
Cost of Funds
|
1.54 | % | 1.64 | % | 1.66 | % | 1.54 | % | 1.41 | % | ||||||||||
|
Noninterest income to Total Revenue
|
23.50 | % | 30.38 | % | 27.08 | % | 18.49 | % | 14.62 | % | ||||||||||
|
Per Share Data
|
||||||||||||||||||||
|
Tangible Book Value
|
$ | 8.86 | $ | 8.76 | $ | 8.60 | $ | 8.48 | $ | 8.47 | ||||||||||
|
Share Price Data
|
||||||||||||||||||||
|
Closing Price
|
$ | 10.45 | $ | 9.95 | $ | 9.98 | $ | 10.00 | $ | 10.23 | ||||||||||
|
Book Value Multiple
|
118 | % | 114 | % | 116 | % | 116 | % | 121 | % | ||||||||||
|
Common Stock Data
|
||||||||||||||||||||
|
Outstanding Shares at End of Period
|
7,221,046 | 7,211,046 | 7,122,102 | 7,112,102 | 7,096,602 | |||||||||||||||
|
Weighted Average shares outstanding, basic
|
7,212,568 | 7,150,649 | 7,114,190 | 7,097,635 | 7,085,636 | |||||||||||||||
|
Weighted Average shares outstanding, diluted
|
7,272,228 | 7,194,786 | 7,177,984 | 7,173,656 | 7,207,759 | |||||||||||||||
|
Capital Ratios
|
||||||||||||||||||||
|
Tier 1 Leverage ratio
|
12.80 | % | 12.80 | % | 12.71 | % | 12.61 | % | 12.16 | % | ||||||||||
|
Common Equity Tier 1 ratio
|
15.26 | % | 14.79 | % | 14.91 | % | 15.28 | % | 14.73 | % | ||||||||||
|
Tier 1 Risk Based Capital ratio
|
15.26 | % | 14.79 | % | 14.91 | % | 15.28 | % | 14.73 | % | ||||||||||
|
Total Risk Based Capital ratio
|
16.24 | % | 15.84 | % | 15.98 | % | 16.42 | % | 15.85 | % | ||||||||||
|
Credit Quality
|
||||||||||||||||||||
|
Net Charge-offs to Average Loans
|
0.09 | % | 0.00 | % | 0.06 | % | 0.02 | % | 0.03 | % | ||||||||||
|
Total Non-performing Loans to Total Loans
|
1.54 | % | 0.67 | % | 0.79 | % | 0.80 | % | 0.83 | % | ||||||||||
|
Total Non-performing Assets to Total Assets
|
1.24 | % | 0.55 | % | 0.65 | % | 0.64 | % | 0.69 | % | ||||||||||
|
Nonaccrual Loans to Total Loans
|
0.42 | % | 0.53 | % | 0.76 | % | 0.65 | % | 0.71 | % | ||||||||||
|
Allowance for Loan and Lease Losses to loans held-for-investment
|
1.05 | % | 1.12 | % | 1.14 | % | 1.19 | % | 1.16 | % | ||||||||||
Contact:
Joseph J. Thomas
President & Chief Executive Officer
703-667-4161: Phone
[email protected]: Email
SOURCE: Freedom Bank of VA