FAIRFAX, Va.--(BUSINESS WIRE)--The Freedom Bank of Virginia (OTCQX: FDVA), (the “Bank” or “Freedom”), today reported net income of $308,207, or $0.05 per diluted share, for the first quarter of 2018.
Highlights for the First Quarter:
- Net income was $308,207, or $0.05 per diluted share for the first quarter of 2018;
- Total assets were $511.2 million at March 31, 2018, a decrease of $21.9 million or 4.1% from December 31, 2017;
- Loans receivable declined by $10.9 million from December 31, 2017, as the Bank systematically reduced exposure to non-owner occupied Commercial Real Estate loans;
- Deposits decreased by $21.5 million during the quarter or 4.62% to $444.5 million at March 31, 2018, with most of the reduction occurring in time deposits. The decline in time deposits was in listed deposits which decreased by $6.6 million or 43.1% during the first quarter and in other time deposits that the Bank elected not to retain for relationship reasons;
- Asset quality remained strong with the ratio of non performing assets to total assets at 0.13% as of March 31, 2018, compared to a ratio of 0.17% as of December 31, 2017;
- Capital ratios were strong during the first quarter, and above regulatory minimums for well-capitalized banks, with increases in the Common Equity Tier 1 Capital ratio, the Tier 1 Capital ratio (based on risk weighted assets), and the Total Capital ratio, compared to December 31, 2017.
CEO Craig Underhill said, “In the first quarter, the Bank implemented a strategy to bolster its senior management team through the addition of experienced community bank professionals who will help us to enhance core deposit generation and business banking capabilities, and position us for stronger growth.”
Total Revenue
Interest income was $5.66 million in the first quarter of 2018, while interest expense was $1.32 million during the same period. Net interest income (before a provision for loan losses) was $4.34 million in the first quarter of 2018. The Bank had a reduction in loans during the quarter, primarily in the area of commercial real estate (“CRE”), as part of an effort to systematically reduce the risk in the loan portfolio and reduce exposure to non-owner occupied CRE loans. The Bank also made some changes to its Prime Money Market Product, designed to reduce sensitivity of those deposit rates to the Prime rate.
Non-interest income in the first quarter was $680,394 and total revenue (comprising net interest income and non-interest income) was $5.02 million during the same period. Most of the Bank’s non-interest income is obtained from its mortgage operations. Mortgage revenue was adversely impacted by a tighter inventory of homes in Northern Virginia, which reduced the number of loan applications.
Non-interest Expense
Non-interest expense for the first quarter of 2018 was $4.63 million. Expenses during the first quarter were impacted by higher fees incurred for professional services, as well as additional investments in software and control infrastructure. We expect the fees for professional services to decline over the course of 2018.
Asset Quality
Asset quality continued to be strong: non-accrual loans were $557,347 or 0.14% of total loans as of March 31, 2018, compared to $666,125 or 0.17% of total loans as of December 31, 2017 and troubled debt restructurings (“TDRs”) were $97,895 or 0.02% of total loans as of March 31, 2018, compared to $220,068 or 0.06% of total loans as of December 31, 2017. On March 31, 2018 and on December 31, 2017, there were no loans that were more than 90 days past due that were not on non-accrual and there were no OREO assets on the balance sheet. Total non-performing assets (defined as the sum of loans greater than 90 days past due, non-accrual loans, TDR’s and OREO) were $655,242 or 0.13% of total assets as of March 31, 2018, compared to $886,193 or 0.17% of total assets at December 31, 2017.
The Bank’s allowance for loan and lease losses (“ALLL”) was $4.51 million or 1.14% of total loans at March 31, 2018, compared to $4.56 million or 1.12% of total loans at December 31, 2017.
Total Assets
Total assets at March 31, 2018 were $511.2 million, compared to $533.1 million at December 31, 2017, a decrease of $21.9 million during the quarter. Changes in major asset categories were as follows:
Cash and due from banks, Federal Funds sold and interest bearing balances with other banks decreased by $4.97 million compared to December 31, 2017, while available-for-sale securities balances decreased by $2.92 million compared to December 31, 2017, as the Bank reduced exposure to wholesale time deposits. Additionally, total loans declined by $10.9 million as the Bank systematically reduced its exposure to CRE loans during the first quarter of 2018.
Total Liabilities
Total liabilities at March 31, 2018 were $456.3 million, a decrease of $21.5 million compared to December 31, 2017. Deposits declined by $21.5 million during the first quarter of 2018 to $444.5 million as of March 31, 2018. Demand deposits decreased slightly by $837,311, savings deposits were flat, while time deposits declined by $20.7 million. The decrease in time deposits resulted from the Bank’s decision to pay off higher cost time deposits at maturity, including $6.6 million of listed deposits. The reduction in deposits during the quarter was related to the Bank’s decision to reduce the risk in the funding base.
Stockholders’ Equity and Capital
Stockholders’ equity at March 31, 2018 was $54.8 million, compared to $55.3 million at December 31, 2017. Additional paid in capital at March 31, 2018 was $53.3 million compared to $53.2 million at December 31, 2017. Accumulated other comprehensive income declined by $806,969 during the quarter, as a result of increased unrealized losses on available-for-sale securities, stemming from higher interest rates. The Bank does not intend to sell these securities and expects to hold them to maturity and therefore does not consider any of the securities to be other-than-temporarily impaired. The book value of the Bank’s common stock at March 31, 2018 was $8.40 per share versus $8.47 per share at December 31, 2017.
As of March 31, 2018, all of the Bank’s capital ratios were well above regulatory minimum capital ratios for well capitalized banks. The Bank’s capital ratios as of March 31, 2018 and December 31, 2017 were as follows:
| March 31, 2018 | December 31, 2017 | |||||
| Total Capital Ratio | 14.99% | 14.41% | ||||
| Tier 1 Capital Ratio | 13.87% | 13.32% | ||||
| Common Equity | ||||||
| Tier 1 Capital Ratio | 13.87% | 13.32% | ||||
| Leverage Ratio | 10.64% | 10.19% | ||||
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.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 Federal Financial Institutions Examination Council. 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 | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | (Audited) | |||||||
| March 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Cash and Due from Banks | $ | 1,200,020 | $ | 1,164,368 | ||||
| Interest Bearing Deposits with Banks | 29,053,211 | 33,936,870 | ||||||
| Federal Funds Sold | - | 127,000 | ||||||
| Securities Available-for-Sale | 59,067,895 | 61,989,669 | ||||||
| Securities Held-to-Maturity | 14,529,382 | 14,869,181 | ||||||
| Restricted Stock Investments | 2,533,500 | 2,533,500 | ||||||
| Loans Held for Sale | 5,045,282 | 7,772,501 | ||||||
| Loans Receivable | 396,454,473 | 407,332,772 | ||||||
| Allowance for Loan Losses | (4,507,545 | ) | (4,562,370 | ) | ||||
| Net Loans | 391,946,928 | 402,770,402 | ||||||
| Bank Premises and Equipment, net | 1,806,182 | 1,595,575 | ||||||
| Accrued Interest Receivable | 1,533,355 | 1,643,427 | ||||||
| Deferred Tax Asset | 822,110 | 974,614 | ||||||
| Bank-Owned Life Insurance | 2,351,683 | 2,338,146 | ||||||
| Other Assets | 1,302,340 | 1,407,079 | ||||||
| Total Assets | $ | 511,191,888 | $ | 533,122,332 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities | ||||||||
| Deposits | ||||||||
| Demand deposits | ||||||||
| Non-interest bearing | $ | 69,129,363 | $ | 69,942,247 | ||||
| Interest bearing | 184,246,985 | 184,271,412 | ||||||
| Savings deposits | 2,269,649 | 2,273,760 | ||||||
| Time deposits | 188,825,421 | 209,493,201 | ||||||
| Total Deposits | 444,471,418 | 465,980,620 | ||||||
| Federal Home Loan Bank advances | 10,285,714 | 10,428,571 | ||||||
| Other accrued expenses | 1,432,216 | 1,256,202 | ||||||
| Accrued interest payable | 166,118 | 162,749 | ||||||
| Total Liabilities | 456,355,466 | 477,828,142 | ||||||
| Stockholders' Equity | ||||||||
|
Preferred stock, $0.01 par value, 5,000,000 shares authorized; 0 shares issued and outstanding, 2017 and 2016 |
- | - | ||||||
| Common stock, $0.01 par value, 25,000,000 shares: | ||||||||
| 23,000,000 shares voting and 2,000,000 shares non-voting. | ||||||||
| Voting Common Stock: | ||||||||
|
5,866,765 shares issued and outstanding at March 31, 2018 and December 31, 2017 |
58,668 | 58,668 | ||||||
| Non-Voting Common Stock: | ||||||||
|
660,143 shares issued and outstanding at March 31, 2018 and December 31, 2017 |
6,601 | 6,601 | ||||||
| Additional paid-in capital | 53,282,243 | 53,241,342 | ||||||
| Accumulated other comprehensive loss, net | (1,380,667 | ) | (573,698 | ) | ||||
| Retained earnings | 2,869,577 | 2,561,277 | ||||||
| Total Stockholders' Equity | 54,836,422 | 55,294,190 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 511,191,888 | $ | 533,122,332 | ||||
| THE FREEDOM BANK OF VIRGINIA | |||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||
| THREE MONTHS ENDED MARCH 31, 2018 AND 2017 | |||
| (Unaudited) | |||
| 2018 | |||
| Interest Income | |||
| Interest and fees on loans | $ | 5,062,087 | |
| Interest on investment securities | 596,889 | ||
| Interest on Federal funds sold | 466 | ||
| Total Interest Income | 5,659,442 | ||
| Interest Expense | |||
| Interest on deposits | 1,273,775 | ||
| Interest on borrowings | 45,426 | ||
| Total Interest Expense | 1,319,201 | ||
| Net Interest Income | 4,340,241 | ||
| Provision for Loan Losses | - | ||
| Net Interest Income after | |||
| Provision for Loan Losses | 4,340,241 | ||
| Non-Interest Income | |||
| Gain on sale of mortgage loans | 576,275 | ||
| Service charges and other income | 90,582 | ||
|
Increase in cash surrender value of bank-owned life insurance |
13,537 | ||
| Total Non-interest Income | 680,394 | ||
| Non-Interest Expenses | |||
|
Officer and employee compensation and benefits |
2,693,270 | ||
| Occupancy expense | 273,113 | ||
| Equipment and depreciation expense | 141,569 | ||
| Insurance expense | 81,496 | ||
| Professional fees | 631,522 | ||
| Data and item processing | 277,357 | ||
| Business development | 70,577 | ||
| Franchise taxes | 131,156 | ||
| Mortgage fees and settlements | 125,480 | ||
| Other operating expense | 205,289 | ||
| Total Non-interest Expenses | 4,630,829 | ||
| Income before Income Taxes | 389,806 | ||
| Income Tax Expense | 81,600 | ||
| Net Income | $ | 308,206 | |
| Earnings per Common Share - Basic | $ | 0.05 | |
| Earnings per Common Share - Diluted | $ | 0.05 | |
| Weighted-Average Common Shares | |||
| Outstanding - Basic | 6,526,908 | ||
| Weighted-Average Common Shares | |||
| Outstanding - Diluted | 6,847,521 | ||
