Freedom Bank Reports Third Consecutive Year of Profitability in 2012

Freedom Bank Reports Third Consecutive Year of Profitability in 2012

FAIRFAX, Va.--(BUSINESS WIRE)-- The Freedom Bank of Virginia (Bulletin Board:FDVA.OB): finished its third consecutive year and fifteenth consecutive profitable quarter on December 31, 2012.

Assets grew to $238,642,144 at December 31, 2012. This was up 14.98% from $207,557,264 at the prior period. The investment in additional lending officers resulted in double digit loan growth for the year. New lenders made a particularly strong contribution in the fourth quarter with loans to medical professionals. Gross loans increased 11.33% to $171,901,847 up from $154,407,193 at December 31, 2011. In addition to strong loan growth, Investment Securities Available for Sale increased $13,533,997 (89.13%) to $28,717,795 at December 31, 2012.


Deposit growth was strong for the year at 16.05%. Non-interest bearing deposits increased $9,558,806 (37.64%) to $34,951,109. This growth was due primarily to the Bank's strong penetration of the government contracting market. The Bank has focused on this market for many years and strong deposit growth in 2012 resulted from this long term effort. Time deposits increased $29,429,419 (21.55%) to $139,555,489 at December 31, 2012. Part of the strong growth in these areas was reduced by a decline in interest bearing checking accounts, which dropped $5,071,905 (12.17%) to $36,601,864 during the year.

Net profit declined for the year primarily due to investments the Bank made in loan growth and improving asset quality. The Bank increased its lending staff by 80% late in the year. This helped increase loan production, but also increased compensation expense by $270,000 in the fourth quarter. The Bank earned a net profit in 2012 of $1,192,000 ($0.42 per share), down from $1,900,300 in 2010 ($0.67 per share). Asset quality improved greatly. Loans on which the Bank is no longer accruing interest was halved from 2.43% at December 31, 2011 to 1.21% at December 31, 2012. Loans past due for regularly scheduled payments declined from 1.67% at December 31, 2011 to 0.23% at December 31, 2012. Although the result positioned the Bank well for the coming year, it did require the Bank to increase the Provision for Possible Loan Losses by $340,200 over the prior year.

Stockholder's Equity exceeded $25,000,000 for the first time for the year ending December 31, 2012. Stockholders Equity was $25,264,084 up 6.61% from $23,697,402 at 12/31/2011. Year end book value per share was $8.81, up from $8.07 the prior year.

Capital continues to be a strength of the Bank. Regulatory capital minimums to be considered well capitalized 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. At 12/31/2012 the ratios for the Bank were 11.06%, 13.80% and 15.03% respectively, all in the well capitalized category. The Bank continues its tradition of maintaining a strong capital base to serve the needs of its customers and stockholders.

Freedom Bank is a community-oriented, locally-owned bank with locations in Fairfax 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

December 31, 2012

December 31, 2011

ASSETS

Assets:

Cash and due from banks

$

10,884,094

$

16,128,032

Federal funds sold

18,788,000

15,753,000

Interest Bearing Balances with Banks

1,016,006

1,007,339

Investment securities available for sale, at fair value

28,717,795

15,183,798

Investment securities held to maturity

348,616

666,152

Federal Reserve Bank stock

746,650

689,350

Loans held for sale

3,656,829

3,007,500

Loans receivable

171,901,847

154,407,193

Allowance for possible loan losses

(2,236,822

)

(2,037,164

)

Net Loans

169,665,025

152,370,029

Bank Premises and equipment, net

199,500

213,857

Accrued interest and other receivables

607,276

519,450

Other assets

3,400,353

1,406,757

Deferred Tax Asset

612,000

612,000

Total Assets

$

238,642,144

$

207,557,264

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Deposits

Demand deposits:

Non-interest bearing deposits

$

34,951,109

$

25,392,303

Interest Checking

36,601,864

41,673,770

Savings deposits

1,467,280

1,269,065

Time deposits

139,555,489

114,811,184

Total Deposits

212,575,742

183,146,322

Other accrued expenses

732,466

654,898

Accrued interest payable

69,852

58,642

Total Liabilities

213,378,060

183,859,862

Stockholders' Equity

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

2,866,117 shares issued and outstanding, December 31, 2012

2,836,404 shares issued and outstanding, December 31, 2011)

11,942,228

11,818,325

Additional paid-in capital

16,284,303

16,184,810

Accumulated other comprehensive income

285,809

134,776

Retained earnings (deficit)

(3,248,256

)

(4,440,509

)

Total Stockholders' Equity

25,264,084

23,697,402

Total Liabilities and Stockholders' Equity

$

238,642,144

$

207,557,264

The Freedom Bank of Virginia

Statements of Operations

For the year ended

December 31,

2012

2011

Interest Income

Interest and fees on loans

$

9,305,595

$

9,110,312

Interest on investment securities

574,361

399,427

Interest on Federal funds sold

40,993

38,662

Total Interest Income

9,920,949

9,548,401

Interest Expense

Interest on deposits

2,008,653

1,861,828

Net Interest Income

7,912,296

7,686,573

Provision for Possible Loan Losses

688,200

348,000

Net Interest Income after Provision for Possible Loan Losses

7,224,096

7,338,573

Other Income

Service charges and other income

875,816

568,028

Operating Expenses

Officers and employee compensation and benefits

4,094,031

3,406,089

Occupancy expense

510,776

530,328

Equipment and depreciation expense

188,442

218,752

Insurance expense

179,105

241,878

Professional fees

548,748

398,568

Data and item processing

607,388

534,008

Business development

123,455

124,851

Franchise tax

226,110

202,955

Other operating expenses

429,602

348,872

Total Operating Expenses

6,907,657

6,006,301

Income before Income Taxes

1,192,255

1,900,300

Income Tax (Benefit) Expense

-

-

Net Income

$

1,192,255

$

1,900,300

Net Income Per Common Share

$

0.42

$

0.67

Net Income Per Diluted Share

$

0.42

$

0.67



The Freedom Bank of Virginia
Craig S. Underhill, Chief Executive Officer
703-242-5300

KEYWORDS: United States North America Virginia

INDUSTRY KEYWORDS:

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