PR Newswire | Apr 29, 2021 08:31AM EDT

04/29 07:30 CDT

The Freedom Bank of Virginia Announces Earnings for the First Quarter of 2021 FAIRFAX, Va., April 29, 2021

FAIRFAX, Va., April 29, 2021 /PRNewswire/ -- The Freedom Bank of Virginia (OTCQX: FDVA), (the "Bank" or "Freedom") today announced net income of $2,468,211, or $0.34 per diluted share, for the three months ended March 31, 2021. This compares to net income of $2,413,775 or $0.33 per diluted share, for the linked quarter and net income of $849,806 or $0.11 per diluted share for the three months ending March 31, 2020.

Joseph J. Thomas, President and CEO, commented, "Balance sheet growth fueled by new lead relationships and additional PPP clients, along with continued improvement in the composition and cost of our deposits, enabled the bank to drive our net income for the first quarter of 2021 to another record level, overcoming a softening in mortgage business volumes caused by rising rates and historically low levels of homes for sale in our primary market. The Bank's momentum enabled us to nearly triple net income in the first quarter of 2021 compared to the prior year and sustain strong returns on average assets and returns on average equity relative to peers. I remain grateful to our clients for choosing Freedom Bank in this challenging business climate and proud of our employees who continue to work virtually and deliver strong results in the face of persistent impacts of the COVID-19 pandemic across the DC region. "

First Quarter 2021 Highlights include:

* Net income for the first quarter was $2,468,211 or $0.34 per diluted share compared to net income of $2,413,775 or $0.33 per diluted share in the linked quarter and net income of $849,806 or $0.11 per diluted share for the three months ended March 31, 2020. The increase in net income in calendar quarters was primarily due to an increase in earning assets and an expansion in net interest margin; * Pre-tax, pre-provision net income was $3,122,414 for the first quarter compared to pre-tax, pre-provision net income of $1,398,806 for the same period in 2020; * Return on Average Assets ("ROAA") was 1.26% for the quarter ended March 31, 2021 compared to 1.28% for the linked quarter and 0.68% for the three months ended March 31, 2020; * Return on Average Equity ("ROAE") was 13.44% for the three months ended March 31, 2021 compared to 13.43% for the linked quarter and 5.27% for the three months ended March 31, 2020; * Total assets were $871.04 million on March 31, 2021, an increase of $103.99 million or 13.56% from total assets on December 31, 2020; * Total loans increased by $50.94 million or by 8.55% during the quarter. Loans held-for-investment (excluding PPP loans) increased by $26.20 million or 5.83% during the quarter, while PPP loan balances increased by $22.32 million and mortgage loans held for sale increased by $2.42 million; * Cash balances at the Federal Reserve increased by $49.91 million during the first quarter, primarily due to a surge in deposit growth; * Total deposits increased by $78.63 million or by 14.34% in the first quarter. Non-interest bearing demand deposits increased by $24.45 million from the linked quarter to $217.44 million and represented 34.67% of total deposits on March 31, 2021; * The net interest margin increased in the first quarter to 3.55%, higher by 49 basis points compared to the linked quarter and higher by 29 basis points compared to the same period in 2020. The increase in the net interest margin across linked quarters was primarily due to higher loan yields, up by 47 basis points, and a 12 basis point reduction in funding costs. The increase in loan yields was due to strong loan growth during the quarter as well as acceleration of deferred fees from PPP loans that were forgiven in the first quarter. Excluding the additional income from PPP loan forgiveness would have reduced the net interest margin by 31 basis points; * The cost of funds was 0.51% for the first quarter, lower by 12 basis points compared to the linked quarter and lower by 93 basis points compared to the same period in 2020, as deposit and borrowing costs declined across the board; * Non-interest income decreased by 35.16% compared to the linked quarter, primarily due to lower mortgage revenue as higher rates caused mortgage activity to slow from the linked quarter; * Non-interest expense decreased by 4.41% compared to the linked quarter and increased by 37.96% compared to the same period in 2020. The increase in non-interest expense in calendar quarters was primarily due to higher performance related costs: specifically, commissions paid to mortgage loan officers and mortgage settlement costs, as well as an increase in data processing expenses stemming from loan and deposit growth; * The Efficiency Ratio was 67.91% for the quarter ended March 31, 2021, compared to 67.52% for the linked quarter and 76.15% for the same period in 2020; * Asset quality remained strong with the ratio of non-performing assets to total assets at 0.28% on March 31, 2021 compared to 0.41% on December 31, 2020; * As a result of an increase in loans held-for-investment during the quarter and an assessment of the risks in the held-for-investment loan portfolio, the Bank recognized a $64,000 provision for loan losses during the first quarter and the ratio of the allowance for loan and lease losses to loans held-for-investment was 0.92% (or 1.16% excluding PPP loans, which carry a full faith and guarantee of the US Government) compared to 0.99% in the linked quarter (or 1.21% excluding PPP loans); * The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 10.95%, Common Equity Tier 1 ratio of 12.88%, Tier 1 Risk Based Capital ratio of 12.88% and a Total Capital ratio of 13.84%.

Total RevenueTotal revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was less than the linked quarter, primarily due to lower non-interest income, and higher by 54.69% compared to the same period in 2020.

Payment Protection Program ActivityIn the second quarter of 2020, the Bank processed and funded 510 PPP loans (referred to as 2020 PPP loans), with balances of $106.37 million. The interest rate on these 2020 PPP loans was 1% and the term varied from two to five years. The SBA also paid processing fees which were deferred over the term of the loans. The loans were fully guaranteed and could be forgiven in whole or in part by the SBA.

In December of 2020, Congress approved a renewal of the PPP loan program with different rules and requirements for small businesses to receive loans, referred to as 2021 PPP loans. These 2021 PPP loans were also fully guaranteed and may be forgiven in whole or in part by the SBA. The interest rate on the loans was 1% and the term was five years. As with 2020 PPP loans, the SBA paid processing fees which are being deferred over the term of the loans. As of April 13, 2021, the bank had made 337 of these PPP loans with a total balance of $50.14 million and expects to collect $2.10 million in fees over the term of the loans.

Beginning in January of 2021, the bank began to process loan forgiveness applications from borrowers of 2020 PPP loans. As of April 13, 2021, the SBA had forgiven 277 of these PPP loans with balances of $33.19 million, and the bank had earned $1.31 million in fees expected to be collected on all 2020 PPP loans.

Net Interest IncomeThe Bank recorded net interest income of $6.67 million for the first quarter of 2021, an increase of 20.88% compared to the linked quarter, and 70.20% higher than the same period in 2020. The net interest margin in the first quarter of 2021 was 3.55%, higher by 49 basis points compared to the linked quarter and higher by 29 basis points compared to the same period in 2020. Income from PPP loan forgiveness during the quarter was $576,748.

The following factors contributed to the changes in net interest margin during the first quarter of 2021 compared to the linked quarter:

* The surge in deposits during the quarter resulted in high levels of excess liquidity which pressured yields on average earning assets. * Yields on average earning assets increased by 38 basis points to 4.02% compared to 3.64% in the linked quarter, primarily due to higher yields on loans and investment securities. * Loan yields increased by 47 basis points to 4.61% from 4.14% in the linked quarter, while yields on investment securities increased by 4 basis points to 2.34% from 2.30% in the linked quarter. * Cost of funds decreased by 12 basis points to 0.51%, from 0.63% in the linked quarter, on continued declines in deposit and borrowing costs. * Excluding the additional income from PPP loan forgiveness would have reduced the net interest margin by 31 basis points.

Non-interest IncomeNon-interest income was $3.06 million for the first quarter, lower by 35.16% compared to the linked quarter and higher by 29.06% compared to the same period in 2020. The decline in non-interest income compared to the previous quarter was largely due to lower mortgage gain-on-sale and fee revenue, stemming from a decline in mortgage originations in the first quarter of 2021.

Non-interest ExpensesNon-interest expenses in the first quarter of 2021 decreased by 4.41% compared to the linked quarter and increased by 37.96% compared to the same period in 2020. The decline in non-interest expenses in the first quarter compared to the linked quarter was largely due to lower mortgage settlement costs, and declines in professional fees and data processing expenses.

The Efficiency Ratio was 67.91% for the quarter ended March 31, 2021, compared to 67.52% for the prior quarter and 76.15% for the same period in 2020.

Income TaxesThe bank's effective tax rate during the quarter was 19.30% compared to an effective tax rate of 21.83% in the fourth quarter of 2020. The lower effective tax rate was largely due to application of tax credits received from an investment in low income housing tax credits. The bank expects to receive additional tax credits from this investment in 2021.

Asset QualityNon-accrual loans were $2.48 million or 0.41% of loans held-for-investment at the end of the first quarter of 2021, compared to $3.18 million or 0.58% of loans held-for-investment at the end of the linked quarter. There were no troubled debt restructurings ("TDRs") as of March 31, 2021. On March 31, 2021, there were no loans that were 90 days or more past due and accruing. There was no Other Real Estate Owned ("OREO") on the balance sheet as of March 31, 2021. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and accruing, loans that are TDRs but not on non-accrual, and OREO assets) were $2.48 million or 0.28% of total assets at March 31, 2021 compared to $3.18 million or 0.41% of total assets, at the end of the linked quarter.

In 2020, in accordance with the spirit and provisions of the CARES Act, the Bank allowed borrowers who had been impacted by the COVID-19 pandemic, to defer loan payments for six months. All of those borrowers had resumed loan payments and there were no loans on payment deferrals as of March 31, 2021.

Following an assessment of the collectability of the loans held-for-investment at the end of the first quarter, it was determined that a $64,000 provision for loan losses was necessary to account for loan growth, the release of reserves related to loans whose payments had been deferred, and changes to environmental factors. The Bank booked a provision of $238,000 in the fourth quarter of 2020. The Bank's ALLL ratio was 0.92% of loans held-for-investment (or 1.16% of loans held-for investment excluding PPP loans) as of March 31, 2021 compared to an ALLL ratio of 0.99% at December 31, 2020 (or 1.21% of loans held-for-investment excluding PPP loans).

Total AssetsTotal assets at March 31, 2021 were $871.04 million compared to $767.04 million on December 31, 2020. Changes in major asset categories during linked quarters were as follows:

* PPP loan balances increased by $22.32 million * Other loans held-for investment grew by $26.20 million * Cash balances at the Federal Reserve increased by $49.91 million

Total LiabilitiesTotal liabilities at March 31, 2021 were $795.41 million compared to total liabilities of $693.59 million on December 31, 2020. Total deposits were $627.12 million compared to total deposits of $548.49 million on December 31, 2020. The primary reason for the increase in deposits compared to the linked quarter was an increase in non-interest bearing deposits. Non-interest bearing demand deposits increased by $27.45 million during the quarter, and comprised 34.67% of total deposits at the end of the quarter, compared to 35.19% of total deposits on December 31, 2020, and 20.58% of total deposits on March 31, 2020. Federal Home Loan Bank advances declined during the quarter, while lower cost PPP Liquidity Facility term advances increased.

Stockholders' Equity and CapitalStockholders' equity at March 31, 2021 was $75.63 million compared to $73.46 million on December 31, 2020. Additional paid in capital was $59.35 million on March 31, 2021 compared to $59.22 million on December 31, 2020. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, decreased by $420,596 on net unrealized losses during the first quarter of 2021. Total shares issued and outstanding were 7,307,915 on March 31, 2021 compared to 7,283,647 shares on December 31, 2020. The tangible book value of the Bank's common stock at March 31, 2021 was $10.35 per share compared to $10.09 per share on December 31, 2020 and $9.02 per share on March 31, 2020.

As of March 31, 2021 of the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized banks. The Bank's capital ratios on March 31, 2021 and December 31, 2020 were as follows:

March 31, 2021 December 31, 2020

Total Capital Ratio 13.84% 14.21%

Tier 1 Capital Ratio 12.88% 13.21%

Common Equity

Tier 1 Capital Ratio 12.88% 13.21%

Leverage Ratio 10.95% 11.20%

About Freedom Bank

Freedom Bank is a community-oriented bank with locations in Fairfax, Reston, Chantilly, Vienna and Manassas, 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; general economic and financial market conditions, in the United States generally and particularly in the markets in which the Bank operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth, including as a result of COVID-19; 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; acquisition or loss of key production personnel; and the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (such as COVID-19), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Bank's borrowers to satisfy their obligations to the Bank, on the value of collateral securing loans, on the demand for the Bank's loans or its other products and services, on incidents of cyberattack and fraud, on the Bank's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Bank's business operations and on financial markets and economic growth. 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

THE FREEDOM BANK OF VIRGINIA

CONSOLIDATED BALANCE SHEETS

(Unaudited) (Audited)

March 31, December 31,

2021 2020

ASSETS

Cash and Due from Banks $ 2,070,355 $ 1,792,660

Interest Bearing Deposits with Banks 75,456,515 25,543,295

Securities Available-for-Sale 99,205,646 97,188,125

Securities Held-to-Maturity 16,102,737 16,132,367

Restricted Stock Investments 3,243,650 3,607,800

Loans Held for Sale 47,468,542 45,047,711

PPP Loans Held for Investment 123,536,745 101,215,376

Other Loans Held for Investment 475,410,582 449,211,475

Allowance for Loan Losses (5,534,832) (5,454,925)

Net Loans 593,412,495 544,971,926

Bank Premises and Equipment, net 1,249,420 1,298,409

Accrued Interest Receivable 2,762,987 2,868,868

Deferred Tax Asset 949,565 1,154,078

Bank-Owned Life Insurance 17,161,100 17,035,214

Right of Use Asset, net 3,421,073 3,258,817

Other Assets 8,540,665 7,145,687

Total Assets 871,044,750 767,044,957

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Deposits

Demand Deposits

Non-interest Bearing $ 217,441,663 $ 192,987,984

Interest Bearing 206,798,973 176,424,255

Savings Deposits 3,864,523 2,962,303

Time Deposits 199,011,687 176,114,292

Total Deposits 627,116,846 548,488,834

Federal Home Loan Bank Advances 26,928,571 30,071,429

PPP Liquidity Facility Advances 123,053,517 101,951,020

Accrued Interest Payable 432,554 480,816

Lease Liability 3,512,888 3,347,075

Other Liabilities 14,365,904 9,247,507

Total Liabilities 795,410,280 693,586,681

Stockholders' Equity

Preferred stock, $0.01 par value, 5,000,000 shares authorized;

0 Shares Issued and Outstanding, March 31, 2021 and December 31, 2020 - -

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:

6,634,915 and 6,610,647 Shares Issued and Outstanding

at March 31, 2021 and December 31, 2020 respectively

(Includes 97,805 and 100,002 Unvested Shares at March 31, 2021 and December31, 2020,

respectively) 65,371 65,106

Non-Voting Common Stock:

673,000 Shares Issued and Outstanding March 31, 2021 and December 31, 2020,

6,730 6,730

Additional Paid-in Capital 59,351,852 59,223,538

Accumulated Other Comprehensive Income, Net 920,057 1,340,654

Retained Earnings 15,290,459 12,822,248

Total Stockholders' Equity 75,634,469 73,458,276

Total Liabilities and Stockholders' Equity 871,044,750 767,044,957

THE FREEDOM BANK OF VIRGINIA

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (Unaudited)

For the three For the three

months ended months ended

March 31, 2021 March 31, 2020

Interest Income

Interest and Fees on Loans $ 6,912,386 $ 5,035,645

Interest on Investment Securities 636,742 357,942

Interest on Deposits with Other Banks 8,831 78,237

Total Interest Income 7,557,959 5,471,824

Interest Expense

Interest on Deposits 675,824 1,395,959

Interest on Borrowings 212,923 157,519

Total Interest Expense 888,747 1,553,478

Net Interest Income 6,669,212 3,918,346

Provision for Loan Losses (64,000) (549,000)

Net Interest Income After

Provision for Loan Losses 6,605,212 3,369,346

Non-Interest Income

Mortgage Loan Gain-on-Sale and Fee Revenue 2,822,186 2,117,866

Service Charges and Other Income 48,702 39,075

Gain on Sale of Securities 12,885 25,608

Servicing Income 51,643 -

Swap Fee Income - 87,500

Increase in Cash Surrender Value of Bank-

owned Life Insurance 125,886 101,998

Total Non-interest Income 3,061,302 2,372,047

Non-Interest Expenses

Officer and Employee Compensation

and Benefits 4,662,235 3,200,721

Occupancy Expense 290,389 292,794

Equipment and Depreciation Expense 155,916 184,022

Insurance Expense 57,056 52,335

Professional Fees 291,434 281,396

Data and Item Processing 267,783 174,135

Advertising 73,078 58,804

Franchise Taxes and State Assessment Fees 185,429 175,870

Mortgage Fees and Settlements 463,419 221,374

Other Operating Expense 161,361 148,487

Total Non-interest Expenses 6,608,100 4,789,938

Income Before Income Taxes 3,058,414 951,455

Income Tax Expense 590,203 101,649

Net Income $ 2,468,211 $ 849,806

Earnings per Common Share - Basic $ 0.34 $ 0.12

Earnings per Common Share - Diluted $ 0.34 $ 0.11

Weighted-Average Common Shares

Outstanding - Basic 7,295,190 7,348,022

Weighted-Average Common Shares

Outstanding - Diluted 7,334,463 7,435,490

THE FREEDOM BANK OF VIRGINIA

CONSOLIDATED STATEMENTS OF OPERATIONS

For the three For the three For the three For the three For the three

months ended months ended months ended months ended months ended

March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020

Interest Income

Interest and Fees on Loans $ 6,912,386 $ 5,931,405 $ 5,657,929 $ 5,508,679 $ 5,035,645

Interest on Investment Securities 636,742 630,449 799,976 500,293 357,942

Interest on Deposits with Other Banks 8,831 10,083 8,236 13,002 78,237

Total Interest Income 7,557,959 6,571,937 6,466,141 6,021,974 5,471,824

Interest Expense

Interest on Deposits 675,824 827,780 919,326 1,095,532 1,395,959

Interest on Borrowings 212,923 226,724 231,700 208,765 157,519

Total Interest Expense 888,747 1,054,504 1,151,026 1,304,297 1,553,478

Net Interest Income 6,669,212 5,517,433 5,315,115 4,717,677 3,918,346

Provision for Loan Losses (64,000) (238,000) - (705,000) (549,000)

Net Interest Income after

Provision for Loan Losses 6,605,212 5,279,433 5,315,115 4,012,677 3,369,346

Non-Interest Income

Mortgage Loan Gain-on-Sale and Fee Revenue 2,822,186 4,283,961 4,742,574 2,805,570 2,117,878

Service Charges and Other Income 48,702 30,535 14,802 33,923 39,062

Gains on Sale of Securities 12,885 3,921 17,174 - 25,608

Servicing Income 51,643 - - - -

Swap Fee Income - 270,450 - 299,762 87,500

Increase in Cash Surrender Value of Bank-

owned Life Insurance 125,886 132,555 277,164 127,496 101,998

Total Non-interest Income 3,061,302 4,721,422 5,051,714 3,266,751 2,372,046

Revenue $ 9,730,514 $ 10,238,855 $ 10,366,829 $ 7,984,428 $ 6,290,392

Non-Interest Expenses

Officer and Employee Compensation

and Benefits 4,662,235 4,479,310 5,065,021 3,488,369 3,200,721

Occupancy Expense 290,389 294,600 306,291 300,634 292,794

Equipment and Depreciation Expense 155,916 227,758 175,684 147,910 184,022

Insurance Expense 57,056 49,008 43,836 51,263 52,335

Professional Fees 291,434 417,497 274,505 325,545 281,396

Data and Item Processing 267,783 322,373 230,152 285,942 174,135

Advertising 73,078 83,559 99,508 36,732 58,804

Franchise Taxes and State Assessment Fees 185,429 185,379 185,404 178,812 175,870

Mortgage Fees and Settlements 463,419 675,218 600,592 454,866 221,374

Other Operating Expense 161,361 178,287 194,777 156,733 148,486

Total Non-interest Expenses 6,608,100 6,912,989 7,175,770 5,426,806 4,789,937

Income before Income Taxes 3,058,414 3,087,866 3,191,059 1,852,622 951,455

Income Tax Expense 590,203 674,091 615,689 327,097 101,649

Net Income $ 2,468,211 $ 2,413,775 $ 2,575,370 $ 1,525,525 $ 849,806

Earnings per Common Share - Basic $ 0.34 $ 0.33 $ 0.36 $ 0.21 $ 0.12

Earnings per Common Share - Diluted $ 0.34 $ 0.33 $ 0.35 $ 0.21 $ 0.11

Weighted-Average Common Shares

Outstanding - Basic 7,295,190 7,252,552 7,234,294 7,238,751 7,348,022

Weighted-Average Common Shares

Outstanding - Diluted 7,334,463 7,312,247 7,277,112 7,267,773 7,435,490

Average Balances, Income and Expenses, Yields and Rates

(Unaudited)

Three Months Ended Three Months Ended Three Months Ended Three Months Ended Three Months Ended

March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020

Average Balance Income/ Expense Yield Average Balance Income/ Expense Yield Average Balance Income/ Expense Yield Average Balance Income/ Expense Yield Average Balance Income/ Expense Yield

Assets

Cash $ 42,563,835 $ 8,831 0.08% $ 38,217,380 $ 10,083 0.10% $ 29,769,485 $ 8,236 0.11% $ 59,558,556 $ 13,002 0.09% $ 24,919,112 $ 78,237 1.26%

Investments (Tax Exempt) 24,057,819 152,583 23,815,369 151,564 11,434,264 250,016 5,953,752 48,657 4,541,049 38,411

Investments (Taxable) 91,675,593 516,202 90,609,147 510,714 90,668,376 602,463 65,890,906 399,846 51,701,396 327,597

Total Investments 115,733,412 668,785 2.34% 114,424,516 662,278 2.30% 102,102,640 852,479 3.32% 71,844,658 448,503 2.51% 56,242,445 366,008 2.62%

Total Loans 607,880,043 $6,912,386 4.61% 569,936,960 5,931,405 4.14% 549,575,996 5,657,929 4.10% 510,763,192 5,521,293 4.35% 404,818,548 5,048,285 5.02%

Earning Assets 766,177,290 7,590,002 4.02% 722,578,856 6,603,766 3.64% 681,448,121 6,518,644 3.81% 642,166,406 5,982,798 3.75% 485,980,105 5,492,530 4.55%

Assets $ 794,829,492 $ 747,427,986 $ 705,290,352 $ 665,767,229 $ 504,847,678

Liabilities

Interest Checking $ 32,270,173 15,629 0.20% $ 39,206,072 15,165 0.15% $ 27,902,031 11,914 0.17% $ 23,143,536 13,029 0.23% $ 25,788,577 22,351 0.35%

Money Market 148,969,677 62,497 0.17% 138,196,830 74,468 0.21% 132,371,367 93,750 0.28% 129,569,263 139,111 0.43% 94,433,574 275,134 1.17%

Savings 3,301,845 814 0.10% 2,836,001 717 0.10% 3,055,994 761 0.10% 2,533,676 703 0.11% 2,382,236 1,099 0.19%

Time Deposits 172,994,520 596,885 1.40% 175,514,471 737,430 1.67% 178,221,780 812,901 1.82% 183,220,441 942,690 2.07% 195,524,566 1,097,375 2.26%

Interest Bearing Deposits 357,536,215 675,825 0.77% 355,753,374 827,780 0.93% 341,551,172 919,326 1.07% 338,466,916 1,095,533 1.30% 318,128,953 1,395,959 1.76%

Borrowings $ 134,120,845 212,923 0.64% $ 135,328,997 226,724 0.67% $ 136,793,181 231,700 0.67% $ 110,132,851 208,765 0.76% $ 40,076,102 157,519 1.58%

Interest Bearing Liabilities 491,657,060 888,748 0.73% 491,082,371 1,054,504 0.85% 478,344,353 1,151,026 0.96% 448,599,767 1,304,298 1.17% 358,205,055 1,553,478 1.74%

Non Interest Bearing Deposits $ 215,148,589 $ 177,583,960 $ 151,878,149 $ 145,370,721 $ 76,609,290

Cost of Funds 0.51% 0.63% 0.73% 0.88% 1.44%

Net Interest Margin^1 $ 6,701,254 3.55% $ 5,549,262 3.06% $ 5,367,618 3.13% $ 4,678,500 2.93% $ 3,939,052 3.26%

Shareholders Equity $ 74,480,607 $ 71,511,341 $ 68,801,586 $ 66,403,194 $ 64,868,539

^1Net interest margin is calculated as fully taxable equivalent net interestincome divided by average earning assets and represents the Bank's net yield onits earning assets

Average Balances, Income andExpenses, Yields and Rates

(Unaudited)

Three Months Ended Three Months Ended

March 31, 2021 Income / March 30, 2020 Income /

Average Balance Expense Yield Average Balance Expense Yield

Assets

Cash $ 42,563,835 $ 8,831 0.08% $ 24,919,112 $ 78,237 1.26%

Investments (Tax Exempt) 24,057,819 152,583 4,541,049 38,411

Investments (Taxable) 91,675,593 516,202 51,701,396 327,597

Total Investments 115,733,412 668,785 2.34% 56,242,445 366,008 2.62%

Total Loans 607,880,043 6,912,386 4.61% 404,818,548 5,048,285 5.02%

Earning Assets 766,177,290 7,590,002 4.02% 485,980,105 5,492,530 4.55%

Assets $ 794,829,492 $ 504,847,678

Liabilities

Interest Checking $ 32,270,173 15,629 0.20% $ 25,788,577 22,351 0.35%

Money Market 148,969,677 62,497 0.17% 94,433,574 275,134 1.17%

Savings 3,301,845 814 0.10% 2,382,236 1,099 0.19%

Time Deposits 172,994,520 596,885 1.40% 195,524,566 1,097,375 1.26%

Interest Bearing Deposits 357,536,215 675,825 0.77% 318,128,953 1,395,959 1.76%

Borrowings 134,120,845 212,923 0.64% 40,076,102 157,519 1.58%

Interest Bearing Liabilities 491,657,060 888,748 0.73% 358,205,055 1,553,478 1.74%

Non Interest Bearing Deposits $ 215,148,589 $ 76,609,290

Cost of Funds 0.51% 1.44%

Net Interest Margin^1 $ 6,701,254 3.55% $ 3,939,052 3.26%

Shareholders Equity $ 74,480,607 $ 64,868,539

ROAA 1.26% 0.68%

ROAE 13.44% 5.27%

^1Net interest margin is calculated as fully taxable equivalent net interestincome divided by average earning assets and represents the Bank's net yield onits earning assets

Selected Financial Data by Quarter Ended:

(Unaudited)

Balance Sheet Ratios March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020

Loans held-for-investment to Deposits 95.51% 100.35% 94.34% 105.31% 97.52%

Income Statement Ratios (Quarterly)

Return on Average Assets (ROAA) 1.26% 1.28% 1.45% 0.92% 0.68%

Return on Average Equity (ROAE) 13.44% 13.43% 14.89% 9.24% 5.27%

Efficiency Ratio 67.91% 67.52% 69.22% 67.97% 76.15%

Net Interest Margin^1 3.55% 3.06% 3.13% 2.93% 3.26%

Yield on Average Earning Assets 4.02% 3.64% 3.81% 3.75% 4.55%

Yield on Securities 2.34% 2.30% 3.32% 2.51% 2.62%

Yield on Loans 4.61% 4.14% 4.10% 4.35% 5.02%

Cost of Funds 0.51% 0.63% 0.73% 0.88% 1.44%

Noninterest income to Total Revenue 31.46% 46.11% 48.73% 40.91% 37.71%

Per Share Data

Tangible Book Value $10.35 $10.09 $9.75 $9.33 $9.02

Share Price Data

Closing Price $10.90 $9.10 $7.20 $7.50 $5.80

Book Value Multiple 105% 90% 74% 80% 64%

Common Stock Data

Outstanding Shares at End of Period 7,307,915 7,283,647 7,233,751 7,238,751 7,238,751

Weighted Average shares outstanding, basic 7,295,190 7,252,552 7,234,294 7,238,751 7,348,022

Weighted Average shares outstanding, diluted 7,334,463 7,312,247 7,277,112 7,267,773 7,435,490

Capital Ratios

Tier 1 Leverage ratio 10.95% 11.20% 11.57% 11.23% 12.88%

Common Equity Tier 1 ratio 12.88% 13.21% 14.10% 13.90% 14.35%

Tier 1 Risk Based Capital ratio 12.88% 13.21% 14.10% 13.90% 14.35%

Total Risk Based Capital ratio 13.84% 14.21% 15.17% 14.99% 15.38%

Credit Quality

Net Charge-offs to Average Loans 0.00% 0.00% 0.00% 0.02% 0.00%

Total Non-performing Loans to loans held-for-investment 0.41% 0.58% 1.06% 0.77% 0.57%

Total Non-performing Assets to Total Assets 0.28% 0.41% 0.49% 0.57% 0.43%

Nonaccrual Loans to loans held-for-investment 0.41% 0.58% 0.76% 0.70% 0.54%

Provision for Loan and Lease Losses $64,000 $238,000 $0 $705,000 $549,000

Allowance for Loan and Lease Losses to loans held-for-investment 0.92% 0.99% 1.04% 1.02% 1.16%

Allowance for Loan and Lease Losses to loans held-for-investment (ex PPP loans) 1.16% 1.21% 1.32% 1.28% 1.16%

^1Net interest margin is calculated as fully taxable equivalent net interestincome divided by average earning assets and represents the Bank's net yield onits earning assets

Contact:Joseph J. ThomasPresident & Chief Executive Officer703-667-4161: Phonejthomas@freedom.bank: Email

View original content to download multimedia: http://www.prnewswire.com/news-releases/the-freedom-bank-of-virginia-announces-earnings-for-the-first-quarter-of-2021-301279662.html

SOURCE Freedom Bank of Virginia