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

2021

10/29 07:30 CDT

The Freedom Bank of Virginia Reports Record Earnings for the Third Quarter of 2021 FAIRFAX, Va., Oct. 29, 2021

FAIRFAX, Va., Oct. 29, 2021 /PRNewswire/ -- The Freedom Bank of Virginia (OTCQX: FDVA), (the "Bank" or "Freedom") today announced net income of $2,890,281, or $0.39 per diluted share, for the three months ended September 30, 2021. This compares to net income of $2,626,381 or $0.36 per diluted share, for the linked quarter and net income of $2,575,370 or $0.35 per diluted share for the three months ending September 30, 2020. Net income for the first nine months of 2021 was $7,984,873 or $1.09 per diluted share compared to net income of $4,950,701 or $0.68 per diluted share for the first nine months of 2020.

Joseph J. Thomas, President and CEO, commented, "The strength of our client franchise and diversity of business lines helped drive another quarter of record earnings with 21.66% growth in pre-tax, pre-provision profit over the comparable quarter in 2020. We achieved this growth even while total fee-based revenue normalized to 26.78% of total revenue in the third quarter, down from 48.73% of total revenue during the previous year when mortgage banking volume was surging. Return on equity was 14.18% driven by continued reduction in cost of funds to 37 basis points and improvement in efficiency ratio to 59.57% in the third quarter. This strong profitability has enabled Freedom Bank to increase tangible book value per share by 14.26% over the past 12 months to $11.14. I am grateful to the entrepreneurs and small businesses that continue to select Freedom as their lead bank and proud of my teammates who are helping these clients in the ways they wish to be served, in-person or on-line."

Third Quarter 2021 Highlights include:

* Net income for the third quarter was $2,890,281 or $0.39 per diluted share compared to net income of $2,626,381 or $0.36 per diluted share in the linked quarter and net income of $2,575,370 or $0.35 per diluted share for the three months ended September 30, 2020; * Pre-tax, pre-provision net income increased by 13.14% to $3,882,322 for the third quarter compared to pre-tax, pre-provision net income of $3,431,336 in the linked quarter and by 21.66% to $3,191,059 for the same period in 2020; * Return on Average Assets ("ROAA") was 1.35% for the quarter ended September 30, 2021 compared to 1.24% for the linked quarter and 1.45% for the three months ended September 30, 2020. ROAA for the first nine months of 2021 was 1.29% compared to 1.06% for the same period in 2020; * Return on Average Equity ("ROAE") was 14.18% for the three months ended September 30, 2021 compared to 13.65% for the linked quarter and 14.89% for the three months ended September 30, 2020. ROAE for the first nine months of 2021 was 13.77% compared to 9.91% for the same period in 2020; * Total assets were $846.6 million on September 30, 2021, an increase of $79.55 million or 10.37% from total assets on December 31, 2020; * Loans held-for-investment (excluding PPP loans) increased by $11.10 million or 2.21% during the quarter, while PPP loan balances decreased by $38.71 million on loan forgiveness and mortgage loans held for sale decreased by $2.84 million, on a decline in mortgage activity; * Cash balances at the Federal Reserve increased by $14.17 million during the third quarter; * Total deposits increased by $53.39 million or by 8.58% in the third quarter and increased by $127.01 million or 23.16% in the first nine months of 2021. Non-interest bearing demand deposits decreased by $10.47 million from the linked quarter to $216.39 million and represented 32.01% of total deposits on September 30, 2021; * The net interest margin increased in the third quarter to 3.43%, higher by 5 basis points compared to the linked quarter and higher by 30 basis points compared to the same period in 2020. Excluding the additional income from forgiveness of PPP loans, the net interest margin would have been 2.93%. The increase in the net interest margin across linked quarters was primarily due to higher yields on loans and a 5 basis point reduction in funding costs. Higher cash balances during the quarter weighed on yields on earning assets and the net interest margin; * The cost of funds was 0.37% for the third quarter, lower by 5 basis points compared to the linked quarter and lower by 36 basis points compared to the same period in 2020, as deposit and borrowing costs declined; * Non-interest income increased by 13.68% compared to the linked quarter and decreased by 25.535 compared to the same period in 2020. The increase in linked quarters was primarily due to higher gain-on sale revenue from SBA loans, partially offset by lower mortgage revenue as higher rates caused mortgage activity to slow from the linked quarter. The decrease in non-interest income in calendar quarters was due to lower mortgage revenue stemming from a slowdown in mortgage activity in 2021 compared to the prior year; * Non-interest expense was flat compared to the linked quarter and decreased by 20.29% compared to the same period in 2020. The decrease in non-interest expense in calendar quarters was primarily due to lower performance related costs: specifically, commissions paid to mortgage loan officers and mortgage settlement costs; * The Efficiency Ratio was 59.57% for the quarter ended September 30, 2021, compared to 62.38% for the linked quarter and 69.22% for the same period in 2020; * Asset quality improved with the ratio of non-performing assets to total assets at 0.10% on September 30, 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 $229,000 provision for loan losses during the third quarter and the ratio of the allowance for loan and lease losses to loans held-for-investment was 1.05% (or 1.17% excluding PPP loans, which carry a full faith and guarantee of the US Government) compared to 0.96% in the linked quarter (or 1.15% excluding PPP loans); * The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 10.47%, Common Equity Tier 1 ratio of 12.73%, Tier 1 Risk Based Capital ratio of 12.73% and a Total Capital ratio of 13.68%.

Pre-tax, Pre-Provision Net Income

Pre-tax, pre-provision net income increased by 13.14% to $3,882,322 for the third quarter compared to pre-tax, pre-provision net income of $3,431,336 in the linked quarter, primarily due to an increase in non-interest income from sales of SBA loans.

Pre-tax, pre-provision net income is a non-GAAP financial measure that the Bank views as an important metric to assess its performance. The following table provides a reconciliation of this measure to net income, the most directly comparable financial measure in accordance with GAAP.

Reconciliation of Pre-Tax, Pre-Provision Net Income (Unaudited) (Unaudited) For the three For the three months ended months ended September 30, 2021 September 30, 2020 Net Income $ 2,890,281 $ 2,575,370 Income Tax Expense 763,041 615,689 Provision 229,000 - Pre-tax, Pre-provision Net Income $ 3,882,322 $ 3,191,059

Paycheck Protection Program ("PPP") Activity

In 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 round two 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. The Bank originated $53.89 million of round two PPP loans during 2021.

Beginning in January of 2021, the bank began to process loan forgiveness applications from borrowers of 2020 PPP loans and round two PPP loans. As of September 30, 2021, the SBA had forgiven 494 of these PPP loans with balances of $83.00 million, and the bank had recognized income from acceleration of processing fees of $1.76 million.

Net Interest Income

The Bank recorded net interest income of $6.99 million for the third quarter of 2021, an increase of 2.46% compared to the linked quarter, and 31.61% higher than the same period in 2020. The net interest margin in the third quarter of 2021 was 3.43%, higher by 5 basis points compared to the linked quarter and higher by 30 basis points compared to the same period in 2020. Income from PPP loan forgiveness during the third quarter was $667,746 (from $27.92 million of PPP loans forgiven by the SBA), compared to PPP loan forgiveness income of $513,543 (from $30.25 million of PPP loans forgiven by the SBA) during the second quarter of 2021. Excluding the additional income from forgiveness of PPP loans, the net interest margin in the third quarter would have been 2.93%.

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

* Yields on average earning assets declined by 1 basis point to 3.77% compared to 3.78% in the linked quarter, as higher yields on loans and investment securities were offset by a surge in average cash balances from strong deposit growth during the quarter. * Loan yields increased by 7 basis points to 4.55% from 4.48% in the linked quarter, while yields on investment securities increased by 1 basis points to 2.23% from 2.22% in the linked quarter. * Cost of funds decreased by 5 basis points to 0.37%, from 0.42% 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 50 basis points.

Non-interest Income

Non-interest income was $2.61 million for the third quarter, higher by 13.68% compared to the linked quarter and lower by 48.40% compared to the same period in 2020. The higher non-interest income across linked quarters was primarily due to an increase in SBA gain-on-sale revenue, while the decline in non-interest income compared to the calendar quarter was largely due to lower mortgage gain-on-sale and fee revenue, stemming from a decline in mortgage activity.

Total Revenue

Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was higher by 5.28% compared to the linked quarter, primarily due to higher net interest and non-interest income, and lower by 7.38% compared to the same period in 2020.

Non-interest Expenses

Non-interest expenses in the third quarter of 2021 were flat compared to the linked quarter and decreased by 20.29% compared to the same period in 2020. The decline in non-interest expenses in the third quarter compared to the calendar quarter was largely due to lower costs related to mortgage commissions and mortgage settlements.

The Efficiency Ratio was 59.57% for the quarter ended September 30, 2021, compared to 62.38% for the prior quarter and 69.22% for the same period in 2020.

Asset Quality

Non-accrual loans were $879,078 or 0.15% of loans held-for-investment at the end of the third quarter of 2021, compared to $879,089 or 0.15% of loans held-for-investment at the end of the linked quarter. There were no troubled debt restructurings ("TDRs") as of September 30, 2021. On September 30, 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 September 30, 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 $879,078 or 0.10% of total assets at June 30, 2021 compared to $879,089 or 0.11% 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 September 30, 2021.

Following an assessment of the collectability of the loans held-for-investment at the end of the third quarter, it was determined that a $229,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Bank booked a provision of $191,000 in the second quarter of 2021. The Bank's ALLL ratio was 1.05% of loans held-for-investment (or 1.17% of loans held-for investment excluding PPP loans) as of September 30, 2021 compared to an ALLL ratio of 0.96% at June 30, 2021 (or 1.15% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets at September 30, 2021 were $846.60 million compared to $837.07 million on June 30, 2021. Changes in major asset categories during linked quarters were as follows:

* Cash balances at the Federal Reserve increased by $14.17 million * Available for sale investment balances increased by $23.78 million * PPP loan balances decreased by $38.71 million on loan forgiveness by the SBA * Other loans held-for investment grew by $11.10 million * Mortgage loans held-for-sale declined by $2.84 million

Total Liabilities

Total liabilities at September 30, 2021 were $765.15 million compared to total liabilities of $758.07 million on June 30, 2021. Total deposits were $675.50 million compared to total deposits of $622.10 million on June 30, 2021. Non-interest bearing demand deposits decreased by $10.47 million during the quarter, and comprised 32.03% of total deposits at the end of the quarter, compared to 35.19% of total deposits on December 31, 2020. Other interest bearing demand deposits increased by $69.42 million during the quarter. Federal Home Loan Bank advances declined by $5.14 million during the quarter, while PPP Liquidity Facility term advances decreased by $40.28 million, in line with PPP loan forgiveness.

Stockholders' Equity and Capital

Stockholders' equity at September 30, 2021 was $81.45 million compared to $78.99 million on June 30, 2021. Additional paid-in capital was $59.56 million on September 30, 2021 compared to $59.46 million on June 30, 2021. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, decreased by $530,890 on net unrealized losses during the third quarter of 2021. Total shares issued and outstanding were 7,312,565 on September 30, 2021 compared to 7,305,581 shares on June 30, 2021. The tangible book value of the Bank's common stock at September 30, 2021 was $11.14 per share compared to $10.81 per share on June 30, 2021 and $9.75 per share on September 30, 2020.

As of September 30, 2021 of the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized banks. The Bank's capital ratios on September 30, 2021 and June 30, 2021 were as follows:

September 30, 2021 June 30, 2021

Total Capital Ratio 13.68% 13.86%

Tier 1 Capital Ratio 12.73% 12.90%

Common Equity

Tier 1 Capital Ratio 12.73% 12.90%

Leverage Ratio 10.47% 10.56%

Bank Holding Company

The Bank has received all required regulatory approvals to form a new holding company that will be named Freedom Financial Holdings, Inc. The Board of Directors believes that forming a holding company now provides more efficient access to capital markets if the need arises, creates flexibility in the overall capital management for our organization, and broadens the nature of non-bank activities that can be conducted.

When the reorganization is completed, current shareholders of the Bank would become shareholders of the newly-formed bank holding company and current shareholders will have the same rights and ownership percentage in the new holding company as they presently have in the bank.

The holding company formation will not impact the Bank's operations; the Bank will continue to provide its full range of financial services comprised of retail banking, commercial banking, and mortgage products. The Bank's headquarters will remain in Fairfax, VA as will the newly-formed holding company.

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) (Unaudited) (Audited)

September 30, June 30, December 31,

2021 2021 2020

ASSETS

Cash and Due from Banks $ 2,430,918 $ 2,445,822 $ 1,792,660

Interest Bearing Deposits with Banks 61,753,387 47,583,608 25,543,295

Securities Available-for-Sale 137,253,597 113,476,021 97,188,125

Securities Held-to-Maturity 18,497,540 16,071,231 16,132,367

Restricted Stock Investments 2,951,550 3,135,150 3,607,800

Loans Held for Sale 22,191,469 25,035,561 45,047,711

PPP Loans Held for Investment 57,809,131 96,521,227 101,215,376

Other Loans Held for Investment 512,670,067 501,568,684 449,211,475

Allowance for Loan Losses (6,011,021) (5,765,021) (5,454,925)

Net Loans 564,468,177 592,324,890 544,971,926

Bank Premises and Equipment, net 1,182,250 1,221,283 1,298,409

Accrued Interest Receivable 2,304,786 2,650,012 2,868,868

Deferred Tax Asset 1,223,546 1,094,904 1,154,078

Bank-Owned Life Insurance 20,428,825 20,037,218 17,035,214

Right of Use Asset, net 2,943,456 3,180,647 3,258,817

Other Assets 8,972,651 8,814,083 7,145,687

Total Assets $ 846,602,152 837,070,430 767,044,957

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits

Demand Deposits

Non-interest Bearing 216,387,250 $ 226,861,750 $ 192,987,984

Interest Bearing 260,304,062 190,881,615 176,424,255

Savings Deposits 4,780,274 4,376,920 2,962,303

Time Deposits 194,024,810 199,982,659 176,114,292

Total Deposits 675,496,396 622,102,944 548,488,834

Federal Home Loan Bank Advances 19,035,714 24,178,571 30,071,429

PPP Liquidity Facility Advances 57,857,132 98,138,367 101,951,020

Accrued Interest Payable 268,170 377,023 480,816

Lease Liability 3,060,286 3,284,393 3,347,075

Other Liabilities 9,429,531 9,992,518 9,247,507

Total Liabilities 765,147,229 758,073,816 693,586,681

Stockholders' Equity

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

0 Shares Issued and Outstanding, September 30, 2021, June 30, 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:

6,639,565, 6,632,581 and 6,610,647 Shares Issued and Outstanding

at September 30, 2021, June 30, 2021 and December 31, 2020 respectively

(Includes 102,455, 95,471 and 100,002 Unvested Shares at September 30,2021

June 30, 2021 and December 31, 2020, respectively) 65,371 65,371 65,106

Non-Voting Common Stock:

673,000 Shares Issued and Outstanding September 30, 2021,

June 30, 2021 and December 31, 2020 6,730 6,730 6,730

Additional Paid-in Capital 59,563,407 59,464,489 59,223,538

Accumulated Other Comprehensive Income, Net 1,012,293 1,543,183 1,340,654

Retained Earnings 20,807,122 17,916,841 12,822,248

Total Stockholders' Equity 81,454,923 78,996,614 73,458,276

Total Liabilities and Stockholders' Equity $ 846,602,152 837,070,430 767,044,957

THE FREEDOM BANK OF VIRGINIA

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

For the three For the three For the nine For the nine

months ended months ended months ended months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Interest Income

Interest and Fees on Loans $ 6,914,453 $ 5,657,930 $ 20,778,804 $ 16,202,254

Interest on Investment Securities 750,570 799,976 2,043,308 1,658,211

Interest on Deposits with Other Banks 26,994 8,236 50,996 99,474

Total Interest Income 7,692,017 6,466,141 22,873,108 17,959,939

Interest Expense

Interest on Deposits 546,168 919,326 1,804,989 3,410,817

Interest on Borrowings 150,599 231,700 576,226 597,984

Total Interest Expense 696,767 1,151,026 2,381,215 4,008,801

Net Interest Income 6,995,249 5,315,115 20,491,893 13,951,138

Provision for Loan Losses (229,000) - (484,000) (1,254,000)

Net Interest Income After

Provision for Loan Losses 6,766,249 5,315,115 20,007,893 12,697,138

Non-Interest Income

Mortgage Loan Gain-on-Sale and Fee Revenue 1,995,535 4,742,574 6,829,874 9,666,023

SBA Gain-on-Sale Revenue 371,172 - 437,825 -

Service Charges and Other Income 67,374 14,802 159,576 87,787

Gain on Sale of Securities (13,493) 17,174 1,117 42,782

Servicing Income 44,443 - 138,934 -

Swap Fee Income - - - 387,262

Increase in Cash Surrender Value of Bank-

owned Life Insurance 141,608 277,164 393,611 506,658

Total Non-interest Income 2,606,640 5,051,714 7,960,937 10,690,512

Non-Interest Expenses

Officer and Employee Compensation

and Benefits 3,862,969 5,065,021 12,285,901 11,754,111

Occupancy Expense 318,109 306,291 915,018 899,719

Equipment and Depreciation Expense 176,379 175,684 491,715 507,616

Insurance Expense 70,814 43,836 193,227 147,433

Professional Fees 243,678 274,505 894,270 881,446

Data and Item Processing 303,444 230,152 882,227 690,228

Advertising 92,806 99,508 248,489 195,043

Franchise Taxes and State Assessment Fees 200,048 185,404 577,986 540,086

Mortgage Fees and Settlements 230,582 600,592 968,232 1,276,831

Other Operating Expense 220,739 194,776 559,693 499,998

Total Non-interest Expenses 5,719,568 7,175,770 18,016,758 17,392,513

Income Before Income Taxes 3,653,322 3,191,059 9,952,072 5,995,136

Income Tax Expense 763,041 615,689 1,967,199 1,044,435

Net Income $ 2,890,281 $ 2,575,370 $ 7,984,873 $ 4,950,701

Earnings per Common Share - Basic $ 0.39 $ 0.36 $ 1.09 $ 0.68

Earnings per Common Share - Diluted $ 0.39 $ 0.35 $ 1.09 $ 0.68

Weighted-Average Common Shares

Outstanding - Basic 7,341,635 7,234,294 7,310,007 7,233,525

Weighted-Average Common Shares

Outstanding - Diluted 7,395,062 7,277,112 7,357,383 7,292,827

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

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

Interest Income

Interest and Fees on Loans $ 6,914,453 $ 6,951,964 $ 6,912,386 $ 5,931,405 $ 5,657,929

Interest on Investment Securities 750,570 655,996 636,742 630,449 799,976

Interest on Deposits with Other Banks 26,994 15,170 8,831 10,083 8,236

Total Interest Income 7,692,017 7,623,130 7,557,959 6,571,937 6,466,141

Interest Expense

Interest on Deposits 546,168 582,997 675,824 827,780 919,326

Interest on Borrowings 150,599 212,703 212,923 226,724 231,700

Total Interest Expense 696,767 795,700 888,747 1,054,504 1,151,026

Net Interest Income 6,995,249 6,827,430 6,669,212 5,517,433 5,315,115

Provision for Loan Losses (229,000) (191,000) (64,000) (238,000) -

Net Interest Income after

Provision for Loan Losses 6,766,249 6,636,430 6,605,212 5,279,433 5,315,115

Non-Interest Income

Mortgage Loan Gain-on-Sale and Fee Revenue 1,995,535 2,012,153 2,822,186 4,283,961 4,742,574

SBA Gain-on-Sale Revenue 371,172 66,652

Service Charges and Other Income 67,374 43,501 48,702 30,535 14,802

Gains on Sale of Securities (13,493) 1,726 12,885 3,921 17,174

Servicing Income 44,443 42,847 51,643 - -

Swap Fee Income - - - 270,450 -

Increase in Cash Surrender Value of Bank-

owned Life Insurance 141,608 126,117 125,886 132,555 277,164

Total Non-interest Income 2,606,640 2,292,996 3,061,302 4,721,422 5,051,714

Revenue $ 9,601,889 $ 9,120,426 $ 9,730,514 $ 10,238,855 $ 10,366,829

Non-Interest Expenses

Officer and Employee Compensation

and Benefits 3,862,969 3,760,697 4,662,235 4,479,310 5,065,021

Occupancy Expense 318,109 306,521 290,389 294,600 306,291

Equipment and Depreciation Expense 176,379 159,420 155,916 227,758 175,684

Insurance Expense 70,814 65,356 57,056 49,008 43,836

Professional Fees 243,678 359,159 291,434 417,497 274,505

Data and Item Processing 303,444 311,000 267,783 322,373 230,152

Advertising 92,806 82,605 73,078 83,559 99,508

Franchise Taxes and State Assessment Fees 200,048 192,508 185,429 185,379 185,404

Mortgage Fees and Settlements 230,582 274,231 463,419 675,218 600,592

Other Operating Expense 220,739 177,593 161,361 178,287 194,777

Total Non-interest Expenses 5,719,567 5,689,090 6,608,100 6,912,989 7,175,770

Income before Income Taxes 3,653,322 3,240,336 3,058,414 3,087,866 3,191,059

Income Tax Expense 763,041 613,955 590,203 674,091 615,689

Net Income $ 2,890,281 $ 2,626,381 $ 2,468,211 $ 2,413,775 $ 2,575,370

Earnings per Common Share - Basic $ 0.39 $ 0.36 $ 0.34 $ 0.33 $ 0.36

Earnings per Common Share - Diluted $ 0.39 $ 0.36 $ 0.34 $ 0.33 $ 0.35

Weighted-Average Common Shares

Outstanding - Basic 7,341,635 7,306,710 7,295,190 7,252,552 7,234,294

Weighted-Average Common Shares

Outstanding - Diluted 7,395,062 7,354,389 7,334,463 7,312,247 7,277,112

Average Balances, Income and Expenses, Yields and Rates (Unaudited) Three Months Ended Three Months Ended September 30, 2021 June 30, 2021 Average Balance Income/ Expense Yield Average Balance Income/ Expense Yield Assets Cash $ 71,114,495 $ 26,994 0.15% $ 64,848,200 $ 15,170 0.09% Investments (Tax Exempt) 27,138,446 177,809 23,292,663 223,691 Investments (Taxable) 113,180,210 610,101 103,971,494 479,280 Total Investments 140,318,656 787,910 2.23% 127,264,157 702,971 2.22% Total Loans 602,948,952 $6,914,454 4.55% 622,826,541 $6,951,964 4.48% Earning Assets 814,382,103 7,729,357 3.77% 814,938,898 7,670,105 3.78% Assets $ 847,472,317 $ 846,402,419 Liabilities Interest Checking $ 36,659,322 12,240 0.13% $ 34,272,772 10,907 0.13% Money Market 189,055,851 80,347 0.17% 164,337,737 63,989 0.16% Savings 4,147,591 1,170 0.11% 4,195,416 1,078 0.10% Time Deposits 197,133,663 452,411 0.91% 197,180,571 507,023 1.03% Interest Bearing Deposits 426,996,426 546,168 0.51% 399,986,496 582,997 0.58% Borrowings $ 101,033,443 150,599 0.59% $ 138,398,143 212,703 0.62% Interest Bearing Liabilities 528,029,869 696,767 0.52% 538,384,639 795,700 0.59% Non Interest Bearing Deposits $ 226,514,808 $ 217,927,934 Cost of Funds 0.37% 0.42% Net Interest Margin^1 $ 7,032,590 3.43% $ 6,874,405 3.38% Shareholders Equity $ 80,866,605 $ 77,178,196 ^1Net 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 Nine Months Ended Nine Months Ended September 30, 2021 Income / September 30, 2020 Income / September 30, 2021 Income / September 30, 2020 Income / Average Balance Expense Yield Average Balance Expense Yield Average Balance Expense Yield Average Balance Expense Yield Assets Cash $ 71,114,495 $ 26,994 0.15% $ 29,769,485 $ 8,236 0.11% $ 59,613,424 50,996 0.11% $ 38,052,045 99,474 0.35% Investments (Tax Exempt) 27,138,446 177,809 11,434,264 250,016 24,840,927 478,487 7,324,742 337,085 Investments (Taxable) 113,180,210 610,101 90,668,376 602,463 103,021,204 1,665,303 69,497,774 1,391,913 Total Investments 140,318,655 787,910 2.23% 102,102,640 852,479 3.32% 127,862,131 2,143,791 2.24% 76,822,516 1,728,999 3.01% Total Loans 602,948,952 6,914,454 4.55% 549,575,996 5,657,929 4.10% 611,199,952 20,778,804 4.55% 488,609,233 16,202,254 4.43% Earning Assets 814,382,103 7,729,357 3.77% 681,448,121 6,518,644 3.81% 798,675,507 22,973,590 3.85% 603,483,794 18,030,726 3.99% Assets $ 847,472,317 $ 705,290,352 $ 829,760,907 $ 625,595,893 Liabilities Interest Checking $ 36,659,322 12,240 0.13% $ 27,902,031 11,914 0.17% $ 34,416,833 38,776 0.15% $ 24,524,820 41,980 0.23% Money Market 189,055,851 80,347 0.17% 132,371,367 93,750 0.28% 167,601,257 206,832 0.16% $ 119,935,885 513,309 0.57% Savings 4,147,591 1,170 0.11% 3,055,994 761 0.10% 3,884,715 3,062 0.11% 2,658,757 2,563 0.13% Time Deposits 197,133,663 452,411 0.91% 178,221,780 812,901 1.82% 189,703,988 $1,556,319 1.10% 185,628,465 2,852,969 2.05% Interest Bearing Deposits 426,996,426 546,168 0.51% 341,551,172 919,326 1.07% 395,606,793 1,804,989 0.61% 332,747,926 3,410,820 1.37% Borrowings 101,033,443 150,599 0.59% 136,793,181 231,700 0.67% 124,396,278 576,226 0.62% 95,817,473 597,984 0.83% Interest Bearing Liabilities 528,029,869 696,767 0.52% 478,344,353 1,151,026 0.96% 520,003,071 2,381,215 0.61% 428,565,399 4,008,804 1.25% Non Interest Bearing Deposits $ 226,514,808 $ 151,878,149 $ 219,905,412 $ 124,718,871 Cost of Funds 0.37% 0.73% 0.43% 0.97% Net Interest Margin^1 $ 7,032,590 3.43% $ 5,367,618 3.13% $ 20,592,375 3.45% $ 14,021,922 3.10% Shareholders Equity $ 80,866,605 $ 68,801,586 $ 77,531,861 $ 66,698,809 ROAA 1.35% 1.45% 1.29% 1.06% ROAE 14.18% 14.89% 13.77% 9.91% ^1Net 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

Selected Financial Data by Quarter Ended: (Unaudited) Balance Sheet Ratios September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 Loans held-for-investment to Deposits 84.45% 96.14% 95.51% 100.35% 94.34% Income Statement Ratios (Quarterly) Return on Average Assets (ROAA) 1.35% 1.24% 1.26% 1.28% 1.45% Return on Average Equity (ROAE) 14.18% 13.65% 13.44% 13.43% 14.89% Efficiency Ratio 59.57% 62.38% 67.91% 67.52% 69.22% Net Interest Margin^1 3.43% 3.38% 3.55% 3.06% 3.13% Yield on Average Earning Assets 3.77% 3.78% 4.02% 3.64% 3.81% Yield on Securities 2.23% 2.22% 2.34% 2.30% 3.32% Yield on Loans 4.55% 4.48% 4.61% 4.14% 4.10% Cost of Funds 0.37% 0.42% 0.51% 0.63% 0.73% Noninterest income to Total Revenue 27.15% 25.14% 31.46% 46.11% 48.73% Per Share Data Tangible Book Value $11.14 $10.81 $10.35 $10.09 $9.75 Share Price Data Closing Price $12.55 $11.98 $10.90 $9.10 $7.20 Book Value Multiple 113% 111% 105% 90% 74% Common Stock Data Outstanding Shares at End of Period 7,312,565 7,305,581 7,307,915 7,283,647 7,233,751 Weighted Average shares outstanding, basic 7,341,635 7,306,710 7,295,190 7,252,552 7,234,294 Weighted Average shares outstanding, diluted 7,395,062 7,354,389 7,334,463 7,312,247 7,277,112 Capital Ratios Tier 1 Leverage ratio 10.47% 10.56% 10.95% 11.20% 11.57% Common Equity Tier 1 ratio 12.73% 12.90% 12.88% 13.21% 14.10% Tier 1 Risk Based Capital ratio 12.73% 12.90% 12.88% 13.21% 14.10% Total Risk Based Capital ratio 13.68% 13.86% 13.84% 14.21% 15.17% Credit Quality Net Charge-offs to Average Loans 0.00% 0.00% 0.00% 0.00% 0.00% Total Non-performing Loans to loans held-for-investment 0.15% 0.15% 0.41% 0.58% 1.06% Total Non-performing Assets to Total Assets 0.10% 0.11% 0.28% 0.41% 0.49% Nonaccrual Loans to loans held-for-investment 0.15% 0.15% 0.41% 0.58% 0.76% Provision for Loan and Lease Losses $229,000 $191,000 $64,000 $238,000 $0 Allowance for Loan and Lease Losses to loans held-for-investment 1.05% 0.96% 0.92% 0.99% 1.04% Allowance for Loan and Lease Losses to loans held-for-investment (ex PPP loans) 1.17% 1.15% 1.16% 1.21% 1.32% ^1Net 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

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

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SOURCE The Freedom Bank of Virginia