FDVA Freedom Financial Holdings Inc (QX)

The Freedom Bank of Virginia (OTCQX: FDVA) earned net income of $1,600,397 for the year ending December 31, 2014, a 16.7% increase over the $1,371,772 net profit at December 31, 2013. Total assets were $342,611,644 at December 31, 2014, up 24.9% from $274,202,059 the prior year. CEO Underhill indicated, “Profitability is increasing based on strong loan growth. Our investment in lenders the past two years is showing results. Our Chief Lending Officer Kevin Curtis and his team had a strong 2013 and surpassed those impressive results in 2014.” Chairman Litman noted, “The board is very pleased with the increasing commercial loan volume of the bank. In December 2014 the bank hired Richard Hutchison, who ran Virginia Heritage Mortgage prior to its sale, to try to generate a similar increase in mortgage lending in 2015. Kevin and Richard have known each other for many years and we believe they will work well together providing Freedom Bank with exceptionally strong lending leadership.”

Strong loan growth increased assets $68,409,585 to $342,611,644 at December 31, 2014. Loans had the highest yield and increased $58,824,702 (26.7%) to $278,989,586. Government bonds, held to meet liquidity needs, were the second highest yielding asset increased $3,554,734 (15.0%) to $27,294,953. Together with fed funds of $24,837,000 and cash of $5,941,254 total liquidity was $58,073,207 or 16.9% of total assets at December 31, 2014.

Asset growth was funded by large increases in deposits. Non interest bearing accounts increased 31.6% from $39,085,418 to $51,431,344 at December 31, 2014. Interest checking deposits rose 39.2% from $47,370,151 to $65,959,271 at December 31, 2014. Certificates of deposit funded the balance rising by $34,666,451 or 22.1% to $191,660,139 at year end.

Capital was $29,769,220 at December 31, 2014, up from $26,118,725 at December 31, 2013. Primary contributors were net profit of $1,600,397 and a public stock sale generating net proceeds of approximately $1,600,000 after expenses. Book value per share increased from $6.85 at December 31, 2013 to $7.40 at December 31, 2014. The bank is presently raising additional capital through a rights offering to its current shareholders. All members of the Board of Directors have participated in the offering which ends January 31, 2015 unless extended by the bank.

Large increases in loans and investments increased total interest income to $13,656,944 in 2014, up 21.3% from $11,259,048 the prior year. Interest paid on deposits increased $283,005 or 14.3% to $2,267,925. The provision for loan losses increased $188,500 to $486,000 leaving net interest income after provision at $10,903,019, at December 31, 2014, up $1,926,391 (21.5%) from $8,976,628 the prior year. Operating expenses increased from $8,484,498 in 2013 to $9,863,144 in 2014. This was a 16.3% increase, but it included a third branch operating for half the year in 2014. The result was 2014 net income increased 16.7% to $1,600,397 from $1,371,772 the prior year. Earnings per share were $0.40 for 2014 versus $0.36 for 2013 despite an increase in shares outstanding from the capital campaign.

Freedom Bank continued improving asset quality. Non performing assets as a percentage of loans decreased from 0.54% at December 31, 2013 to 0.11% at December 31, 2014. Loans past due for regularly scheduled payments were 0.01% of loans at December 31, 2013 versus 0.02% of loan at December 31, 2014. Both compared very favorable with peer banks.

Freedom Bank is a community-oriented, locally-owned bank with locations in Fairfax, Reston 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 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 Statements of Financial Condition

(UNAUDITED)

      ASSETS 12/31/2014 12/31/2013 Cash and due from banks $4,917,099 $8,171,071 Federal funds sold 24,837,000 16,817,000 Interest Bearing Balances with Banks 1,024,155 1,020,078 Investment securities available for sale, at fair value 27,294,953 23,740,219 Investment securities held to maturity 5,610 44,679 FHLB and Federal Reserve Bank stock 1,104,000 778,000 Loans held for sale 649,975 768,900 Loans receivable 278,989,586 220,164,884 Allowance for possible loan losses (2,685,807 ) (2,587,363 ) Net Loans 276,303,779   217,577,521   Premises and equipment, net 830,770 292,377 Accrued interest and other receivables 864,224 697,326 Other Real Estate Owned Other assets 2,619,512 2,193,284 Bank Owned Life Insurance 2,160,567 2,101,603   Total Assets $342,611,644   $274,202,059     LIABILITIES AND STOCKHOLDERS' EQUITY     Liabilities: Demand deposits: Non-interest bearing deposits $51,431,344 $39,085,418 Interest Checking 65,959,271 47,370,151 Savings deposits 2,637,231 3,704,290 Time deposits 191,660,138 156,993,688 Total Deposits 311,687,984 247,153,547     Other accrued expenses 1,062,136 852,477 Accrued interest payable 92,304 77,309 Total Liabilities 312,842,424 248,083,334     Stockholders' Equity:     Common stock, $3.16 par value. (5,000,000 shares authorized: 4,025,348 shares issued and outstanding December 31, 2014 3,810,822 shares issued and outstanding December 31, 2013) 12,707,042 12,042,200 Additional paid-in capital 17,457,152 16,371,940 Accumulated other comprehensive income (118,889 ) (418,932 ) Retained earnings (deficit) (276,085 ) (1,876,483 )   Total Stockholders' Equity 29,769,220   26,118,725     Total Liabilities and Stockholders' Equity $342,611,644   $274,202,059         The Freedom Bank of Virginia Statements of Operations (UNAUDITED)   For the year ended December 31, 2014   2013 Interest Income Interest and fees on loans $ 13,098,078 $ 10,728,017 Interest on investment securities 535,438 498,274 Interest on Federal funds sold   23,428   32,757 Total Interest Income 13,656,944 11,259,048   Interest Expense Interest on deposits   2,267,925   1,984,920   Net Interest Income 11,389,019 9,274,128   Provision for Possible Loan Losses   486,000   297,500  

Net Interest Income after Provision for Possible Loan Losses

10,903,019 8,976,628   Other Income Service charges and other income 501,558 821,214 Increase in cash surrender value of bank-owned life insurance   58,964   58,428 Total Other Income 560,522 879,642   Operating Expenses Officers and employee compensation and benefits 5,974,486 5,224,922 Occupancy expense 622,690 533,771 Equipment and depreciation expense 370,921 240,302 Insurance expense 237,421 213,319 Professional fees 844,756 636,913 Data and item processing 816,954 733,474 Business development 185,868 163,386 Franchise tax 260,048 248,180 Other operating expenses   550,000   490,231 Total Operating Expenses   9,863,144   8,484,498   Income before Income Taxes 1,600,397 1,371,772 Provision for Income Taxes   -   -   Net Income $ 1,600,397 $ 1,371,772   Net Income Per Common Share $ 0.40 $ 0.36  

The Freedom Bank of VirginiaCraig S. Underhill, Chief Executive Officer703-242-5300cunderhill@freedombankva.com