FAIRFAX, Va., July 26, 2024 /PRNewswire/ -- Freedom Financial Holdings (OTCQX:FDVA), (the "Company" or "Freedom"), the holding company for The Freedom Bank of Virginia (the "Bank") today announced net income of $2,044,233 or $0.28 per diluted share for the second quarter compared to net income of $1,164,226, or $0.16 per diluted share for the three months ended March 31, 2024, and net income of $1,770,075 or $0.24 per diluted share for the three months ended June 30, 2023. Net income for the six months ended June 30, 2024, was $3,208,460 or $0.44 per diluted share, compared to $3,006,710 or $0.41 per diluted share for the six months, ended June 30, 2023.   Joseph J. Thomas, President, and CEO, commented, "Our strong earnings in the second quarter, an improvement of 75.6% relative to the linked quarter and 15.5% ahead of the calendar quarter, were achieved in part through a reserve release related to the favorable resolution of our largest non-performing loan. While deposit costs stabilized in the second quarter, loan yields and legal expenses were negatively impacted by our efforts to proactively resolve high-yielding problem loans.  Loan growth in the quarter came from the exceptional efforts of our residential mortgage team and our tactical decision to retain loans on balance sheet given the attractive economics and favorable capital treatment.  Looking forward, the additions to our executive team and commercial banking practices this quarter, combined with strong balance sheet capacity, and growing confidence in a soft landing for the economy should lead to higher levels of loan and deposit growth in the second half of 2024.  Second Quarter 2024 Highlights include: The Company posted net income of $2,044,233 or $0.28 per diluted share for the second quarter compared to net income of $1,164,226 or $0.16 per diluted share for the three months ended March 31, 2024, and net income of $1,770,075 or $0.24 per diluted share for the three months ending June 30, 2023. Tangible Book Value per share1 increased during the quarter to $11.11 on June 30, 2024, compared to $10.78 on December 31, 2023. Return on Average Assets ("ROAA") was 0.75% for the quarter ended June 30, 2024, compared to ROAA of 0.43% for the quarter ended March 31, 2024, and 0.69% for the three months ended June 30, 2023. Return on Average Equity ("ROAE") was 10.71% for the quarter ended June 30, 2024, compared to ROAE of 6.05% for the three months ended March 31, 2024, and 9.15% for the three months ended June 30, 2023. Total Assets were $1.10 billion on June 30, 2024, an increase of $11.44 million or 1.05% from total assets on December 31, 2023. Loans held-for-investment (excluding PPP loans) increased by $14.99 million or 1.97% during the quarter. Total deposits decreased by $14.73 million or by 1.65% during the quarter, largely due to seasonal activity. Non-interest-bearing demand deposits decreased by $5.21 million from the linked quarter to $136.49 million and represented 15.52% of total deposits on June 30, 2024. The net interest margin2 decreased in the second quarter to 2.41%, lower by 13 basis points compared to the linked quarter and lower by 35 basis points compared to the same period in 2023. The decrease in the net interest margin across linked quarters was primarily related to expected payoffs of high yielding problem loans during the quarter. The cost of funds was 3.61% for the second quarter, higher by 1 basis point compared to the linked quarter and higher by 56 basis points compared to the same period in 2023, as changes in deposit and borrowing costs moderated, supplemented by income from balance sheet hedges. Non-interest income increased by 3.66% compared to the linked quarter and increased by 9.47% compared to the same period in 2023. The increase in non-interest income in the second quarter of 2024 compared to the linked quarter was primarily due to higher revenue from mortgage loans and an increase in the value of investments in SBIC's. Non-interest expense in the second quarter decreased by 2.80% compared to the linked quarter and increased by 12.27% compared to the same period in 2023. The decrease in non-interest expense compared to the linked quarter, was primarily due to lower expenses related to compensation and occupancy. The increase in expenses compared to the calendar quarter was primarily related to higher occupancy costs, increased FDIC insurance costs and higher professional fees, in the form of legal costs related to loan workouts, as well as accounting fees related to FDICIA internal controls. The Efficiency Ratio3 was 81.72% for the quarter ended June 30, 2024, compared to 80.64% for the linked quarter and 69.02% for the same period in 2023. Uninsured deposits were 22.76% of total deposits and total available secured liquidity4 was 150.53% of uninsured deposits on June 30, 2024. Net charge offs decreased in the second quarter and were 0.01% of average loans compared to 0.14% in the prior quarter. The ratio of non-accrual loans to loans held-for-investment was 1.49% on June 30, 2024, compared to 1.74% on March 31, 2024, and 0.93% on June 30, 2023. The ratio of non-performing assets to total assets was 1.06% on June 30, 2024, compared to 1.21% on March 31, 2024, and 0.65% on June 30, 2023. Following the resolution of our largest non-performing loan, and an assessment of the collectability of loans held-for-investment, the Company had a negative loan loss provision of $1,167,997 in the second quarter, which reduced the allowance for losses. The ratio of the allowance for loan losses to loans held-for-investment was 1.06% compared to 1.24% in the linked quarter. The Company continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 10.28%, Common Equity Tier 1 ratio of 13.05%, Tier 1 Risk Based Capital ratio of 13.05% and a Total Capital ratio of 14.01%. Net Interest IncomeThe Company recorded net interest income of $6.19 million for the second quarter of 2024, lower by 5.49% compared to the linked quarter, and lower by 7.61% compared to the same period in 2023. The net interest margin in the second quarter of 2024 was 2.41%, lower by 13 basis points compared to the linked quarter and lower by 35 basis points compared to the same period in 2023. The following factors contributed to the changes in net interest margin during the second quarter of 2024 compared to the linked and calendar quarters. Yields on average earning assets were 5.90% in the second quarter of 2024, lower by 9 basis points compared to the linked quarter, and higher by 22 basis points compared to the calendar quarter. The decline in yields on average earning assets in the second quarter was primarily due to a decline in loan yields, largely related to expected payoffs of high yielding problem loans during the quarter. Loan yields decreased by 17 basis points to 6.22% from 6.39% in the linked quarter, while yields on investment securities increased by 4 basis points to 4.92% from 4.88% in the linked quarter. Loan yields increased by 22 basis points, while yields on investment securities increased by 21 basis points compared to the calendar quarter. Cost of funds increased by 1 basis point to 3.61% from 3.60% in the linked quarter, and by 56 basis points compared to the calendar quarter, as changes in deposit and borrowing costs moderated, supplemented by income from balance sheet hedges. Deposit costs declined for non-maturity deposits and borrowings and were marginally higher for time deposits. Balance sheet hedges also offset any increase in deposit costs. The balance sheet hedges are in the form of interest rate swaps. The bank had $80 million in pay-fixed, receive floating swaps at the end of the quarter, and $20 million of a receive fixed, pay floating interest rate swap executed in the second quarter, as a hedge against declining rates on variable rate commercial loans. Non-interest IncomeNon-interest income was $1.22 million for the second quarter, an increase of 3.66% when compared to the linked quarter and an increase of 9.47% when compared to the same period in 2023. The increase in non-interest income in the second quarter of 2024 compared to the linked quarter was primarily due to higher revenue from mortgage loans and an increase in the value of investments in SBIC's. Total Revenue5Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was lower by 4.10% compared to the linked quarter and lower by 5.18% compared to the calendar quarter in 2023. The decrease in total revenue compared to the linked quarter was primarily due to a decrease in the net interest margin, driven by a decline in loan yields, largely related to planned loan payoffs in the second quarter. Non-interest ExpenseNon-interest expense in the second quarter decreased by 2.80% compared to the linked quarter and increased by 12.27% compared to the same period in 2023. The decrease in non-interest expense compared to the linked quarter, was primarily due to lower expenses related to compensation and occupancy. The increase in expenses compared to the calendar quarter was primarily related to higher occupancy costs, increased FDIC insurance costs and higher professional fees, in the form of legal costs related to loan workouts, as well as accounting fees related to FDICIA internal controls.    The Efficiency Ratio was 81.72% for the quarter ended June 30, 2024, compared to 80.64% for the linked quarter and 69.02% for the same period in 2023.   Asset QualityNon-accrual loans declined in the second quarter and were at $11,570,865 or 1.21% of loans held-for-investment compared to $13,236,862 or 1.74% of loans held-for-investment at the end of the linked quarter. As of June 30, 2024, 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 June 30, 2024. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and accruing, and OREO assets) were $11,570,865 or 1.06% of total assets as of June 30, 2024, compared to $13,236,852 or 1.21% of total assets, at the end of the linked quarter. Following the resolution of our largest non-performing loan, and an assessment of the collectability of loans held for-investment, the Company had a negative loan loss provision of $1,167,997 in the second quarter, which reduced the allowance for losses. The Company's ratio of Allowance for Loan Losses to loans held-for-investment was 1.06% as of June 30, 2024, compared to the ratio of Allowance for Loan Losses to loans held-for-investment of 1.24% as of March 31, 2024. Total AssetsTotal assets on June 30, 2024, were $1.10 billion compared to total assets of $1.08 billion on December 31, 2023.  Changes in major asset categories since December 31, 2023, were as follows: Interest bearing deposits at banks decreased by $11.06 million. Available for sale investment balances increased by $7.44 million. Other loans held-for investment increased by $5.88 million Total LiabilitiesTotal liabilities on June 30, 2024, were $1.02 billion compared to total liabilities of $1.01 billion on March 31, 2024, and total liabilities of $1.00 billion on December 31, 2023. Total deposits were  $879.38 million on June 30, 2024, compared to total deposits of $894.11 million on March 31, 2024, and total deposits of $921.06 million on December 31, 2023. Non-interest-bearing demand deposits decreased by $5.21 million during the second quarter and comprised 15.52% of total deposits at the end of the second quarter. Other interest-bearing demand deposits decreased by $12.42 million, savings deposits increased by $958,901 and time deposits increased by $1.94 million during the quarter. Federal Home Loan Bank borrowings increased by $15 million during the quarter and borrowings from the Federal Reserve Bank of Richmond were flat. Stockholders' Equity and CapitalStockholders' equity as of June 30, 2024, was $79.30 million compared to $77.46 million on March 31, 2024, and stockholders' equity of $77.23 million on December 31, 2023. AOCI was relatively unchanged during the second quarter as a decrease in unrealized losses on available-for-sale securities, was largely offset by a reduced gain on balance sheet hedges. The tangible book value of the Company's common stock on June 30, 2024, was $11.11 per share compared to $10.83 on March 31, 2024, and tangible book value per share of $10.78  on December 31, 2023. Excluding AOCI losses/gains, the tangible book value of the Company's common stock on June 30, 2024, was $13.70 per share compared to $13.39 on March 31, 2024, and $13.25 per share on December 31, 2023. Stock Buyback ProgramIn April of 2024, the Company repurchased 19,243 shares pursuant to its authorized 250,000 share repurchase program.  As of June 30, 2024, the Company had repurchased 36,708 shares. Our Board of Directors believes that share buyback program represents continued disciplined capital management strategy for the company.  Capital RatiosAs of June 30, 2024, the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized bank holding companies. The Bank's capital ratios as of June 30, 2024, and December 31, 2023, were as follows: June 30, 2024 December 31, 2023 Total Capital Ratio 14.01 % 13.82 % Tier 1 Capital Ratio 13.05 % 12.65 % Common Equity Tier 1 Capital Ratio 13.05 % 12.65 % Leverage Ratio 10.28 % 10.26 % About Freedom Financial Holdings, Inc. Freedom Financial Holdings, Inc. is the holding company of The Freedom Bank of Virginia, a community bank with locations in Fairfax, Reston, Chantilly, Vienna, and Manassas, Virginia. For information about deposits, loans and other services, visit the 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 Company operates and in which its loans are concentrated, including the effects of declines in real estate values, increases in unemployment levels, inflation, recessions and slowdowns in economic growth, including as a result of COVID-19 and the impact of geopolitical conflicts, such as the war between Russia and Ukraine;  adverse developments in the financial services industry such as the recent bank failures; 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, wars, terrorist acts or public health events, and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Company's borrowers to satisfy their obligations to the Company, on the value of collateral securing loans, on the demand for the Company's loans or its other products and services, on incidents of cyberattack and fraud, on the Company's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Company's business operations and on financial markets and economic growth. The Company 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 Company 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.   FREEDOM FINANCIAL HOLDINGS CONSOLIDATED BALANCE SHEETS (Unaudited) (Unaudited) (Audited) June 30, March 31, December 31, 2024 2024 2023 ASSETS Cash and Due from Banks $                                    4,105,473 $                                    3,367,684 $                                   2,442,050 Interest Bearing Deposits with Banks 10,749,717 31,347,571 21,806,078 Securities Available-for-Sale 218,707,957 216,503,816 211,263,518 Securities Held-to-Maturity 20,759,365 20,789,233 20,114,269 Restricted Stock Investments 6,264,100 5,551,550 4,769,900 Loans Held for Sale 3,743,127 4,369,801 6,663,929 PPP Loans Held for Investment  209,907 234,840 259,794 Other Loans Held for Investment  775,367,896 760,376,517 769,484,088 Allowance for Loan Losses $                                  (8,235,506) (9,465,851) (10,519,335) Net Loans 767,342,297 751,145,506 759,224,547 Bank Premises and Equipment, net 821,033 849,378 878,957 Accrued Interest Receivable 4,452,526 4,420,462 3,721,730 Deferred Tax Asset 8,016,767 7,998,822 7,954,018 Bank-Owned Life Insurance 27,136,099 26,929,302 26,731,339 Right of Use Asset, net 2,368,629 2,119,110 1,987,075 Other Assets 21,640,688 17,331,241 17,110,642 Total Assets $         1,096,107,778 $         1,092,723,477 $         1,084,668,051 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Demand Deposits Non-interest Bearing $                    136,487,673 $                    141,696,408 $                    143,956,306 Interest Bearing 453,948,791 466,369,810 519,339,202 Savings Deposits 3,956,072 2,997,171 4,120,770 Time Deposits 284,987,090 283,045,173 253,641,860 Total Deposits 879,379,626 894,108,562 921,058,138 Federal Home Loan Bank Advances 65,000,000 50,000,000 35,000,000 Other Borrowings 35,209,907 35,234,840 15,270,576 Subordinated Debt (Net of Issuance Costs) 19,791,681 19,772,200 19,752,719 Accrued Interest Payable 3,698,422 3,302,056 2,842,646 Lease Liability 2,483,255 2,201,003 1,925,672 Other Liabilities 11,241,252 10,644,432 11,590,247 Total Liabilities $         1,016,804,143 $         1,015,263,093 $         1,007,439,998 Stockholders' Equity Preferred stock, $0.01 par value, 5,000,000 shares authorized: 0 Shares Issued and Outstanding, June 30, 2024, March 31, 2024 and December 31, 2023 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:     6,588,012, 6,622,542 and 6,582,677 Shares Issued and Outstanding     at June 30, 2024, March 31, 2024 and December 31, 2023 respectively     (Includes 123,982, 140,484 and 88,993 Unvested Shares on June 30, 2024, March 31, 2024   and December 31, 2023 respectively) 64,640 64,821 64,937 Non-Voting Common Stock: 673,000 Shares Issued and Outstanding at June 30, 2024, March 31, 2024 and December 31, 2023 respectively) 6,730 6,730 6,730  Additional Paid-in Capital  57,939,140 58,000,382 58,320,419 Accumulated Other Comprehensive Income, Net (18,466,282) (18,326,721) (17,715,015) Retained Earnings 39,759,407 37,715,174 36,550,983 Total Stockholders' Equity 79,303,635 77,460,385 77,228,054 Total Liabilities and Stockholders' Equity $         1,096,107,778 $         1,092,723,477 $         1,084,668,051   FREEDOM FINANCIAL HOLDINGS CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Unaudited) (Unaudited) (Unaudited) For the three For the three For the six For the six months ended months ended months ended months ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Interest Income Interest and Fees on Loans $                      11,893,288 $                                            10,857,368 $                      24,176,527 $                      20,840,105 Interest on Investment Securities 2,927,306 2,522,682 5,798,785 4,688,405 Interest on Deposits with Other Banks 375,815 464,321 704,072 765,227 Total Interest Income 15,196,409 13,844,371 30,679,385 26,293,737 Interest Expense Interest on Deposits 7,865,934 6,796,570 15,889,824 11,667,577 Interest on Borrowings 1,142,481 350,096 2,054,407 729,962 Total Interest Expense 9,008,415 7,146,666 17,944,231 12,397,539 Net Interest Income 6,187,994 6,697,706 12,735,154 13,896,198 Provision for (Recovery of) Loan Losses 1,167,997 (238,000) 1,195,483 (781,000) Net Interest Income After Provision for Loan Losses 7,355,991 6,459,706 13,930,637 13,115,198 Non-Interest Income Mortgage Loan Gain-on-Sale and Fee Revenue 745,366 769,649 1,282,090 1,148,207  SBA Gain-on-Sale Revenue - - 287,032 - Service Charges and Other Income 221,022 94,428 353,445 249,016 Gain on Sale of Securities 1,816 - (13,246) -  Servicing Income 42,268 64,688 77,522 130,103 Swap Fee Income - - - - Increase in Cash Surrender Value of Bank- owned Life Insurance 206,796 183,235 404,760 526,374 Total Non-interest Income 1,217,268 1,112,000 2,391,603 2,053,700 Total Revenue 7,405,262 7,809,707 15,126,757 15,949,897 Non-Interest Expenses Officer and Employee Compensation and Benefits 3,544,148 3,469,477 7,279,287 7,618,689 Occupancy Expense 255,233 38,488 647,109 366,407 Equipment and Depreciation Expense 185,959 148,901 381,304 330,396 Insurance Expense 229,259 136,555 453,266 291,622 Professional Fees 568,765 325,405 1,095,339 675,485 Data and Item Processing 395,579 323,906 656,861 643,906 Advertising   162,354 133,907 277,352 252,386 Franchise Taxes and State Assessment Fees 276,843 290,049 586,713 572,789 Mortgage Fees and Settlements 83,617 141,333 178,617 200,619 Other Operating Expense 349,979 382,577 722,214 849,889 Total Non-interest Expenses 6,051,736 5,390,599 12,278,062 11,802,187 Income Before Income Taxes 2,521,523 2,181,106 4,044,178 3,366,710 Income Tax Expense/(Benefit) 477,293 411,031 835,718 360,000 Net Income $                            2,044,230 $                                                  1,770,075 $                            3,208,460 $                            3,006,710 Earnings per Common Share - Basic $                                      0.28 $                                                            0.24 $                                      0.44 $                                      0.41 Earnings per Common Share - Diluted $                                      0.28 $                                                            0.24 $                                      0.44 $                                      0.41 Weighted-Average Common Shares Outstanding - Basic 7,267,044 7,307,802 7,276,076 7,287,186 Weighted-Average Common Shares  Outstanding - Diluted 7,305,392 7,317,113 7,314,424 7,314,655   FREEDOM FINANCIAL HOLDINGSCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 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 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 Interest Income Interest and Fees on Loans $                11,893,288 $                12,283,239 $                12,076,745 $                11,513,273 $                10,857,368 Interest on Investment Securities 2,927,306 2,871,479 2,933,870 2,730,411 2,522,682 Interest on Deposits with Other Banks   375,815 328,257 502,411 471,031 464,321 Total Interest Income 15,196,409 15,482,975 15,513,026 14,714,715 13,844,371 Interest Expense Interest on Deposits 7,865,934 8,023,891 8,108,762 7,829,199 6,796,570 Interest on Borrowings 1,142,481 911,926 634,972 359,191 350,096 Total Interest Expense 9,008,415 8,935,816 8,743,734 8,188,390 7,146,666 Net Interest Income 6,187,994 6,547,159 6,769,292 6,526,325 6,697,705 Provision for (Recovery of) Loan Losses 1,167,997 27,486 (4,751,441) (205,000) (238,000) Net Interest Income after Provision/Recovery for Loan Losses 7,355,991 6,574,645 2,017,851 6,321,325 6,459,705 Non-Interest Income Mortgage Loan Gain-on-Sale and Fee Revenue 745,366 536,724 467,874 470,800 769,649  SBA Gain-on-Sale Revenue - 287,032 - -