Freedom Financial Holdings Announces Earnings for Fourth Quarter and Full Year 2022

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Jan 27, 2023, 08:00 ET

FAIRFAX, Va., Jan. 27, 2023 /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 $2,861,940, or $0.39 per diluted share, for the three months ended December 31, 2022. This compares to net income of $2,689,950 or $0.37 per diluted share, for the linked quarter and net income of $2,743,088 or $0.37 per diluted share for the three months ended December 31, 2021. Net income for the full year 2022 was $10,563,572 or $1.45 per diluted share compared to net income of $10,727,961 or $1.46 per diluted share for the full year 2021. Tangible book value per share in the fourth quarter of 2022 was higher by 4.72% from the prior quarter but was lower by 8.91% compared to the same period in 2021, primarily due to changes in Accumulated Other Comprehensive Income ("AOCI").

Joseph J. Thomas, President, and CEO, commented, "I am proud of the entire Freedom Bank team that worked diligently to deliver strong fourth quarter earnings that were higher by 6.39% compared to the prior quarter, and an increase in tangible book value per share¹, excluding changes in AOCI of 13.29%, to $12.87, on December 31, 2022. Full year earnings of $10.56 million reflect our core bank's profitability, which was strong compared to the prior year, with loan growth of 21.78%, a 10-basis point increase in net interest margin² to 3.63%, and an improvement in the efficiency ratio³ to 61.11% in 2022 from 63.14% in the prior year. These results enabled the Company to overcome a $5.2 million decline in mortgage revenue in 2022 compared to 2021, in part offset by a solid contribution from the SBA lending business which delivered an increase in gain on sale revenue of 127.94% compared to the prior year. We accomplished all of this while maintaining a strong allowance for loan losses at 1.10% of total loans (excluding PPP loans) and Tier 1 Capital Ratio at 13.37%, all of which are important as the economic environment becomes more challenging and uncertain."

Fourth Quarter and Full Year 2022 Highlights include:

Net income for the fourth quarter was $2,861,940 or $0.39 per diluted share compared to net income of $2,689,950 or $0.37 per diluted share in the linked quarter and net income of $2,743,088 or $0.37 per diluted share for the three months ending December 31, 2021.
Net income for the full year 2022 was lower by 1.53% compared to the full year 2021. Net income was $10,563,572 or $1.45 per diluted share compared to net income of $10,727,961 or $1.46 per diluted share for the full year 2021.
Return on Average Assets ("ROAA") was 1.17% for the quarter ended December 31, 2022, compared to 1.15% for the linked quarter and 1.22% for the three months ended December 31, 2021. ROAA for the full year 2022 was 1.16% compared to 1.27% for the full year 2021.
Return on Average Equity ("ROAE") was 15.51% for the three months ended December 31, 2022, compared to 13.81% for the linked quarter and 13.11% for the three months ended December 31, 2021. ROAE for the full year 2022 was 13.55% compared to 13.60% for the full year 2021.
Total assets were $985.06 million on December 31, 2022, an increase of $108.39 million or 12.36% from total assets on December 31, 2021.
Loans held-for-investment (excluding PPP loans) increased by $36.91 million or 5.62% during the quarter and by $124.16 million or 21.78% for the full year 2022 on continued strong portfolio loan growth.
PPP loan balances decreased by $25.53 million during 2022 on loan forgiveness and mortgage loans held for sale decreased by $8.23 million during the year, on continued decline in mortgage activity.
Cash balances at the Federal Reserve decreased by $18.99 million during the fourth quarter.
Available for sale investment securities were unchanged during the fourth quarter and increased by $10.04 million in 2022.
Total deposits increased by $10.40 million or by 1.24% in the fourth quarter and increased by $147.30 million or 20.99% for the full year 2022. Non-interest-bearing demand deposits decreased by $17.31 million from the linked quarter to $187.42 million and were lower by $34.75 million for the full year 2022 and represented 22.08% of total deposits on December 31, 2022.
The net interest margin decreased in the fourth quarter to 3.49%, lower by 22 basis points compared to the linked quarter and lower by 25 basis points compared to the same period in 2021. The decrease in the net interest margin across linked and calendar quarters was primarily due to an increase in funding costs.
The cost of funds was 1.69% for the fourth quarter, higher by 77 basis points compared to the linked quarter and higher by 136 basis points compared to the same period in 2021, as deposit costs increased, partially offset by income from balance sheet hedges.
Cost of funds was 0.89% for the full year 2022 compared to 0.40% for the full year 2021, primarily due to increased deposit costs across all deposit categories in 2022.
Non-interest income decreased by 4.32% compared to the linked quarter and decreased by 38.31% compared to the same period in 2021. Non-interest income in the full year 2022 was lower by 41.39% compared to the prior year. The decrease in non-interest income in 2022 was primarily due to lower mortgage revenue stemming from a slowdown in mortgage activity in 2022 resulting from higher rates and tight housing inventory, compared to the prior year, as well as lower gain-on-sale revenue from SBA loans. Premiums in the secondary market were lower in 2022, which led to more SBA loan originations being retained on the balance sheet.
Non-interest expense in the fourth quarter decreased by 3.09% compared to the linked quarter and decreased by 12.21% compared to the same period in 2021. Non-interest expenses for the full year 2022 were lower by 5.63% compared to the prior year. The decrease in non-interest expense for linked and calendar quarters, as well as the full year was primarily due to lower performance related costs, such as commissions paid to mortgage loan officers and mortgage settlement costs, as well as lower fees for legal and other professional services.
The Efficiency Ratio was 58.44% for the quarter ended December 31, 2022, compared to 59.19% for the linked quarter and 62.62% for the same period in 2021. The efficiency ratio for the full year 2022 was 61.11% compared to 63.14% for the full year 2021.
Credit metrics improved in the fourth quarter causing the ratio of non-performing assets to total assets to decrease to 0.88% on December 31, 2022, compared to 1.01% on December 31, 2021. Most of the Company's non-accrual loan balances comprise a single relationship and various workout solutions are currently being implemented to resolve this relationship.
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 Company recognized a $327,000 provision for loan losses during the fourth quarter and the ratio of the allowance for loan and lease losses to loans held-for-investment was 1.09% (or 1.10% excluding PPP loans, which carry a full faith and credit guarantee of the US Government) compared to 1.12% in the linked quarter (or 1.13% excluding PPP loans).
The Company continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 11.32%, Common Equity Tier 1 ratio of 13.37%, Tier 1 Risk Based Capital ratio of 13.37% and a Total Capital ratio of 14.28%.

Net Interest Income
The Company recorded net interest income of $8.11 million for the fourth quarter of 2022, lower by 1.52% compared to the linked quarter, and 1.16% higher than the same period in 2021. The net interest margin in the fourth quarter of 2022 was 3.49%, lower by 22 basis points compared to the linked quarter and lower by 25 basis points compared to the same period in 2021. The net interest margin for the full year 2022 was 3.63%, higher by 10 basis points compared to 2021.

The following factors contributed to the changes in net interest margin during the fourth quarter of 2022 compared to the linked and calendar quarters:

Yields on average earning assets increased by 53 basis points to 5.11% compared to 4.58% in the linked quarter. Yields on average earning assets increased by 106 basis points in 2022 compared to the calendar quarter. Higher yields on investment securities, loans and cash balances at the Federal Reserve drove the increase in yields on earning assets.
Loan yields increased by 33 basis points to 5.47% from 5.14% in the linked quarter, while yields on investment securities increased by 82 basis points to 4.11% from 3.29% in the linked quarter. Loan yields increased by 36 basis points, while yields on investment securities increased by 157 basis points compared to the calendar quarter. Repricing of loans and securities in the higher rate environment was the primary reason for higher yields on these asset categories.
Cost of funds increased by 77 basis points to 1.69% from 0.92% in the linked quarter, and by 136 basis points compared to the calendar quarter, due to rising rates on interest checking and money market deposit accounts. The increase in deposit expense was partially offset by interest income from balance sheet hedges, in the form of interest rate swaps, whereby the bank pays a fixed rate and receives the Federal Funds effective rate for the duration of the swaps. The notional amount of the interest rate swaps was $50 million with a weighted average remaining term of 4.20 years, as of December 31, 2022.

The following factors contributed to the changes in net interest margin during the full year 2022 compared to the prior year:

Yields on average earning assets increased by 57 basis points to 4.47% compared to 3.90% in the prior year, driven by higher yields on loans, investments, and interest earning cash balances.
Loan yields increased by 35 basis points to 5.03% from 4.68% in the prior year, while yields on investment securities increased by 87 basis points to 3.21% from 2.34% in the prior year.
Cost of funds increased by 49 basis points to 0.89%, from 0.40% in the prior year, on higher deposit and borrowing costs.

Non-interest Income
Non-interest income was $1.09 million for the fourth quarter, a decrease of 4.32% when compared to the linked quarter and a decrease of 38.31% when compared to the same period in 2021. Non-interest income in 2022 was lower by 41.39% compared to the prior year. The decrease in non-interest income compared to linked and calendar quarters, as well to the prior year, was primarily due to lower mortgage revenue stemming from a slowdown in mortgage activity. Additionally, secondary market premiums for SBA loans decreased during 2022, and the Company elected to retain more SBA loans on its balance sheet instead of selling them into the secondary market.

Total Revenue⁴
Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was lower by 1.86% compared to the linked quarter and lower by 5.94% compared to the calendar quarter in 2021, primarily due to a decline in non-interest income stemming from reduced mortgage activity. Total revenue for the full year 2022 was lower by 2.49% compared to 2021, primarily due to lower non-interest income, also related to a decline in mortgage activity, compared to the prior year.

Non-interest Expenses
Non-interest expenses in the fourth quarter of 2022 decreased by 3.09% compared to the linked quarter and decreased by 12.21% compared to the same period in 2021. Non-interest expenses for the full year 2022 were lower by 5.63% compared to the prior year. The decrease in non-interest expense for linked and calendar quarters, as well as the full year was primarily due to lower performance related costs, such as commissions paid to mortgage loan officers and mortgage settlement costs, as well as lower fees for legal and other professional services.

The Efficiency Ratio was 58.44% for the quarter ended December 31, 2022, compared to 59.19% for the prior quarter and 62.62% for the same period in 2021. The Efficiency Ratio for the full year 2022 was 61.11% compared to 63.14% for 2021.

Asset Quality

Non-accrual loans were $8,638,559 or 1.23% of loans held-for-investment as of December 31, 2022, compared to $8,677,688 or 1.31% of loans held-for-investment at the end of the linked quarter. There were no troubled debt restructurings ("TDRs") as of December 31, 2022. As of December 31, 2022, 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 December 31, 2022. 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 $8,638,559 or 0.88% of total assets as of December 31, 2022, compared to $8,677,688 or 0.90% of assets, at the end of the linked quarter. Most of the Company's non-accrual loan balances comprise a single relationship and various workout solutions are currently being implemented to resolve this relationship.

Following an assessment of the collectability of the loans held-for-investment at the end of the third quarter, it was determined that a $327,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Company booked a provision of $355,000 in the third quarter of 2022. The Company's ALLL ratio was 1.09% of loans held-for-investment (or 1.10% of loans held-for investment excluding PPP loans) as of December 31, 2022, compared to an ALLL ratio of 1.12% as of September 30, 2022 (or 1.13% of loans held-for-investment excluding PPP loans).

The Company adopted ASU 2016-13, Topic 326, Financial Instruments – Credit Losses, effective January 1, 2023. The accounting standard requires the use of the current expected credit losses methodology (CECL) for estimating allowances for credit losses. We do not expect that the adoption of CECL will have a material impact on the Company's allowance for credit losses.

Total Assets
Total assets as of December 31, 2022, were $985.06 million compared to $964.28 million as of September 30, 2022. Changes in major asset categories during linked quarters were as follows:

Cash balances at the Federal Reserve and Federal Home Loan Banks decreased by $18.99 million, as the Company deployed excess liquidity to fund loan growth.
Available for sale investment balances were flat.
Other loans held-for investment grew by $36.91 million.
Mortgage loans held-for-sale increased by $1.96 million.

Total Liabilities
Total liabilities as of December 31, 2022, were $910.12 million compared to total liabilities of $891.79 million as of September 30, 2022. Total deposits were $848.90 million compared to total deposits of $838.60 million as of September 30, 2022. Non-interest-bearing demand deposits decreased by $17.31 million during the quarter and comprised 22.08% of total deposits at the end of 2022. Other interest-bearing demand deposits increased by $50.90 million, savings deposits were flat and time deposits decreased by $23.12 million during the quarter. Federal Home Loan Bank advances increased by $10.00 million during the quarter.

Stockholders' Equity and Capital
Stockholders' equity as of December 31, 2022, was $74.95 million compared to $72.49 million as of September 30, 2022. Additional paid-in capital was $58.24 million on December 31, 2022, compared to $58.45 million as of September 30, 2022. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, was generally unchanged during the fourth quarter of 2022. Retained earnings were $34.11 million on December 31, 2022, compared to $31.25 million at the end of the prior quarter. Total shares issued and outstanding were 7,184,259 as of December 31, 2022, compared to 7,281,606 shares as of September 30, 2022. The tangible book value of the Company's common stock on December 31, 2022, was $10.43 per share compared to $9.96 per share on September 30, 2022, and $11.59 per share on December 31, 2021. Excluding AOCI losses/gains, the tangible book value of the Company's common stock on December 31, 2022, was $12.87 per share compared to $12.33 per share on September 30, 2022, and $11.36 per share on December 31, 2021.

In 2022, the Company repurchased 173,400 shares of its common stock, pursuant to a Board-authorized stock repurchase plan of 250,000 shares.

As of December 31, 2022, 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 December 31, 2022, and September 30, 2022, were as follows:

	December 31, 2022	September 30, 2022
Total Capital Ratio	14.28 %	14.55 %
Tier 1 Capital Ratio	13.37 %	13.62 %
Common Equity
Tier 1 Capital Ratio	13.37 %	13.62 %
Leverage Ratio	11.32 %	11.59 %

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. The Freedom Bank of Virginia also has a mortgage division headquartered in Chantilly, Virginia and an SBA division headquartered in Harrison, NY. 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 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; 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. Some of the financial tables in this document reflect classifications to accounts to improve consistency in financial reporting.



	FREEDOM FINANCIAL HOLDINGS
	CONSOLIDATED BALANCE SHEETS

		(Unaudited)		(Unaudited)		(Audited)
		December 31,		September 30,		December 31,
		2022		2022		2021
ASSETS
Cash and Due from Banks	$	2,099,062	$	1,959,084	$	2,536,450
Interest Bearing Deposits with Banks		32,674,953		51,668,557		31,696,891
Securities Available-for-Sale		181,558,037		181,558,490		171,532,394
Securities Held-to-Maturity		17,096,010		17,586,727		18,012,874
Restricted Stock Investments		3,889,200		3,389,200		3,321,250
Loans Held for Sale		5,064,385		3,107,940		13,297,125
PPP Loans Held for Investment		5,829,662		6,824,897		32,355,451
Other Loans Held for Investment		694,173,347		657,263,342		570,013,870
Allowance for Loan Losses		(7,614,120)		(7,407,120)		(6,486,120)
Net Loans		692,388,889		656,681,120		595,883,201
Bank Premises and Equipment, net		989,072		1,018,840		1,139,204
Accrued Interest Receivable		3,784,076		2,822,515		2,466,712
Deferred Tax Asset		1,982,776		1,842,093		1,631,115
Bank-Owned Life Insurance		26,248,974		26,090,001		24,579,879
Right of Use Asset, net		1,736,285		1,980,602		2,704,888
Other Assets		15,551,415		14,573,695		7,870,617
Total Assets	$	985,063,133	$	964,278,863	$	876,672,600
LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
Demand Deposits
Non-interest Bearing	$	187,416,628	$	204,729,740		222,167,095
Interest Bearing		409,760,573		358,864,223		300,361,979
Savings Deposits		5,977,828		6,044,616		5,841,800
Time Deposits		245,840,048		268,956,966		173,322,527
Total Deposits		848,995,078		838,595,544		701,693,401
Federal Home Loan Bank Advances		25,000,000		15,000,000		29,035,714
Other Borrowings		5,826,298		7,075,513		32,055,915
Subordinated Debt (Net of Issuance Costs)		19,674,794		19,675,313		19,616,869
Accrued Interest Payable		1,265,796		741,780		294,237
Lease Liability		1,862,773		2,088,416		2,823,885
Other Liabilities		7,492,264		8,612,267		6,993,855
Total Liabilities	$	910,117,002	$	891,788,834	$	792,513,876
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized:
0 Shares Issued and Outstanding, December 31, 2022, September 30, 2022, and December 31, 2021,
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:
6,511,259, 6,608,606 and 6,676,545 Shares Issued and Outstanding
at December 31, 2022, September 30, 2022 and December 31, 2021 respectively
(Includes 93,003, 93,003, and 106,171 Unvested Shares on December 31, 2022, September 30, 2022, and
December 31, 2021, respectively)		65,160		65,156		65,898
Non-Voting Common Stock:
673,000 Shares Issued and Outstanding at December 31, 2022, September 30, 2022,
and December 31, 2021		6,730		6,730		6,730
Additional Paid-in Capital		58,241,451		58,454,038		59,884,615
Accumulated Other Comprehensive Income, Net		(17,480,993)		(17,287,737)		651,272
Retained Earnings		34,113,783		31,251,842		23,550,209
Total Stockholders' Equity		74,946,131		72,490,030		84,158,724
Total Liabilities and Stockholders' Equity	$	985,063,133	$	964,278,863	$	876,672,600

	FREEDOM FINANCIAL HOLDINGS
	CONSOLIDATED STATEMENTS OF OPERATIONS
			(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
			For the three		For the three		For the twelve		For the twelve
			months ended		months ended		months ended		months ended
			December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
Interest Income
Interest and Fees on Loans		$	9,503,228	$	7,556,406	$	32,213,808	$	28,335,210
Interest on Investment Securities			2,061,298		1,092,427		6,111,756		3,135,735
Interest on Deposits with Other Banks			339,592		35,908		601,382		86,903
Total Interest Income			11,904,118		8,684,741		38,926,946		31,557,848
Interest Expense
Interest on Deposits			3,685,412		470,791		6,512,624		2,275,780
Interest on Borrowings			101,216		189,834		826,392		766,060
Total Interest Expense			3,786,628		660,625		7,339,016		3,041,840

Net Interest Income			8,117,490		8,024,116		31,587,930		28,516,009
Provision for Loan Losses			(327,000)		(355,000)		(1,248,000)		(839,000)
Net Interest Income After
Provision for Loan Losses			7,790,490		7,669,116		30,339,930		27,677,009
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue			357,654		1,456,195		3,091,941		8,286,068
SBA Gain-on-Sale Revenue			404,409		-		997,967		437,825
Service Charges and Other Income			92,235		95,335		622,369		254,911
Gain on Sale of Securities			20,503		6,315		30,972		7,432
Servicing Income			53,332		53,479		218,190		192,413
Swap Fee Income			-		-		68,404		-
Increase in Cash Surrender Value of Bank-
owned Life Insurance			158,972		151,054		669,094		544,665
Total Non-interest Income			1,087,106		1,762,377		5,698,937		9,723,314
Non-Interest Expenses
Officer and Employee Compensation
and Benefits			3,495,260		4,055,344		15,160,439		16,341,245
Occupancy Expense			318,462		317,038		1,266,050		1,232,056
Equipment and Depreciation Expense			179,679		170,335		705,170		662,050
Insurance Expense			140,926		74,357		363,099		267,583
Professional Fees			238,732		470,786		1,062,306		1,365,057
Data and Item Processing			304,767		299,120		1,212,233		1,181,347
Advertising			124,450		80,569		448,904		329,059
Franchise Taxes and State Assessment Fees			282,796		200,084		990,442		778,069
Mortgage Fees and Settlements			23,156		172,967		355,710		1,141,200
Other Operating Expense			271,396		287,458		1,221,355		847,150
Total Non-interest Expenses			5,379,623		6,128,057		22,785,708		24,144,815
Income Before Income Taxes			3,497,972		3,303,435		13,253,160		13,255,507
Income Tax Expense			636,033		560,347		2,689,588		2,527,546
Net Income		$	2,861,939	$	2,743,088	$	10,563,572	$	10,727,961
Earnings per Common Share - Basic		$	0.40	$	0.37	$	1.45	$	1.47
Earnings per Common Share - Diluted		$	0.39	$	0.37	$	1.45	$	1.46
Weighted-Average Common Shares
Outstanding - Basic			7,238,807		7,336,016		7,285,726		7,316,505
Weighted-Average Common Shares
Outstanding - Diluted			7,252,669		7,380,138		7,307,659		7,363,536



Efficiency Ratio			58.44 %		62.62 %		61.11 %		63.14 %

	FREEDOM FINANCIAL HOLDINGS
	CONSOLIDATED 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
		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021
Interest Income
Interest and Fees on Loans	$	9,503,228	$	8,408,971	$	7,159,610	$	7,141,999	$	7,556,406
Interest on Investment Securities		2,061,298		1,626,322		1,278,759		1,145,377		1,092,427
Interest on Deposits with Other Banks		339,592		171,644		74,550		15,596		35,908
Total Interest Income		11,904,118		10,206,937		8,512,919		8,302,972		8,684,741

Interest Expense
Interest on Deposits		3,685,412		1,735,027		673,396		418,788		470,791
Interest on Borrowings		101,216		229,283		225,115		270,778		189,834
Total Interest Expense		3,786,628		1,964,310		898,511		689,566		660,625

Net Interest Income		8,117,490		8,242,627		7,614,408		7,613,406		8,024,116
Provision for Loan Losses		(327,000)		(382,000)		(375,000)		(164,000)		(355,000)
Net Interest Income after
Provision for Loan Losses		7,790,490		7,860,627		7,239,408		7,449,406		7,669,116
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue		357,654		710,149		986,160		1,037,978		1,456,195
SBA Gain-on-Sale Revenue		404,409		63,727		263,806		266,023		-
Service Charges and Other Income		92,235		52,755		175,853		301,396		95,335
Gains on Sale of Securities		20,503		10,600		-		-		6,315
Servicing Income		53,332		54,792		57,917		52,149		53,479
Swap Fee Income		-		68,404		-		-		-
Increase in Cash Surrender Value of Bank-
owned Life Insurance		158,972		175,815		173,679		160,628		151,054
Total Non-interest Income		1,087,106		1,136,243		1,657,415		1,818,174		1,762,378


Total Revenue⁴	$	9,204,596	$	9,378,870	$	9,271,823	$	9,431,580	$	9,786,494

Non-Interest Expenses
Officer and Employee Compensation
and Benefits		3,495,260		3,655,913		4,005,945		4,003,321		4,055,344
Occupancy Expense		318,462		311,070		304,153		332,366		317,038
Equipment and Depreciation Expense		179,679		170,070		183,315		172,107		170,335
Insurance Expense		140,926		76,563		74,983		70,626		74,357
Professional Fees		238,732		251,597		323,647		248,329		470,786
Data and Item Processing		304,767		299,501		342,340		265,625		299,120
Advertising		124,450		104,119		114,966		105,369		80,569
Franchise Taxes and State Assessment Fees		282,796		282,912		224,636		200,099		200,084
Mortgage Fees and Settlements		23,156		97,495		129,210		105,849		172,967
Other Operating Expense		271,396		301,977		332,567		315,416		287,459

Total Non-interest Expenses		5,379,623		5,551,217		6,035,762		5,819,107		6,128,059
Income before Income Taxes		3,497,972		3,445,652		2,861,061		3,448,473		3,303,435

Income Tax Expense		636,033		755,702		633,677		664,176		560,347

Net Income	$	2,861,939	$	2,689,950	$	2,227,385	$	2,784,297	$	2,743,088
Earnings per Common Share - Basic	$	0.40	$	0.37	$	0.31	$	0.38	$	0.37
Earnings per Common Share - Diluted	$	0.39	$	0.37	$	0.30	$	0.38	$	0.37
Weighted-Average Common Shares
Outstanding - Basic		7,238,807		7,271,784		7,290,417		7,324,527		7,336,016
Weighted-Average Common Shares
Outstanding - Diluted		7,252,669		7,285,786		7,312,200		7,362,290		7,380,138

Average Balances, Income and Expenses, Yields and Rates
(Unaudited)

	Three Months Ended			Three Months Ended			Three Months Ended			Three Months Ended			Three Months Ended
	December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
	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	$ 35,596,385	$ 339,592	3.78 %	$ 37,133,361	$ 171,644	1.83 %	$ 35,469,783	$ 74,550	0.84 %	$ 40,375,846	$ 15,596	0.16 %	$ 91,458,843	$ 35,908	0.16 %

Investments (Tax Exempt)	20,664,285	184,800		21,615,440	186,314		22,199,648	187,816		23,331,336	187,632		23,460,432	190,195
Investments (Taxable)	182,096,499	1,915,306		179,086,818	1,479,134		167,905,374	1,130,385		165,979,811	957,745		153,582,906	942,173
Total Investments	202,760,784	2,100,106	4.11 %	200,702,258	1,665,447	3.29 %	190,105,022	1,318,201	2.78 %	189,311,147	1,145,377	2.45 %	177,043,338	1,132,368	2.54 %

Total Loans	689,158,712	9,503,228	5.47 %	648,964,205	8,408,971	5.14 %	615,110,994	7,159,610	4.67 %	609,412,292	7,141,999	4.75 %	586,725,477	7,556,406	5.11 %

Earning Assets	927,515,881	11,942,926	5.11 %	886,799,824	10,246,063	4.58 %	840,685,799	8,552,361	4.08 %	839,099,285	8,302,972	4.01 %	855,227,658	8,724,682	4.05 %



Assets	$ 969,662,029			$ 929,265,436			$ 880,810,523			$ 876,180,566			$ 891,226,178

Liabilities
Interest Checking	$ 130,004,364	$ 862,014	2.63 %	$ 132,342,702	$ 458,605	1.37 %	$ 128,008,728	$ 134,727	0.42 %	$ 110,305,411	$ 48,246	0.18 %	$ 88,172,651	$ 38,893	0.18 %
Money Market	240,285,109	1,383,701	2.28 %	216,851,258	581,082	1.06 %	203,094,067	180,932	0.36 %	206,230,959	89,516	0.18 %	202,560,648	85,450	0.17 %
Savings	6,108,935	3,067	0.20 %	6,659,935	2,119	0.13 %	8,303,586	2,147	0.10 %	6,652,079	1,725	0.11 %	5,336,531	1,431	0.11 %
Time Deposits	261,984,431	1,436,630	2.18 %	218,365,002	693,221	1.26 %	186,130,419	355,590	0.77 %	174,009,190	279,301	0.65 %	187,240,613	345,016	0.73 %
Interest Bearing Deposits	638,382,839	3,685,412	2.29 %	574,218,895	1,735,027	1.20 %	525,536,800	673,396	0.51 %	497,197,639	418,788	0.34 %	483,310,443	470,790	0.39 %

Borrowings	$ 46,940,688	$ 101,216	0.86 %	$ 53,279,949	$ 229,283	1.72 %	$ 56,154,130	$ 225,115	1.61 %	$ 71,634,636	$ 270,778	1.53 %	$ 81,399,848	$ 189,834	0.93 %

Interest Bearing Liabilities	685,323,527	3,786,628	2.19 %	627,498,844	1,964,310	1.24 %	581,690,931	898,511	0.62 %	568,832,275	689,566	0.49 %	564,710,291	660,624	0.46 %

Non Interest Bearing Deposits	$ 202,342,666			$ 215,426,363			$ 212,429,933			$ 213,315,104			$ 231,181,073

Cost of Funds			1.69 %			0.92 %			0.45 %			0.36 %			0.33 %

Net Interest Margin²		$ 8,156,298	3.49 %		$ 8,281,753	3.71 %		$ 7,653,850	3.65 %		$ 7,613,406	3.68 %		$ 8,064,057	3.74 %
Shareholders Equity	$ 73,185,633			$ 77,295,762			$ 78,112,151			$ 83,440,208			$ 82,994,140

² Net 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			Twelve Months Ended			Twelve Months Ended
	December 31, 2022	Income /		December 31, 2021	Income /		December 31, 2022	Income /		December 31, 2021	Income /
	Average Balance	Expense	Yield	Average Balance	Expense	Yield	Average Balance	Expense	Yield	Average Balance	Expense	Yield
Assets
Cash	$ 35,596,385	$ 339,592	3.78 %	$ 91,458,843	$ 35,908	0.16 %	$ 37,130,721	$ 601,382	1.62 %	$ 67,640,215	$ 86,903	0.13 %

Investments (Tax Exempt)	20,664,285	184,800		23,460,432	190,195		21,944,446	746,561		24,492,967	668,682
Investments (Taxable)	182,096,499	1,915,306		153,582,906	942,173		173,825,855	5,521,973		115,765,523	2,607,476
Total Investments	202,760,784	2,100,106	4.11 %	177,043,338	1,132,368	2.54 %	195,770,302	6,268,534	3.20 %	140,258,490	3,276,158	2.34 %

Total Loans	689,158,712	9,503,228	5.47 %	586,725,477	7,556,406	5.11 %	640,902,781	32,213,808	5.03 %	605,029,296	28,335,210	4.68 %

Earning Assets	927,515,881	11,942,926	5.11 %	855,227,658	8,724,682	4.05 %	873,803,803	39,083,724	4.47 %	812,928,001	31,698,271	3.90 %

Assets	$ 969,662,029			$ 891,226,178			$ 914,277,631			$ 845,256,803

Liabilities
Interest Checking	$ 130,004,364	862,014	2.63 %	$ 88,172,651	$ 38,893	0.18 %	$ 126,903,635	$ 1,503,592	1.18 %	$ 47,966,245	$ 77,669	0.16 %
Money Market	240,285,109	1,383,701	2.28 %	202,560,648	85,450	0.17 %	215,044,593	2,235,231	1.04 %	176,412,939	292,283	0.17 %
Savings	6,108,935	3,067	0.20 %	5,336,531	1,431	0.11 %	6,928,902	9,059	0.13 %	4,250,652	4,494	0.11 %
Time Deposits	261,984,431	1,436,630	2.18 %	187,240,613	345,016	0.73 %	210,385,871	2,764,742	1.31 %	189,083,082	1,901,335	1.01 %
Interest Bearing Deposits	638,382,839	3,685,412	2.29 %	483,310,443	470,790	0.39 %	559,263,003	6,512,624	1.16 %	417,712,918	2,275,781	0.54 %

Borrowings	$ 46,940,688	101,216	0.86 %	$ 81,399,848	189,834	0.93 %	$ 56,924,498	$ 826,392	1.45 %	$ 113,558,822	$ 766,060	0.67 %

Interest Bearing Liabilities	685,323,527	3,786,628	2.19 %	564,710,291	660,624	0.46 %	616,187,501	7,339,016	1.19 %	531,271,740	3,041,841	0.57 %

Non Interest Bearing Deposits	$ 202,342,666			$ 231,181,073			$ 210,860,915			$ 222,747,496

Cost of Funds			1.69 %			0.33 %			0.89 %			0.40 %

Net Interest Margin²		$ 8,156,298	3.49 %		$ 8,064,057	3.74 %		$ 31,744,708	3.63 %		$ 28,656,431	3.53 %
Shareholders Equity	$ 73,185,633			$ 82,994,140			$ 77,978,391			$ 78,908,655
ROAA	1.17 %			1.22 %			1.16 %			1.27 %
ROAE	15.51 %			13.11 %			13.55 %			13.60 %

² Net 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	December 31, 2022	September 30, 2022	June 30, 2022	March 31, 2022	December 31, 2021
Loans held-for-investment to Deposits	82.45 %	79.19 %	83.49 %	83.07 %	85.85 %
Income Statement Ratios (Quarterly)
Return on Average Assets (ROAA)	1.17 %	1.15 %	1.01 %	1.29 %	1.22 %
Return on Average Equity (ROAE)	15.51 %	13.81 %	11.44 %	13.53 %	13.11 %
Efficiency Ratio³	58.44 %	59.19 %	65.10 %	61.70 %	62.62 %
Net Interest Margin²	3.49 %	3.71 %	3.65 %	3.68 %	3.74 %
Yield on Average Earning Assets	5.11 %	4.58 %	4.08 %	4.01 %	4.05 %
Yield on Securities	4.11 %	3.29 %	2.78 %	2.45 %	2.54 %
Yield on Loans	5.47 %	5.14 %	4.67 %	4.75 %	5.11 %
Cost of Funds	1.69 %	0.92 %	0.45 %	0.36 %	0.33 %
Noninterest income to Total Revenue	11.81 %	12.11 %	17.88 %	19.28 %	18.01 %
Per Share Data
Tangible Book Value	$10.43	$9.96	$10.31	$10.94	$11.45
Tangible Book Value (ex AOCI)¹	$12.87	$12.33	$11.95	$11.66	$11.36
Share Price Data
Closing Price	$14.57	$14.60	$14.80	$14.06	$13.37
Book Value Multiple	140 %	147 %	144 %	129 %	117 %
Common Stock Data
Outstanding Shares at End of Period	7,184,259	7,281,606	7,319,006	7,296,063	7,349,545
Weighted Average shares outstanding, basic	7,238,807	7,271,784	7,290,417	7,324,527	7,336,016
Weighted Average shares outstanding, diluted	7,252,669	7,285,786	7,312,200	7,362,290	7,438,268
Capital Ratios (Bank Only)
Tier 1 Leverage ratio	11.32 %	11.59 %	11.95 %	12.09 %	11.85 %
Common Equity Tier 1 ratio	13.37 %	13.62 %	13.84 %	14.23 %	14.49 %
Tier 1 Risk Based Capital ratio	13.37 %	13.62 %	13.84 %	14.23 %	14.49 %
Total Risk Based Capital ratio	14.28 %	14.55 %	14.77 %	15.15 %	15.42 %
Credit Quality
Net Charge-offs to Average Loans	0.02 %	0.00 %	0.00 %	0.00 %	-0.02 %
Total Non-performing Loans to loans held-for-investment	1.23 %	1.31 %	1.38 %	1.48 %	1.46 %
Total Non-performing Assets to Total Assets	0.88 %	0.90 %	0.97 %	1.02 %	1.00 %
Nonaccrual Loans to loans held-for-investment	1.23 %	1.31 %	1.38 %	1.48 %	1.46 %
Provision for Loan and Lease Losses	$327,000	$382,000	$375,000	$164,000	$355,000
Allowance for Loan and Lease Losses to net loans held-for-investment	1.09 %	1.12 %	1.11 %	1.12 %	1.08 %
Allowance for Loan and Lease Losses to net loans held-for-investment (ex PPP loans)	1.10 %	1.13 %	1.13 %	1.15 %	1.14 %

² Net 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

FREEDOM FINANCIAL HOLDINGS, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
DEFINITIONS AND RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES:


¹ Tangible Book Value (ex-AOCI) (non-GAAP)	As of
	December 31, 2022	September 30, 2022	June 30, 2022	March 31, 2022	December 31, 2021
Shareholder's Equity	74,946,131	72,490,029	75,473,368	79,794,028	84,158,724
Outstanding Shares at End of Period	7,184,259	7,281,606	7,319,006	7,296,063	7,349,545
Tangible Book Value (GAAP)	$ 10.43	$ 9.96	$ 10.31	$ 10.94	$ 11.45
Accumulated Other Comprehensive Income (Net) (AOCI)	(17,480,993)	(17,287,737)	(11,985,199)	(5,272,569)	651,272
AOCI per share equivalent	(2.43)	(2.37)	(1.64)	(0.72)	0.09
Tangible Book Value (ex-AOCI) (non-GAAP)	$ 12.87	$ 12.32	$ 11.95	$ 11.67	$ 11.37

² Net interest income has been computed on a fully taxable equivalent basis ("FTE") using a 21% federal income tax rate for the 2022 and 2021 periods.	Quarter-to-Date					Year-to-Date
	December 31, 2022	September 30, 2022	June 30, 2022	March 31, 2022	December 31, 2021	December 31, 2022	December 31, 2021
Income on Tax Exempt Securities	$ 146,021	$ 147,188	$ 148,374	$ 148,229	$ 150,254	$ 589,783	$ 528,259
Tax Equivalent Adjustment	38,816	39,126	39,441	39,403	39,941	156,778	140,423
Income on Tax Exempt Securities (Non-GAAP)	184,837	186,314	187,816	187,632	190,195	746,561	668,682

Average Earning Assets	927,515,881	886,799,824	840,685,799	839,099,285	855,227,658	873,803,804	812,928,001
Yield on Interest Earning Assets (GAAP)	5.09 %	4.57 %	4.06 %	4.01 %	4.03 %	4.45 %	3.89 %
Yield on Interest-Earning Assets (FTE) (Non-GAAP)	5.11 %	4.58 %	4.08 %	4.03 %	4.05 %	4.47 %	3.90 %
Net Interest Margin (NIM) (GAAP)	3.47 %	3.69 %	3.69 %	3.68 %	3.72 %	3.61 %	3.52 %
Net Interest Margin (NIM) (FTE) (Non-GAAP)	3.49 %	3.71 %	3.65 %	3.70 %	3.74 %	3.63 %	3.53 %

³Efficiency Ratio (Non-GAAP)	Quarter-to-Date					Year-to-Date
	December 31, 2022	September 30, 2022	June 30, 2022	March 31, 2022	December 31, 2021	December 31, 2022	December 31, 2021
Net Interest Income	8,117,490	8,242,627	7,614,408	7,613,406	8,024,116	31,587,931	28,516,009
Non-Interest Income	1,087,106	1,136,242	1,657,415	1,818,174	1,762,378	5,698,938	9,723,314
	9,204,596	9,378,869	9,271,823	9,431,579	9,786,494	37,286,869	38,239,322
Non-Interest Expense	5,379,623	5,551,217	6,035,762	5,819,107	6,128,059	22,785,709	24,144,816
Efficiency Ratio (Non-GAAP)	58.44 %	59.19 %	65.10 %	61.70 %	62.62 %	61.11 %	63.14 %

⁴Total Revenues (Non-GAAP)	Quarter-to-Date					Year-to-Date
	December 31, 2022	September 30, 2022	June 30, 2022	March 31, 2022	December 31, 2021	December 31, 2022	December 31, 2021
Net Interest Income	$ 8,117,490	$ 8,242,627	$ 7,614,408	$ 7,613,406	$ 8,024,116	$ 31,587,931	$ 28,516,009
Non-Interest Income	1,087,106	1,136,242	1,657,415	1,818,174	1,762,378	5,698,938	9,723,314
Total Revenue (non-GAAP)	$ 9,204,596	$ 9,378,869	$ 9,271,823	$ 9,431,579	$ 9,786,494	$ 37,286,869	$ 38,239,322