Freedom Financial Holdings Announces Earnings for Second Quarter of 2023

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Jul 28, 2023, 08:30 ET

FAIRFAX, Va., July 28, 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 $1,770,075, or $0.27 per diluted share, for the three months ended June 30, 2023. This compares to net income of $1,236,635 or $0.17 per diluted share, for the linked quarter and net income of $2,227,385 or $0.30 per diluted share for the three months ended June 30, 2022. Net income for the six months ended June 30, 2023, was $3,006,710 or $0.41 per diluted share, compared to $5,011,682 or $0.68 per diluted share for the three months, ended June 30, 2022.

Joseph J. Thomas, President, and CEO, commented, "We are encouraged by improvements in the Company's second quarter performance with pre-tax income increasing by 83.97% compared to the first quarter of 2023. We achieved continued growth of our balance sheet with steady annualized growth of loans held for investment of 11.24% and total deposits of 12.92% in the second quarter of 2023. The low loan to deposit ratio of 80.45% and the high total capital ratio of 14.31% have enabled us to continue serving the needs of our clients and growing lead relationships during a period of turmoil in the industry. Not unexpectedly in this era of rising interest rates, the net interest margin declined to 2.76% due to the higher cost of deposits. We were able to mitigate the margin compression by increasing non-interest income by 18.08% in the quarter compared to the first quarter and reducing non-interest expense by 15.92% compared to the first quarter of 2023. Considering the headwinds in deposits costs and net interest margin, the management team has launched a series of performance projects intended to increase fee-based revenues and lower non-interest expenses which will favorably impact results and further improve the efficiency ratio over the balance of 2023. The Company continues to be proactive in managing performance in uncertain times and preparing for opportunities with its strong liquidity and capital positions."

Second Quarter 2023 Highlights include:

Net income for the second quarter was $1,770,075 or $0.27 per diluted share compared to net income of $1,236,635 or $0.17 per diluted share in the linked quarter and net income of $2,227,385 or $0.30 per diluted share for the three months ending June 30, 2022.
Return on Average Assets ("ROAA") was 0.69% for the quarter ended June 30, 2023, compared to 0.51% for the linked quarter and 1.01% for the three months ended June 30, 2022.
Return on Average Equity ("ROAE") was 9.15% for the three months ended June 30, 2023, compared to 6.52% for the linked quarter and 11.44% for the three months ended June 30, 2022.
Total Assets were $1.04 billion on June 30, 2023, an increase of $56.23 million or 5.71% from total assets on December 31, 2022.
Loans held-for-investment (excluding PPP loans) increased by $19.82 million or by 2.81% during the quarter.
Uninsured deposits were 25.78% of total deposits and total available secured liquidity was 121.45% of uninsured deposits on June 30, 2023.
The tangible common equity ratio (adjusted for unrealized losses on held-to-maturity securities) was at 7.16% at the end of the quarter.
Total deposits increased by $28.23 million or by 3.23% in the second quarter. Non-interest-bearing demand deposits decreased by $5.13 million from the linked quarter to $165.54 million and represented 18.33% of total deposits on June 30, 2023.
The net interest margin² decreased in the second quarter to 2.76%, lower by 36 basis points compared to the linked quarter and lower by 89 basis points compared to the same period in 2022. 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 3.05% for the second quarter, higher by 68 basis points compared to the linked quarter and higher by 260 basis points compared to the same period in 2022, as deposit costs increased, partially offset by income from balance sheet hedges.
Non-interest income increased by 18.08% compared to the linked quarter and decreased by 32.91% compared to the same period in 2022. The increase in non-interest income in the second quarter of 2023 compared to the linked quarter was primarily due to a rebound in gain-on-sale revenue from mortgage loans. However, continued market volatility and higher yields, have led to the bank electing to retain more mortgage and SBA loans on the balance sheet in 2023.
Non-interest expense in the second quarter decreased by 15.92% compared to the linked quarter and decreased by 10.69% compared to the same period in 2022. The decrease in non-interest expense for linked and calendar quarters, was due to a combination of lower compensation expenses and occupancy costs.
The Efficiency Ratio³ was 69.02% for the quarter ended June 30, 2023, compared to 78.76% for the linked quarter and 65.10% for the same period in 2022.
Net charge offs declined in the second quarter and were 0.04% of average loans. The ratio of non-accrual loans to loans held-for-investment was 0.93% on June 30, 2023, compared to 1.23% on December 31, 2022. The ratio of non-performing assets to total assets was 0.65% on June 30, 2023, compared to 0.88% on December 31, 2022.
The Company recognized a $238,000 provision for loan losses during the second quarter and the ratio of the allowance for credit losses to loans held-for-investment was 0.98% compared to 1.01% in the linked quarter.
The Company continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 10.99%, Common Equity Tier 1 ratio of 13.52%, Tier 1 Risk Based Capital ratio of 13.52% and a Total Capital ratio of 14.37%.

Net Interest Income

The Company recorded net interest income of $6.70 million for the second quarter of 2023, lower by 6.96% compared to the linked quarter, and 12.04% lower than the same period in 2022. The net interest margin in the second quarter of 2023 was 2.76%, lower by 36 basis points compared to the linked quarter and lower by 89 basis points compared to the same period in 2022.

The following factors contributed to the changes in net interest margin during the second quarter of 2023 compared to the linked and calendar quarters:

Yields on average earning assets increased to 5.68% compared to 5.38% in the linked quarter and compared to 4.08% in 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 25 basis points to 6.00% from 5.75% in the linked quarter, while yields on investment securities increased by 37 basis points to 4.71% from 4.34% in the linked quarter. Loan yields increased by 133 basis points, while yields on investment securities increased by 193 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 68 basis points to 3.05% from 2.37% in the linked quarter, and by 260 basis points compared to the calendar quarter, due to rising rates on interest checking and money market deposit accounts and a decrease in non-interest-bearing deposits. 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 3.70 years, as of June 30, 2023.

Non-interest Income

Non-interest income was $1,112,000 for the second quarter, an increase of 18.08% when compared to the linked quarter and a decrease of 32.91% when compared to the same period in 2022. The increase in non-interest income in the second quarter compared to the linked quarter was primarily due to a rebound in gain-on-sale revenue from mortgage loans. However, continued market volatility and higher yields, has led to the bank electing to retain more mortgage and SBA loans on the balance sheet in 2023.

Total Revenue⁵

Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was lower by 4.06% compared to the linked quarter and lower by 15.77% compared to the calendar quarter in 2022, due to a combination of lower net interest income, resulting from net interest margin compression, as well as a decline in non-interest income stemming from reduced mortgage and SBA loan activity.

Non-interest Expenses

Non-interest expense in the second quarter decreased by 15.92% compared to the linked quarter and decreased by 10.69% compared to the same period in 2022. The decrease in non-interest expense for linked and calendar quarters, was due to a combination of lower compensation expenses and lower occupancy costs.

The Efficiency Ratio was 69.02% for the quarter ended June 30, 2023, compared to 78.76% for the linked quarter and 65.10% for the same period in 2022.

Asset Quality

Non-accrual loans were relatively unchanged in the second quarter at $6,776,013 or 0.93% of loans held-for-investment compared to $6,796,262 or 0.96% of loans held-for-investment at the end of the linked quarter. As of June 30, 2023, 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, 2023. 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 $6,776,013 or 0.65% of total assets as of June 30, 2023, compared to $6,796,262 or 0.67% of total assets, at the end of the linked quarter.

Following an assessment of the collectability of the loans held-for-investment at the end of the second quarter, it was determined that a $238,000 provision for loan losses was necessary to account for loan growth and changes to environmental factors. The Company booked a provision of $543,000 in the first quarter of 2023.

The Company's ratio of Allowance for Credit Losses to loans held-for-investment was 0.98% (or 0.98% of loans held-for investment excluding PPP loans) as of June 30, 2023, compared to the ratio of Allowance for Loan and Lease Losses to loans held-for-investment of 1.09% as of December 31, 2022 (or 1.10% of loans held-for-investment excluding PPP loans).

Total Assets

Total assets as of June 30, 2023, were $1.04 billion compared to $1.01 billion on March 31, 2023, and total assets of $985.06 million on December 31, 2022. Changes in major asset categories since December 31, 2022, were as follows:

Available for sale investment balances increased by $14.79 million.
Other loans held-for investment grew by $30.49 million
Deferred tax assets increased by $5.51 million, primarily due to deferred taxes on investment securities

Total Liabilities

Total liabilities as of June 30, 2023, were $963.90 million compared to total liabilities of $937.21 million on March 31, 2023, and total liabilities of $910.12 million on December 31, 2022. Total deposits were $903.20 million on June 30, 2023, compared to $874.97 million on March 31, 2023, and total deposits of $848.90 million as of December 31, 2022. Non-interest-bearing demand deposits decreased by $5.13 million during the second quarter and comprised 18.33% of total deposits at the end of the second quarter. Other interest-bearing demand deposits increased by $69.31 million, savings deposits were flat and time deposits decreased by $34.77 million during the quarter.

Stockholders' Equity and Capital

Stockholders' equity as of June 30, 2023 was $77.40 million compared to $77.26 million on March 31, 2023, and $74.95 million as of December 31, 2022. Additional paid-in capital was $58.37 million on June 30, 2023, compared to $58.36 million on March 31, 2023, and $58.24 million as of December 31, 2022. Accumulated Other Comprehensive Income ("AOCI"), which generally comprises unrealized gains and losses on available-for-sale securities and derivative positions, declined during the second quarter of 2023. Retained earnings were $37.24 million on June 30, 2023, compared to $35.47 million on March 31, 2023, and $34.11 million on December 31, 2022. Total shares issued and outstanding were 7,197,834 compared to 7,184,259 shares as of December 31, 2022. The tangible book value of the Company's common stock on June 30, 2023, was $10.61 per share compared to $10.43 per share on December 31, 2022. Excluding AOCI losses/gains, the tangible book value of the Company's common stock on June 30, 2023, was $13.11 per share compared to $12.87 per share on December 31, 2022.

As of June 30, 2023, 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, 2023, and December 31, 2022, were as follows:

	June 30, 2023	December 31, 2022
Total Capital Ratio	14.36 %	14.28 %
Tier 1 Capital Ratio	13.52 %	13.37 %
Common Equity Tier 1 Capital Ratio	13.52 %	13.37 %
Leverage Ratio	10.99 %	11.32 %

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 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. 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)
	June 30,	March 31,	December 31,
	2023	2023	2022
ASSETS
Cash and Due from Banks	$ 3,708,015	$ 2,696,734	$ 2,099,062
Interest Bearing Deposits with Banks	29,896,249	35,210,460	32,674,953
Securities Available-for-Sale	196,348,060	190,848,972	181,558,037
Securities Held-to-Maturity	20,819,794	16,846,320	17,096,010
Restricted Stock Investments	3,750,400	3,744,910	3,889,200
Loans Held for Sale	6,917,461	4,813,710	5,064,385
PPP Loans Held for Investment	1,916,844	5,415,614	5,829,662
Other Loans Held for Investment	724,666,359	704,841,433	694,173,347
Allowance for Credit Losses	(7,107,804)	(7,169,699)	(7,614,120)
Net Loans	719,475,399	703,087,348	692,388,889
Bank Premises and Equipment, net	945,786	983,882	989,072
Accrued Interest Receivable	3,523,829	3,591,624	3,784,076
Deferred Tax Asset	7,496,829	7,513,426	1,982,776
Bank-Owned Life Insurance	26,350,770	26,169,382	26,248,974
Right of Use Asset, net	2,207,805	2,389,964	1,736,285
Other Assets	19,857,624	16,564,590	15,551,415
Total Assets	$ 1,041,298,020	$ 1,014,461,322	$ 985,063,133
LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
Demand Deposits
Non-interest Bearing	$ 165,540,044	$ 170,666,205	$ 187,416,628
Interest Bearing	506,957,179	437,648,342	409,760,573
Savings Deposits	5,664,940	6,845,210	5,977,828
Time Deposits	225,037,517	259,806,734	245,840,048
Total Deposits	903,199,680	874,966,491	848,995,078
Federal Home Loan Bank Advances	20,000,000	20,000,000	25,000,000
Other Borrowings	2,834,173	5,415,614	5,826,298
Subordinated Debt (Net of Issuance Costs)	19,733,756	19,714,275	19,674,794
Accrued Interest Payable	1,935,957	1,857,047	1,265,796
Lease Liability	2,128,300	2,508,751	1,862,773
Other Liabilities	14,067,030	12,743,118	7,492,264
Total Liabilities	$ 963,898,897	$ 937,205,296	$ 910,117,002
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized:
0 Shares Issued and Outstanding, June 30, March 31, 2023 and December 31, 2022
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:
6,524,834, 6,541,415 and 6,516,000 Shares Issued and Outstanding
at June 30, 2023, March 31, 2023 and December 31, 2022 respectively
(Includes 165,863, 165,863 and 93,003 Unvested Shares on June 30, 2023, March 31, 2023 and
December 31, 2022 respectively)	65,248	65,415	65,160
Non-Voting Common Stock:
673,000, 673,000, 673,000 Shares Issued and Outstanding at June 30, 2023, March 31, 2023 and
December 31, 2022 respectively)	6,730	6,730	6,730
Additional Paid-in Capital	58,369,052	58,359,940	58,241,451
Accumulated Other Comprehensive Income, Net	(18,280,904)	(16,644,981)	(17,480,993)
Retained Earnings	37,238,997	35,468,922	34,113,783
Total Stockholders' Equity	77,399,123	77,256,026	74,946,131
Total Liabilities and Stockholders' Equity	$ 1,041,298,020	$ 1,014,461,322	$ 985,063,133

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, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Interest Income
Interest and Fees on Loans	$ 10,857,368	$ 7,159,610	$ 20,840,105	$ 14,301,609
Interest on Investment Securities	2,522,682	1,278,759	4,688,405	2,424,136
Interest on Deposits with Other Banks	464,321	74,550	765,227	90,146
Total Interest Income	13,844,371	8,512,919	26,293,737	16,815,891
Interest Expense
Interest on Deposits	6,796,570	673,396	11,667,577	1,092,184
Interest on Borrowings	350,096	225,115	729,962	495,894
Total Interest Expense	7,146,666	898,511	12,397,539	1,588,078

Net Interest Income	6,697,705	7,614,408	13,896,198	15,227,813
Provision for Loan Losses	(238,000)	(375,000)	(781,000)	(539,000)
Net Interest Income After
Provision for Loan Losses	6,459,705	7,239,408	13,115,198	14,688,813
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue	769,649	986,160	1,148,207	2,024,138
SBA Gain-on-Sale Revenue	-	263,806	-	529,830
Service Charges and Other Income	94,428	175,853	249,016	477,380
Gain on Sale of Securities	-	-	-	(131)
Servicing Income	64,688	57,917	130,103	110,065
Swap Fee Income	-	-	-	-
Increase in Cash Surrender Value of Bank-
owned Life Insurance	183,235	173,679	526,374	334,307
Total Non-interest Income	1,112,000	1,657,415	2,053,700	3,475,589
Non-Interest Expenses
Officer and Employee Compensation
and Benefits	3,469,477	4,005,945	7,618,689	8,009,266
Occupancy Expense	38,488	304,153	366,407	636,519
Equipment and Depreciation Expense	148,901	183,315	330,396	355,421
Insurance Expense	136,555	74,983	291,622	145,609
Professional Fees	325,405	323,647	675,485	571,976
Data and Item Processing	323,906	342,340	643,906	607,965
Advertising	133,907	114,966	252,386	220,335
Franchise Taxes and State Assessment Fees	290,049	224,636	572,789	424,734
Mortgage Fees and Settlements	141,333	129,210	200,619	235,059
Other Operating Expense	382,577	332,567	849,889	647,983
Total Non-interest Expenses	5,390,599	6,035,762	11,802,188	11,854,868
Income Before Income Taxes	2,181,106	2,861,061	3,366,710	6,309,535
Income Tax Expense/(Benefit)	411,031	633,677	360,000	1,297,853
Net Income	$ 1,770,075	$ 2,227,384.65	$ 3,006,710	$ 5,011,682
Earnings per Common Share - Basic	$ 0.27	$ 0.31	$ 0.41	$ 0.69
Earnings per Common Share - Diluted	$ 0.27	$ 0.30	$ 0.41	$ 0.68
Weighted-Average Common Shares
Outstanding - Basic	6,641,930	7,290,417	7,290,770	7,313,766
Weighted-Average Common Shares
Outstanding - Diluted	6,651,241	7,312,200	7,318,239	7,343,634

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
	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022	June 30, 2022
Interest Income
Interest and Fees on Loans	$ 10,857,368	$ 9,982,737	$ 9,503,228	$ 8,408,971	$ 7,159,610
Interest on Investment Securities	2,522,682	2,165,723	2,061,298	1,626,322	1,278,759
Interest on Deposits with Other Banks	464,321	300,906	339,592	171,644	74,550
Total Interest Income	13,844,371	12,449,366	11,904,118	10,206,937	8,512,919

Interest Expense
Interest on Deposits	6,796,570	4,871,008	3,685,412	1,735,027	673,396
Interest on Borrowings	350,096	379,866	101,216	229,283	225,115
Total Interest Expense	7,146,666	5,250,874	3,786,628	1,964,310	898,511

Net Interest Income	6,697,705	7,198,492	8,117,490	8,242,627	7,614,408
Provision for Loan Losses	(238,000)	(543,000)	(327,000)	(382,000)	(375,000)
Net Interest Income after
Provision for Loan Losses	6,459,705	6,655,492	7,790,490	7,860,627	7,239,408
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue	769,649	378,558	357,654	710,149	986,160
SBA Gain-on-Sale Revenue	-	-	404,409	63,727	263,806
Service Charges and Other Income	94,428	154,588	92,235	52,755	175,853
Gains on Sale of Securities	-	-	20,503	10,600	-
Servicing Income	64,688	65,415	53,332	54,792	57,917
Swap Fee Income	-	-	-	68,404	-
Increase in Cash Surrender Value of Bank-
owned Life Insurance	183,235	343,140	158,972	175,815	173,679
Total Non-interest Income	1,112,000	941,701	1,087,106	1,136,243	1,657,415


Total Revenue⁵	$ 7,809,705	$ 8,140,192	$ 9,204,596	$ 9,378,870	$ 9,271,823

Non-Interest Expenses
Officer and Employee Compensation
and Benefits	3,469,477	4,149,212	3,495,260	3,655,913	4,005,945
Occupancy Expense	38,488	327,919	318,462	311,070	304,153
Equipment and Depreciation Expense	148,901	181,495	179,679	170,070	183,315
Insurance Expense	136,555	155,068	140,926	76,563	74,983
Professional Fees	325,405	350,080	238,732	251,597	323,647
Data and Item Processing	323,906	320,000	304,767	299,501	342,340
Advertising	133,907	118,479	124,450	104,119	114,966
Franchise Taxes and State Assessment Fees	290,049	282,739	282,796	282,912	224,636
Mortgage Fees and Settlements	141,333	59,286	23,156	97,495	129,210
Other Operating Expense	382,577	467,311	271,396	301,977	332,567

Total Non-interest Expenses	5,390,599	6,411,589	5,379,623	5,551,217	6,035,762
Income before Income Taxes	2,181,106	1,185,604	3,497,972	3,445,652	2,861,061

Income Tax Expense	411,031	(51,031)	636,033	755,702	633,677

Net Income	$ 1,770,075	$ 1,236,635	$ 2,861,939	$ 2,689,950	$ 2,227,385
Earnings per Common Share - Basic	$ 0.27	$ 0.17	$ 0.40	$ 0.37	$ 0.31
Earnings per Common Share - Diluted	$ 0.27	$ 0.17	$ 0.39	$ 0.37	$ 0.30
Weighted-Average Common Shares
Outstanding - Basic	6,641,930	7,280,803	7,238,807	7,271,784	7,290,417
Weighted-Average Common Shares
Outstanding - Diluted	6,651,241	7,317,805	7,252,669	7,285,786	7,312,200

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

	Three Months Ended			Three Months Ended			Three Months Ended			Three Months Ended			Three Months Ended
	June 30, 2023	Income/		March 31, 2023	Income/		December 31, 2022	Income/		September 30, 2022	Income/		June 30, 2022	Income/
	Average Balance	Expense	Yield	Average Balance	Expense	Yield	Average Balance	Expense	Yield	Average Balance	Expense	Yield	Average Balance	Expense	Yield
Assets
Cash	$ 36,370,275	$ 464,321	5.12 %	$ 31,062,495	$ 300,906	3.93 %	$ 35,596,385	$ 339,592	3.78 %	$ 37,133,361	$ 171,644	1.83 %	$ 35,469,783	$ 74,550	0.84 %

Investments (Tax Exempt)	21,202,088	187,739		21,182,371	182,470		20,664,285	184,800		21,615,440	186,314		22,199,648	187,816
Investments (Taxable)	197,080,849	2,374,368		184,686,055	2,021,572		182,096,499	1,915,306		179,086,818	1,479,134		167,905,374	1,130,385
Total Investments	218,282,937	2,562,107	4.71 %	205,868,426	2,204,042	4.34 %	202,760,784	2,100,106	4.11 %	200,702,258	1,665,447	3.29 %	190,105,022	1,318,201	2.78 %

Total Loans	726,201,568	10,857,368	6.00 %	703,610,368	9,982,737	5.75 %	689,158,712	9,503,228	5.47 %	648,964,205	8,408,971	5.14 %	615,110,994	7,159,610	4.67 %

Earning Assets	980,854,780	13,883,796	5.68 %	940,541,289	12,487,685	5.38 %	927,515,881	11,942,926	5.11 %	886,799,824	10,246,063	4.58 %	840,685,799	8,552,361	4.08 %



Assets	$ 1,035,350,077			$ 988,804,262			$ 969,662,029			$ 929,265,436			$ 880,810,523

Liabilities
Interest Checking	$ 197,224,144	$ 1,892,301	3.85 %	$ 154,625,978	$ 1,320,093	3.46 %	$ 130,004,364	$ 862,014	2.63 %	$ 132,342,702	$ 458,605	1.37 %	$ 128,008,728	$ 134,727	0.42 %
Money Market	282,452,498	2,308,846	3.28 %	261,801,221	2,036,801	3.16 %	240,285,109	1,383,701	2.28 %	216,851,258	581,082	1.06 %	203,094,067	180,932	0.36 %
Savings	5,678,056	1,586	0.11 %	6,935,212	2,326	0.14 %	6,108,935	3,067	0.20 %	6,659,935	2,119	0.13 %	8,303,586	2,147	0.10 %
Time Deposits	239,305,940	2,593,837	4.35 %	248,679,942	1,511,787	2.47 %	261,984,431	1,436,630	2.18 %	218,365,002	693,221	1.26 %	186,130,419	355,590	0.77 %
Interest Bearing Deposits	724,660,638	6,796,570	3.76 %	672,042,353	4,871,007	2.94 %	638,382,839	3,685,412	2.29 %	574,218,895	1,735,027	1.20 %	525,536,800	673,396	0.51 %

Borrowings	$ 45,865,355	$ 350,096	3.06 %	$ 49,125,142	$ 379,866	3.14 %	$ 46,940,688	$ 101,216	0.86 %	$ 53,279,949	$ 229,283	1.72 %	$ 56,154,130	$ 225,115	1.61 %

Interest Bearing Liabilities	770,525,994	7,146,666	3.72 %	721,167,495	5,250,873	2.95 %	685,323,527	3,786,628	2.19 %	627,498,844	1,964,310	1.24 %	581,690,931	898,511	0.62 %

Non Interest Bearing Deposits	$ 169,160,626			$ 176,477,412			$ 202,342,666			$ 215,426,363			$ 212,429,933

Cost of Funds			3.05 %			2.37 %			1.69 %			0.92 %			0.45 %

Net Interest Margin²		$ 6,737,130	2.76 %		$ 7,236,812	3.12 %		$ 8,156,298	3.49 %		$ 8,281,753	3.71 %		$ 7,653,850	3.65 %
Shareholders Equity	$ 77,557,760			$ 76,928,018			$ 73,185,633			$ 77,295,762			$ 78,112,151

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			Six Months Ended			Six Months Ended
	June 30, 2023	Income /		June 30, 2022	Income /		June 30, 2023	Income /		June 30, 2022	Income /
	Average Balance	Expense	Yield	Average Balance	Expense	Yield	Average Balance	Expense	Yield	Average Balance	Expense	Yield
Assets
Cash	$ 36,370,275	$ 464,321	5.12 %	$ 35,469,783	$ 74,550	0.84 %	$ 33,731,047	$ 765,227	4.57 %	$ 37,909,262	$ 90,146	0.48 %

Investments (Tax Exempt)	21,202,088	187,739		22,199,648	187,816		21,192,284	370,209		22,762,366	375,447
Investments (Taxable)	197,080,849	2,374,368		167,905,374	1,130,385		190,917,692	4,395,940		166,947,911	2,127,533
Total Investments	218,282,937	2,562,107	4.71 %	190,105,021	1,318,200	2.78 %	212,109,976	4,766,149	4.53 %	189,710,277	2,502,980	2.66 %

Total Loans	726,201,568	10,857,368	6.00 %	615,110,994	7,159,610	4.67 %	714,968,375	20,840,105	5.88 %	612,277,385	14,301,609	4.71 %

Earning Assets	980,854,780	13,883,796	5.68 %	840,685,799	8,552,361	4.08 %	960,809,398	26,371,481	5.53 %	839,896,924	16,894,735	4.06 %

Assets	$ 1,035,350,077			$ 880,810,523			$ 1,012,205,749			$ 878,508,335

Liabilities
Interest Checking	$ 197,224,144	$ 1,892,301	3.85 %	$ 128,008,728	$ 134,727	0.42 %	$ 176,021,842	3,212,395	3.68 %	$ 122,562,966	182,973	0.30 %
Money Market	282,452,498	2,308,846	3.28 %	203,094,067	180,932	0.36 %	272,204,800	4,028,641	2.98 %	201,296,855	270,448	0.27 %
Savings	5,678,056	1,586	0.11 %	8,303,586	2,147	0.10 %	6,303,161	3,912	0.13 %	7,482,395	3,872	0.10 %
Time Deposits	239,305,940	2,593,837	4.35 %	186,130,419	355,590	0.77 %	243,898,399	4,422,630	3.66 %	180,103,288	634,891	0.71 %
Interest Bearing Deposits	724,660,638	6,796,570	3.76 %	525,536,800	673,396	0.51 %	698,428,202	11,667,578	3.37 %	511,445,504	1,092,184	0.43 %

Borrowings	$ 45,865,355	350,096	3.06 %	$ 56,154,130	225,115	1.61 %	$ 47,486,244	729,962	3.10 %	63,851,619	495,894	1.57 %

Interest Bearing Liabilities	770,525,994	7,146,666	3.72 %	581,690,931	898,511	0.62 %	745,914,445	12,397,540	3.35 %	575,297,123	1,588,078	0.56 %

Non Interest Bearing Deposits	$ 169,160,626			$ 212,429,933			$ 172,683,492			$ 212,870,074

Cost of Funds			3.05 %			0.45 %			2.72 %			0.41 %

Net Interest Margin²		$ 6,737,130	2.76 %		$ 7,653,850	3.65 %		$ 13,973,941	2.93 %		$ 15,306,657	3.68 %
Shareholders Equity	$ 77,557,760			$ 78,112,151			$ 77,244,629			$ 80,761,461
ROAA	0.69 %			1.01 %			0.60 %			1.15 %
ROAE	9.15 %			11.44 %			7.85 %			12.51 %

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	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022	June 30, 2022
Loans held-for-investment to Deposits	80.45 %	81.18 %	82.45 %	79.19 %	83.49 %
Income Statement Ratios (Quarterly)
Return on Average Assets (ROAA)	0.69 %	0.51 %	1.17 %	1.15 %	1.01 %
Return on Average Equity (ROAE)	9.15 %	6.52 %	15.51 %	13.81 %	11.44 %
Efficiency Ratio³	69.02 %	78.76 %	58.44 %	59.19 %	65.10 %
Net Interest Margin²	2.76 %	3.12 %	3.49 %	3.71 %	3.65 %
Yield on Average Earning Assets	5.68 %	5.38 %	5.11 %	4.58 %	4.08 %
Yield on Securities	4.71 %	4.34 %	4.11 %	3.29 %	2.78 %
Yield on Loans	6.00 %	5.75 %	5.47 %	5.14 %	4.67 %
Cost of Funds	3.05 %	2.37 %	1.69 %	0.92 %	0.45 %
Noninterest income to Total Revenue	14.24 %	11.57 %	11.81 %	12.11 %	17.88 %
Liquidity Ratios⁴
Uninsured Deposits to Total Deposits	25.78 %	21.77 %	27.05 %	30.57 %	36.14 %
Total Liquidity⁶ to Uninsured Deposits	120.82 %	149.16 %	127.88 %	119.04 %	103.98 %
Total Liquidity to Unfunded Commitments, CDs and Borrowings maturing in next 30 days	213.43 %	206.92 %	190.69 %	231.02 %	203.89 %
Tangible Common Equity Ratio	7.43 %	7.62 %	7.61 %	7.52 %	8.43 %
Tangible Common Equity Ratio (adjusted for unrealized losses on HTM securities)	7.16 %	7.38 %	7.36 %	7.23 %	8.14 %

Available -for-Sale securities (as % of total securities)	90.41 %	91.89 %	91.39 %	91.17 %	90.47 %
Per Share Data
Tangible Book Value	$10.75	$10.71	$10.43	$9.96	$10.31
Tangible Book Value (ex AOCI)¹	$13.29	$13.02	$12.87	$12.33	$11.95
Share Price Data
Closing Price	$10.56	$13.95	$14.57	$14.60	$14.80
Book Value Multiple	98 %	130 %	140 %	147 %	144 %
Common Stock Data
Outstanding Shares at End of Period	7,197,834	7,214,466	7,184,259	7,281,606	7,319,006
Weighted Average shares outstanding, basic	6,641,930	7,280,803	7,238,807	7,271,784	7,290,417
Weighted Average shares outstanding, diluted	6,651,241	7,317,805	7,252,669	7,285,786	7,312,200
Capital Ratios (Bank Only)
Tier 1 Leverage ratio	10.99 %	11.30 %	11.32 %	11.59 %	11.95 %
Common Equity Tier 1 ratio	13.52 %	13.47 %	13.37 %	13.62 %	13.84 %
Tier 1 Risk Based Capital ratio	13.52 %	13.47 %	13.37 %	13.62 %	13.84 %
Total Risk Based Capital ratio	14.37 %	14.34 %	14.28 %	14.55 %	14.77 %
Credit Quality
Net Charge-offs to Average Loans	0.04 %	0.06 %	0.02 %	0.00 %	0.00 %
Total Non-performing Loans to loans held-for-investment	0.93 %	0.96 %	1.23 %	1.31 %	1.38 %
Total Non-performing Assets to Total Assets	0.65 %	0.67 %	0.88 %	0.90 %	0.97 %
Nonaccrual Loans to loans held-for-investment	0.93 %	0.96 %	1.23 %	1.31 %	1.38 %
Provision for Loan and Lease Losses	$238,000	$543,000	$327,000	$382,000	$375,000
Allowance for Loan and Lease Losses to net loans held-for-investment	0.98 %	1.01 %	1.09 %	1.12 %	1.11 %
Allowance for Loan and Lease Losses to net loans held-for-investment (ex PPP loans)	0.98 %	1.02 %	1.10 %	1.13 %	1.13 %

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
⁶ Total Liquidity is the sum of cash, cash balances at banks, unencumbered available-for-sale securities and secured borrowing availability at the Federal Reserve and the Federal Home Loan Bank.

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
	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022	June 30, 2022
Shareholder's Equity	$ 77,399,123	$ 77,256,026	$ 74,946,131	$ 72,490,029	$ 75,473,368
Outstanding Shares at End of Period	7,197,834	7,214,466	7,184,259	7,281,606	7,319,006
Tangible Book Value (GAAP)	$ 10.75	$ 10.71	$ 10.43	$ 9.96	$ 10.31
Accumulated Other Comprehensive Income (Net) (AOCI)	$ (18,280,904)	$ (16,644,981)	$ (17,480,993)	$ (17,287,737)	$ (11,985,199)
AOCI per share equivalent	(2.54)	(2.31)	(2.43)	(2.37)	(1.64)
Tangible Book Value (ex-AOCI) (non-GAAP)	$ 13.29	$ 13.02	$ 12.87	$ 12.32	$ 11.95

² Net interest income has been computed on a fully taxable equivalent basis ("FTE") using a 21% federal income tax rate for the 2023 and 2022 periods.		Quarter-to-Date				Year-to-Date
	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022	June 30, 2022	June 30, 2023	June 30, 2022
Income on Tax Exempt Securities	$ 148,314	$ 144,151	$ 146,021	$ 147,188	$ 148,374	$ 292,465	$ 296,603
Tax Equivalent Adjustment	39,425	38,319	38,816	39,126	39,441	77,744	$ 78,844
Income on Tax Exempt Securities (Non-GAAP)	$ 187,739	$ 182,470	$ 184,837	$ 186,314	$ 187,816	$ 370,209	$ 375,447

Average Earning Assets	$ 980,854,780	$ 940,541,289	$ 927,515,881	$ 886,799,824	$ 840,685,799	$ 960,809,398	$ 839,896,924
Yield on Interest Earning Assets (GAAP)	5.66 %	5.37 %	5.09 %	4.57 %	4.06 %	5.78 %	4.18 %
Yield on Interest-Earning Assets (FTE) (Non-GAAP)	5.68 %	5.38 %	5.11 %	4.58 %	4.08 %	5.53 %	4.06 %
Net Interest Margin (NIM) (GAAP)	2.74 %	3.10 %	3.47 %	3.69 %	3.69 %	2.83 %	3.74 %
Net Interest Margin (NIM) (FTE) (Non-GAAP)	2.76 %	3.12 %	3.49 %	3.71 %	3.65 %	2.93 %	3.68 %

³Efficiency Ratio (Non-GAAP)		Quarter-to-Date				Year-to-Date
	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022	June 30, 2022	June 30, 2023	June 30, 2022
Net Interest Income	$ 6,697,705	$ 7,198,492	$ 8,117,490	$ 8,242,627	$ 7,614,408	$ 13,896,198	$ 15,227,813
Non-Interest Income	1,112,000	941,701	1,087,106	1,136,242	1,657,415	2,053,700	3,475,589
Total Revenue	$ 7,809,705	$ 8,140,193	$ 9,204,596	$ 9,378,869	$ 9,271,823	$ 15,949,898	$ 18,703,403
Non-Interest Expense	5,390,599	6,411,589	5,379,623	5,551,217	6,035,762	11,802,188	11,854,868
Efficiency Ratio (Non-GAAP)	69.02 %	78.76 %	58.44 %	59.19 %	65.10 %	74.00 %	63.38 %

⁴Liquidity Ratios (Non-GAAP)			Quarter-to-Date
	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022	June 30, 2022
Available-for-Sale Securities (as % of total securities)	90.41 %	91.89 %	91.39 %	91.17 %	90.47 %
Uninsured Deposits to Total Deposits	25.78 %	21.77 %	27.05 %	30.57 %	36.14 %
Total Liquidity to Uninsured Deposits	120.82 %	149.16 %	127.88 %	119.04 %	103.98 %
Total Liquidity to Unfunded Commitments, CDs and Borrowings maturing in next 30 days	213.43 %	206.92 %	190.69 %	231.02 %	203.89 %
Tangible Common Equity Ratio	7.43 %	7.62 %	7.61 %	7.52 %	8.43 %
Tangible Common Equity Ratio(adjusted for unrealized losses	7.16 %	7.38 %	7.36 %	7.23 %	8.14 %
on HTM Securities)

⁵Total Revenues (Non-GAAP)		Quarter-to-Date				Year-to-Date
	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022	June 30, 2022	June 30, 2023	June 30, 2022
Net Interest Income	$ 6,697,705	$ 7,198,492	$ 8,117,490	$ 8,242,627	$ 7,614,408	$ 13,896,198	$ 15,227,813
Non-Interest Income	1,112,000	941,701	1,087,106	1,136,242	1,657,415	2,053,700	3,475,589
Total Revenue (non-GAAP)	$ 7,809,705	$ 8,140,193	$ 9,204,596	$ 9,378,869	$ 9,271,823	$ 15,949,898	$ 18,703,403