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Freedom Financial Holdings Announces Earnings for Fourth Quarter and Full Year 2022
Freedom Financial Holdings Announces Earnings for Fourth Quarter and Full Year 2022
PR Newswire
FAIRFAX, Va., Jan. 27, 2023
FAIRFAX, Va., Jan. 27, 2023 /PRNewswire/ — Freedom Financial Holdings (OTCQX: FDVA), (the “Company” or “Freedom”), the hold…
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Freedom Financial Holdings Announces Earnings for Fourth Quarter and Full Year 2022
PR Newswire
FAIRFAX, Va., Jan. 27, 2023
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, | September 30, | June 30, | March 31, | December 31, | ||||||||||||
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, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||
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 % | |||||||||
3 Efficiency Ratio (Non-GAAP) | Quarter-to-Date | Year-to-Date | ||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||
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 % | |||||||||
4 Total Revenues (Non-GAAP) | Quarter-to-Date | Year-to-Date | ||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||
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 | |||||||||
Contact:
Joseph J. Thomas
President & Chief Executive Officer
703-667-4161: Phone
jthomas@freedom.bank: Email
View original content to download multimedia:https://www.prnewswire.com/news-releases/freedom-financial-holdings-announces-earnings-for-fourth-quarter-and-full-year-2022-301732119.html
SOURCE Freedom Financial Holdings
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Das: Is A Full-Blown Global Banking Crisis In The Offing?
Das: Is A Full-Blown Global Banking Crisis In The Offing?
Authored by Styajit Das via NewIndianExpress.com,
If everything is fine, then why…
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Authored by Styajit Das via NewIndianExpress.com,
If everything is fine, then why are US banks borrowing billions at punitive rates at the discount window... a larger amount than in 2008/9?
Financial crashes like revolutions are impossible until they are inevitable. They typically proceed in stages. Since central banks began to increase interest rates in response to rising inflation, financial markets have been under pressure.
In 2022, there was the crypto meltdown (approximately $2 trillion of losses).
The S&P500 index fell about 20 percent. The largest US technology companies, which include Apple, Microsoft, Alphabet and Amazon, lost around $4.6 trillion in market value The September 2022 UK gilt crisis may have cost $500 billion. 30 percent of emerging market countries and 60 percent of low-income nations face a debt crisis. The problems have now reached the financial system, with US, European and Japanese banks losing around $460 billion in market value in March 2023.
While it is too early to say whether a full-fledged financial crisis is imminent, the trajectory is unpromising.
***
The affected US regional banks had specific failings. The collapse of Silicon Valley Bank ("SVB") highlighted the interest rate risk of financing holdings of long-term fixed-rate securities with short-term deposits. SVB and First Republic Bank ("FRB") also illustrate the problem of the $250,000 limit on Federal Deposit Insurance Corporation ("FDIC") coverage. Over 90 percent of failed SVB and Signature Bank as well as two-thirds of FRB deposits were uninsured, creating a predisposition to a liquidity run in periods of financial uncertainty.
The crisis is not exclusively American. Credit Suisse has been, to date, the highest-profile European institution affected. The venerable Swiss bank -- which critics dubbed 'Debit Suisse' -- has a troubled history of banking dictators, money laundering, sanctions breaches, tax evasion and fraud, shredding documents sought by regulators and poor risk management evidenced most recently by high-profile losses associated with hedge fund Archegos and fintech firm Greensill. It has been plagued by corporate espionage, CEO turnover and repeated unsuccessful restructurings.
In February 2023, Credit Suisse announced an annual loss of nearly Swiss Franc 7.3 billion ($7.9 billion), its biggest since the financial crisis in 2008. Since the start of 2023, the bank's share price had fallen by about 25 percent. It was down more than 70 percent over the last year and nearly 90 percent over 5 years. Credit Suisse wealth management clients withdrew Swiss Franc 123 billion ($133 billion) of deposits in 2022, mostly in the fourth quarter.
The categoric refusal -- "absolutely not" -- of its key shareholder Saudi National Bank to inject new capital into Credit Suisse precipitated its end. It followed the announcement earlier in March that fund manager Harris Associates, a longest-standing shareholder, had sold its entire stake after losing patience with the Swiss Bank’s strategy and questioning the future of its franchise.
While the circumstances of individual firms exhibit differences, there are uncomfortable commonalities - interest rate risk, uninsured deposits and exposure to loss of funding.
***
Banks globally increased investment in high-quality securities -- primarily government and agency backed mortgage-backed securities ("MBS"). It was driven by an excess of customer deposits relative to loan demand in an environment of abundant liquidity. Another motivation was the need to boost earnings under low-interest conditions which were squeezing net interest margin because deposit rates were largely constrained at the zero bound. The latter was, in part, driven by central bank regulations which favour customer deposit funding and the risk of loss of these if negative rates are applied.
Higher rates resulted in unrealised losses on these investments exceeding $600 billion as at end 2022 at
Federal Deposit Insurance Corporation-insured US banks. If other interest-sensitive assets are included, then the loss for American banks alone may be around $2,000 billion. Globally, the total unrealised loss might be two to three times that.
Pundits, most with passing practical banking experience, have criticised the lack of hedging. The reality is that eliminating interest rate risk is costly and would reduce earnings. While SVB's portfolio's duration was an outlier, banks routinely invest in 1- to 5-year securities and run some level of the resulting interest rate exposure.
Additional complexities inform some investment portfolios. Japanese investors have large holdings of domestic and foreign long-maturity bonds. The market value of these fixed-rate investments have fallen. While Japanese short-term rates have not risen significantly, rising inflationary pressures may force increases that would reduce the margin between investment returns and interest expense reducing earnings.
It is unclear how much of the currency risk on these holdings of Japanese investors is hedged. A fall in the dollar, the principal denomination of these investments, would result in additional losses. The announcement by the US Federal Reserve ("the Fed") of coordinated action with other major central banks (Canada, England, Japan, Euro-zone and Switzerland) to provide US dollar liquidity suggests ongoing issues in hedging these currency exposures.
Banking is essentially a confidence trick because of the inherent mismatch between short-term deposits and longer-term assets. As the rapid demise of Credit Suisse highlights, strong capital and liquidity ratios count for little when depositors take flight.
Banks now face falling customer deposits as monetary stimulus is withdrawn, the build-up of savings during the pandemic is drawn down and the economy slows. In the US, deposits are projected to decline by up to 6 percent. Financial instability and apprehension about the solvency of individual institutions can, as recent experience corroborates, result in bank runs.
***
The fact is that events have significantly weakened the global banking system. A 10 percent loss on bank bond holdings would, if realised, decrease bank shareholder capital by around a quarter. This is before potential loan losses, as higher rates affect interest-sensitive sectors of the economy, are incorporated.
One vulnerable sector is property, due to high levels of leverage generally employed.
House prices are falling albeit from artificially high pandemic levels. Many households face financial stress due to high mortgage debt, rising repayments, cost of living increases and lagging real income. Risks in commercial real estate are increasing. The construction sector globally shows sign of slowing down. Capital expenditure is decreasing because of uncertainty about future prospects. Higher material and energy costs are pushing up prices further lowering demand.
Heavily indebted companies, especially in cyclical sectors like non-essential goods and services and many who borrowed heavily to get through the pandemic will find it difficult to repay debt. The last decade saw an increase in leveraged purchases of businesses. The value of outstanding US leveraged loans used in these transactions nearly tripled from $500 billion in 2010 to around $1.4 trillion as of August 2022, comparable to the $1.5 trillion high-yield bond market. There were similar rises in Europe and elsewhere.
Business bankruptcies are increasing in Europe and the UK although they fell in the US in 2022. The effects of higher rates are likely to take time to emerge due to staggered debt maturities and the timing of re-pricing. Default rates are projected to rise globally resulting in bank bad debts, reduced earnings and erosion of capital buffers.
***
There is a concerted effort by financial officials and their acolytes to reassure the population and mainly themselves of the safety of the financial system. Protestations of a sound banking system and the absence of contagion is an oxymoron. If the authorities are correct then why evoke the ‘systemic risk exemption’ to guarantee all depositors of failed banks? If there is liquidity to meet withdrawals then why the logorrhoea about the sufficiency of funds? If everything is fine, then why have US banks borrowed $153 billion at a punitive 4.75% against collateral at the discount window, a larger amount than in 2008/9? Why the compelling need for authorities to provide over $1 trillion in money or force bank mergers?
John Kenneth Galbraith once remarked that "anyone who says he won't resign four times, will". In a similar vein, the incessant repetition about the absence of any financial crisis suggests exactly the opposite.
***
The essential structure of the banking is unstable, primarily because of its high leverage where around $10 of equity supports $100 of assets. The desire to encourage competition and diversity, local needs, parochialism and fear of excessive numbers of systemically important and 'too-big-to-fail' institutions also mean that there are too many banks.
There are over 4,000 commercial banks in the US insured by the FDIC with nearly $24 trillion in assets, most of them small or mid-sized. Germany has around 1,900 banks including 1,000 cooperative banks, 400 Sparkassen, and smaller numbers of private banks and Landesbanken. Switzerland has over 240 banks with only four (now three) major institutions and a large number of cantonal, regional and savings banks.
Even if they were adequately staffed and equipped, managers and regulators would find it difficult to monitor and enforce rules. This creates a tendency for 'accidents' and periodic runs to larger banks.
Deposit insurance is one favoured means of ensuring customer safety and assured funding. But that entails a delicate balance between consumer protection and moral hazard - concerns that it might encourage risky behaviour. There is the issue of the extent of protection.
In reality, no deposit insurance system can safeguard a banking system completely, especially under conditions of stress. It would overwhelm the sovereign's balance sheet and credit. Banks and consumers would ultimately have to bear the cost.
Deposit insurance can have cross-border implications. Thought bubbles like extending FDIC deposit coverage to all deposits for even a limited period can transmit problems globally and disrupt currency markets. If the US guarantees all deposits, then depositors might withdraw money from banks in their home countries to take advantage of the scheme setting off an international flight of capital. The movement of funds would aggravate any dollar shortages and complicate hedging of foreign exchange exposures. It may push up the value of the currency inflicting losses on emerging market borrowers and reducing American export competitiveness.
In effect, there are few if any neat, simple answers.
***
This means the resolution of any banking crisis relies, in practice, on private sector initiatives or public bailouts.
The deposit of $30 billion at FRB by a group of major banks is similar to actions during the 1907 US banking crisis and the 1998 $3.6 billion bailout of hedge fund Long-Term Capital Management. Such transactions, if they are unsuccessful, risk dragging the saviours into a morass of expanding financial commitments as may be the case with FRB.
A related option is the forced sale or shotgun marriage. It is unclear how given systemic issues in banking, the blind lending assistance to the deaf and dumb strengthens the financial system. Given the ignominious record of many bank mergers, it is puzzling why foisting a failing institution onto a healthy rival constitutes sound policy.
HSBC, which is purchasing SVB's UK operations, has a poor record of acquisitions that included Edmond Safra's Republic Bank which caused it much embarrassment and US sub-prime lender Household International just prior to the 2008 crisis. The bank's decision to purchase SVB UK for a nominal £1 ($1.20) was despite a rushed due diligence and admissions that it was unable to fully analyse 30 percent of the target's loan book. It was justified as 'strategic' and the opportunity to win new start-up clients.
On 19 March 2023, Swiss regulators arranged for a reluctant UBS, the country's largest bank, to buy Credit Suisse after it become clear that an emergency Swiss Franc 50 billion ($54 billion) credit line provided by the Swiss National Bank was unlikely to arrest the decline. UBS will pay about Swiss Franc 0.76 a share in its own stock, a total value of around Swiss Franc 3 billion ($3.2 billion). While triple the earlier proposed price, it is nearly 60 percent lower than CS’s last closing price of Swiss Franc1.86.
Investors cheered the purchase as a generational bargain for UBS. This ignores Credit Suisse's unresolved issues including toxic assets and legacy litigation exposures. It was oblivious to well-known difficulties in integrating institutions, particularly different business models, systems, practices, jurisdictions and cultures. The purchase does not solve Credit Suisse's fundamental business and financial problems which are now UBS’s.
It also leaves Switzerland with the problem of concentrated exposure to a single large bank, a shift from its hitherto preferred two-bank model. Analysts seemed to have forgotten that UBS itself had to be supported by the state in 2008 with taxpayer funds after suffering large losses to avoid the bank being acquired by foreign buyers.
***
The only other option is some degree of state support.
The UBS acquisition of Credit Suisse requires the Swiss National Bank to assume certain risks. It will provide a Swiss Franc 100 billion ($108 billion) liquidity line backed by an enigmatically titled government default guarantee, presumably in addition to the earlier credit support. The Swiss government is also providing a loss guarantee on certain assets of up to Swiss Franc 9 billion ($9.7 billion), which operates after UBS bears the first Swiss Franc 5 billion ($5.4 billion) of losses.
The state can underwrite bank liabilities including all deposits as some countries did after 2008. As US Treasury Secretary Yellen reluctantly admitted to Congress, the extension of FDIC coverage was contingent on US officials and regulators determining systemic risk as happened with SVB and Signature. Another alternative is to recapitalise banks with public money as was done after 2008 or finance the removal of distressed or toxic assets from bank books.
Socialisation of losses is politically and financially expensive.
Despite protestations to the contrary, the dismal truth is that in a major financial crisis, lenders to and owners of systemic large banks will be bailed out to some extent.
European supervisors have been critical of the US decision to break with its own standard of guaranteeing only the first $250,000 of deposits by invoking a systemic risk exception while excluding SVB as too small to be required to comply with the higher standards applicable to larger banks. There now exist voluminous manuals on handling bank collapses such as imposing losses on owners, bondholders and other unsecured creditors, including depositors with funds exceeding guarantee limit, as well as resolution plans designed to minimise the fallout from failures. Prepared by expensive consultants, they serve the essential function of satisfying regulatory checklists. Theoretically sound reforms are not consistently followed in practice. Under fire in trenches, regulators concentrate on more practical priorities.
The debate about bank regulation misses a central point. Since the 1980s, the economic system has become addicted to borrowing-funded consumption and investment. Bank credit is central to this process. Some recommendations propose a drastic reduction in bank leverage from the current 10-to-1 to a mere 3-to1. The resulting contraction would have serious implications for economic activity and asset values.
In Annie Hall, Woody Allen cannot have his brother, who thinks he is a chicken, treated by a psychiatrist because the family needs the eggs. Banking regulation flounders on the same logic.
As in all crises, commentators have reached for the 150-year-old dictum of Walter Bagehot in Lombard Street that a central bank's job is "to lend in a panic on every kind of current security, or every sort on which money is ordinarily and usually lent."
Central bankers are certainly lending, although advancing funds based on the face value of securities with much lower market values would not seem to be what the former editor of The Economist had in mind. It also ignores the final part of the statement that such actions "may not save the bank; but if it do not, nothing will save it."
Banks everywhere remain exposed. US regional banks, especially those with a high proportion of uninsured deposits, remain under pressure.
European banks, in Germany, Italy and smaller Euro-zone economies, may be susceptible because of poor profitability, lack of essential scale, questionable loan quality and the residual scar tissue from the 2011 debt crisis.
Emerging market banks' loan books face the test of an economic slowdown. There are specific sectoral concerns such as the exposure of Chinese banks to the property sector which has necessitated significant ($460 billion) state support.
Contagion may spread across a hyper-connected financial system from country to country and from smaller to larger more systematically important banks. Declining share prices and credit ratings downgrades combined with a slowdown in inter-bank transactions, as credit risk managers become increasingly cautious, will transmit stress across global markets.
For the moment, whether the third banking crisis in two decades remains contained is a matter of faith and belief. Financial markets will test policymakers' resolve in the coming days and weeks.
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Southwest Airlines Tries to End a Passenger Boarding Pain Point
The company has a novel way to end a practice that passengers hate.
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The company has a novel way to end a practice that passengers hate.
Southwest Airlines boards its planes in a way very different from that of any of its major rivals.
As fans and detractors of the brand know, the airline does not offer seat assignments. Instead, passengers board by group and number. When you check into your flight, Southwest assigns you to the A, B, or C boarding groups and gives you a number 1-60. The A group boards first in numerical order.
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In theory, people board in the assigned order and can claim any seat that's available. In practice, the airline's boarding process leaves a lot of gray area that some people exploit. Others simply don't know exactly what the rules are.
If, for example, you are traveling with a friend who has a much later boarding number, is it okay to save a middle seat for that person?
Generally, that's okay because middle seats are less desirable, but technically it's not allowed. In general practice, if you move into the second half of the plane, no passenger will fight for a specific middle seat, but toward the front some may claim a middle seat.
There's less grey area, however, when it comes to trying to keep people from sitting in unoccupied seats. That's a huge problem for the airline, one that Southwest has tried to address in a humorous way.
Image source: Shutterstock
Southwest Airlines Has a Boarding Problem
When Southwest boards its flights it generally communicates to passengers about how full it expects the plane to be. In very rare cases, the airline will tell passengers when the crowd is small and they can expect that nobody will have to sit in a middle seat.
In most cases, however, at least since air travel has recovered after the covid pandemic, the airline usually announces that the flight is full or nearly full as passengers board. That's a de facto (and sometimes explicit) call not to attempt to discourage people from taking open seats in your row.
Unfortunately, many passengers know that sometimes when the airline says a flight is full, that's not entirely true. There might be a few no shows or a few seats that end up being open for one reason or another.
That leads to passengers -- at least a few of them on nearly every flight -- going to great lengths to try to end up next to an empty seat. Southwest has tried lots of different ways to discourage this behavior and has now resorted to humor in an effort to stop the seat hogs.
Southwest Uses Humor to Address a Pain Point
The airline recently released a video that addressed what it called "discouraged but crafty strategies to get a row to yourself" on Southwest. The video shows a man demonstrating all the different ways people try to dissuade other passengers from taking the open seats in their row.
These include, but are not limited to:
- Laying out across the whole row.
- Holding your arm up to sort of block the seats.
- Being too encouraging about someone taking the seat.
- Actually saying no when someone asks if they can have an open seat.
The airline also detailed a scenario it called "the fake breakup," where the person in the seat holds a loud phone conversation where he pretends he's being broken up with.
That one seems a bit of a reach, especially when Southwest left the most common seat-saving tactic out of its video -- simply putting some of your stuff in the open seat to make it appear unavailable.
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Why We Opened The Belgrade Bitcoin Hub
With a rich history and recent evolution, Belgrade is now home to the latest Bitcoin working and presentation space.
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With a rich history and recent evolution, Belgrade is now home to the latest Bitcoin working and presentation space.
This is an opinion editorial by Plumski, a native of Serbia and founder of the Belgrade Bitcoin Hub.
“What we now want is closer contact and better understanding between individuals and communities all over the earth, and the elimination of egoism and pride which is always prone to plunge the world into primeval barbarism and strife…”
–Serbian-American inventor Nikola Tesla.
As Bitcoin adoption grows at an unprecedented rate for a new technology, Bitcoiners are setting up physical locations around the world where enthusiasts can work and play in group atmospheres.
For those of us taking part in this Bitcoin "Renaissance" period, it has been a great joy to watch the Bitcoin Beach success story in El Salvador that likely resulted in the country-wide adoption of bitcoin as legal tender. Since such projects are numerous in Africa, Central and South America, Bitcoiners living in Eastern Europe have watched these developments with intrigue. And added to that is the fact that Eastern Europe is economically underdeveloped compared to its Western European counterpart.
Inspired by what we saw in other parts of the world, a small group of Bitcoiners centered in the Serbian capital city of Belgrade recently opened a Bitcoin hub where we want to welcome visitors from around the world.
A New Chapter For A Historic City
Belgrade is a city that lies at the confluence of two great European rivers, the Danube and Sava, the apex of which is marked by the great Kalemegdan Fortress. This defensive fortress has withstood the test of time for over 15 centuries, bearing witness to battles too numerous to count. The history of Belgrade and the Serbian people as a whole has been a turbulent one.
Having the (mis)fortune of being located at the center of the geopolitically-important Balkan Peninsula, often on the border of two rivaling Eurasian empires, its people have been fighting for their independence from foreign influence throughout their history. Although it’s hard to estimate, history suggests that Belgrade has been destroyed and rebuilt over 40 times throughout its 17-century existence. Despite this, or perhaps because of it, Belgrade has always been the economic and artistic center of the region, as well as a home to people of all races, faiths and denominations.
Today, Belgrade is once again undergoing an important historical transition period. During the 1990s, civil wars took place in Croatia and Bosnia, republics of former Yugoslavia, culminating in the NATO bombing of Serbia and its capital city in 1999 and about 15 years of economic isolation from the western world.
Although the transformation is not fully complete, Belgrade is re-emerging as a vibrant cultural epicenter of the region. Much like the mosaic of architectural styles visible in the city's buildings, ranging from Communist-style, soulless heaps of gray concrete intermingled with wonderful old Secessionist buildings adorned with ornamental facades, its streetfronts are a collage of mom-and-pop-owned, modest businesses clashing with modern boutiques and glass-clad office buildings. Gone are the days when food options in the city's restaurants were limited solely to Balkan traditional cuisine. Now, poke, sushi, Chinese and Indian food, burger joints and American-style diners are all on the menu for the city's residents.
Contributing to the metamorphosis of the city's cultural fabric is also a noticeable shift in the residents who make up its population. Perhaps due to the relatively low cost of living compared to other world capitals, or Serbia's generally lax pandemic restrictions, or the political uncertainty that seems to have gripped the western world as of late, I have seen that a once heavily-emigrating city has been welcoming back a large segment of its old population and a sizeable inpouring of digital nomads that now call this place home.
Bitcoin Resilience, Despite Obstacles
In Serbian, the term "inat," a historically-defining characteristic of its people, can be loosely translated as "resilience." This mindset is ingrained in its population which, time and time again, rebuilds its homes on the heels of destructive periods to their former glory, to the dismay of invading armies, occupiers and detractors, because: inat.
As a result of years of unfulfilled promises from regional politicians, people of the Balkans are hard to convince about the long-term benefits that can be realized by adopting Bitcoin in one's life. A low time preference way of life to most people in this region is associated with disappointment and the lowered standards of living that have happened many times before.
Promises of quick riches (especially ones that suggest there is no associated risk whatsoever) is much more preferable for many and, thus, the power of the shitcoin narrative has sadly thrived in this region as "cryptocurrency" and "blockchain" marketing schemes gripped the world at large. To those of us who grew up in this part of the world, it is a dark comedy that, for instance, the Celsius bankruptcy affected our country as well. Like an exaggerated piece of irony from an Emir Kusturica movie, when the dust around this company's disastrous financial collapse finally settled, legal documents revealed that several entities associated with the Serbian government were listed as creditors to this well-known Ponzi scheme.
In general, Bitcoin-only companies and projects are hard to find here, but a growing community of Balkan Bitcoiners are imagining a different world of financial freedom to their compatriots.
And, much like Belgrade many times before, my personal life is undergoing a restructuring period. On my travels through the Bitcoin rabbit hole, I have met many people who are redesigning their lives around this paradigm-shifting technological discovery. With my recent move back from Canada to the city where I grew up, as I look around, it is easy to draw many parallels between the Bitcoin network architecture and the somewhat chaotic organization of Belgrade that just somehow seems to work — tick tock, next block.
Introducing DvadesetJedan
A group of us Bitcoiners from the countries of former Yugoslavia began to organize regular meetups about a year ago. Our group, called DvadesetJedan is an offshoot of the German Einundzwanzig initiative that was started to bring plebs together in meatspace so that enthusiasts can socialize, share ideas and formulate business ventures together in an informal atmosphere.
The idea behind Einundzwanzig is that geographically-distributed, independent Bitcoin communities can form across the world and eventually collaborate on their ongoing projects and offer traveling Bitcoiners a home, wherever they happen to be. In the Balkans, DvadesetJedan records a weekly podcast in the Serbian/Croatian language to cover Bitcoin news, philosophy and the technical architecture of the network. We are very proud to be the first Bitcoin-only podcast in the region and it is a great way for people that are too far from the city's urban centers, where our meetups take place, to receive high-signal Bitcoin content on a regular basis. This podcast is also complemented by our active Telegram channel and while our core group is made up of vehement shitcoin minimalists, a fair-sized part of the group is made up of noobs. We take special joy in guiding them through their journey toward understanding Bitcoin.
Since four of the six former Yugoslav republics that are now independent countries speak the same language, our initiative is multinational in nature. We collaborate with members from Slovenia, Macedonia, Croatia, Bosnia and Montenegro and our group has been steadily growing over the past year. We have a mixture of Bitcoin builders, content creators, developers and Bitcoin enthusiasts in the group who all come together on a regular basis for bar hopping, barbecues and road trips to Bitcoin events in the region.
While trendy breweries and coffee shops for our meetups are aplenty in Belgrade, a Bitcoin-dedicated space did not exist here nor in the wider Balkan peninsula. A small group of us decided to undertake the mission of finding and equipping a space where more serious discussions and presentations can take place.
Since Bitcoin professionals here are somewhat isolated compared to more-established regions such as Germany and the U.S., we also wanted the space to serve as a co-working environment for locals to bounce ideas off of other experts in the field. As we plan on partnering with local developers to build Bitcoin-focused businesses, this office space would also serve as the physical location for new startups to work with their teams.
Meetup in Belgrade: R0ckstarDev and Johns Beharry displaying Bitko Yinowski’s famous Bitcoin jam made from Serbian apricots.
The hunt was on and we scoured Belgrade in search of an ideal location. We focused our search to the center of the city so that future visitors can not only work in a comfortable space but can also easily access the museums, galleries, music venues, bars and restaurants that make up Belgrade's exciting social scene. We eventually found a duplex on the top floor of an old, mixed-use building next to the University of Belgrade’s philosophy faculty and it is perhaps fitting that the fort of Kalemegdan is within a two-minute walk from our new Belgrade Bitcoin Hub.
Welcome To The Belgrade Bitcoin Hub
Elevator control board to the top floor of the building where the hub is located. Source: Author.
The hub features a large, communal, co-working/presentation room where most of the action will be taking place, with two additional rooms that we will outfit into a recording studio and a more private office space.
At our disposal for visitors we have a variety of hardware wallets, a point-of-sale unit powered by BTCPay Server, a Bitcoin node and an Antminer S9 to experiment with the newest software being developed by the tenants of the space. For educational purposes, or to get extra inspiration, the hub has a small collection of Bitcoin literature for visitors to read.
During the early days of activity in the hub, it has been populated by drop-in visitors that prefer working in group settings. As we grow, we will develop the hub to be a venue for cultural events, art exhibits/auctions, hackathons, as well as a small-scale presentation center for Bitcoiners. While advanced users will be working at the hub, novices will benefit from presentations and hands-on demonstrations that will take place in the evenings and weekends. Inspired by many ventures around the world with similar goals in mind, we are especially proud that we made this hub a reality using our own funds to finance these initial steps.
In one of the first public presentations at the hub, Pavlenex described the history of the BTCPay Server project along with a live demo to an audience. Source: Author.
We want this space to be a permanent Bitcoin home in Belgrade and we hope that organizing such events will enable the space to finance itself for many years to come. While locals will be able to purchase annual memberships, we also have a structure in place so that Bitcoiners who do not live in Belgrade can come and work from the hub during their visits to Serbia. We are especially excited to welcome foreigners to the Belgrade Bitcoin Hub to build and help us build, however, the space will be limited.
Indeed, matching Bitcoiners from around the world with the immense talent that exists in Serbia is one of our top priorities. After all, everything our small group of believers has done to date has culminated into the Belgrade Hub genesis block.
This is a guest post by Plumski. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
cryptocurrency bitcoin blockchain btc pandemic
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