Freedom Financial Holdings, Inc.

2014

ANNUAL REPORT

THE FREEDOM BANK OF VIRGINIA

a letter to our 
SHAREHOLDERS

Dear Shareholders,

On behalf of the Board of Directors and employees of Freedom Bank, we are pleased to present you with these results.

The Freedom Bank of Virginia earned net income of $1,600,397 for the year ending December 31, 2014, a 16.7% increase over the 

$1,371,772 net profit at December 31, 2013. This included the nineteenth consecutive quarterly net profit for the Bank.

Strong loan growth led to increased assets of $68,409,585 to $342,611,644 at December 31, 2014, up 24.9% from $274,202,059 the 

prior year. Loans had the highest yield and increased $58,824,702 (26.7%) to $278,989,586. Government bonds, held to meet liquidity 

needs, were the second highest yielding asset increased $3,554,734 (15.0%) to $27,294,953. Together with fed funds of $24,837,000 

and cash of $5,941,254 total liquidity was $58,073,207 or 16.9% of total assets at December 31, 2014.

Asset  growth  was  funded  by  large  increases  in  deposits.  Non  interest  bearing  accounts  increased  31.6%  from  $39,085,418  to 

$51,431,344 at December 31, 2014. Interest checking deposits rose 39.2% from $47,370,151 to $65,959,271 at December 31, 2014. 

Certificates of deposit funded the balance rising by $34,666,451 or 22.1% to $191,660,139 at year end.

Capital was $29,769,220 at December 31, 2014, up 14.0% from $26,118,725 at December 31, 2013. Primary contributors were net 

profit of $1,600,397 and a public stock sale generating net proceeds of approximately $1,600,000 after expenses. Book value per 

share increased 8.0% from $6.85 at December 31, 2013 to $7.40 at December 31, 2014.

Large  increases  in  loans  and  investments  increased  total  interest  income  to  $13,656,944  in  2014,  up  21.3%  from  $11,259,048  the 

prior year. Interest paid on deposits increased $283,005 or 14.3% to $2,267,925. The provision for loan losses increased $188,500 to 

$486,000 leaving net interest income after provision at $10,903,019, at December 31, 2014, up $1,926,391 (21.5%) from $8,976,628 the 

prior year. Operating expenses increased from $8,484,498 in 2013 to $9,863,144 in 2014. This was a 16.3% increase, but it included a 

third branch operating for half of 2014. The result was 2014 net income increased 16.7% to $1,600,397 from $1,371,772 the prior year. 

Earnings per share were $0.40 for 2014 versus $0.36 for 2013 despite an increase in shares outstanding from the capital campaign.

Freedom Bank continued improving asset quality. Non performing assets as a percentage of loans decreased from 0.54% at December 

31, 2013 to 0.11% at December 31, 2014. Loans past due for regularly scheduled payments were 0.01% of loans at December 31, 2013 

versus 0.02% of loan at December 31, 2014. Both compared very favorable with peer banks.

Profitability is increasing based on strong loan growth. Our investment in lenders the past two years is showing results. Our Chief 

Lending Officer Kevin Curtis and his team had a strong 2013 and surpassed those impressive results in 2014. In December 2014, the 

Bank hired Richard Hutchison, who ran Virginia Heritage Mortgage prior to its sale, to try to generate a similar increase in mortgage 

lending  in  2015.  Kevin  and  Richard  have  known  each  other  for  many  years  and  we  believe  they  will  work  well  together  providing 

Freedom Bank with exceptionally strong lending leadership.

We thank you for your continued support of the Bank.

Craig S. Underhill 

PRESIDENT & CEO 

Richard C. Litman 

CHAIRMAN OF THE BOARD

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FREEDOM BANK OF VIRGINIA 
 
 
 
 
 
FINANCIAL HIGHLIGHTS

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$320

$280

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$280

$260

$240

$220

$200

$180

$160

$0

ASSET GROWTH

$342,611,644

$238,642,144

$274,202,059

2012

2013

Year

2014

LOAN GROWTH

$220,164,884

$278,989,586

$171,901,847

2012

2013

Year

2014

 
 
 
 
FINANCIAL HIGHLIGHTS

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$320

$280

$240

$200

$160

$120

$80

$0

NON-INTEREST BEARING
NON-MATURING DEPOSITS

$51,431,344

$34,951,109

$39,085,418

2012

2013

Year

2014

TOTAL DEPOSITS

$212,575,742

$247,153,547

$311,687,984

2012

2013

Year

2014

 
 
 
 
TABLE OF 
CONTENTS

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32

Independent Auditors’ Report  On The Financial Statements
Financial Statements
balance sheets
statements of operations
statements of comprehensive income
statements of changes in stockholders’ equity
statements of cash flows
notes to financial statements
Shareholder & Company Information

INDEPENDENT  
AUDITORS’ REPORT

To the Board of Directors and Stockholders 
The Freedom Bank of Virginia 

Fairfax, Virginia

We have audited the accompanying financial statements of The Freedom Bank of Virginia, which comprise the balance 

sheets as of December 31, 2014 and 2013, and the related statements of operations, comprehensive income, changes in 

stockholders’ equity and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with 

accounting principles generally accepted in the United States of America; this includes the design, implementation, and 

maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from 

material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits  

in accordance with auditing standards generally accepted in the United States of America.  Those standards require that  

we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of  

material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial 

statements.  The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material 

misstatement of the financial statements, whether due to fraud or error.  In making those risk assessments, the auditors 

consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to 

design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the 

effectiveness of the entity’s internal control.  Accordingly, we express no such opinion.  An audit also includes evaluating 

the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by 

management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The 

Freedom Bank of Virginia as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the 

years then ended in accordance with accounting principles generally accepted in the United States of America. 

Fairfax, Virginia 
March 23, 2015

2

FREEDOM BANK OF VIRGINIA|  2014 ANNUAL REPORTFINANCIAL  
STATEMENTS

Balance Sheets

YEARS ENDED DECEMBER 31 
2014 AND 2013

ASSETS

Cash and Due from Banks

Interest Bearing Deposits with Banks

Federal Funds Sold

Securities Available-for-Sale

Securities Held-to-Maturity

Federal Reserve Bank Stock, at cost

Federal Home Loan Bank Stock, at cost

Loans Held for Sale

Loans Receivable

Allowance for Possible Loan Losses

Net Loans

Bank Premises and Equipment, net

Accrued Interest Receivable

Deferred Tax Asset

Bank-Owned Life Insurance

Other Assets

TOTAL ASSETS

2014 ($)

2013 ($)

4,917,099

1,024,155

8,171,071

1,020,078

24,837,000

16,817,000

27,294,953

23,740,219

5,610

829,200

274,800

649,975

44,679

778,000

—

768,900

278,989,586

220,164,884

(2,685,807)

(2,587,363)

276,303,779

217,577,521

830,770

864,224

1,320,000

2,160,567

1,299,512

292,377

697,326

859,000

2,101,603

1,334,285

342,611,644

274,202,059

NOTE: The Notes to Financial Statements are an integral part of these statements.

3

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIALIABILITIES

Deposits

Demand Deposits

 Non-interest Bearing

 Interest Bearing

Savings Deposits

Time Deposits

Total Deposits

Other Accrued Expenses

Accrued Interest Payable

Total Liabilities

STOCKHOLDERS’ EQUITY

Common stock, $3.16 par value, 15,000,000 shares authorized:

4,025,349 Shares Issued & Outstanding, 2014; 
3,814,956 Shares Issued & Outstanding, 2013

Additional Paid-in Capital

Accumulated Other Comprehensive Income (loss), net

Retained Deficit

Total Stockholders’ Equity

2014 ($)

2013 ($)

51,431,344

39,085,418

65,959,271

47,370,151

2,637,231

3,704,290

191,660,138

156,993,688

311,687,984

247,153,547

1,062,136

92,304

852,477

77,310

312,842,424

248,083,334

12,707,042

12,042,200

17,457,152

16,371,940

(118,889)

(276,085)

(418,932)

(1,876,483)

29,769,220

26,118,725

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

342,611,644

274,202,059

NOTE: The Notes to Financial Statements are an integral part of these statements.

4

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIA 
 
Statements of Operations

YEARS ENDED DECEMBER 31 
2014 AND 2013

INTEREST INCOME

Interest & Fees on Loans

Interest on Investment Securities

Interest on Federal Funds Sold

Total interest income

INTEREST EXPENSE

Interest on Deposits

Net Interest Income

PROVISION FOR POSSIBLE LOAN LOSSES

Net Interest Income After Provision for  
Possible Loan Losses 

OTHER INCOME

Service Charges & Other Income

Increase in Cash Surrender Value of  
Bank-owned Life Insurance

Total Other Income

OPERATING EXPENSES

2014 ($)

2013 ($)

13,098,078

10,728,017

535,438

23,428

498,274

32,757

13,656,944

11,259,048

2,267,925

11,389,019

1,984,920

9,274,128

486,000

297,500

10,903,019

8,976,628

501,558

821,214

58,964

560,522

58,428

879,642

Officers & Employee Compensation & Benefits

5,974,486

5,224,922

Occupancy Expense

Equipment & Depreciation Expense

Insurance Expense

Professional Fees

Data & Item Processing

Business Development

Franchise Taxes

Other Operating Expenses

Total Operating Expenses

Income Before Income Taxes

622,690

370,921

237,421

844,756

816,954

185,868

260,048

549,999

533,771

240,302

213,319

636,913

733,474

163,386

248,180

490,230

9,863,143

1,600,398

8,484,497

1,371,773

NOTE: The Notes to Financial Statements are an integral part of these statements.

5

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIAINCOME TAX EXPENSE

NET INCOME

EARNINGS PER COMMON SHARE – BASIC

EARNINGS PER COMMON SHARE – DILUTED

WEIGHTED-AVERAGE COMMON SHARES  
OUTSTANDING - BASIC

WEIGHTED-AVERAGE COMMON SHARES  
OUTSTANDING - DILUTED

2014 ($)

2013 ($)

—

—

1,600,398

1,371,773

0.42

0.40

0.36

0.36

3,833,821

3,792,514

3,978,880

3,792,514

Statements of Comprehensive Income

YEARS ENDED DECEMBER 31 
2014 AND 2013

Net Income

Other Comprehensive Income (Loss):

Unrealized holding gain (loss) arising during the year, 
net of tax expense of $161,562 in 2014 and tax benefit of 
$379,475 in 2013

COMPREHENSIVE INCOME

2014 ($)

2013 ($)

1,600,398

1,371,773

300,043

(704,741)

1,900,441

667,032

NOTE: The Notes to Financial Statements are an integral part of these statements.

6

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIAStatements of Changes in Stockholders’ Equity

YEARS ENDED DECEMBER 31 
2014 AND 2013

BALANCE  
(DEC. 31, 2012)

Net Income

Other Comprehensive Loss

Six-for-Five Stock Split

Stock Options Exercised

BALANCE  
(DEC. 31, 2013)

Net Income

Other Comprehensive 
Income

Stock Warrants Exercised

Eleven-for-Ten Stock Split

Stock Options Exercised

Sale of Common Stock

SHARES OF 
 COMMON 
STOCK ($)

COMMON 
STOCK ($)

ADDITIONAL 
PAID-IN  
CAPITAL ($)

ACCUMULATED  
OTHER  
COMPREHENSIVE 
INCOME (LOSS) ($)

RETAINED 
EARNINGS 
(DEFICIT) ($) 

TOTAL  
STOCKHOLDERS’ 
EQUITY ($)

*2,866,117

11,942,228

16,284,303

285,809

(3,248,256)

25,264,084

—

—

573,232

—

—

—

—

—

—

28,800

99,972 

 87,637

—

1,371,773

 1,371,773

(704,741)

—

—

—

—

—

(704,741)

—

 187,609

*3,468,149

12,042,200

16,371,940

(418,932)

(1,876,483)

26,118,725

—

—

73

346,807

—

—

231

—

—

—

379

—

23,260

73,501

66,794

187,060

591,110

1,009,781

—

1,600,398

1,600,398

300,043

—

—

—

—

—

—

—

—

—

—

—

300,043

610

—

140,295

1,600,891

8,258

Stock-based Compensation

—

—

8,258

BALANCE  
(DEC. 31, 2014)

4,025,349

12,707,042

17,457,152

(118,889)

(276,085)

29,769,220

*Shares of common stock retroactively adjusted for the six-for-five stock split effective August 13, 2013 is 3,439,340  
as of December 31, 2012
*Shared of common stock retroactively adjusted for the eleven-for-ten stock split effective April 1, 2014 is 3,814,956  
and 3,783,274 as of December 31, 2013 and 2012, respectively.

NOTE: The Notes to Financial Statements are an integral part of these statements.

7

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIAStatements of Cash Flows

YEARS ENDED DECEMBER 31 
2014 AND 2013

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income

Non-Cash Items Included in Net Income

Depreciation & Amortization

Provision for Possible Loan Losses

Net Amortization of Available-for-Sale Securities

(Gain) Loss on Sale of Available-for-Sale Securities

Stock-based Compensation Expense

Deferred Income Tax

Increase in Cash Surrender Value of Bank-Owned Life Insurance

(Increase) Decrease in

Loans Held for Sale

Accrued Interest Receivable

Other Assets

Increase (Decrease) in

Other Accrued Expenses

Accrued Interest Payable

2014 ($)

1,600,398

2013 ($)

1,371,773

167,795

486,000

202,071

(26,693)

8,258

(461,000)

(58,964)

91,530

297,500

481,794

19,554

—

(541,000)

(58,428)

118,925

2,887,929

(166,898)

(126,789)

209,659

14,994

(90,050)

542,472

273,908

7,458

NET CASH PROVIDED BY OPERATING ACTIVITIES

1,967,756

5,284,440

CASH FLOWS FROM INVESTING ACTIVITIES

Federal Funds Sold, net

Interest Bearing Deposit with Banks

Loan Originations, net

Purchase of Available-for-Sale Securities

Maturities, Calls & Paydowns of Securities Available-for-Sale

Proceeds from Sales of Securities Available-for-Sale

Purchase of Federal Home Loan Bank Stock

Paydowns of Held-to-Maturity Securities

Purchase of Federal Reserve Bank Stock

Acquisition of Bank Equipment

NET CASH USED BY INVESTING ACTIVITIES

(8,020,000)

1,971,000

(4,077)

(4,072)

(59,212,258)

(48,209,996)

(14,665,874)

(7,564,873)

5,107,507

6,289,860

(274,800)

39,069

(51,200)

8,611,051

2,345,833

—

303,937

(31,350)

(706,188)
(71,497,961)

(184,407)
(42,762,877)

NOTE: The Notes to Financial Statements are an integral part of these statements.

8

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIACASH FLOWS FROM FINANCING ACTIVITIES

Increase in Deposits, net

Proceeds From Stock Options & Warrants Exercised

Proceeds From Sale of Stock, net

Net Cash Provided by Financing Activities

2014 ($)

2013 ($)

64,534,437

34,577,805

140,905

187,609

1,600,891

66,276,233

—

34,765,414

NET DECREASE IN CASH AND DUE FROM BANKS

(3,253,972)

(2,713,023)

CASH AND DUE FROM BANKS  
(BEGINNING OF YEAR)

CASH AND DUE FROM BANKS  
(END OF YEAR) 

NONCASH INVESTING ACTIVITY

Unrealized Gain (loss) on Securities  
Available-for-Sale, net

SUPPLEMENTAL INFORMATION

8,171,071

10,884,094

4,917,099

8,171,071

300,043

(704,741)

Cash Paid During the Year for Interest

2,252,931

1,977,462

Cash Paid During the Year for Income Taxes

438,000

469,000

NOTE: The Notes to Financial Statements are an integral part of these statements.

9

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIANotes to Financial Statements
DECEMBER 31, 2014 AND 2013

1.  Nature of Operations and Summary of Significant Accounting Policies

The accounting and reporting policies of The Freedom Bank of Virginia (the Bank) conform to generally accepted 
accounting principles (GAAP) and reflect practices of the banking industry. The policies are summarized below.

NATURE OF OPERATIONS

The Freedom Bank of Virginia is a state chartered bank and a member of the Federal Reserve and is subject to 
the rules and regulations of the Virginia State Banking Commission, the Federal Reserve and the Federal Deposit 
Insurance Corporation (FDIC). The Bank provides banking services at its branch offices in Vienna, Fairfax and 
Reston, Virginia, and serves customers primarily in the Northern Virginia area. The Bank was in organization 
during the period January 27, 2000 through July 22, 2001, and opened for business on July 23, 2001.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires 
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and  
disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts 
of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain 
amounts in the 2013 financial statements have been reclassified. Total stockholders’ equity and net income are 
unchanged due to these reclassifications.

The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly 
susceptible to significant changes in the economic environment and market conditions. In connection with  
the determination of the estimated losses on loans, management obtains independent appraisals for  
significant collateral.

INTEREST BEARING DEPOSITS WITH BANKS

The Bank maintains an interest bearing deposit with another institution in Virginia. Interest bearing deposits are 
valued at cost. Interest income is recorded as interest income on investment securities.

SECURITIES

Debt securities are classified as held-to-maturity when the Bank has the positive intent and ability to hold the 
securities to maturity. Securities held-to-maturity are carried at amortized cost.

Debt securities not classified as held-to-maturity or trading securities are classified as available-for-
sale. Securities available-for-sale are carried at fair value with unrealized gains and losses reported in 
other comprehensive income. Realized gains (losses) on securities available-for-sale are included in other 
income (expense) and, when applicable, are reported as a reclassification adjustment, net of tax, in other 
comprehensive income.

The amortization of premiums and accretion of discounts are recognized in interest income using methods 
approximating the interest method over the period to maturity. Declines in the fair value of individual held-to-
maturity and available-for-sale securities below their cost that are deemed to be other than temporary result in 
write-downs of the individual securities to their fair value. The related write-downs are included in earnings as 
realized losses. Gains and losses on sales of securities are recorded on the trade date and are determined using 
the specific-identification method.

Federal Reserve Bank stock is considered a restricted investment security, is carried at cost and is evaluated 
annually for impairment. The stock is required in order to be a member of the Federal Reserve.

Federal Home Loan Bank (FHLB) stock is considered a restricted investment security, is carried at cost and is 
evaluated annually for impairment. The stock is required in order to be a member of the FHLB.

10

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIALOANS AND LOAN FEES

Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, 
generally are stated at the principal amount outstanding, less the allowance for loan losses and net deferred loan 
fees. Interest on loans is generally computed using the simple interest method.

Loan origination and commitment fees, as well as certain direct origination costs, are deferred and amortized 
as a yield adjustment over the lives of the related loans using the interest method. Amortization of deferred loan 
fees is discontinued when a loan is placed on non-accrual status.

The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days 
delinquent, unless the credit is well secured and in process of collection. Other personal loans are typically 
charged off no later than 180 days past due. In all cases, loans are placed on non-accrual or charged off at an 
earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on non-accrual or charged off is reversed against 
interest income. The interest on these loans is accounted for on the cash basis or cost-recovery method, until 
qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts 
contractually due are brought current and future payments are reasonably assured.

LOANS HELD FOR SALE

Loans held for sale consist primarily of residential mortgage loans, which are secured by one-to-four family 
residential real estate. Loans held for sale are carried at the lower of aggregate cost, net of purchase discounts 
or premiums, deferred fees, and deferred origination costs, or fair value. The Bank sells its mortgage loans 
forward to investors and the estimated fair value is largely dependent upon the terms of these outstanding 
loan purchase commitments, as well as movement in market interest rates. Income from loans sold is included 
in service charges and other income on the financial statements. Income from loans sold was $234,881 and 
$445,935 for the years ended December 31, 2014 and 2013, respectively.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is maintained at a level that, in management’s judgment, is adequate to absorb 
credit losses inherent in the loan portfolio. The amount of the allowance is based on management’s ongoing 
evaluation of the collectability of the loan portfolio, including the nature of the portfolio, credit concentrations, 
trends in historical loss experience, specific impaired loans, economic conditions, and other risks inherent in  
the portfolio.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be 
unable to collect the scheduled payments of principal or interest when due, according to the contractual terms 
of the loan agreement. Allowances for impaired loans are generally determined based on collateral values or the 
present value of estimated cash flows. Although management uses available information to recognize losses on 
loans, because of uncertainties associated with local economic conditions, collateral values, and future cash 
flows on impaired loans, it is reasonably possible that a material change could occur in the allowance for loan 
losses in the near term. However, the amount of the change that is reasonably possible cannot be estimated. 
The allowance is increased by a provision for loan losses, which is charged to expense and reduced by charge-
offs, net of recoveries. Changes in the allowance relating to impaired loans are charged or credited to the 
provision for loan losses. Past due status is determined based on contractual terms.

BANK PREMISES AND EQUIPMENT

Bank premises and equipment are stated at cost, less accumulated depreciation and amortization. Leasehold 
improvements are amortized over the shorter of the asset life or lease term using the straight-line method. 
Furniture and equipment are depreciated over estimated useful lives of three to seven years using the  
straight-line method. The Bank depreciates premises and equipment using accelerated methods for income  
tax reporting.

Expenditures for maintenance, repairs and improvements that do not materially extend the useful lives of bank 
premises and equipment are charged to earnings. When bank premises or equipment are sold or otherwise 
disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts, and 
the effect is reflected in current earnings.

Leases that meet certain specified criteria are accounted for as capital assets and liabilities, and those not 
meeting the criteria are accounted for as operating leases.

11

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIAOTHER REAL ESTATE OWNED

Real estate properties acquired through or in lieu of loan foreclosures are initially recorded at the fair value less 
estimated selling cost at the date of foreclosure. Any write-downs based on the asset’s fair value at the date of 
acquisition are charged to the allowance for loan losses. After foreclosure, valuations are periodically performed 
by management and property held for sale is carried at the lower of the new cost basis or fair value less cost 
to sell. Impairment losses on property to be held and used are measured as the amount by which the carrying 
amount of a property exceeds its fair value. Costs of significant property improvements are capitalized, whereas 
costs relating to holding property are expensed. The portion of interest costs relating to development of real 
estate is capitalized. Valuations are periodically performed by management, and any subsequent write downs 
are recorded as a charge to operations, if necessary, to reduce the carrying value of a property to the lower of its 
cost or fair value less cost to sell. The Bank owned no other real estate at December 31, 2014 and 2013.

BANK-OWNED LIFE INSURANCE

The Bank entered into bank-owned single premium life insurance policies during 2012 that are maintained 
by two counterparties. Under the bank-owned life insurance policies, executives or other key individuals are 
the insured and the Bank is the owner and beneficiary of each policy. As such, the insured has no claim to 
either the insurance policy, cash value, or a portion of the policy’s death proceeds. The increase in the cash 
surrender value over time is recorded as other income. The Bank monitors the financial strength and condition 
of both counterparties.

STOCKHOLDERS’ EQUITY

At December 31, 2014, warrants were outstanding and exercisable to purchase 367,553 shares of common stock 
at $8.36 per share if exercised by January 15, 2015, and 71,121 shares of common stock at $8.36 per share if 
exercised by February 16, 2015. The amounts and number of warrants have been adjusted for the six-for-five 
stock split that was effective on February 16, 2012 and August 13, 2013 and the eleven-for-ten stock split that 
was effective on April 1, 2014.

On February 20, 2014, the Bank declared an eleven-for-ten stock split, effective for stockholders of record on 
April 1, 2014. On July 22, 2013, the Bank declared a six-for-five stock split, effective for stockholders of record on 
August 13, 2013. All references to share and per share amounts in the financial statements have been restated to 
reflect the stock splits.

On October 31, 2014, the Bank released an Offering Memorandum for up to $4,000,000 of common stock, par 
value $3.16 per share, at an offering price of $9.00 per share (“capital offering”). The offering was for a maximum 
of 444,445 shares of common stock. The offering closed December 12, 2014 and the amount of funds raised 
from the capital offering, net of related expenses, was $1,600,891. Common stock of 187,060 shares was issued. 
Capital funds raised were allocated to common stock and additional paid-in capital.

On December 22, 2014, the Bank released an Offering Memorandum for subscription rights to holders of 
common stock (“rights offering”). Pursuant to this rights offering, the Bank offered subscription rights to 
purchase up to 66,667 units (each a “unit”) at a per unit price of $45.00. Each unit will consist of five shares 
of common stock and one two-year warrant to purchase one share of common stock at a price of $9.00 per 
share. Shareholders who own outstanding warrants to purchase common stock may surrender these warrants 
in exchange for a credit of $.64 per warrant surrendered toward the purchase price of units they purchase in this 
rights offering. The offering closed January 30, 2015. The amount of funds raised from the rights offering, net 
of related expenses, was $1,893,612. Common stock of 244,713 shares was issued. Capital funds raised were 
allocated to common stock and additional paid-in capital.

The proceeds of the capital and rights offerings are for general corporate purposes which may include improving 
the Bank’s regulatory capital position and supporting future growth.

Comprehensive income represents all changes in equity that result from recognized transactions and other 
economic events of the period. Other comprehensive income refers to revenues, expenses, gains and 
losses that under accounting principles generally accepted in the United States of America are included 
in comprehensive income but excluded from net income, such as unrealized gains and losses on certain 
investments in debt and equity securities.

12

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIAINCOME TAXES

Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist 
of taxes currently due plus deferred taxes related primarily to the difference between the basis of the allowance 
for loan losses. The deferred tax assets and liabilities represent the future tax return consequences of those 
differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. 
Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred 
tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, 
deferred tax assets and liabilities are adjusted through the provision for income taxes.

Management has determined that recent profitability and projections of future taxable income will be adequate 
to absorb the Bank’s allowance for loan loss included in the deferred tax asset.

The Bank files an income tax return in the U.S. Federal jurisdiction. The Bank pays state franchise tax in lieu of 
state income taxes. Currently, the 2013, 2012 and 2011 income tax returns are open and subject to examination. 
The Bank is not currently under audit by any income tax jurisdiction.

The Bank has no uncertain tax positions that qualify for either recognition or disclosure in the financial 
statements, and no interest and penalties have been recorded in the accompanying financial statements related 
to uncertain tax positions.

EARNINGS PER SHARE (EPS)

Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the 
weighted-average number of common shares outstanding for the year. Diluted EPS reflects the potential dilution 
that could occur if securities or other contracts to issue common stock were exercised or converted into 
common stock or resulted in the issuance of common stock that then shared in the earnings of the Bank.

STOCK-BASED COMPENSATION

The Bank recognizes the cost of employee services received in exchange for an award of equity instruments in 
the financial statements over the period the employee is required to perform the services in exchange for the 
award (presumptively the vesting period). The Bank also measures the cost of employee services received in 
exchange for an award based on the grant-date fair value of the award.

EMPLOYMENT CONTRACTS

In August 2010, the Bank entered into an employment agreement with the Bank’s current President. The 
agreement provides for a base salary, a performance bonus, annual adjustments to compensation and other 
benefits. The agreement has an initial term of 17 months and will be automatically renewed for successive 
12-month terms until employment is terminated under specific conditions as provided in the agreement.

The Bank has also entered into employment agreements with certain other key employees. The agreements 
provide for base salary, performance bonuses and other benefits. The terms of the agreements range from one 
to two years with options to extend for additional one-year periods until employment is terminated under specific 
conditions as provided in the agreements.

STATEMENTS OF CASH FLOWS

The Bank considers all cash and amounts due from banks, excluding interest-bearing deposits in other banks 
and Federal funds sold, to be cash equivalents for purposes of the statements of cash flows. The Freedom Bank 
of Virginia periodically has bank deposits, including short-term investments, in excess of Federally insured limits.

OFF-BALANCE SHEET CREDIT RELATED FINANCIAL INSTRUMENTS

In the ordinary course of business, the Bank has entered into commitments to extend credit, including 
commitments under credit card arrangements, commercial letters of credit, and standby letters of credit. Such 
financial instruments are recorded when they are funded.

SUBSEQUENT EVENTS

The date to which events occurring after December 31, 2014, the date of the most recent balance sheet, have 
been evaluated for possible adjustment to the financial statements or disclosure is March, 23, 2015, which is the 
date on which the financial statements were available to be issued.

13

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIA2.  Restriction of Cash and Due From Banks

The Bank is required to maintain reserve funds in cash or on deposit with the Federal Reserve. The required 
reserve at December 31, 2014 and 2013 was $759,000 and $727,000, respectively.

3.  Securities Available-for-Sale and Held-to-Maturity

The amortized cost and fair values of securities as shown in the balance sheets of the Bank are as follows:

DEC. 31, 2014

Available-for-Sale

U.S. Gov’t & Agency Securities

Corporate Securities

Mortgage Backed Securities

SBA Loan Pools

TOTAL AVAILABLE-FOR-SALE

Held-to-Maturity

Mortgage Backed Securities

TOTAL INVESTMENT SECURITIES

AMORTIZED 
COSTS ($)

GROSS  
UNREALIZED 
GAINS ($)

GROSS  
UNREALIZED 
LOSSES ($)

FAIR  
VALUE ($)

3,999,064

1,061,234

16,635,961

5,781,598

27,477,857

5,610

27,483,467

—

—

56,926

15,530

72,456

36

72,492

(59,877) 

3,939,187

(8,697)

(87,564)

(99,222)

1,052,537

16,605,323

5,697,906

(255,360)

27,294,953

—

5,646

(255,360)

27,300,599

DEC. 31, 2013

Available-for-Sale

U.S. Gov’t & Agency Securities

Corporate Securities

Mortgage Backed Securities

Municipal Securities

SBA Loan Pools

TOTAL AVAILABLE-FOR-SALE

Held-to-Maturity

Mortgage Backed Securities

TOTAL INVESTMENT SECURITIES

AMORTIZED 
COSTS ($)

GROSS  
UNREALIZED 
GAINS ($)

GROSS  
UNREALIZED 
LOSSES ($)

FAIR  
VALUE ($)

5,498,891

2,024,844

10,196,736

529,176

6,135,083

496

41,361

50,840

239

—

(188,447) 

5,310,940

(23,202)

2,043,003

(246,124)

10,001,452

—

529,415

(279,674)

5,855,409

24,384,730

92,936

(737,447)

23,740,219

44,679

24,429,409

868

93,804

—

45,547

(737,447)

23,785,766

14

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIAThe amortized cost and estimated fair value of debt securities at December 31, 2014, by contractual maturity,  
are as follows:

Amounts Maturing in:

1 Year or Less

After 1 Year - 5 Years

After 5 Years - 10 Years

After 10 Years

Mortgage Backed Securities

AVAILABLE-FOR-SALE

HELD-TO-MATURITY

AMORTIZED COST 
($)

FAIR  
VALUE ($)

AMORTIZED COST 
($)

FAIR  
VALUE ($)

—

—

3,562,213

1,498,085

5,781,598

10,841,896

16,635,961

27,477,857

3,509,186

1,482,538

5,697,906

10,689,630

16,605,323

27,294,953

—

—

—

—

—

5,610

5,610

—

—

—

—

—

5,646

5,646

Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay 
obligations with or without call or prepayment penalties.

At December 31, 2014 and 2013, U.S. Government and agency securities and mortgage backed securities with 
a carrying value of $14,653,130 and $14,009,759, respectively, were pledged to secure public deposits and for 
other purposes required or permitted by law.

Information pertaining to securities with gross unrealized losses at December 31, 2014, aggregated by 
investment category and length of time that individual securities have been in a continuous loss position, is  
as follows:

LESS THAN 12 MONTHS

OVER 12 MONTHS

GROSS  
UNREALIZED 
LOSSES ($)

FAIR VALUE ($) 

GROSS  
UNREALIZED 
LOSSES ($)

FAIR VALUE ($)

Available-for-Sale

Corporate Securities

1,123

497,899

7,574

554,639

Mortgage Backed Securities

50,407

5,570,098

37,157

2,349,066

US Treasury Obligations

SBA Loan Pools

Held-to-Maturity

Mortgage Backed Securities 

—

910

—

—

59,877

3,939,186

1,144,161

98,312

3,400,742

—

—

—

15

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIAManagement evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more 
frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length 
of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term 
prospects of the issuer, and (3) the intent and ability of the Bank to retain its investment in the issuer for a period 
of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2014, eight debt securities with an unrealized loss for less than one year and twelve debt 
securities with an unrealized loss for greater than one year depreciated less than one and two percent, 
respectively, from the Bank amortized cost basis. Eighteen of the securities are secured by Federal agency 
mortgage backed securities or U.S. Treasury obligations and direct obligations of U.S. Government agencies. 
Two of the securities are corporate bonds. These unrealized losses relate principally to current interest rates 
for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the 
securities are issued by the Federal government or its agencies, whether downgrades by bond rating agencies 
have occurred, and the results of reviews of the issuer’s financial condition. As management has the ability to 
hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, management 
feels that the unrealized losses on the securities are not deemed to be other-than-temporary.

4.  Loans Receivable

Loans receivable include the following: 

Commercial

Consumer & Other

Real Estate

SUBTOTAL

Deferred Loan Fees

TOTALS

2014 ($)

2013 ($)

49,266,330

49,599,356

8,159,864

8,182,910

222,251,579

279,677,773

162,801,191

220,583,457

(688,187)

(418,573)

278,989,586

220,164,884

Commercial and industrial loans: The commercial lending portfolio consists primarily of commercial and 
industrial loans for the financing of accounts receivable, property, plant and equipment. Commercial loans 
typically are made on the basis of the borrower’s ability to repay the loan from the cash flow from its business 
and are secured by business assets, such as commercial real estate, accounts receivable, equipment and 
inventory, the values of which may fluctuate over time and generally cannot be appraised with as much precision 
as residential real estate. To manage these risks, the Bank’s policy is to secure commercial loans originated with 
both the assets of the business, which are subject to the risks described above, and other additional collateral 
and guarantees that may be available.

Real estate - commercial loans: Commercial real estate loans are primarily secured by various types 
of commercial real estate, including office, retail, warehouse, industrial and other non-residential types of 
properties and are made to the owners and/or occupiers of such property. The repayment of loans secured by 
income-producing properties is typically dependent upon the successful operation of a business or real estate 
project, and thus may be subject to adverse conditions in the commercial real estate market or in the general 
economy. The Bank generally requires personal guarantees or endorsements with respect to these loans and 
loan-to-value ratios for commercial real estate loans, which generally do not exceed 80 percent.

Real estate - residential and home equity loans: This portfolio consists of residential first and second 
mortgage loans, residential construction loans and home equity lines of credit and term loans secured primarily 
by the residences of borrowers. Residential mortgage loans and home equity lines of credit secured by owner-
occupied property generally are made with a loan-to-value ratio of up to 80 percent.

16

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIAAn analysis of the allowance for possible loan losses based on type or loan segment, which identifies certain 
loans that are evaluated for individual or collective impairment, as of December 31 is as follows:

YEAR 2014

Allowance for Possible Loan Losses

Beginning Balance

Charge-offs

Recoveries

Provision

ENDING BALANCE

COMMERCIAL & 
INDUSTRIAL ($)

REAL ESTATE 
COMMERCIAL 
($)

REAL ESTATE 
CONSTRUCTION  
($)

REAL ESTATE 
RESIDENTIAL 
($)

CONSUMER  
($)

TOTAL ($)

449,602

1,282,986

480,842

275,925

98,008

(336,027)

(97,248)

75,000

142,503

331,078

—

141,211

1,326,949

—

—

231,015

711,857

—

—

(29,758)

477

(60,029)

31,300

2,587,363

(463,033)

75,477

486,000

215,896

100,027

2,685,807

Individually Evaluated for Impairment

Collectively Evaluated for Impairment

—

—

—

—

—

331,078

1,326,949

711,857

215,896

100,027

—

2,685,807

Loans Receivable

ENDING BALANCE

49,266,330

124,993,736

36,247,806

61,010,037

8,159,864 279,677,773

Individually Evaluated for Impairment

—

566,562

393,529

264,640

—

1,224,731

Collectively Evaluated for Impairment

49,266,330

124,427,174

35,854,277

60,745,397

8,159,864

278,453,042

YEAR 2013

Allowance for Possible Loan Losses

Beginning Balance

Charge-offs

Recoveries

Provision

ENDING BALANCE

COMMERCIAL & 
INDUSTRIAL ($)

REAL ESTATE 
COMMERCIAL 
($)

REAL ESTATE 
CONSTRUCTION  
($)

REAL ESTATE 
RESIDENTIAL 
($)

CONSUMER  
($)

TOTAL ($)

380,032

1,221,293

316,118

270,641

48,738

—

—

—

—

69,570

449,602

61,693

1,282,986

—

105,000

59,724

480,842

(42,215)
—

47,499

275,925

(9,744)
—

59,014

98,008

2,236,822

(51,959)

105,000

297,500

2,587,363

Individually Evaluated or Impairment

Collectively Evaluated or Impairment

100,923

348,679

185,672

—

—

1,097,314

480,842

275,925

31,346

66,662

317,941

2,269,422

Loans Receivable

ENDING BALANCE

49,599,356

101,628,392

17,528,755

43,644,044

8,182,910 220,583,457

Individually Evaluated for Impairment

471,163

1,631,300

693,529

—

31,346

2,827,338

Collectively Evaluated for Impairment

49,128,193

99,997,092

16,835,226

43,644,044

8,151,564

217,756,119

17

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIAAn analysis of non-accrual and past due loans is as follows at December 31:

30-59 DAYS 
PAST DUE  
($)

60-89 DAYS 
PAST DUE  
($)

90 DAYS OR 
MORE  
PAST DUE ($)

TOTAL  
PAST DUE  
($)

CURRENT  
($)

TOTAL  
FINANCING  
RECEIVABLES 
($)

NONACCRUAL  
LOANS ($)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

60,000

60,000

—

—

—

—

—

—

—

—

—

—

— 49,266,330

49,266,330

— 54,173,344

54,173,344

— 70,820,392

70,820,392

—

—

—

— 15,989,057

15,989,057

393,529

— 20,258,749

20,258,749

—

233,693

233,693

— 7,926,171

7,926,171

— 49,950,577

49,950,577

60,000

10,999,460

11,059,460

—

—

—

—

—

60,000 279,617,773 279,677,773

393,529

30-59 DAYS 
PAST DUE  
($)

60-89 DAYS 
PAST DUE  
($)

90 DAYS OR 
MORE  
PAST DUE ($)

TOTAL  
PAST DUE  
($)

CURRENT  
($)

TOTAL  
FINANCING  
RECEIVABLES 
($)

NONACCRUAL  
LOANS ($)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

— 49,599,356

49,599,356

471,163

— 41,969,695

41,969,695

— 59,658,697

59,658,697

—

—

— 15,730,226

15,730,226

693,529

— 1,798,529

1,798,529

—

—

135,100

135,100

28,926

28,926

8,018,884

8,047,810

—

—

— 32,321,997

32,321,997

— 11,322,047

11,322,047

2,420

28,926

—

—

28,926

28,926 220,554,531 220,583,457

1,196,038

YEAR 2014

Commercial Non-Real Estate

Commercial & Industrial

Commercial Real Estate

Owner Occupied

Non-Owner Occupied

Construction

Residential

Commercial

Consumer Non-Real Estate

Automobile

Other

Residential

First Trusts

Equity Lines

TOTAL

YEAR 2013

Commercial Non-Real Estate

Commercial & Industrial

Commercial Real Estate

Owner Occupied

Non-Owner Occupied

Construction

Residential

Commercial

Consumer Non-Real Estate

Automobile

Other

Residential

First Trusts

Equity Lines

TOTAL

18

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIAAn analysis of impaired loans based on loan segment is as follows at December 31:

RECORDED  
INVESTMENT 
($) 

UNPAID  
PRINCIPAL  
BALANCE ($)

RELATED  
ALLOWANCE 
FOR LOAN 
LOSSES ($)

AVERAGE  
RECORDED  
INVESTMENT 
($)

INTEREST  
INCOME  
RECOGNIZED 
($)

393,529

393,529

566,562

264,640

393,529

566,562

264,460

566,562

264,640

393,529

566,562

264,460

—

—

—

—

—

—

560,132

—

1,827,791

271,251

560,132

1,827,791

271,251

101,703

15,295

—

101,703

15,295

RECORDED  
INVESTMENT 
($) 

UNPAID  
PRINCIPAL  
BALANCE ($)

RELATED  
ALLOWANCE 
FOR LOAN 
LOSSES ($)

AVERAGE  
RECORDED  
INVESTMENT 
($)

INTEREST  
INCOME  
RECOGNIZED 
($)

YEAR 2014

With No Related  
Allowance Recorded

Construction

Residential

Commercial-Real Estate

Non-Owner Occupied

Residential Real Estate

TOTAL

RESIDENTIAL CONSTRUCTION

COMMERCIAL-REAL ESTATE

RESIDENTIAL REAL ESTATE

YEAR 2013

With No Related Allowance Recorded

Construction

Residential

With An Allowance Recorded

Commercial-Non-Real Estate

Commercial & Industrial

Commercial-Real Estate

Non-Owner Occupied

Consumer

TOTAL

693,529

693,529

—

1,017,775

471,163

471,163

100,923

480,365

1,631,300

1,631,300

31,346

31,346

185,672

31,346

100,923

—

185,672

31,346

1,631,300

34,381

480,365

1,017,775

1,631,300

34,381

—

—

82,698

1,696

—

—

82,698

1,696

COMMERCIAL NON-REAL ESTATE

RESIDENTIAL CONSTRUCTION

471,163

693,529

471,163

693,529

COMMERCIAL REAL ESTATE

1,631,300

1,631,300

CONSUMER

31,346

31,346

No additional funds are committed to be advanced in connection with the impaired loans.

One of the most significant factors in assessing the Bank’s loan portfolio is the risk rating. The Bank uses the 
following risk ratings to manage the credit quality of its loan portfolio: pass, special mention, substandard, 
doubtful and loss. Special mention loans are those loans that have potential weakness that deserves 
management’s close attention. These loans have potential weaknesses that may result in deterioration of the 
repayment prospects for the loan or the Bank’s credit position at some future date. Substandard loans are 
inadequately protected by current sound worth, paying capacity of the borrower, or pledged collateral. Doubtful 
loans have all the inherent weaknesses in the substandard classification and collection or liquidation in full is 
highly questionable. Loss loans are considered uncollectible and of such little value that continuance as an 
active asset is not warranted. All other loans not rated are considered to have a pass rating.

19

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIAAn analysis of the credit quality indicators is as follows at December 31:

YEAR 2014

Commercial-Non-Real Estate

Commercial and Industrial

Commercial-Real Estate

Owner Occupied

Non-Owner Occupied

Construction

Residential

Commercial

Consumer-Non-Real Estate

Automobile

Other

Residential

First Trusts

Equity Lines

TOTAL

YEAR 2013

Commercial-Non-Real Estate

Commercial and Industrial

Commercial-Real Estate

Owner Occupied

Non-Owner Occupied

Construction

Residential

Commercial

Consumer-Non-Real Estate

Automobile

Other

Residential

First Trusts

Equity Lines

TOTAL

PASS ($)

SPECIAL MENTION ($)

SUBSTANDARD ($)

DOUBTFUL ($)

LOSS ($)

48,943,957

157,486

164,887

52,926,770

70,648,324

15,595,529

20,258,748

233,693

7,926,171

49,651,751

9,018,520

275,203,463

1,246,574

—

—

—

—

—

238,828

1,770,886

3,413,774

—

172,068

393,529

—

—

—

—

330,052

1,060,536

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

PASS ($)

SPECIAL MENTION ($)

SUBSTANDARD ($)

DOUBTFUL ($)

LOSS ($)

48,824,848

303,345

471,163

37,739,935

54,761,163

15,036,698

1,798,528

132,680

8,018,884

32,198,604

10,484,005

208,995,345

3,552,783

3,266,234

676,977

1,631,300

—

—

—

—

123,393

838,042

693,529

—

2,420

28,926

—

—

8,083,797

3,504,315

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

20

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIAA loan modification is classified as a troubled debt restructuring (TDR) if both of the following exist: 1) the 
borrower is experiencing financial difficulty, and 2) the Bank has granted a concession to the borrower. The 
assessment of whether the above conditions exist is subjective and requires management’s judgment. TDRs are 
typically modified through reductions in interest rates, reduction in payments, changing the payment terms or 
through extensions in term maturity

There were no loans modified as TDRs for the years ended December 31, 2014 and 2013.

The Bank has entered into transactions with certain directors, executive officers, significant stockholders and 
their affiliates. Such transactions were made in the ordinary course of business on substantially the same terms 
and conditions, including interest rates and collateral, as those prevailing at the same time for comparable 
transactions with other customers and did not, in the opinion of management, involve more than normal credit 
risk or present other unfavorable features. The aggregate amount of loans outstanding to such related parties 
was $2,665,314 and $3,145,213 at December 31, 2014 and 2013, respectively. New loans made to such related 
parties, including loans held by new directors, amounted to $313,463 and $531,351, and payments amounted to 
$793,362 and $414,615 at December 31, 2014 and 2013, respectively.

5.  BANK PREMISES AND EQUIPMENT

Bank premises and equipment include the following:

Furniture & Equipment

Leasehold Improvements 

Software 

TOTAL COST

Less Accumulated Depreciation

NET BANK PREMISES AND EQUIPMENT

2014 ($)

1,379,335

485,762

238,382

2013 ($)

1,056,741

133,489

207,061

2,103,479

1,397,291

(1,272,709)

(1,104,914)

830,770

292,377

Depreciation and amortization of bank premises and equipment charged to expense amounted to $167,795 and 
$91,530 in 2014 and 2013, respectively.

21

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIA6.  DEPOSITS 

Time deposits in denominations of $100,000 or more totaled $146,683,907 and $115,552,642 at December 31, 
2014 and 2013, respectively.

The following are time deposits maturing in years ending December 31:

2015

2016

2017 

2018

2019 and Thereafter

TOTAL

$110,295,979

53,467,488

3,661,704

18,543,346

5,691,621

$191,660,138

The Bank held related party deposits of approximately $10,943,000 and $8,156,000 at December 31, 2014  
and 2013, respectively.

7.  BORROWINGS

At December 31, 2014 and 2013, the Bank had $2,100,000 available under a line of credit Fed Funds facility to be 
used for temporary, short-term needs with borrowings not to exceed seven consecutive business days. There 
were no borrowings on this line at December 31, 2014 and 2013.

At December 31, 2014 and 2013, the Bank had an additional $2,000,000 available under a line of credit Fed 
Funds facility to be used for temporary, short-term needs with borrowings not to exceed 30 consecutive 
calendar days. There were no borrowings on this line at December 31, 2014 and 2013.

At December 31, 2014 and 2013, the Bank also had $6,000,000 available under a line of credit Fed Funds 
facility to be used for overnight cash settlements. The borrowings are secured by $300,000 held in a cash and 
correspondent account that is recorded as cash and due from banks on the balance sheet. There were no 
borrowings on this line at December 31, 2014 and 2013.

22

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIA8.  INCOME TAXES

Significant components of deferred income tax assets and liabilities are as follows at December 31:

DEFERRED SOURCE

Loans & Loan Loss Reserve

Unearned Loan Fees & Costs, net

Depreciation

Gross deferred tax assets

Valuation Allowance

Net Deferred tax assets

The provision for income taxes consists of the following at December 31:

Current Tax Expense

Deferred Tax Expense (Benefit)

Change in Valuation Allowance

2014 ($)

1,305,000

234,000

(219,000)

2013 ($)

1,322,000

142,000

(62,000)

1,320,000

1,402,000

—

1,320,00

(543,000)

859,000

2014 ($)

2013 ($)

461,000

82,000

(543,000)

—

541,000

(86,000)

(455,000)

—

The following is a reconciliation of the Federal statutory income tax rate to the effective tax rate as a percent of 
pre-tax income for the years ended December 31:

Federal Statutory Rate

Permanent Differences

Change in Valuation Allowance

Effective Tax Rate

2014 (%)

2013 (%)

34%

—    

(34)

0%

34%

—

(34)

0%

23

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIA9.  CAPITAL REQUIREMENTS

The Bank is subject to various regulatory capital requirements administered by Federal banking agencies.  
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional 
discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s  
financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective 
action, the Bank must meet specific capital guidelines that involve quantitative measures of their assets, 
liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s 
capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative 
judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain 
minimum amounts and ratios of total risk-based capital and Tier 1 capital to risk-weighted assets (as defined in 
the regulations), and Tier 1 capital to adjusted total assets (as defined). Management believes, as of December 
31, 2014, that the Bank meets all the capital adequacy requirements to which it is subject.

As of December 31, 2014, the Bank was categorized as well capitalized under the regulatory framework for 
prompt corrective action. To remain categorized as well capitalized, the Bank will have to maintain minimum 
total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as disclosed in the following table. There are no 
conditions or events since the most recent notification that management believes have changed the Bank’s 
prompt corrective action category.

The Bank’s actual capital amounts and ratios as of December 31, 2014 and 2013 are as follows:

ACTUAL

FOR CAPITAL  
ADEQUACY PURPOSES

MINIMUM TO BE WELL  
CAPITALIZED UNDER  
PROMPT CORRECTIVE  
ACTION PROVISIONS

AMOUNT ($)

RATIO (%)

AMOUNT ($)

RATIO (%)

AMOUNT ($)

RATIO (%)

29,769,220

10.95

21,749,040

8.00

27,186,300

10.00

29,828,107

10.97

10,874,520

4.00

16,311,780

29,828,107

10.02

11,911,117

4.00

14,888,897

6.00

5.00

26,118,725

11.91

17,540,800

8.00

21,926,000

10.00

26,477,656

12.08

8,770,400

4.00

13,155,600

26,477,656

10.48

10,102,931

4.00

12,628,664

6.00

5.00

DEC. 31, 2014

Total Capital  
(to Risk Weighted Assets)

Tier 1 Capital  
(to Risk Weighted Assets)

Tier 1 Capital  
(to Average Assets)

DEC. 31, 2013

Total Capital  
(to Risk Weighted Assets)

Tier 1 Capital  
(to Risk Weighted Assets)

Tier 1 Capital  
(to Average Assets)

24

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIA10.  STOCK OPTION PLAN

In 2007, the Bank established the 2007 stock option and equity plan (the Plan) for executives, other employees, 
officers, directors and consultants. Shares under the Plan may be granted at not less than 100 percent of the fair 
market value at the grant date. The authorized and granted options under the Plan are as follows at December 
31, 2014: 

2007 Plan

AUTHORIZED

GRANTED

VESTED

633,600

530,033

409,555

The stock options shall not be exercisable more than ten years after the date such option is granted. Shares 
typically vest over periods ranging from one to four years. At December 31, 2014, there was approximately 
$58,000 in unrecognized compensation expense related to non-vested share-based compensation. At  
December 31, 2013, there was approximately $8,000 in unrecognized compensation expense related to non-
vested share-based compensation, which was all recognized in 2014 due to materiality.

Amounts and the number of options have been retrospectively adjusted for the six-for-five stock splits that were 
effective on February 16, 2012 and August 13, 2013 and the eleven-for-ten stock split that was effective on April 1, 
2014. The Bank canceled and reissued stock options granted in 2007.

The following summarizes the option activity under the Plan:

OUTSTANDING 
(DEC. 31, 2012)

Grants

Exercised

Canceled or Expired

OUTSTANDING 
(DEC. 31, 2013)

Grants

Exercised

Canceled or Expired

OUTSTANDING 
(DEC. 31, 2014)

NUMBER OF  
SHARES

OPTION PRICE  
PER SHARE ($)

WEIGHTED  
AVERAGE  
EXERCISE PRICE ($) 

493,979

—

(31,680)

(3,697)

458,602

96,275

(23,260)

(1,584)

530,033

6.38

—

5.92

6.41

6.50

8.99

6.03

6.27

7.24

6.38

—

5.92

6.41

6.50

8.99

6.03

6.27

7.24

The weighted average fair value of options granted during the year ended December 31, 2014 was $8.99. The 
weighted average remaining contractual life of options outstanding as of December 31, 2014 is 7.17 years.

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is 
recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The 
Bank uses the Black-Scholes option pricing model to determine the fair value of stock options. The fair value 
of the stock based payment awards is affected by the price of the stock and a number of financial assumptions 
and variables. These variables include the risk-free interest rate, expected dividend rate, expected stock price 
volatility and the expected life of the options. The following assumptions were used: a risk-free interest rate of 
3.25 percent, an estimated dividend yield of zero percent, an expected holding period of 10 years and volatility 
of 5.00 percent.

The expected volatility is based on the historical volatility of peer institutions. The risk-free interest rate is the 
implied yield available on U.S. Treasury bonds with a remaining term equal to the expected term of the options 
granted. The expected life is based on the average of the contracted life and vesting schedule for the options 
granted. The dividend yield assumption is based on expected dividend payouts.

25

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIAFor the year ended December 31, 2014, the Bank recognized approximately $8,000 in stock-based 
compensation expense. For the year ended December 31, 2013, the Bank did not recognize stock-based 
compensation expense.

11.  OPERATING LEASES

In December 2010, the Bank exercised its second five-year option for the branch facility located at 502 Maple 
Avenue in Vienna, Virginia. The agreement provides for a term of five years ending December 2015. The total 
base annual lease payments for the second year of the extension are $66,774, increasing a maximum of five 
percent per annum thereafter. The lease agreement includes approximately 1,862 square feet on the ground 
floor for the branch facility. The lease agreement includes additional rent payments based on a pro rata portion 
of annual taxes and common area maintenance charges.

In July 2011, the Bank renewed its lease for its loan operations on the second floor at 10555 Main Street in 
Fairfax, Virginia. The agreement provided for an initial lease term of five years commencing August 1, 2011 and 
ending July 31, 2016. Total base annual lease payments are $148,764 for the first year, increasing three percent 
per annum thereafter. In December 2014, the Bank entered into an updated agreement amending the lease to 
end on December 31, 2015. The lease agreement is for 6,072 square feet. The agreement includes additional 
rent payments based on a pro rata portion of annual taxes, common area maintenance charges, and utilities.

In October 2004, the Bank entered into a lease for its headquarters and an additional branch facility at 10555 
Main Street in Fairfax, Virginia. The agreement provides for an initial lease term of ten years commencing 
January 1, 2005 and ending December 31, 2014. In December 2014, the Bank entered into an updated 
agreement that separated the headquarters and branch space. The headquarters space for 6,002 square 
feet was extended for an additional year ending December 31, 2015. Total base annual lease payments under 
the one-year extension are $225,855 for both the headquarters and branch space. The agreement includes 
additional rent payments based on a pro rata portion of annual taxes, common area maintenance charges,  
 and utilities.

The updated lease agreement for the branch is for an initial lease term of ten years commencing January 1, 2016 
and ending December 31, 2025. Total base annual lease payments are $125,895 for the first year, increasing 3 
percent per annum thereafter. The agreement includes additional rent payments based on a pro rata portion 
of annual taxes, common area maintenance charges, and utilities. The Bank has the right to renew the branch 
lease for two periods of five additional years as provided for in the lease.

In November 2013, the Bank entered into a lease for an additional branch facility at 11700 Plaza America Drive 
in Reston, Virginia. The agreement provides for an initial lease term of 10 years commencing May 1, 2014 and 
ending April 30, 2024 with the option to extend the term for two additional periods of five years each. Total base 
annual lease payments are $80,576 for the first year, increasing 1.0275 percent per annum thereafter. The lease 
agreement is for 2,518 square feet. The agreement includes additional rent payments based on a pro rata portion 
of annual taxes, common area maintenance charges, and utilities.

The following are the future minimum lease payments at December 31, 2014:

YEARS ENDING DECEMBER 31

2015

2016

2017 

2018

2019

Thereafter

$552,739

207,857

212,476

217,217

222,083

1,292,825

$2,705,197

Rent expense amounted to $530,626 and $460,684 for the years ended December 31, 2014 and 2013, respectively.

26

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIA12. FAIR VALUE MEASUREMENTS

Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value 
Measurements and Disclosures, provides a framework for measuring fair value. That framework provides a fair 
value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value focuses 
on the price that would be received to sell the asset or paid to transfer the liability regardless of whether an 
observable liquid market price existed (an exit price). 

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or 
liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The 
three levels of the fair value hierarchy under FASB ASC 820 are described below:

Level 1 – inputs to the valuation methodology are based upon unadjusted quoted prices for identical assets or 

liabilities in active markets that the Bank has the ability to access.

Level 2 – inputs to the valuation methodology include: quotes prices for similar assets or liabilities in active 

markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs 
other than quoted prices that are observable for the asset or liability, and market-corroborated inputs. 
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for 
substantially the full term of the asset or liability.

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. 

Level 3 assets and liabilities measured at fair value are based on one or more of three valuation 
techniques (market, cost, or income approach). The market approach evaluates prices and other 
relevant information generated by market transactions involving identical or comparable assets or 
liabilities. The cost approach evaluates the amount that would be required to replace the service 
capacity of an asset (i.e., replacement cost). The income approach uses techniques that convert future 
amounts to a single present amount based on market expectations (including present value techniques, 
option-pricing models, and lattice models).

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of 
any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use 
of observable inputs and minimize the use of unobservable inputs.

The following describes the valuation techniques used by the Bank to measure certain financial assets and 
liabilities recorded at fair value on a recurring basis in the financial statements:

Securities available-for-sale: Securities available-for-sale are recorded at fair value on a recurring 
basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted 
market prices are not available, fair values are measured utilizing independent valuation techniques 
of identical or similar securities for which significant assumptions are derived primarily from or 
corroborated by observable market data. Third party vendors compile prices from various sources and 
may determine the fair value of identical or similar securities by using pricing models that considers 
observable market data (Level 2).

The following table presents the balances of financial assets and liabilities measured at fair value on a recurring 
basis as of December 31:

QUOTED PRICES IN 
ACTIVE MARKETS FOR 
IDENTICAL ASSETS  
(LEVEL 1) ($)

SIGNIFICANT OTHER 
OBSERVABLE INPUTS  
(LEVEL 2) ($)

SIGNIFICANT  
UNOBSERVABLE 
INPUTS  
(LEVEL 3) ($)

FAIR VALUE ($)

DEC. 31, 2014

AVAILABLE-FOR-SALE SECURITIES

27,294,953

DEC. 31, 2013

AVAILABLE-FOR-SALE SECURITIES

23,740,219

—

—

27,294,953

23,740,219

—

—

27

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIACertain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. 
Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market 
accounting or write-downs of individual assets.

The following describes the valuation techniques used by the Bank to measure certain financial assets recorded 
at fair value on a nonrecurring basis in the financial statements:

Impaired loans: Loans are designated as impaired when, in the judgment of management based on 
current information and events, it is probable that all amounts due according to the contractual terms 
of the loan agreement will not be collected. The measurement of loss associated with impaired loans 
can be based on either the observable market price of the loan or the fair value of the collateral. Fair 
value is measured based on the value of the collateral securing the loans. Collateral may be in the 
form of real estate or business assets, including equipment, inventory and accounts receivable. The 
vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an 
income or market valuation approach based on an appraisal conducted by an independent, licensed 
appraiser outside of the Bank using observable market data (Level 2). However, if the collateral is a 
house or building in the process of construction, or if an appraisal of the real estate property is over 
two years old, then the fair value is considered Level 3. The value of business equipment is based upon 
an outside appraisal if deemed significant, or the net book value on the applicable business’ financial 
statements if not considered significant using observable market data. Likewise, values for inventory 
and accounts receivable collateral are based on financial statement balances or aging reports (Level 3). 
Impaired loans allocated to the allowance for loan losses are measured at fair value on a nonrecurring 
basis. Any fair value adjustments are recorded in the period incurred as provision for possible loan 
losses on the statements of operations.

The following table summarizes the Bank’s financial assets that were measured at fair value on a nonrecurring 
basis as of December 31:

QUOTED PRICES IN 
ACTIVE MARKETS FOR 
IDENTICAL ASSETS  
(LEVEL 1) ($)

SIGNIFICANT OTHER 
OBSERVABLE INPUTS  
(LEVEL 2) ($)

SIGNIFICANT  
UNOBSERVABLE 
INPUTS  
(LEVEL 3) ($)

FAIR VALUE ($)

DEC. 31, 2014

AVAILABLE-FOR-SALE SECURITIES

1,224,731

DEC. 31, 2013

AVAILABLE-FOR-SALE SECURITIES

2,827,338

—

—

1,224,731

—

2,509,397

317,941

The following methods and assumptions were used by the Bank in estimating fair values of financial instruments 
as disclosed herein:

Cash and due from banks: The carrying amounts of cash and due from banks approximate their  
fair value.

Interest bearing deposits with banks: The carrying amounts of interest bearing deposits with banks 
payable on demand, consisting of money market deposits, approximate fair value. Fair value of fixed-
rate certificates of deposit is estimated based on discounted cash flow analyses using the remaining 
maturity of the underlying accounts and interest rates currently offered on certificates of deposit with 
similar original maturities.

Securities available-for-sale and held-to-maturity: Fair values for securities are based on quoted 
market prices, where available. If quoted market prices are not available, fair values are based on 
quoted market prices of comparable instruments.

Loans held for sale: The carrying amount is the lower of aggregate cost or fair value. The estimated 
fair value is dependent upon the terms of the outstanding loan purchase commitments as well as 
movement in market interest rates.

28

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIALoans receivable: For variable-rate loans that reprice frequently and have no significant change in 
credit risk, fair values are based on carrying values. Fair values for certain mortgage loans (for example, 
one to four family residential), credit card loans and other consumer loans are based on quoted market 
prices of similar loans sold in conjunction with securitization transactions, adjusted for differences 
in loan characteristics. Fair values for business real estate and business loans are estimated using 
discounted cash flow analyses, using interest rates currently being offered for loans with similar terms 
to borrowers of similar credit quality. Fair values for impaired loans are estimated using discounted 
cash flows analyses or underlying collateral values, where applicable.

Accrued interest: The carrying amounts of accrued interest approximate fair value.

Deposits: The carrying amounts of deposit liabilities payable on demand, consisting of money market 
deposits and saving deposits, approximate fair value. Fair value of fixed-rate certificates of deposit 
is estimated based on discounted cash flow analyses using the remaining maturity of the underlying 
accounts and interest rates currently offered on certificates of deposit with similar original maturities.

Off-balance sheet financial instruments: At December 31, 2014 and 2013, the fair values of loan 
commitments and standby letters of credit are immaterial. Therefore, they have not been included in 
the following table.

The estimated fair values of the Bank’s financial instruments are as follows at December 31:

Financial Assets

Cash and Due from Banks

Interest Bearing Deposits with Banks

Federal Funds Sold

Securities Available-for-Sale

Loans Held for Sale

Securities Held-to-Maturity

Loans Receivable, net

Accrued Interest Receivable

Bank-owned Life Insurance

2014

2013

CARRYING  
AMOUNT ($)

FAIR VALUE ($)

CARRYING  
AMOUNT ($)

FAIR VALUE ($)

4,917,099

1,024,155

4,917,099

1,024,155

8,171,071

1,020,078

8,171,071

1,020,078

24,837,000

24,837,000

16,817,000

16,817,000

27,294,953

27,294,953

23,740,219

23,740,219

5,610

649,975

5,646

649,975

768,900

44,679

768,900

45,547

276,303,779

275,320,723

217,577,521

217,816,123

864,224

864,224

697,326

697,326

2,160,567

2,160,567

2,101,603

2,101,603

TOTAL FINANCIAL ASSETS

338,057,362

337,074,342

270,938,397

271,177,867

Financial Liabilities

Non-interest Bearing Deposits

Interest Bearing Deposits

Saving Deposits

Time Deposits

Accrued Interest Payable

51,431,344

51,431,344

39,085,418

39,085,418

65,959,271

65,959,271

47,370,151

47,370,151

2,637,231

2,637,231

3,704,290

3,704,290

191,660,138

191,945,611

156,993,688

155,359,016

92,304

92,304

77,310

77,310

TOTAL FINANCIAL LIABILITIES

311,780,288

312,065,761

247,230,857

245,596,185

29

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIA13.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In the normal course of business, the Bank has outstanding commitments and contingent liabilities, such 
as commitments to extend credit and standby letters of credit, which are not included in the accompanying 
financial statements. The Bank’s exposure to credit loss in the event of nonperformance by the other party to 
the financial instruments for commitments to extend credit and standby letters of credit is represented by the 
contractual or notional amount of those instruments. The Bank uses the same credit policies in making such 
commitments as it does for instruments that are included in the balance sheets.

Financial instruments whose contract amount represents credit risk were approximately as follows:

Commitments to Extend Credit

Standby Letters of Credit

2014 ($)

2013 ($)

107,464,000

89,741,000

1,001,000

757,000

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any 
condition established in the contract. Commitments generally have fixed expiration dates or other termination 
clauses and may require payment of a fee. Since many of the commitments are expected to expire without 
being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The 
Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if 
deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation. Collateral 
held varies, but may include accounts receivable, inventory, property and equipment, and income-producing 
commercial properties.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a 
customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination 
clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the 
same as that involved in extending loan facilities to customers. The Bank’s policy for obtaining collateral, and the 
nature of such collateral, is essentially the same as that involved in making commitments to extend credit.

The Bank has not been required to perform on any financial guarantees during the past two years. The Bank has 
not incurred any losses on its commitments in either 2014 or 2013.

14.  RESTRICTION ON DIVIDENDS

The Bank is subject to certain restrictions on the amount of dividends that it may pay without prior regulatory 
approval. At December 31, 2014 and 2013, capital was not available for payment of dividends.

30

|  2014 ANNUAL REPORTFREEDOM BANK OF VIRGINIA15.  DEFERRED BENEFITS

Effective July 1, 2002, the Bank adopted a contributory 401(k) savings plan covering substantially all 
employees, which allows eligible employees to contribute up to 25 percent of their compensation. The Board 
of Directors may elect to approve to match a portion of each employee’s contribution. The Bank elected to 
make a discretionary contribution of $140,700 and $110,400 for the years ended December 31, 2014 and 
2013, respectively.

The Bank adopted deferred compensation plans for its directors, effective December 31, 2012, and its 
executives, effective February 1, 2013. Under the directors’ plan, a director may elect to defer all or a portion 
of any director-related fees, including fees for serving on board committees. Under the executives’ plan, 
certain employees may defer all or a portion of their compensation, including any bonus compensation.

16.  LEGAL CONTINGENCIES

Various legal claims can arise from time to time in the normal course of business which, in the opinion of 
management, will have no material effect on the Bank’s financial statements.

31

FINANCIAL STATEMENTS  |FREEDOM BANK OF VIRGINIASHAREHOLDER &  
COMPANY INFORMATION

BOARD OF DIRECTORS

RICHARD C. LITMAN

Chairman

CYNTHIA CARTER ATWATER
Corporate Secretary

DAVID C. KARLGAARD, Ph.D.

G. THOMAS COLLINS, JR.

ALVIN E. NASHMAN, Ph.D.

TERRY L. COLLINS, Ph.D. 

JOHN T. ROHRBACK 
Vice Chairman

H. JASON GOLD

NORMAN P. HORN

CRAIG S. UNDERHILL
President and 
Chief Executive Officer

DIRECTORS EMERITUS

With Deepest Appreciation for the 
Directors Who Previously Served

IRVING BERNSTEIN
Founding Director
2000-2007
In Memoriam

MICHAEL A. MIRANDA
Co-Founder & Organizing Director
2000-2013
In Memoriam

JOHN F. CARMAN
Founding Director & Vice Chairman
2000-2006
In Memoriam

GEORGE C. DUKAS
Director
2002-2005
Director Emeritus

WILLIAM G. DUKAS
Founding Director
2000-2011
In Memoriam

MICHAEL A. FALKE
Founding Director
2000-2002

RICHARD L. HALL
Founding Director, President, & COO
2000-2003
In Memoriam

TIMOTHY P. HECHT
Director
2005-2007
Director Emeritus

GEORGE Z. KONTZIAS
Director
2002-2006
Director Emeritus

JAMES N. NEWSOME
Founding Chairman & CEO
2000-2003
Director Emeritus

RUSSEL E. SHERMAN
Founding Director
2000-2007
In Memoriam

HARRY N. SNYDER, O.D.
Founding Director
2000-2007

JAMES F. STEFFEY
Founding Director
2000-2007
Director Emeritus

C. STEPHEN TEMPLETON
Founding Director
2000-2002

CHARLES M. WRIGHT
Founding Director
2000-2002
Director Emeritus

33

FREEDOM BANK OF VIRGINIASHAREHOLDER & COMPANY INFORMATION   |ADVISORY BOARD

AZMAT ALI

USAMA H. MISLEH

FRANK V. STURGEON

DARREN BERNSTEIN

ELIZABETH J. MOFFETT

C. STEPHEN TEMPLETON

BRIAN BLOXOM

JAMES N. NEWSOME

STEPHEN M. TURNER

PHILLIP DONDES

ARLENE LYLES PRIPETON

ROBERT G. WILLIAMS

BRYAN FELDER

THOMAS J. RILEY

CHARLES M. WRIGHT

STEPHEN MASCIOLA

JAMES F. STEFFEY

OWEN MICHAEL MCCALL

MICHAEL J. SULLIVAN

EXECUTIVE OFFICERS  
& SENIOR LEADERSHP TEAM

CRAIG S. UNDERHILL

President &
Chief Executive Officer 

KARIN M. JOHNS

C. KEVIN CURTIS

Executive Vice President 
Chief Financial Officer 

Executive Vice President 
Chief Lending Officer 
NMLS# 1040247

SALLY T. SIVERONI

ROBERT D. WILLEY, JR.

RICHARD A. HUTCHISON

Senior Vice President 
Chief Credit Officer 

Executive Vice President 
Commercial Banking 

Senior Vice President 
Chief Mortgage Officer 
 NMLS# 179316

KIMBERLY J. RYMAN

DEBORAH A. FREE

JOAN E. LISZKA

Senior Vice President 
Senior Loan Administration Officer

Senior Vice President 
Branch Administration Officer

Senior Vice President,  
Human Resources 
Assistant Corporate Secretary

34

FREEDOM BANK OF VIRGINIA|  2014 ANNUAL REPORTCOMMERCIAL BANKING

VISHAL M. GANDHI

Vice President 

DANIEL E. MARKS

Vice President 
NMLS# 618696

JAMES T. NELSON, III

MICHAEL J. UNDERWOOD

Senior Vice President 

Senior Vice President and 
Team Leader

LAURA L. POWELL

STEPHEN A. WITT

Senior Vice President 

Senior Vice President

E. ROBERT MUSSEMAN, JR.

RICHARD M. SOBONYA

Vice President
NMLS# 85152

Vice President

MORTGAGE DIVISION

RICHARD A. HUTCHISON

Senior Vice President
Chief Mortgage Officer
NMLS# 179316

BRANCH LOCATIONS

FAIRFAX

VIENNA

RESTON 

G. VERONIKA CAVERO

ALFREDO G. MOLINA

PAULA A. NEWSOME

Branch Officer/Manager
NMLS# 1307431

Branch Officer/Manager 
NMLS# 1306195 

Vice President/Branch Manager
NMLS# 993276

FBV CAPITAL ADVISORS, INC.

A subsidiary of The Freedom Bank of Virginia

ROBERT N. RUBIN

President

35

FREEDOM BANK OF VIRGINIASHAREHOLDER & COMPANY INFORMATION   | 
CORPORATE HEADQUARTERS

THE FREEDOM BANK OF VIRGINIA

10555 Main Street
Fairfax, VA 22030
703-242-5300

TRANSFER AGENT
American Stock Transfer & Trust Company
Shareholder Services - Admin 2 Team
6201 Fifteenth Avenue
Brooklyn, NY 11219
800-937-5449

www. amstock.com

INDEPENDENT REGISTERED  
PUBLIC ACCOUNTING FIRM
Thompson Greenspon
Fairfax, VA

COMMON STOCK

THE FREEDOM BANK OF VIRGINIA

Common stock is traded on the
OTC Markets Group (OTCQX)
under the symbol FDVA

NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders  
will be held on  
Wednesday, July 22, 2015 - 10:00 a.m. 
at the Westwood Country Club
800 Maple Avenue East
Vienna, VA 22180

36

FREEDOM BANK OF VIRGINIA|  2014 ANNUAL REPORTTHE FREEDOM BANK OF VIRGINIA

FAIRFAX

RESTON

VIENNA

10555 Main Street
Fairfax, VA 22030

11700 Plaza America Drive
Reston, VA 22190

502 Maple Avenue W.
Vienna, VA 22180

MORTGAGE DIVISION

4211 Pleasant Valley Road
Chantilly, VA 20151

703.242.5300
www.FreedomBankVA.com