Freedom Financial Holdings Announces Results for Fourth Quarter and Full Year of 2025

FAIRFAX, Va., Jan. 30, 2026 /PRNewswire/ -- Freedom Financial Holdings (OTCQX: FDVA), (the "Company" or "Freedom"), the holding company for The Freedom Bank of Virginia (the "Bank") today announced net loss of $3,567,973 or $0.50 per diluted share for the fourth quarter compared to net income of $1,122,930 or $0.16 per diluted share for the three months ended September 30, 2025, and net income of $1,156,906 or $0.16 per diluted share for the three months ended December 31, 2024. Net income for the twelve months ended December 31, 2025, was $374,197 or $0.05 per diluted share, compared to $4,710,286 or $0.64 per diluted share for the twelve months ended December 31, 2024.

Joseph J. Thomas, President, and CEO, commented, "Our core bank experienced strong financial results in the fourth quarter with pre-provision, pre-tax income¹ ("PPNR") for the fourth quarter of $2.2 million up 84.4% over fourth quarter of 2025 and 22.6% over third quarter 2025. Pre-provision, pre-tax income for the full year 2025 was $8.62 million and increase of 74.6% over 2024. In addition, the bank demonstrated positive momentum in the year, growing core deposits by $111MM, or 19%, and reducing higher cost, brokered funding by $97 million and borrowings by $25 million, which enabled improvement in our Net Interest margin by 35 bps, from 2.41% to 2.76% for the full year. In the fourth quarter alone, we increased C&I loan balances by 13.6% (now 23% of total loans) and Non-Interest Bearing Deposits by 18.0% (now 16% of total deposits). Through strong expense management, we also improved our efficiency ratio from 83.59% to 73.83%. Unfortunately, at the end of the year, we learned of adverse developments in a large, syndicated loan exposure for one commercial borrower originated in 2022. Based upon recent performance and provided projections, we downgraded the loan to non-accrual and set up a specific reserve of $5.925 million, which is 50% of our total exposure to correspond to and corresponds with the terms of the currently proposed corporate restructuring. We will continue to evaluate the credit to determine if this level of specific reserve remains appropriate as we evaluate workout and litigation strategies. This one particular credit issue does not represent a systemic issue or reflect other correlated risks with ongoing lending operations or local economy. The Bank's Total Risk Based Capital ratio increased to 15.08% at year-end compared to 14.35% at FYE 2024 and we remain well positioned form a liquidity standpoint at loan-to-deposit ratio of 83.4%. Our bank remains safe and sound and open for business to serve customers and communities and the improvement in core results over prior period reflects the outstanding work of employees across the company. Our Board of Directors authorized an additional 250,000 shares to repurchase under the Company's share buyback program and believes this represents a disciplined capital management strategy for our shareholders."

Fourth Quarter and Full Year 2025 Highlights include:

• The Company posted net income of ($3,567,973) or ($0.50) per diluted share in the fourth quarter compared to net income of 1,122,930 or $0.16 per diluted share for the three months ended September 30, 2025, and net income of $1,156,906 or $0.16 per diluted share for the three months ended December 31, 2024.
• Net income for the full year 2025 was $374,197 or $0.05 per diluted share compared to net income of $4,710,286 or $0.64 per diluted share for the full year 2024.
• Return on Average Assets ("ROAA") was (1.37%) for the quarter ended December 31, 2025, compared to 0.41% for the linked quarter and 0.41% for the three months ended December 31, 2024. ROAA for the full year 2025 was 0.04% compared to 0.43% for the full year 2024.
• Return on Average Equity ("ROAE") was (15.96%) for the three months ended December 31, 2025, compared to 5.57% for the linked quarter and 5.58% for the three months ended December 31, 2024. ROAE for the full year 2025 was 0.44% compared to 5.93% for the full year 2024.
• Total Assets were $1.066 billion on December 31, 2025, a decrease of $24.4 million or 2.23% from total assets of 1.09 billion on December 31, 2024.
• Loans held-for-investment increased by $21.2 million or 2.86% during the quarter and decreased by $5.34 million or 0.70% for the full year 2025.
• Total deposits increased by $59.2 million or by 6.93% in the fourth quarter and increased by $4.7 million or 0.52% for the full year 2025. Non-interest-bearing demand deposits increased by $22.8 million from the linked quarter to $149.52 million and increased by $15.9 million for the full year 2025 and represented 16.3% of total deposits on December 31, 2025 as compared to 14.7% of deposits at December 31, 2024.
• Tangible book value per share decreased by 3.0% during the fourth quarter to $12.08 per share from $12.45 per share and increased by 6.06% in 2025 to $12.08 per share from $11.39 per share. The tangible common equity ratio was 7.91% at the end of 2025 and 7.47% at the end of 2024.
• The net interest margin² increased in the fourth quarter to 2.70%, higher by 4 basis points compared to the linked quarter and higher by 25 basis points compared to the same period in 2024. The increase in the net interest margin was 35 basis points, to 2.76% in 2025 from 2.41% in 2024.
• The cost of funds was 2.99% for the fourth quarter, lower by 20 basis points compared to the linked quarter and lower by 47 basis points compared to the same period in 2024, as deposit costs decreased for interest bearing demand deposits and borrowings, driven by the Federal Reserve's reductions to the Federal Funds rate and the Bank's ability to substitute core deposits for brokered funds and borrowings.
• Non-interest income decreased by 17.1% compared to the linked quarter and decreased by 7.2% compared to the same period in 2024. Non-interest income in the full year 2025 was higher by 1.61% compared to the prior year. The decrease in non-interest income in the fourth quarter of 2025 compared to the linked quarter was primarily due to Service Charges and Other Income that included higher valuation gains related to SBIC investments in the third quarter, while the increase in non-interest income relative to the prior year was due to higher swap fee income and gain on sale of securities that also reside in that category.
• Non-interest expense in the fourth quarter decreased by 11.27% compared to the linked quarter and decreased by 13.2% compared to the same period in 2024. The decrease in non-interest expense for linked and calendar quarters was primarily due to lower expenses related to incentive compensation related to Bank's earnings performance, lower FDIC insurance expense due to the reduction in brokered deposits and lower advertising expense.
• The Efficiency Ratio³ was 71.29% for the quarter ended December 31, 2025, compared to 77.43% for the linked quarter and 84.07% for the same period in 2024. The Efficiency Ratio for the full year 2025 was 73.83% compared to 83.59% for the full year 2024.
• Uninsured deposits increased with the increase in core deposits and were 29.43% of total deposits on December 31, 2025, compared to 21.55% on December 31, 2024.
• Total available secured liquidity⁴ was 130.31% of uninsured deposits on December 31, 2025, compared to 162.14% on December 31, 2024.
• The Company charged off $197 thousand of loans in the fourth quarter and charge offs to average loans decreased to 0.03% compared to 0.13% in the prior quarter. Total charge offs for the year of 2025 were $1.14 million or 0.15% of average loans.
• The ratio of non-accrual loans to loans held-for-investment was 3.51% on December 31, 2025, compared to 1.78% on December 31, 2024. Eight of the loans that were on non-accrual include guaranteed portions of SBA loans, carrying the full faith and credit of the United States. Non-accrual loans with SBA guarantees totaled $11,474,689, supported by guarantees amounting to $9,128,683, or 80% guaranteed.
• Following an assessment of the collectability of loans held-for-investment and investment securities, the Company had a provision for credit losses of $6,941,897 in the fourth quarter, which roughly doubled the allowance for credit losses from the prior quarter and the prior year, related almost entirely to one large syndicated loan that was placed on non-accrual in the quarter, where negotiations with the lead bank and the borrower are ongoing.
• The ratio of the allowance for credit losses to loans held-for-investment was 1.82% compared to 0.96% in the linked quarter and 0.85% in the prior year.
• The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 11.05%, Common Equity Tier 1 ratio of 13.82%, Tier 1 Risk Based Capital ratio of 13.82% and a Total Capital ratio of 15.08%.

Net Interest Income
The Company recorded net interest income of $6.70 million for the fourth quarter of 2025, lower by 0.77% compared to the linked quarter, and higher by 4.3% compared to the same period in 2024. The net interest margin in the fourth quarter of 2025 was 2.70%, higher by 4 basis points compared to the linked quarter and higher by 26 basis points compared to the same period in 2024. The net interest margin for the full year 2025 was 2.76%, higher by 35 basis points compared to 2024.

The following factors contributed to the changes in net interest margin during the fourth quarter of 2025 compared to the linked and calendar quarters.

• Yields on average earning assets decreased to 5.55% compared to 5.72% in the linked quarter and 5.76% in the calendar quarter. Lower yields on cash, investment securities and loans, driven by the Federal Reserve's actions in 2025 to reduce the target Federal Funds rate drove the decrease in yields on earning assets as assets repriced. We also had to reverse out interest income related to additional nonaccrual loans that contributed to 12 basis points of yield reduction in the quarter.
• Loan yields decreased by 24 basis points to 5.98% from 6.22% in the linked quarter, while yields on investment securities decreased by 6 basis points to 4.23% from 4.29% in the linked quarter. Loan yields decreased by 17 basis points, while yields on investment securities decreased by 46 basis points compared to the calendar quarter.
• Cost of funds decreased by 20 basis points to 2.99% from 3.19% in the linked quarter and decreased by 47 basis points compared to the calendar quarter, primarily due to lower rates on interest checking and money market accounts and a reduction in borrowings during the current quarter.

The following factors contributed to the changes in net interest margin during the full year 2025 compared to the prior year:

• Yields on average earning assets decreased by 10 basis points to 5.78% compared to 5.88% in the prior year, driven by lower yields on investments and interest earning cash balances.
• Loan yields increased by 1 basis points to 6.28% from 6.27% in the prior year, while yields on investment securities decreased by 39 basis points to 4.37% from 4.76% in the prior year.
• Cost of funds decreased by 46 basis points to 3.15%, from 3.61% in the prior year, on lower deposit and borrowing costs and the addition of core deposit and reduction of brokered funding.

Non-interest Income
Non-interest income was $1.18 million for the fourth quarter, a decrease of 17.13% when compared to the linked quarter and a decrease of 7.15% when compared to the same period in 2024. Non-interest income in 2025 was higher by 1.61% compared to the prior year. The decrease in non-interest income in the fourth quarter of 2025 compared to the linked quarter was primarily due to higher Service Charges and Other Income in the third quarter related to SBIC investments, while the decrease in non-interest income relative to the calendar quarter was due to lower gain-on-sale revenue from mortgage loans in the current quarter. The increase in non-interest income in 2025 was primarily due to higher swap fee income and gain on sale of securities.

Total Revenue³
Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was lower by 3.65% compared to the linked quarter and higher by 2.35% compared to the calendar quarter in 2024. The decrease in revenue compared to the linked quarter was primarily due to the decrease in interest income stemming from one large loan going into non-accrual in the fourth quarter. The higher revenue compared to the calendar quarter was due to swap fee income and gain on sale of securities sold in the fourth quarter of 2025.

Total revenue for the full year 2025 was higher by 9.51% compared to 2024, primarily due to net interest margin expansion related to lower funding costs in 2025.

Non-interest Expense
Non-interest expense in the fourth quarter decreased by 11.27% compared to the linked quarter and decreased by 13.20% compared to the same period in 2024. The decrease in non-interest expense for linked and calendar quarters was primarily due to a combination of lower expenses related to incentive compensation, advertising, and FDIC insurance. Non-interest expense for the full year 2025 was lower by 3.27% compared to the prior year, primarily due to previously mentioned factors and also lower professional fees.

The Efficiency Ratio was 71.29% for the quarter ended December 31, 2025, compared to 77.43% for the linked quarter and 84.07% for the same period in 2024. The Efficiency Ratio for the full year 2025 was 73.83% compared to 83.59% for the full year 2024.

Asset Quality
Non-accrual loans in the fourth quarter were $26,767,487 or 3.51% of loans held-for-investment compared to $16,400,753 or 2.30% of loans held-for-investment at the end of the linked quarter, primarily attributed to one large syndicated loan. Eight of the loans that were on non-accrual include guaranteed portions of SBA loans, carrying the full faith and credit of the United States. Non-accrual loans with SBA guarantees totaled $11,474,689, supported by guarantees amounting to $9,128,683, or 80% guaranteed. Other Real Estate Owned ("OREO") was $1,302,801 as of December 31, 2025. Total non-performing assets (defined as the sum of loans on non-accrual, loans greater than 90 days past due and accruing, and OREO assets) were $28,070,288 or 2.51% of total assets as of December 31, 2025, compared to 1.65% of total assets, at the end of the linked quarter and 1.25% as of December 31, 2024.

The Company charged off $197 thousand of loans in the fourth quarter and charge offs to average loans decreased to 0.03% compared to 0.13% in the prior quarter. Total charge offs for 2025 were $1.14 million, or 0.15% of average loans.

The Company's ratio of Allowance for Credit Losses to loans held-for-investment was 1.82% as of December 31 2025, compared to the ratio of Allowance for Credit Losses to loans held-for-investment of 0.85% as of December 31, 2024.

Total Assets
Total assets as of December 31, 2025, were $1.07 billion compared to $1.03 billion on September 30, 2025, and total assets of $1.09 million on December 31, 2024. Changes in major balance sheet categories since December 31, 2024, were as follows:

• Non-Interest bearing deposits increased by $15.8 million.
• Interest bearing core deposits at banks increased by $86.0 million.
• Interest bearing wholesale deposits decreased by $97.1 million.
• Borrowings decreased by $25.0 million.
• Investment balances decreased by $52.1 million.
• Cash and Due from Banks increased by $45.4 million.
• Other loans held-for investment decreased by $8.16 million

Total Liabilities
Total liabilities as of December 31, 2025, were $981.8 million compared to total liabilities of $944.2 million on September 30, 2025, and $1.01 billion on December 31, 2024. Total deposits were $914.3 million on December 31, 2025, compared to $855.0 million on September 30, 2025, and total deposits of $909.5 as of December 31, 2024. Non-interest-bearing demand deposits increased by $22.8 million during the fourth quarter and comprised 16.3% of total deposits at the end of the fourth quarter. Other interest-bearing deposits increased by $36.4 million in the quarter. Federal Home Loan Bank borrowings decreased by $20 million during the quarter.

Stockholders' Equity and Capital
Stockholders' equity as of December 31, 2025, was $84.34 million compared to $87.19 million on September 30, 2025, and stockholders' equity of $81.44 million on December 31, 2024. AOCI increased during the fourth quarter as there was a decrease in unrealized losses on available-for-sale securities of $893 thousand. The tangible book value of the Company's common stock on December 31, 2025, was $12.08 per share compared to $12.45 on September 30, 2025, and tangible book value per share of $11.39 on December 31, 2024. Excluding AOCI losses/gains⁵, the tangible book value of the Company's common stock on December 31, 2025 was $14.08 per share compared to $14.58 on September 30, 2025, and $13.94 per share on December 31, 2024.

As of December 31, 2025, the Bank and the Holding Company'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, 2025 and December 31, 2024, were as follows:

Stock Buyback Program
In the fourth quarter, the Company purchased 29,400 shares pursuant to its previously announced share repurchase program, and 207,092 over the full year 2025 at a weighted average price of $10.51 per share. Between 2024 and 2025, the firm had repurchased 243,800 of the 250,000 shares authorized for repurchase under the program, and our Board of Directors reauthorized the Company to repurchase another 250,000 in 2026. Our Board of Directors continues to believe that the share buyback program represents a disciplined capital management strategy for the Company.

About Freedom Financial Holdings, Inc.

Freedom Financial Holdings, Inc. is the holding company of The Freedom Bank of Virginia, a community bank with locations in Fairfax, Reston, Chantilly, Vienna, and Manassas, Virginia. For information about deposits, loans and other services, visit the website at www.freedom.bank.

Forward Looking Statements

This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management's projections, forecasts, estimates, and expectations include: fluctuation in market rates of interest and loan and deposit pricing; general economic and financial market conditions, in the United States generally and particularly in the markets in which the Company operates and in which its loans are concentrated, including the effects of declines in real estate values, increases in unemployment levels, inflation, recessions and slowdowns in economic growth, including as a result of the impact of geopolitical conflicts, such as the war between Russia and Ukraine; the impact of any U.S. federal government shutdown; U.S. and global trade policies and changes, including the impact of the imposition of or changes in tariffs and trade barriers; adverse developments in the financial services industry such as the bank failures in 2023; maintenance and development of well-established and valued client relationships and referral source relationships; the adequacy or inadequacy of our allowance for credit 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.