Joseph J. Thomas, President, and CEO, commented, "We are pleased to start off 2026, our 25th anniversary year, with favorable net income trends, improving net interest margin, and stabilizing credit quality. Net income increased $4.728 million after last quarter's loss on the recognition of a $6.9 million credit provision. We continue to see improvement in our cost of funds dropping 15 basis points in the first quarter, enabling net interest margin expansion of 3 basis points to 2.73%. Despite the changing and uncertain economic environment, we continue to see improvement in the credit quality of our loan portfolio with non-accrual loans down 28% to $19.2 million. Our entire team is working hard to grow loans and we experienced a 2.97% increase in net loans in the quarter including growth in the Held for Sale mortgage portfolio. We were pleased with the increase in mortgage activity with gain on sale and fee revenue that increased by 30% to $942,257 in the first quarter of 2026 from $680,766 in the fourth quarter of 2025 as mortgage rates decreased. Our team is taking the steps necessary to help clients manage through higher rates and inflation, changes in credit markets, and increasing technology risks and opportunities.
First Quarter 2026 Highlights include:
The Company posted net income of $1,160,338 or $0.16 per diluted share for the first quarter compared to a net loss of $3,567,973, or $0.50 per diluted share for the three months ended December 31, 2025, and net income of $2,019,348 or $0.28 per diluted share for the three months ended March 31, 2025
Tangible Book Value per share remained relatively flat during the quarter at $12.08 on March 31, 2026, compared to $12.05 on December 31, 2025, as quarter to date earnings were largely offset by changes in valuation on the available for sale portfolio and share buybacks were offset by shares vested in the quarter.
Return on Average Assets ("ROAA") was 0.44% for the quarter ended March 31, 2026, compared to ROAA of (1.37%) for the quarter ended December 31, 2025, and 0.76% for the three months ended March 31, 2025.
Return on Average Equity ("ROAE") was 5.57% for the quarter ended March 31, 2026, compared to ROAE of (15.96%) for the three months ended December 31, 2025, and 9.95% for the three months ended March 31, 2025.
Total Assets were $1.053 billion on March 31, 2026, a decrease of $13 million or 1.2% from total assets on December 31, 2025, mostly due to using excess cash assets to repay FHLB advances.
Gross Loans held-for-investment increased by $8.4 million or 1.1% during the quarter.
Total deposits increased by $3.1 million or by 0.34% during the quarter. Non-interest-bearing demand deposits decreased by $178 thousand during the quarter to $149.3 million and represented 16.28% of total deposits on March 31, 2026.
The net interest margin1 increased in the first quarter to 2.73%, higher by 3 basis points compared to the linked quarter and lower by 30 basis points compared to the same period in 2025. The increase in the net interest margin across linked quarters was a result of lower funding costs, while the decrease for the same period a year ago is related to the recognition of previously uncollected interest from problem loan resolutions, with such interest contributing 41 basis points to the net interest margin at that time.
The cost of funds was 2.84% for the first quarter, lower by 15 basis points compared to the linked quarter and lower by 39 basis points compared to the same period in 2025, as a result of a decline in deposit costs and borrowing costs.
Non-interest income increased by 20% compared to the linked quarter and decreased by 44% compared to the same period in 2025. The increase in non-interest income in the first quarter of 2026 was primarily due to higher net revenue from the mortgage unit.
Non-interest expense increased by $1.19 million in the first quarter or by 21% compared to the linked quarter and increased by 13% compared to the same period in 2025. The increase in expenses compared to the linked quarter was largely due to increased accruals for annual bonuses over the prior quarter where there was only minimal bonus expense due to the net loss in the quarter, increased commission expense and lender credits resulting from increased mortgage activity, increased health insurance premiums, and increased FDIC insurance expense due to the deterioration in credit quality in Q4.
The Efficiency Ratio2 was 81.88% for the quarter ended March 31, 2026, compared to 71.29% for the linked quarter and 69.22% for the same period in 2025, which included the aforementioned interest income and legal expense recoveries.
Uninsured deposits were 27.11% of total deposits and total liquidity to uninsured deposits3 was 117.18% of uninsured deposits on March 31, 2026.
Net charge offs were 0.81% of average loans compared to 0.03% in the prior quarter as the Company recognized the $6.2 million in charge-offs mostly related to the large loan that had been provisioned for in the prior quarter. No additional expense was recognized in relation to this credit in Q1 and this charge-off was met with the commensurate amelioration in our allowance for credit losses. The ratio of non-accrual loans to loans held-for-investment was 2.50% on March 31, 2026, compared to 3.51% on December 31, 2025, and 1.45% on March 31, 2025. The ratio of non-performing assets to total assets was 1.95% on March 31, 2026, compared to 2.51% on December 31, 2025, and 1.01% on March 31, 2025.
The Company recognized a provision for loan losses of $59,336, related to changes in the overall portfolio including loan growth.
The ratio of the allowance for loan losses to loans held-for-investment was 1.00% at March 31, 2026 compared to 1.82% at the end of the linked quarter.
The Bank continues to be well capitalized and capital ratios continue to be strong with a Leverage ratio of 10.70%, Common Equity Tier 1 ratio of 13.50%, Tier 1 Risk Based Capital ratio of 13.50% and a Total Capital ratio of 14.42% as of March 31, 2026. Common Equity Tier 1, Tier 1 Risk Based Capital, and Total Capital ratios are down by 32 basis points, 32 basis points, and 66 basis points, respectively, due to the Bank holding higher average assets in the quarter, higher risk weighted assets at quarter end due to loan growth, lower Tier 2 capital as the allowance for credit losses that was included in capital at 2025 year end was abated due to the charge-off, and the charge-off causing a portion of our deferred tax asset to be disallowed for capital purposes.
Net Interest IncomeThe Company recorded net interest income of $6.895 million for the first quarter of 2026, higher by 2.97% compared to the linked quarter, and lower by 10.68% compared to the same period in 2025. The net interest margin in the first quarter of 2026 was 2.73%, higher by 3 basis points compared to the linked quarter and lower by 30 basis points compared to the same period in 2025.
The following factors contributed to the changes in net interest margin during the first quarter of 2026 compared to the linked and calendar quarters.
Yields on average earning assets were 5.44% in the first quarter of 2026, lower by 11 basis points compared to the linked quarter, and lower by 67 basis points compared to the prior year calendar quarter. The decrease in yields on average earning assets in the first quarter compared to the linked quarter was primarily due to increased cash and decreased securities held on the balance sheet in the first quarter. The decrease over the calendar quarter is largely due to the recognition of uncollected interest from problem loan resolutions in the prior year calendar quarter which added 41 basis points to the earning asset yield in that quarter. The remaining difference stems from interest rate decreases on cash and floating rate securities and loans that took place over the course of the year.
Loan yields decreased by 1 basis point to 5.97% from 5.98% in the linked quarter, while yields on investment securities decreased by 26 basis points to 3.97% from 4.23% in the linked quarter. Loan yields decreased by 77 basis points, while yields on investment securities decreased by 58 basis points compared to the calendar quarter.
Cost of funds decreased by 15 basis points to 2.84% from 2.99% in the linked quarter, and by 39 basis points compared to the prior year quarter, due to lower deposit and borrowing costs.
Non-interest IncomeNon-interest income was $1.4 million for the first quarter, an increase of 20% when compared to the linked quarter and an increase of 44% when compared to the same period in 2025. The increase in non-interest income in the first quarter of 2026 compared to the linked quarter and the prior calendar quarter was due to higher revenue from the gain on sale of mortgage loans.
Total Revenue4Total revenue, defined as the sum of net interest income, before provision for loan losses, and non-interest income, was higher by 5.47% compared to the linked quarter and lower by 4.5% compared to the calendar quarter in 2025. The increase in total revenue compared to the linked quarter was due to an increase in the net interest margin, contributing to the increase of $199 thousand in net interest income over the linked quarter and $232 thousand in increased non-interest income largely from the gain on sale of residential mortgages. The decrease compared to the prior calendar quarter is due to the extraordinary recovery of $1.04 million of previously uncollected interest from problem loan resolutions.
Non-interest ExpenseNon-interest expense in the first quarter increased by $1.19 million or by 21.14% compared to the linked quarter and increased by 12.96% compared to the same period in 2025. The increase in expenses compared to the linked quarter was largely related to accrual expenses for annual bonuses that were curtailed in the prior quarter given the net loss experienced, and increased expenses related to increased mortgage activity, including commission expense, appraisal fees, and lender credits. Salary expenses are up due to annual raises taking effect and increased hiring related to the opening of the new location in Tysons Corner, VA. The new location resulted in additional occupancy expenses related to pre-opening, and the Bank also experienced annual escalations in our other leased locations and from lease renewals. Health insurance premiums have risen over the rates paid in 2025. We also increased our marketing expenses related to promoting the new location and planning for our 25th anniversary year.
The Efficiency Ratio2 was 81.88% for the quarter ended March 31, 2026, compared to 71.29% for the linked quarter and 69.22% for the same period in 2025.
Asset QualityNon-accrual loans decreased in the first quarter and were 2.46% of loans held-for-investment compared to 3.51% of loans held-for-investment at the end of the linked quarter as we recognized charge-offs. 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 1.95% of total assets as of March 31, 2026, compared to 2.51% of total assets, at the end of the linked quarter.
The Company recognized a provision for loan losses of $59,336, primarily related to changes in the overall portfolio, including loan growth.
The Company's ratio of Allowance for Loan Losses to loans held-for-investment was 1.00% as of March 31, 2026, compared to the ratio of Allowance for Loan Losses to loans held-for-investment of 1.82% as of December 31, 2025.
Total AssetsTotal assets on March 31, 2026, were $1.053 billion compared to total assets of $1.065 billion on December 31, 2025. Changes in major asset categories since December 31, 2025, were as follows:
Interest bearing deposits at banks decreased by $36.4 million.
Investment balances decreased by $3.56 million.
Gross loans held-for investment increased by $8.39 million
Residential mortgage loans held for sale increased by $7.794 million
Total LiabilitiesTotal liabilities on March 31, 2026, were $968.58 million compared to total liabilities of $981.79 million on December 31, 2025. Total deposits were $917.36 million on March 31, 2026, compared to total deposits of $914.26 million on December 31, 2025. Non-interest-bearing demand deposits decreased by $178 thousand during the first quarter and comprised 16.28% of total deposits at the end of the first quarter. Other core interest-bearing demand deposits decreased by $31.8 million and core time deposits decreased by $2.3 million during the quarter. Brokered Deposits increased by $37.4 million while Federal Home Loan Bank borrowings decreased by $20.0 million.
Stockholders' Equity and CapitalStockholders' equity as of March 31, 2026, was $84.25 million compared to $84.14 million on December 31, 2025. AOCI decreased during the first quarter as there was an increase in unrealized losses on available-for-sale securities due to rising interest rates in the quarter. The tangible book value of the Company's common stock on March 31, 2026, was $12.08 per share compared to $12.05 on December 31, 2025. Excluding AOCI losses/gains5, the tangible book value of the Company's common stock on March 31, 2026, was $14.18 per share compared to $14.08 on December 31, 2025.
Stock Buyback ProgramIn the first quarter, the Company purchased 43,800 shares pursuant to its previously announced share repurchase program. As of March 31, 2026, the Company had repurchased 43,800 of the 250,000 shares currently authorized for repurchase under the program that was approved at the end of 2025. The Company purchased 29,400 shares in the fourth quarter of 2025 under its previous authorized program. Our Board of Directors continues to believe that the share buyback program represents a disciplined capital management strategy for the Company.
Capital RatiosAs of March 31, 2026, the Bank's capital ratios were well above regulatory minimum capital ratios for well-capitalized bank holding companies. The Bank's capital ratios as of March 31, 2026, and December 31, 2025, were as follows:
March 31, 2026
December 31, 2025
Total Capital Ratio
14.42 %
15.08 %
Tier 1 Capital Ratio
13.50 %
13.82 %
Common Equity Tier 1 Capital Ratio
13.50 %
13.82 %
Leverage Ratio
10.70 %
11.05 %
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, Tysons Corner, 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.
FREEDOM FINANCIAL HOLDINGS
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Audited)
March 31,
December 31,
2026
2025
ASSETS
Cash and Due from Banks
$ 4,527,248
$ 4,540,452
Interest Bearing Deposits with Banks
33,646,083
70,078,398
Securities Available-for-Sale
156,852,319
158,446,651
Securities Held-to-Maturity
18,242,410
19,242,952
Restricted Stock Investments
4,468,100
5,435,300
Loans Held for Sale
12,077,102
4,283,305
PPP Loans Held for Investment
112,661
117,738
Other Loans Held for Investment
770,827,073
762,435,469
Allowance for Credit Losses
(7,696,395)
(13,897,689)
Net Loans
775,320,441
752,938,823
Bank Premises and Equipment, net
1,189,003
728,030
Accrued Interest Receivable
4,463,908
4,059,501
Deferred Tax Asset
7,579,833
7,428,794
Bank-Owned Life Insurance
28,700,809
28,469,911
Right of Use Asset, net
5,657,815
1,582,514
Other Assets
12,178,246
12,931,701
Total Assets
$ 1,052,826,215
$ 1,065,883,027
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
-
Demand Deposits
Non-interest Bearing
$ 149,338,747
$ 149,516,366
Interest Bearing
548,420,087
555,799,698
Savings Deposits
2,289,866
1,989,696
Time Deposits
217,315,240
206,958,024
Total Deposits
917,363,940
914,263,784
Federal Home Loan Bank Advances
20,000,000
40,000,000
Other Borrowings
112,661
117,737
Subordinated Debt (Net of Issuance Costs)
19,948,049
19,928,568
Accrued Interest Payable
$ 887,034
913,813
Lease Liability
5,878,842
1,666,836
Other Liabilities
4,385,636
4,852,310
Total Liabilities
$ 968,576,162
$ 981,743,048
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized:
0 Shares Issued and Outstanding, March 31, 2026 andDecember 31, 2025
Common Stock, $0.01 Par Value, 25,000,000 Shares:
23,000,000 Shares Voting and 2,000,000 Shares Non-voting.
Voting Common Stock:
6,973,747 and 6,984,013 Shares Issued and Outstanding at March 31, 2026 and December 31, 2025 respectively
69,737
69,840
Non-Voting Common Stock:
-
-
0 Shares Issued and Outstanding at March 31, 2026 andDecember 31, 2025respectively)
Additional Paid-in Capital
56,029,673
56,624,236
Accumulated Other Comprehensive Income, Net
(14,645,539)
(14,189,941)
Retained Earnings
42,796,182
41,635,844
Total Stockholders' Equity
84,250,053
84,139,979
Total Liabilities and Stockholders' Equity
$ 1,052,826,215
$ 1,065,883,027
FREEDOM FINANCIAL HOLDINGS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Unaudited)
For the three
For the three
months ended
months ended
March 31, 2026
March 31, 2025
Interest Income
Interest and Fees on Loans
$ 11,276,251
$ 12,703,493
Interest on Investment Securities
1,773,078
2,613,258
Interest on Deposits with Other Banks
703,390
262,507
Total Interest Income
13,752,719
15,579,258
Interest Expense
Interest on Deposits
6,340,041
6,946,194
Interest on Borrowings
517,291
913,154
Total Interest Expense
6,857,332
7,859,348
Net Interest Income
6,895,387
7,719,910
Provision/(Recovery) for Loan Losses
59,336
(284,683)
Net Interest Income After
Provision for Loan Losses
6,836,051
7,435,227
Non-Interest Income
Mortgage Loan Gain-on-Sale and Fee Revenue
942,257
654,530
SBA Gain-on-Sale Revenue
-
-
Service Charges and Other Income
220,740
70,334
Servicing Income
17,493
32,442
Increase in Cash Surrender Value of Bank-
owned Life Insurance
230,899
220,864
Total Non-interest Income
1,411,389
978,170
Total Revenue
8,306,776
8,698,080
Non-Interest Expenses
Officer and Employee Compensation and Benefits
4,403,621
3,769,535
Occupancy Expense
364,940
242,163
Equipment and Depreciation Expense
10,712
8,726
Insurance Expense
206,599
225,766
Professional Fees
346,305
470,310
Data and Item Processing
530,962
538,213
Advertising
81,600
83,115
Franchise Taxes and State Assessment Fees
326,569
314,214
Mortgage Fees and Settlements
74,839
87,258
Other Operating Expense
455,395
281,611
Total Non-interest Expenses
6,801,542
6,020,911
Income Before Income Taxes
1,445,898
2,392,486
Income Tax Expense/(Benefit)
285,560
373,138
Net Income (Loss)
1,160,338
2,019,348
Earnings (Loss) per Common Share - Basic
$ 0.16
$ 0.28
Earnings (Loss) per Common Share - Diluted
$ 0.16
$ 0.28
Weighted-Average Common Shares
Outstanding - Basic
7,104,820
7,136,456
Weighted-Average Common Shares
Outstanding - Diluted
7,174,318
7,193,284
FREEDOM FINANCIAL HOLDINGS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Audited)
(Unaudited)
(Unaudited)
(Unaudited)
For the three
For the three
For the three
For the three
For the three
months ended
months ended
months ended
months ended
months ended
March 31, 2026
December 31, 2025
September 30, 2025
June 30, 2025
March 31, 2025
Interest Income
Interest and Fees on Loans
