Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesx No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock — $0.01 par value, 23,763,401 shares, as of October 13, 2025.
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
TFIN
New York Stock Exchange
NYSE Texas
Depositary Shares Each Representing a 1/40th Interest in a Share of 7.125% Series C Fixed-Rate Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Triumph Financial, Inc. (collectively with its subsidiaries, “Triumph Financial”, or the “Company” as applicable) is a financial holding company headquartered in Dallas, Texas, offering a diversified line of banking, factoring, payments, and intelligence services. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Triumph CRA Holdings, LLC (“TCRA”), TBK Bank, SSB (“TBK Bank”), and TBK Bank’s wholly owned subsidiary Triumph Insurance Group, Inc. (“TIG”). Substantially all of the Company's products and services (other than certain insurance brokerage activities at TIG) are offered through TBK Bank.
Effective January, 1, 2025, Triumph Financial Services LLC, the entity through which the Company previously conducted all of its factoring operations, was merged with and into TBK Bank, SSB.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and in accordance with guidance provided by the Securities and Exchange Commission (“SEC”). Accordingly, the condensed financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary for a fair presentation. Transactions between the subsidiaries have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
Reportable Segments
The Company’s reportable segments are comprised of strategic business units primarily based upon industry categories and, to a lesser extent, the core competencies relating to product origination, distribution methods, operations and servicing. Segment determination also considers organizational structure and is consistent with the presentation of financial information to the chief operating decision maker to evaluate segment performance, develop strategy, and allocate resources. The Company's chief operating decision maker is the Chief Executive Officer of Triumph Financial, Inc. Management has determined that the Company has four reportable segments consisting of Banking, Factoring, Payments, and Intelligence.
The Banking segment includes the operations of TBK Bank's traditional community banking services. The Banking segment derives its revenue principally from investments in interest-earning assets as well as noninterest income typical for the banking industry.
The Factoring segment derives its revenue principally from factoring services.
The Payments segment includes the operations of the TBK Bank's payments products and services focused on the transportation industry, which is the payments network for presentment, audit, and payment of over-the-road trucking invoices. The Payments segment derives its revenue from transaction fees and interest income on factored receivables related to invoice payments. These factored receivables consist of (i) invoices where we offer a carrier a quickpay opportunity to receive payment at a discount in advance of the standard payment term for such invoice in exchange for the assignment of such invoice to us, (ii) offering freight brokers the ability to settle their invoices with us on an extended term following our payment to their carriers as an additional liquidity option for such freight brokers, and (iii) factoring transactions where we purchase receivables payable to such freight brokers from their shipper clients.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Intelligence segment was launched in the fourth quarter of 2024 to turn the over-the-road trucking data collected through our services into actionable insights for our customers. This launch coincided with our acquisition of the assets of Isometric Technologies Inc., a company that provides service and performance scoring and benchmarking capabilities to the over-the-road trucking industry. The operations of this segment were further supplemented with our acquisition of Greenscreens AI. Inc., a pricing solution for the logistics industry that delivers short-term freight market pricing intelligence and business insights, during the quarter ended June 30, 2025. Intelligence offerings enable better decision making, market intelligence and automation. The revenue for these offerings is derived through access and subscription fees, as well as seat licenses where applicable.
For further discussion of management's operating segments and allocation methodology, see Note 16 – Business Segment Information.
Adoption of New Accounting Standards
In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, "Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures" ("ASU 2023-07"). ASU 2023-07 Requires public entities to disclose significant segment expenses, an amount and description for other segment items, the title and position of the entity’s chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measures of profit or loss to assess segment performance, and, on an interim basis, certain segment related disclosures that previously were required only on an annual basis. ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements and that an entity is permitted to disclose multiple measures of segment profit or loss, provided that certain criteria are met. ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 effective December 31, 2024. Adoption of ASU 2023-07 did not have a material impact on the Company's consolidated financial statements. See Note 16 – Business Segment Information for new disclosures required by ASU 2023-07.
Newly Issued, But Not Yet Effective Accounting Standards
In December 2023, the FASB issued Accounting Standards Update 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things. ASU 2023-09 is effective for the Company for annual periods beginning after December 15, 2024 with early adoption permitted. The Company will update its income tax disclosures upon adoption.
In November 2024, the FASB issued Accounting Standards Update 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)" ("ASU 2024-03"). ASU 2024-03 requires public entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. ASU 2024-03 is effective for the Company for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company will update its expense disclosures upon adoption.
In July 2025, the FASB issued Accounting Standards Update 2025-05, “Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"). ASU 2025-05 provides the option to elect a practical practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. ASU 2025-05 is effective for the Company for fiscal years beginning after December 15, 2025 and interim periods within those fiscal years. The Company does not expect adoption of ASU 2025-05 to have a material impact on its consolidated financial statements.
In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software" ("ASU 2025-06"). ASU 2025-06 clarified and modernizes the accounting for costs related to internal-use software. The amendments in ASU 2025-06 remove all references to project stages throughout Subtopic 350-40 and clarify the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for the Company for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of ASU 2025-06 on its consolidated financial statements.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
USPS Settlement
At June 30, 2025, we carried a receivable (the “Misdirected Payments Receivable”) payable by the United States Postal Service (“USPS”) arising from accounts factored to a large carrier. The balance of such Misdirected Payments Receivable, net of customer reserves, was $19.4 million. The amounts represented by this receivable were paid by the USPS directly to such customer in contravention of notices of assignment delivered to, and previously honored by, the USPS, which amount was then not remitted back to us by such customer as required. The USPS disputed their obligation to make such payment, citing purported deficiencies in the notices delivered to them. We were a party to litigation in the United States Court of Federal Claims against the USPS seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. On June 30, 2025, we reached an agreement with the USPS ("the USPS Settlement") whereby the USPS agreed to pay us $47.5 million to settle the litigation in the United States Court of Federal Claims and certain other related proceedings. Such settlement was entered into as part of a global settlement of the disputes related to the Misdirected Payments Receivable, other amounts we asserted were due to us from USPS for other balances owed to us as a result of their failure to honor our notices of assignment, and certain claims of the large carrier involved in this matter against the USPS for underpayment on certain transportation contracts in which we had a security interest. We received the full $47.5 million settlement proceeds on July 10, 2025. The proceeds of the USPS Settlement were applied as follows:
•$11.5 million to the aforementioned large carrier,
•$19.4 million to relieve the entire balance of Misdirected Payments Receivable, net of customer reserves,
•$1.1 million of interest and fees,
•$7.9 million of legal expense recovery
•$3.8 million to recovery of previously charged-off acquired over-formula advances related to the aforementioned large carrier, and
•$3.8 million to CVLG in accordance with the amended terms of the CVLG transaction.
The USPS Settlement had a $12.4 million and $11.5 million positive impact on pretax net income for the three months ended June 30, 2025 and nine months ended September 30, 2025, respectively, made up of the prior period impacts of the interest and fees, legal expense recovery, and the recovery of the previously charged-off acquired over-formula advances. The $19.4 million Misdirected Payments Receivable balance was legally discharged upon receipt of the settlement proceeds on July 10, 2025.
Restructuring Activities
In August 2025, the Company announced a reduction in force involving approximately 5% of the Company's workforce, as well as other cost saving initiatives including non-headcount related reductions in facilities, legacy technology, vendor spend, and travel. These actions are part of the Company’s initiatives to re-balance its cost structure in light of technology investments that have delivered significant efficiencies across the organization. These advancements have reduced the need for certain roles and prompted a reorganization of teams and responsibilities to better serve the Company’s transportation verticals. The Company believes these actions will strengthen its competitive position, enhance operational agility, and support sustainable long-term growth.
During the three months ended September 30, 2025, the Company recognized $3,134,000 of expense related to the reduction in force, which consisted primarily of one-time termination charges arising from severance obligations and other customary employee benefit payments made in connection with a reduction in force. These costs were included in salaries and benefits expense in the consolidated statements of income and for segment reporting, $522,000 of the expense was recognized by the Banking segment, $1,059,000 was recognized by the Factoring segment, $513,000 was recognized by the Payments segment, $210,000 was recognized by the Intelligence segment, and $830,000 was allocated to the corporate and other category. The Company also recognized $1,250,000 of expense during the three months ended September 30, 2025 related to the cost saving initiatives, which consisted primarily of one-time contract amendment fees. These costs were included in professional fees in the consolidated statements of income and were allocated to the corporate and other category for segment reporting.
All of the restructuring costs were incurred and substantially all of the restructuring costs were paid during the three months ended September 30, 2025. The remaining liability for these costs totaled $246,000 at September 30, 2025 and was included in other liabilities in the consolidated balance sheets.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 — ACQUISITIONS AND DIVESTITURES
Greenscreens.ai
On May 8, 2025, the Company, through its wholly-owned subsidiary TBK Bank, SSB, acquired Greenscreens AI, Inc. ("Greenscreens"), a pricing solution for the logistics industry that delivers short-term freight market pricing intelligence and business insights.
A summary of the estimated fair values of assets acquired, consideration transferred, and the resulting goodwill is as follows:
(Dollars in thousands)
Assets acquired:
Cash and cash equivalents
$
1,601
Accounts receivable and other
935
Intangible assets - customer relationship
36,380
Intangible assets - software
8,340
47,256
Liabilities assumed:
Accounts payable and other
1,104
Deferred tax liabilities, net
6,251
7,355
Fair value of net assets acquired
$
39,901
Consideration:
Cash paid
$
139,118
Stock consideration
12,732
Total consideration
$
151,850
Goodwill
$
111,949
Consideration paid for the acquisition totaled $151,850,000, including $139,118,000 in cash and 256,984 shares of the Company's common stock valued at $12,732,000.
The Company has recognized goodwill of $111,949,000, which was calculated as the excess of the fair value of consideration exchanged as compared to the fair value of identifiable net assets acquired. The goodwill in this acquisition resulted from expected synergies between our Factoring, Payments, and Intelligence segments, as well as progress towards the development of data products to be offered to the freight brokerage community; therefore goodwill of $16,096,000 was allocated to the Company's Factoring segment, $15,425,000 was allocated to the Company's Payments segment, and $80,428,000 was allocated to the Company’s Intelligence segment. The goodwill will not be deducted for tax purposes. The initial accounting for the acquisition has not been completed because the fair values of the consideration paid, the assets acquired, and the liabilities assumed have not yet been finalized.
The intangible assets recognized include a customer relationship intangible asset with an acquisition date fair value of $36,380,000 which will be amortized utilizing an accelerated method over its twelve year estimated useful life and a capitalized software intangible asset with an acquisition date fair value of $8,340,000 which will be amortized on a straight-line basis over its five year estimated useful life. A customer relationship intangible asset of $21,520,000 was allocated to the Company's Intelligence segment and a customer relationship intangible asset of $14,860,000 was allocated to the Company's Payments segment. The entire software intangible asset was allocated to the Company's Intelligence segment.
Revenue and earnings of Greenscreens since the acquisition date have not been disclosed as the acquired company was merged into the Company and separate financial information is not readily available.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Expenses related to the acquisition totaling $3,009,000 and $967,000 were recorded in professional fees in the consolidated statements of income during the three months ended June 30, 2025 and March 31, 2025, respectively.
Isometric Technologies Inc.
On December 1, 2024, the Company acquired the assets of Isometric Technologies Inc. ("ISO"), a freight technology company engaged in providing service and performance scoring and benchmarking capabilities to the over-the-road trucking industry.
A summary of the estimated fair values of assets acquired, consideration transferred, and the resulting goodwill is as follows:
(Dollars in thousands)
Assets acquired:
Intangible assets - capitalized software
$
1,680
Intangible assets - customer relationship
60
Intangible assets - other
20
Fair value of net assets acquired
$
1,760
Consideration:
Cash paid
$
10,000
Goodwill
$
8,240
The Company has recognized goodwill of $8,240,000, which was calculated as the excess of the fair value of consideration exchanged as compared to the fair value of identifiable net assets acquired and was allocated to the Company’s Intelligence segment. The goodwill in this acquisition resulted from expected synergies and progress towards the development of data products to be offered to the freight brokerage community. The goodwill will be deducted for tax purposes. The initial accounting for the acquisition has not been completed because the fair values of the assets acquired have not yet been finalized.
The intangible assets recognized include a capitalized software intangible asset with an acquisition date fair value of $1,680,000 which will be amortized on a straight-line basis over its four year estimated useful life, a customer relationship intangible asset with an acquisition date fair value of $60,000 which will be amortized utilizing an accelerated method over its four year estimated useful life, and a trade name intangible asset with an acquisition date fair value of $20,000 which will be amortized on a straight-line basis over its one year estimated useful life.
Revenue and earnings of ISO since the acquisition date have not been disclosed as the acquired company was merged into the Company and separate financial information is not readily available.
Expenses related to the acquisition totaling $324,000 were recorded in professional fees in the consolidated statements of income during the three months ended December 31, 2024.
NOTE 3 — SECURITIES
Equity Securities With Readily Determinable Fair Values
The Company held equity securities with readily determinable fair values of $4,569,000 and $4,445,000 at September 30, 2025 and December 31, 2024, respectively. The gross realized and unrealized gains and losses recognized on equity securities with readily determinable fair values in noninterest income in the Company’s consolidated statements of income were as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Unrealized gains (losses) on equity securities held at the reporting date
$
43
$
161
$
124
$
95
Realized gains (losses) on equity securities sold during the period
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Equity Securities Without Readily Determinable Fair Values
The following table summarizes the Company's investments in equity securities without readily determinable fair values:
(Dollars in thousands)
September 30, 2025
December 31, 2024
Equity Securities without readily determinable fair value, at cost
$
75,652
$
71,807
Upward adjustments based on observable price changes, cumulative
10,163
10,163
Equity Securities without readily determinable fair value, carrying value
$
85,815
$
81,970
Equity securities without readily determinable fair values include Federal Home Loan Bank and other restricted stock, which are reported separately in the Company's consolidated balance sheets. Equity securities without readily determinable fair values also include the Company's investments in the common stock of Trax Group, Inc. and Warehouse Solutions Inc., with carrying amounts of $9,700,000 and $38,088,000, respectively, at September 30, 2025. Both investments have been allocated to our Payments segment and are included in other assets in the Company's consolidated balance sheets.
The gross realized and unrealized gains (losses) recognized on equity securities without readily determinable fair values in noninterest income in the Company’s consolidated statements of income were as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Unrealized gains (losses) on equity securities still held at the reporting date
$
—
$
—
$
—
$
—
Realized gains (losses) on equity securities sold during the period
89
—
89
534
$
89
$
—
$
89
$
534
Management monitors its equity securities without readily determinable fair values for observable transactions in similar equity instruments as well as indicators of impairment either of which would require it to mark such equity securities to fair value. No such transactions or indicators of impairment were detected during the three and nine months ended September 30, 2025.
Debt Securities
Debt securities have been classified in the financial statements as available for sale or held to maturity. The following table summarizes the amortized cost, fair value, and allowance for credit losses of debt securities and the corresponding amounts of gross unrealized gains and losses of available for sale securities recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses of held to maturity securities:
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Amortized Cost
Gross Unrecognized Gains
Gross Unrecognized Losses
Fair Value
September 30, 2025
Held to maturity securities:
CLO securities
$
3,165
$
—
$
(1,226)
$
1,939
Allowance for credit losses
(1,399)
Total held to maturity securities, net of ACL
$
1,766
(Dollars in thousands)
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Allowance for Credit Losses
Fair Value
December 31, 2024
Available for sale securities:
Mortgage-backed securities, residential
$
89,740
$
89
$
(5,644)
$
—
$
84,185
Asset-backed securities
907
—
(2)
—
905
State and municipal
3,154
—
(91)
—
3,063
CLO Securities
290,286
1,627
—
—
291,913
Corporate bonds
266
—
(4)
—
262
SBA pooled securities
1,305
9
(81)
—
1,233
Total available for sale securities
$
385,658
$
1,725
$
(5,822)
$
—
$
381,561
(Dollars in thousands)
Amortized Cost
Gross Unrecognized Gains
Gross Unrecognized Losses
Fair Value
December 31, 2024
Held to maturity securities:
CLO securities
$
5,367
$
—
$
(2,853)
$
2,514
Allowance for credit losses
(3,491)
Total held to maturity securities, net of ACL
$
1,876
The amortized cost and estimated fair value of securities at September 30, 2025, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Available for Sale Securities
Held to Maturity Securities
(Dollars in thousands)
Amortized Cost
Fair Value
Amortized Cost
Fair Value
Due in one year or less
$
190
$
190
$
—
$
—
Due from one year to five years
2,176
2,163
3,165
1,939
Due from five years to ten years
39,545
39,622
—
—
Due after ten years
237,605
238,748
—
—
279,516
280,723
3,165
1,939
Mortgage-backed securities, residential
99,123
95,416
—
—
Asset-backed securities
838
851
—
—
SBA pooled securities
1,143
1,098
—
—
$
380,620
$
378,088
$
3,165
$
1,939
There were no sales of debt securities during the three and nine months ended September 30, 2025 and 2024.
Debt securities with a carrying amount of approximately $28,884,000 and $25,818,000 at September 30, 2025 and December 31, 2024, respectively, were pledged to secure public deposits, customer repurchase agreements, and for other purposes required or permitted by law.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accrued interest on available for sale securities totaled $3,810,000 and $4,755,000 at September 30, 2025 and December 31, 2024, respectively, and was included in other assets on the Company's consolidated balance sheets. There was no accrued interest related to debt securities reversed against interest income for the three and nine months ended September 30, 2025 and 2024.
The following table summarizes available for sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous loss position:
Less than 12 Months
12 Months or More
Total
(Dollars in thousands)
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
September 30, 2025
Available for sale securities:
Mortgage-backed securities, residential
$
12,247
$
(49)
$
44,373
$
(3,940)
$
56,620
$
(3,989)
Asset-backed securities
—
—
—
—
—
—
State and municipal
—
—
1,876
(52)
1,876
(52)
CLO securities
3,108
—
—
—
3,108
—
Corporate bonds
262
(4)
—
—
262
(4)
SBA pooled securities
—
—
805
(53)
805
(53)
$
15,617
$
(53)
$
47,054
$
(4,045)
$
62,671
$
(4,098)
Less than 12 Months
12 Months or More
Total
(Dollars in thousands)
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
December 31, 2024
Available for sale securities:
Mortgage-backed securities, residential
$
32,124
$
(641)
$
35,340
$
(5,003)
$
67,464
$
(5,644)
Asset-backed securities
—
—
905
(2)
905
(2)
State and municipal
355
(5)
2,356
(86)
2,711
(91)
CLO Securities
—
—
—
—
—
—
Corporate bonds
262
(4)
—
—
262
(4)
SBA pooled securities
—
—
876
(81)
876
(81)
$
32,741
$
(650)
$
39,477
$
(5,172)
$
72,218
$
(5,822)
Management evaluates available for sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.
At September 30, 2025, the Company had 76 available for sale debt securities in an unrealized loss position without an allowance for credit losses. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of September 30, 2025, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in interest rates and other market conditions, and therefore the Company carried no allowance for credit losses on available for sale debt securities at September 30, 2025.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents the activity in the allowance for credit losses for held to maturity debt securities:
(Dollars in thousands)
Three Months Ended September 30,
Nine Months Ended September 30,
Held to Maturity CLO Securities
2025
2024
2025
2024
Allowance for credit losses:
Beginning balance
$
1,399
$
3,162
$
3,491
$
3,190
Credit loss expense
—
221
48
193
Charge-offs
—
—
(2,160)
—
Recoveries
—
—
20
—
Allowance for credit losses ending balance
$
1,399
$
3,383
$
1,399
$
3,383
The Company’s held to maturity securities are investments in the unrated subordinated notes of collateralized loan obligation funds. These securities are the junior-most in securitization capital structures, and are subject to suspension of distributions if the credit of the underlying loan portfolios deteriorates materially. The ACL on held to maturity securities is estimated at each measurement date on a collective basis by major security type. At September 30, 2025 and December 31, 2024, the Company’s held to maturity securities consisted of investments in the subordinated notes of collateralized loan obligation (“CLO”) funds. Expected credit losses for these securities are estimated using a discounted cash flow methodology which considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Ultimately, the realized cash flows on CLO securities such as these will be driven by a variety of factors, including credit performance of the underlying loan portfolio, adjustments to the portfolio by the asset manager, and the timing of a potential call. During the three months ended March 31, 2025, the Company charged off one of it's three investments in these CLO funds as it was deemed to be an uncollectible investment. The charge-off was fully reserved in a prior period. At September 30, 2025 and December 31, 2024, $1,913,000 and $4,073,000, respectively, of the Company’s held to maturity securities were classified as nonaccrual.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Loans Held for Investment
Loans
The following table presents the amortized cost and unpaid principal balance of loans held for investment:
September 30, 2025
December 31, 2024
(Dollars in thousands)
Amortized Cost
Unpaid Principal
Difference
Amortized Cost
Unpaid Principal
Difference
Commercial real estate
$
769,314
$
769,589
$
(275)
$
777,689
$
777,980
$
(291)
Construction, land development, land
204,247
204,483
(236)
203,804
204,268
(464)
1-4 family residential
180,970
180,211
759
154,020
153,711
309
Farmland
43,208
43,278
(70)
56,366
56,450
(84)
Commercial
1,144,872
1,155,281
(10,409)
1,119,245
1,120,551
(1,306)
Factored receivables
1,424,631
1,428,388
(3,757)
1,204,510
1,208,486
(3,976)
Consumer
17,235
17,252
(17)
8,000
8,005
(5)
Mortgage warehouse
1,202,445
1,202,445
—
1,023,326
1,023,326
—
Total loans held for investment
4,986,922
$
5,000,927
$
(14,005)
4,546,960
$
4,552,777
$
(5,817)
Allowance for credit losses
(33,549)
(40,714)
$
4,953,373
$
4,506,246
The difference between the amortized cost and the unpaid principal is due to (1) premiums and discounts associated with acquired loans totaling $10,581,000 and $2,689,000 at September 30, 2025 and December 31, 2024, respectively, and (2) net deferred origination and factoring fees totaling $3,424,000 and $3,128,000 at September 30, 2025 and December 31, 2024, respectively.
Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $42,827,000 and $36,838,000 at September 30, 2025 and December 31, 2024, respectively, and was included in other assets on the Company's consolidated balance sheets.
During the three months ended June 30, 2025, the Company acquired a $23,411,000 nonperforming commercial loan for $3,284,000. The loan was purchased credit deteriorated ("PCD") and a $10,780,000 ACL was established on Day 1 resulting in a discount of $9,348,000. Prior to June 30, 2025, the Company determined that the entire $10,780,000 ACL was uncollectible and charged off the entire amount. Such charge-off had no impact on credit loss expense.
As of September 30, 2025, most of the Company’s non-factoring business activity is with customers located within certain states. The states of Texas (19%), Colorado (11%), Illinois (11%), and Iowa (4%) make up 45% of the Company’s gross loans, excluding factored receivables. Therefore, the Company’s exposure to credit risk is affected by changes in the economies in these states. At December 31, 2024, the states of Texas (22%), Illinois (12%), Colorado (10%), and Iowa (4%) made up 48% of the Company’s gross loans, excluding factored receivables.
A majority (96%) of the Company's factored receivables, representing approximately 28% of the Company's total loan portfolio as of September 30, 2025, are transportation receivables. At December 31, 2024, 97% of the Company's factored receivables, representing approximately 26% of the Company's total loan portfolio, were transportation receivables.
At September 30, 2025 and December 31, 2024, the Company had $290,479,000 and $267,891,000, respectively, of customer reserves associated with factored receivables. These amounts represent customer reserves held to settle any payment disputes or collection shortfalls, may be used to pay customers’ obligations to various third parties as directed by the customer, are periodically released to or withdrawn by customers, and are reported as deposits in the consolidated balance sheets.
As of December 31, 2024, the Company carried a separate receivable (the “Misdirected Payments Receivable”) payable by the United States Postal Service (“USPS”) arising from accounts factored to a large carrier. The balance of such Misdirected Payments Receivable, net of customer reserves, was $0 and $19,361,000 at September 30, 2025 and December 31, 2024, respectively and is reflected in factored receivables. Refer to Note 1 for further discussion.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Loans with carrying amounts of $1,859,817,000 and $1,744,145,000 at September 30, 2025 and December 31, 2024, respectively, were pledged to secure Federal Home Loan Bank borrowing capacity and Federal Reserve Bank discount window borrowing capacity.
Allowance for Credit Losses
The Company’s estimate of the ACL reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications. The activity in the allowance for credit losses (“ACL”) related to loans held for investment is as follows:
(Dollars in thousands)
Beginning Balance
Credit Loss Expense
Charge-offs
Recoveries
Initial ACL on Loans Purchased with Credit Deterioration
Ending Balance
Three Months Ended September 30, 2025
Commercial real estate
$
4,198
$
306
$
(36)
$
4
$
—
$
4,472
Construction, land development, land
2,589
(415)
—
46
—
2,220
1-4 family residential
1,560
243
(58)
23
—
1,768
Farmland
302
(7)
—
—
—
295
Commercial
17,813
1,724
(5,424)
18
—
14,131
Factored receivables
10,553
2,310
(4,014)
183
—
9,032
Consumer
466
114
(158)
25
—
447
Mortgage warehouse
1,210
(26)
—
—
—
1,184
$
38,691
$
4,249
$
(9,690)
$
299
$
—
$
33,549
(Dollars in thousands)
Beginning Balance
Credit Loss Expense
Charge-offs
Recoveries
Initial ACL on Loans Purchased with Credit Deterioration
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Beginning Balance
Credit Loss Expense
Charge-offs
Recoveries
Initial ACL on Loans Purchased with Credit Deterioration
Ending Balance
Nine Months Ended September 30, 2025
Commercial real estate
$
3,825
$
733
$
(157)
$
71
$
—
$
4,472
Construction, land development, land
2,873
(450)
(250)
47
—
2,220
1-4 family residential
1,404
442
(104)
26
—
1,768
Farmland
386
(91)
—
—
—
295
Commercial
21,419
2,486
(20,927)
373
10,780
14,131
Factored receivables
9,600
1,181
(6,087)
4,338
—
9,032
Consumer
185
584
(428)
106
—
447
Mortgage warehouse
1,022
162
—
—
—
1,184
$
40,714
$
5,047
$
(27,953)
$
4,961
$
10,780
$
33,549
(Dollars in thousands)
Beginning Balance
Credit Loss Expense
Charge-offs
Recoveries
Initial ACL on Loans Purchased with Credit Deterioration
Ending Balance
Nine Months Ended September 30, 2024
Commercial real estate
$
6,030
$
(798)
$
(831)
$
—
$
—
$
4,401
Construction, land development, land
965
1,963
—
1
—
2,929
1-4 family residential
927
71
(32)
4
—
970
Farmland
442
(48)
—
—
—
394
Commercial
14,060
9,558
(3,734)
82
—
19,966
Factored receivables
11,896
3,045
(4,283)
912
—
11,570
Consumer
171
221
(308)
62
—
146
Mortgage warehouse
728
139
—
—
—
867
$
35,219
$
14,151
$
(9,188)
$
1,061
$
—
$
41,243
The decrease in required ACL during the three months ended September 30, 2025 is a function of net charge-offs of $9,391,000 and credit loss expense of $4,249,000.
The decrease in required ACL during the nine months ended September 30, 2025 is a function of net charge-offs of $22,992,000 and credit loss expense of $5,047,000. Included in charge-offs for the nine months ended September 30, 2025 was the $10,780,000 day-one purchased credit deteriorated ACL that was deemed uncollectible and charged off with no impact to credit loss expense.
The Company uses the discounted cash flow (DCF) method to estimate ACL for the commercial real estate, construction, land development, land, 1-4 family residential, commercial (excluding liquid credit), and consumer loan pools. For all loan pools utilizing the DCF method, the Company utilizes and forecasts national unemployment as a loss driver. The Company also utilizes and forecasts either one-year percentage change in national retail sales (commercial real estate – non multifamily, commercial general, commercial agriculture, commercial asset-based lending, commercial equipment finance, consumer), one-year percentage change in the national home price index (1-4 family residential and construction, land development, land), or one-year percentage change in national gross domestic product (commercial real estate – multifamily) as a second loss driver depending on the nature of the underlying loan pool and how well that loss driver correlates to expected future losses. Consistent forecasts of the loss drivers are used across the loan segments. The Company also forecasts prepayments speeds for use in the DCF models with higher prepayment speeds resulting in lower required ACL levels and vice versa for shorter prepayment speeds. These assumed prepayment speeds are based upon our historical prepayment speeds by loan type adjusted for the expected impact of the future interest rate environment. The impact of these assumed prepayment speeds is lesser in magnitude than the aforementioned loss driver assumptions.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
For all DCF models at September 30, 2025, the Company has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over eight quarters on a straight-line basis. The Company leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by the Company when developing the forecast metrics. At September 30, 2025 as compared to December 31, 2024, the Company forecasted a modest increase in national unemployment and modest degradation in one-year percentage change in national retail sales, one-year percentage change in national home price index, and one-year percentage change in national gross domestic product. At September 30, 2025 for national unemployment, the Company projected a low percentage in the first quarter followed by a gradual rise in the following three quarters. For percentage change in national retail sales, the Company projected small increases in the first two projected quarters followed by a decline to negative levels over the last two projected quarters to a level below recent actual periods. For percentage change in national home price index, the Company projected a breakeven level in the first projected quarter followed by a steep drop to negative levels for the remaining three quarters with such negative levels peaking in the fourth projected quarter. For percentage change in national gross domestic product, management projected very low growth for the first two projected quarters with low levels of contraction for the final two projected quarters. At September 30, 2025, the Company used its historical prepayment speeds with minimal adjustment.
The Company uses a loss-rate method to estimate expected credit losses for the farmland, liquid credit, factored receivable, and mortgage warehouse loan pools. For each of these loan segments, the Company applies an expected loss ratio based on internal and peer historical losses adjusted as appropriate for qualitative factors. Qualitative loss factors are based on the Company's judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions. Loss factors used to calculate the required ACL on pools that use the loss-rate method reflect the forecasted economic conditions described above.
For the three months ended September 30, 2025, changes in projected loss drivers and prepayment assumptions over the reasonable and supportable forecast period increased the required ACL by $156,000. Changes in loan volume and mix increased the required ACL by $243,000. Changes in required specific reserves decreased the ACL by $5,542,000. Net charge-offs during the period were $9,391,000.
For the three months ended September 30, 2024, changes in projected loss drivers and prepayment assumptions over the reasonable and supportable forecast period increased the required ACL by $531,000. Changes in loan volume and mix decreased the required ACL by $1,068,000. Changes in required specific reserves increased the ACL by $2,189,000. Net charge-offs during the period were $3,522,000.
For the nine months ended September 30, 2025, changes in projected loss drivers and prepayment assumptions over the reasonable and supportable forecast period increased the required ACL by $442,000. Changes in loan volume and mix increased the required ACL by $2,029,000. Decreases in required specific reserves decreased the required ACL by $9,637,000. Net charge-offs during the period were $22,992,000.
For the nine months ended September 30, 2024, changes in projected loss drivers and prepayment assumptions over the reasonable and supportable forecast period increased the required ACL by $2,539,000. Changes on loan volume and mix had an insignificant impact on the ACL. Increases in required specific reserves increased the required ACL by $3,543,000. Net charge-offs during the period were $8,127,000.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans:
(Dollars in thousands)
Real Estate
Accounts Receivable
Equipment
Other
Total
ACL Allocation
September 30, 2025
Commercial real estate
$
25,236
$
—
$
—
$
—
$
25,236
$
—
Construction, land development, land
—
—
—
—
—
—
1-4 family residential
1,038
—
—
—
1,038
—
Farmland
1,418
—
59
166
1,643
—
Commercial
281
—
44,664
11,499
56,444
1,338
Factored receivables
—
4,447
—
—
4,447
1,788
Consumer
—
—
—
18
18
—
Mortgage warehouse
—
—
—
—
—
—
Total
$
27,973
$
4,447
$
44,723
$
11,683
$
88,826
$
3,126
Commercial loans secured by Other collateral primarily consist of large liquid credit loans secured by the underlying enterprise values of the borrowers.
(Dollars in thousands)
Real Estate
Accounts Receivable
Equipment
Other
Total
ACL Allocation
December 31, 2024
Commercial real estate
$
30,042
$
—
$
—
$
4,211
$
34,253
$
28
Construction, land development, land
2,410
—
—
—
2,410
—
1-4 family residential
810
—
—
—
810
47
Farmland
1,870
—
73
53
1,996
—
Commercial
2,196
—
52,364
18,819
73,379
9,294
Factored receivables
—
32,773
—
—
32,773
3,993
Consumer
—
—
—
116
116
—
Mortgage warehouse
—
—
—
—
—
—
Total
$
37,328
$
32,773
$
52,437
$
23,199
$
145,737
$
13,362
Past Due and Nonaccrual Loans
The following tables present an aging of contractually past due loans:
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Past Due 30-59 Days
Past Due 60-90 Days
Past Due 90 Days or More
Total Past Due
Current
Total
Past Due 90 Days or More and Accruing
December 31, 2024
Commercial real estate
$
840
$
3,404
$
10,363
$
14,607
$
763,082
$
777,689
$
—
Construction, land development, land
—
2,410
—
2,410
201,394
203,804
—
1-4 family residential
1,188
631
229
2,048
151,972
154,020
—
Farmland
601
140
150
891
55,475
56,366
—
Commercial
7,525
16,150
51,437
75,112
1,044,133
1,119,245
—
Factored receivables
24,828
4,193
24,718
53,739
1,150,771
1,204,510
24,718
Consumer
33
11
—
44
7,956
8,000
—
Mortgage warehouse
—
—
—
—
1,023,326
1,023,326
—
Total
$
35,015
$
26,939
$
86,897
$
148,851
$
4,398,109
$
4,546,960
$
24,718
At December 31, 2024, the Misdirected Payments Receivable, net of customer reserves, totaled $19,361,000, all of which was considered past due 90 days or more. Given the nature of factored receivables, these assets are disclosed as past due 90 days or more still accruing; however, the Company is not recognizing income on the assets. Historically, any income recognized on factored receivables that are past due 90 days or more has not been material.
The following table presents the amortized cost basis of loans on nonaccrual status and the amortized cost basis of loans on nonaccrual status for which there was no related allowance for credit losses:
September 30, 2025
December 31, 2024
(Dollars in thousands)
Total Nonaccrual
Nonaccrual With No ACL
Total Nonaccrual
Nonaccrual With No ACL
Commercial real estate
$
8,382
$
8,382
$
11,254
$
10,481
Construction, land development, land
—
—
2,410
2,410
1-4 family residential
1,011
1,011
810
763
Farmland
732
732
1,996
1,996
Commercial
56,454
48,241
73,437
45,405
Factored receivables
—
—
—
—
Consumer
18
18
116
116
Mortgage warehouse
—
—
—
—
$
66,597
$
58,384
$
90,023
$
61,171
The following table presents accrued interest on nonaccrual loans reversed through interest income:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Commercial real estate
$
—
$
—
$
76
$
—
Construction, land development, land
—
—
—
2
1-4 family residential
—
4
2
5
Farmland
11
—
11
13
Commercial
14
6
17
194
Factored receivables
—
—
—
—
Consumer
—
—
—
—
Mortgage warehouse
—
—
—
—
$
25
$
10
$
106
$
214
There was no interest earned on nonaccrual loans during the three and nine months ended September 30, 2025 and 2024.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents information regarding nonperforming loans:
(Dollars in thousands)
September 30, 2025
December 31, 2024
Nonaccrual loans
$
66,597
$
90,023
Nonperforming factored receivables
1,140
23,289
$
67,737
$
113,312
Credit Quality Information
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including: current collateral and financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk on a regular basis. Large groups of smaller balance homogeneous loans, such as consumer loans, are analyzed primarily based on payment status. The Company uses the following definitions for risk ratings:
Pass – Pass rated loans have low to average risk and are not otherwise classified.
Classified – Classified loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Certain classified loans have the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. As of September 30, 2025 and December 31, 2024, based on the most recent analysis performed, the risk category of loans is as follows:
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Loan Modifications to Borrowers Experiencing Financial Difficulty
In an effort to mitigate potential losses on loans, the Company will endeavor to work with borrowers experiencing financial difficulty to modify the terms of such loans to improve the likelihood of principal repayment. Such modifications generally fall into four broad categories; principal forgiveness, interest rate reduction, other-than-insignificant payment delay, or a term extension. Modifications can reflect one or multiple modification categories. For all loan types, including commercial real estate loans, the Company considers the likelihood of repayment by the borrower experiencing financial difficulty under the potential agreed upon modified terms. If such repayment is not deemed likely, the Company will not grant the troubled borrower a modification and will commence ultimate collection proceedings. On an ongoing basis, the Company monitors the performance of modified loans related to their restructured terms.
The following tables present the amortized cost basis of loan modifications to borrowers experiencing financial difficulty made during the reporting period:
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents the payment status of loans that have been modified in the last twelve months:
September 30, 2025
(Dollars in thousands)
Current
Past Due 30-89 Days
Past Due 90 Days or More
Total
Commercial real estate
$
101,829
$
—
$
—
$
101,829
Construction, land development, land
—
—
—
—
1-4 family residential
12
—
—
12
Farmland
—
—
—
—
Commercial
5,490
523
—
6,013
Factored receivables
—
—
—
—
Consumer
—
—
—
—
Mortgage warehouse
—
—
—
—
$
107,331
$
523
$
—
$
107,854
At September 30, 2025, the Company had $69,000 of commitments to lend additional funds to borrowers experiencing financial difficulty for which the Company modified the terms of the loans in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension during the current period.
There were no loans to borrowers experiencing financial difficulty that had a payment default during the three and nine months ended September 30, 2025 and were modified in the twelve months prior to that default. There were $1,909,000 of commercial loans to a borrower experiencing financial difficulty that had a payment default during the three and nine months ended September 30, 2024 and were modified in the form of a payment delay in the twelve months prior to that default. Default is determined at 90 or more days past due, upon charge-off, or upon foreclosure. Modified loans in default are individually evaluated for the allowance for credit losses or if the modified loan is deemed uncollectible, the loan, or a portion of the loan, is written off and the allowance for credit losses is adjusted accordingly.
Residential Real Estate Loans In Process of Foreclosure
At September 30, 2025 and December 31, 2024, the Company had no 1-4 family residential real estate loans for which formal foreclosure proceedings were in process.
Other Real Estate Owned
At September 30, 2025 and December 31, 2024, the Company had $210,000 and $0 of other real estate owned, net.
NOTE 5 — GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets consist of the following:
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The changes in goodwill and intangible assets during the three and nine months ended September 30, 2025 and 2024 are as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Beginning balance
$
409,163
$
254,652
$
258,208
$
257,355
Acquired goodwill
—
—
111,949
—
Acquired intangible assets
—
—
44,844
2,920
Amortization of intangibles
(2,956)
(3,600)
(8,756)
(9,193)
Amortization of intangibles included in lease income
(18)
(27)
(56)
(57)
Ending balance
$
406,189
$
251,025
$
406,189
$
251,025
NOTE 6 — VARIABLE INTEREST ENTITIES
Collateralized Loan Obligation Funds – Closed
The Company holds investments in the subordinated notes of the following closed Collateralized Loan Obligation (“CLO”) funds:
(Dollars in thousands)
Offering Date
Offering Amount
Trinitas CLO IV, LTD (Trinitas IV)
June 2, 2016
$
406,650
Trinitas CLO VI, LTD (Trinitas VI)
June 20, 2017
$
717,100
The net carrying amounts of the Company’s investments in the subordinated notes of the CLO funds, which represent the Company’s maximum exposure to loss as a result of its involvement with the CLO funds, totaled $1,766,000 and $1,876,000 at September 30, 2025 and December 31, 2024, respectively, and are classified as held to maturity securities within the Company’s consolidated balance sheets.
The Company performed a consolidation analysis to confirm whether the Company was required to consolidate the assets, liabilities, equity or operations of the closed CLO funds in its financial statements. The Company concluded that the closed CLO funds were variable interest entities and that the Company holds variable interests in the entities in the form of its investments in the subordinated notes of entities. However, the Company also concluded that the Company does not have the power to direct the activities that most significantly impact the entities’ economic performance. As a result, the Company was not the primary beneficiary and therefore was not required to consolidate the assets, liabilities, equity, or operations of the closed CLO funds in the Company’s financial statements.
NOTE 7 — LEGAL CONTINGENCIES
TBK Bank, SSB (the “Bank”), the wholly-owned bank subsidiary of the Company, is the agent bank for a $60.5 million floorplan loan facility, of which the Bank holds approximately $22.5 million, for which Tricolor Holdings, LLC (“Tricolor”) is the lead borrower. On September 10, 2025, Tricolor and its affiliates filed for Chapter 7 bankruptcy in the United States District Court for the Northern District of Texas. Public reports have surfaced alleging that Tricolor was engaged in fraud; however, the details of this alleged fraud are not yet known. The floorplan loan facility is secured by a first-priority security interest in the vehicle inventory and certain other assets of Tricolor. As of September 30, 2025, the Bank believes its collateral position adequately secures the outstanding balance of the loan facility. As the bankruptcy proceedings progress, however, the Bank may discover additional information regarding the status of Tricolor’s vehicle inventory. Other creditors have asserted that they have interests in some of the vehicles in which the Bank asserts a first-priority security interest. To the extent necessary, the bankruptcy court may ultimately have to determine the Bank’s and other creditors’ interest in specific vehicles that the Bank believes to be part of Tricolor’s vehicle inventory. The Company may also be subject to additional claims asserted by creditors or the trustee in the bankruptcy proceedings. Should any of such factual determinations or developments in the bankruptcy proceedings negatively impact the Bank’s assessment of its collateral position or otherwise have a negative impact on the Company, the Company might incur losses which could be material to our business, financial condition and results of operations.
Additionally, other various legal claims have arisen from time to time in the normal course of business which, in the opinion of management as of September 30, 2025, will have no material effect on the Company’s consolidated financial statements.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 8 — OFF-BALANCE SHEET LOAN COMMITMENTS
From time to time, the Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments.
The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet financial instruments.
The contractual amounts of financial instruments with off-balance sheet risk were as follows:
September 30, 2025
December 31, 2024
(Dollars in thousands)
Fixed Rate
Variable Rate
Total
Fixed Rate
Variable Rate
Total
Unused lines of credit
$
91,177
$
480,855
$
572,032
$
103,784
$
486,414
$
590,198
Standby letters of credit
$
6,438
$
4,598
$
11,036
$
16,630
$
7,320
$
23,950
Commitments to purchase loans
$
—
$
287
$
287
$
—
$
9,500
$
9,500
Mortgage warehouse commitments
$
—
$
625,792
$
625,792
$
—
$
810,913
$
810,913
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 fully drawn upon, the total commitment amounts disclosed above do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by the Company, upon extension of credit, is based on management’s credit evaluation of the customer.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the event of nonperformance by the customer, the Company has rights to the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The credit risk to the Company in issuing letters of credit is essentially the same as that involved in extending loan facilities to its customers.
Commitments to purchase loans represent loans purchased by the Company that have not yet settled.
Mortgage warehouse commitments are unconditionally cancellable and represent the unused capacity on mortgage warehouse facilities the Company has approved. The Company reserves the right to refuse to buy any mortgage loans offered for sale by a customer, for any reason, at the Company’s sole and absolute discretion.
The Company records an allowance for credit losses on off-balance sheet credit exposures through a charge to credit loss expense on the Company’s consolidated statements of income. At September 30, 2025 and December 31, 2024, the allowance for credit losses on off-balance sheet credit exposures totaled $2,518,000 and $2,701,000, respectively, and was included in other liabilities on the Company’s consolidated balance sheets. The following table presents credit loss expense for off balance sheet credit exposures:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Credit loss expense (benefit)
$
35
$
(1,132)
$
(183)
$
(30)
NOTE 9 — FAIR VALUE DISCLOSURES
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The methods of determining the fair value of assets and liabilities presented in this note are consistent with the methodologies disclosed in Note 16 of the Company’s 2024 Form 10-K.
Assets and liabilities measured at fair value on a recurring basis are summarized in the table below.
(Dollars in thousands)
Fair Value Measurements Using
Total Fair Value
September 30, 2025
Level 1
Level 2
Level 3
Assets measured at fair value on a recurring basis
Securities available for sale
Mortgage-backed securities, residential
$
—
$
95,416
$
—
$
95,416
Asset-backed securities
—
851
—
851
State and municipal
—
2,819
—
2,819
CLO securities
—
277,643
—
277,643
Corporate bonds
—
261
—
261
SBA pooled securities
—
1,098
—
1,098
$
—
$
378,088
$
—
$
378,088
Equity securities with readily determinable fair values
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Fair Value Measurements Using
Total Fair Value
December 31, 2024
Level 1
Level 2
Level 3
Assets measured at fair value on a recurring basis
Securities available for sale
Mortgage-backed securities, residential
$
—
$
84,185
$
—
$
84,185
Asset-backed securities
—
905
—
905
State and municipal
—
3,063
—
3,063
CLO Securities
—
291,913
—
291,913
Corporate bonds
—
262
—
262
SBA pooled securities
—
1,233
—
1,233
$
—
$
381,561
$
—
$
381,561
Equity securities with readily determinable fair values
Mutual fund
$
4,445
$
—
$
—
$
4,445
Loans held for sale
$
—
$
1,172
$
—
$
1,172
Indemnification asset
$
—
$
—
$
679
$
679
Revenue share asset
$
—
$
—
$
2,616
$
2,616
There were no transfers between levels during 2025 or 2024.
Indemnification Asset
The fair value of the indemnification asset is calculated as the present value of the estimated cash payments expected to be received from Covenant for probable losses on the covered Over-Formula Advance Portfolio acquired during 2020. The cash flows are discounted at a rate to reflect the uncertainty of the timing and receipt of the payments from Covenant. The indemnification asset is reviewed quarterly and changes to the asset are recorded as adjustments to other noninterest income or expense, as appropriate, within the Consolidated Statements of Income. The indemnification asset fair value is considered a Level 3 classification. At September 30, 2025 and December 31, 2024, the estimated cash payments expected to be received from Covenant for probable losses on the covered Over-Formula Advance Portfolio were approximately $78,000 and $715,000, respectively, and a discount rate of 5.0% and 5.0%, respectively, was applied to calculate the present value of the indemnification asset. A reconciliation of the opening balance to the closing balance of the fair value of the indemnification asset is as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Beginning balance
$
270
$
1,088
$
679
$
1,497
Indemnification asset recognized in business combination
—
—
—
—
Change in fair value of indemnification asset recognized in earnings
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Revenue Share Asset
On June 30, 2022 and September 6, 2022, the Company entered into and closed two separate agreements to sell two separate portfolios of factored receivables. The June 30, 2022 agreement contains revenue share provisions that entitles the Company to an amount equal to fifteen percent of the future gross monthly revenue of the clients associated with the sold factored receivable portfolio. The September 6, 2022 agreement contains revenue share provisions that entitles the Company to an amount ranging from fifteen to twenty percent, depending on the client, of the future gross monthly revenue of the clients associated with the sold factored receivable portfolio. The fair value of the revenue share assets is calculated each reporting period, and changes in the fair value of the revenue share assets are recorded in noninterest income in the consolidated statements of income. The revenue share asset fair value is considered a Level 3 classification.
At September 30, 2025 and December 31, 2024, the estimated cash payments expected to be received from the purchaser for the Company's share of future gross monthly revenue as $2,441,000 and $3,572,000, respectively, and a discount rate of 10.0% was applied to calculate the present value of the revenue share asset. A reconciliation of the opening balance to the closing balance of the fair value of the revenue share asset is as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Beginning balance
$
2,344
$
2,789
$
2,616
$
2,516
Revenue share asset recognized
—
—
—
—
Change in fair value of revenue share asset recognized in earnings
(321)
416
(47)
1,295
Revenue share payments received
(251)
(301)
(797)
(907)
Ending balance
$
1,772
$
2,904
$
1,772
$
2,904
Assets measured at fair value on a non-recurring basis are summarized in the table below. There were no liabilities measured at fair value on a non-recurring basis at September 30, 2025 and December 31, 2024.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Fair Value Measurements Using
Total Fair Value
December 31, 2024
Level 1
Level 2
Level 3
Collateral dependent loans
Commercial real estate
$
—
$
—
$
745
$
745
Commercial
—
—
18,727
18,727
Factored receivables
—
—
28,780
28,780
$
—
$
—
$
48,252
$
48,252
Collateral Dependent Loans Specific Allocation of ACL: A loan is considered to be a collateral dependent loan when, based on current information and events, the Company expects repayment of the financial assets to be provided substantially through the operation or sale of the collateral and the Company has determined that the borrower is experiencing financial difficulty as of the measurement date. The ACL is measured by estimating the fair value of the loan based on the present value of expected cash flows, the market price of the loan, or the underlying fair value of the loan’s collateral. For real estate loans, fair value of the loan’s collateral is determined by third party appraisals, which are then adjusted for the estimated selling and closing costs related to liquidation of the collateral. For this asset class, the actual valuation methods (income, sales comparable, or cost) vary based on the status of the project or property. For example, land is generally based on the sales comparable method while construction is based on the income and/or sales comparable methods. The unobservable inputs may vary depending on the individual assets with no one of the three methods being the predominant approach. The Company reviews the third party appraisal for appropriateness and adjusts the value downward to consider selling and closing costs, which typically range from 5% to 8% of the appraised value. For non-real estate loans, fair value of the loan’s collateral may be determined using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business.
The estimated fair values of the Company’s financial instruments not measured at fair value on a recurring or non-recurring basis at September 30, 2025 and December 31, 2024 were as follows:
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Carrying Amount
Fair Value Measurements Using
Total Fair Value
December 31, 2024
Level 1
Level 2
Level 3
Financial assets:
Cash and cash equivalents
$
330,117
$
330,117
$
—
$
—
$
330,117
Securities - held to maturity
1,876
—
—
2,514
2,514
Loans not previously presented, gross
4,505,408
49,860
—
4,389,000
4,438,860
FHLB and other restricted stock
14,054
N/A
N/A
N/A
N/A
Accrued interest receivable
41,940
41,940
—
—
41,940
Financial liabilities:
Deposits
4,820,820
—
4,817,208
—
4,817,208
Federal Home Loan Bank advances
30,000
—
30,000
—
30,000
Subordinated notes
69,662
—
56,643
—
56,643
Junior subordinated debentures
42,352
—
43,835
—
43,835
Accrued interest payable
9,766
9,766
—
—
9,766
NOTE 10 — REGULATORY MATTERS
The Company (on a consolidated basis) and TBK Bank are subject to various regulatory capital requirements administered by federal and state 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 Company’s or TBK Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and TBK 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 capital amounts and classification 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 Company and TBK Bank to maintain minimum amounts and ratios (set forth in the table below) of total, common equity Tier 1, and Tier 1 capital to risk weighted assets, and of Tier 1 capital to average assets. Management believes, as of September 30, 2025 and December 31, 2024, the Company and TBK Bank meet all capital adequacy requirements to which they are subject.
As of September 30, 2025 and December 31, 2024, TBK Bank’s capital ratios exceeded those levels necessary to be categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” TBK Bank must maintain minimum total risk based, common equity Tier 1 risk based, Tier 1 risk based, and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since September 30, 2025 that management believes have changed TBK Bank’s category.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The actual capital amounts and ratios for the Company and TBK Bank are presented in the following table.
(Dollars in thousands)
Actual
Minimum for Capital Adequacy Purposes
To Be Well Capitalized Under Prompt Corrective Action Provisions
September 30, 2025
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total capital (to risk weighted assets)
Triumph Financial, Inc.
$
684,116
12.1%
$
452,532
8.0%
N/A
N/A
TBK Bank, SSB
$
664,733
11.8%
$
450,471
8.0%
$
563,088
10.0%
Tier 1 capital (to risk weighted assets)
Triumph Financial, Inc.
$
576,978
10.2%
$
339,399
6.0%
N/A
N/A
TBK Bank, SSB
$
628,822
11.2%
$
337,853
6.0%
$
450,471
8.0%
Common equity Tier 1 capital (to risk weighted assets)
Triumph Financial, Inc.
$
489,149
8.6%
$
254,549
4.5%
N/A
N/A
TBK Bank, SSB
$
628,822
11.2%
$
253,390
4.5%
$
366,007
6.5%
Tier 1 capital (to average assets)
Triumph Financial, Inc.
$
576,978
9.6%
$
241,665
4.0%
N/A
N/A
TBK Bank, SSB
$
628,822
10.4%
$
241,562
4.0%
$
301,952
5.0%
December 31, 2024
Total capital (to risk weighted assets)
Triumph Financial, Inc.
$
802,192
15.2%
$
421,400
8.0%
N/A
N/A
TBK Bank, SSB
$
784,157
15.0%
$
419,480
8.0%
$
524,350
10.0%
Tier 1 capital (to risk weighted assets)
Triumph Financial, Inc.
$
688,025
13.1%
$
316,050
6.0%
N/A
N/A
TBK Bank, SSB
$
742,989
14.2%
$
314,610
6.0%
$
419,480
8.0%
Common equity Tier 1 capital (to risk weighted assets)
Triumph Financial, Inc.
$
600,673
11.4%
$
237,037
4.5%
N/A
N/A
TBK Bank, SSB
$
742,989
14.2%
$
235,957
4.5%
$
340,827
6.5%
Tier 1 capital (to average assets)
Triumph Financial, Inc.
$
688,025
12.0%
$
228,843
4.0%
N/A
N/A
TBK Bank, SSB
$
742,989
13.0%
$
228,726
4.0%
$
285,907
5.0%
As permitted by the interim final rule issued on March 27, 2020 by the federal banking regulatory agencies, the Company elected the option to delay the estimated impact on regulatory capital of ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which was effective January 1, 2020. The initial impact of adoption of ASU 2016-13 as well as 25% of the quarterly increases in the allowance for credit losses subsequent to adoption of ASU 2016-13 (collectively the “transition adjustments”) was delayed for two years. After two years, the cumulative amount of the transition adjustments became fixed and was phased out of the regulatory capital calculations evenly over a three-year period, with 75% recognized in year three, 50% recognized in year four, and 25% recognized in year five. After December 31, 2024, the temporary regulatory capital benefits were fully reversed.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Dividends paid by TBK Bank are limited to, without prior regulatory approval, current year earnings and earnings less dividends paid during the preceding two years.
The capital conservation buffer set forth by the Basel III regulatory capital framework was 2.5% at September 30, 2025 and December 31, 2024. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the full amount of the buffer will result in restrictions on the Company’s ability to make capital distributions, including dividend payments and stock repurchases, and to pay discretionary bonuses to executive officers. At September 30, 2025 and December 31, 2024, the Company’s and TBK Bank’s risk based capital exceeded the required capital conservation buffer.
NOTE 11 — STOCKHOLDERS' EQUITY
The following summarizes the capital structure of Triumph Financial, Inc.
Preferred Stock Series C
(Dollars in thousands, except per share amounts)
September 30, 2025
December 31, 2024
Shares authorized
51,750
51,750
Shares issued
45,000
45,000
Shares outstanding
45,000
45,000
Par value per share
$
0.01
$
0.01
Liquidation preference per share
$
1,000
$
1,000
Liquidation preference amount
$
45,000
$
45,000
Dividend rate
7.125
%
7.125
%
Dividend payment dates
Quarterly
Quarterly
Common Stock
(Dollars in thousands, except per share amounts)
September 30, 2025
December 31, 2024
Shares authorized
50,000,000
50,000,000
Shares issued
29,533,842
29,121,213
Treasury shares
(5,770,441)
(5,729,802)
Shares outstanding
23,763,401
23,391,411
Par value per share
$
0.01
$
0.01
NOTE 12 — STOCK BASED COMPENSATION
Stock based compensation expense that has been charged against income was $4,013,000 and $4,026,000 for the three months ended September 30, 2025 and 2024, respectively, and $10,274,000 and $11,092,000 for the nine months ended September 30, 2025 and 2024, respectively.
2014 Omnibus Incentive Plan
The Company’s 2014 Omnibus Incentive Plan (“Omnibus Incentive Plan”) provides for the grant of nonqualified and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other awards that may be settled in, or based upon the value of, the Company’s common stock. The maximum number of shares of common stock available for issuance under the Omnibus Incentive Plan is 3,650,000 shares.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Restricted Stock Awards
A summary of changes in the Company’s nonvested Restricted Stock Awards (“RSAs”) under the Omnibus Incentive Plan for the nine months ended September 30, 2025 were as follows:
Nonvested RSAs
Shares
Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2025
48,868
90.18
Granted
—
—
Vested
(48,293)
90.21
Forfeited
(575)
87.77
Nonvested at September 30, 2025
—
—
RSAs granted to employees under the Omnibus Incentive Plan typically vest immediately or over four years. Compensation expense for the RSAs will be recognized over the vesting period of the awards based on the fair value of the stock at the issue date. As of September 30, 2025, there was no unrecognized compensation cost related to nonvested RSAs.
Restricted Stock Units
A summary of changes in the Company’s nonvested Restricted Stock Units (“RSUs”) under the Omnibus Incentive Plan for the nine months ended September 30, 2025 were as follows:
Nonvested RSUs
Shares
Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2025
224,568
66.07
Granted
115,572
55.77
Vested
(95,137)
69.51
Forfeited
(43,793)
59.51
Nonvested at September 30, 2025
201,210
59.95
RSUs granted to employees under the Omnibus Incentive Plan typically vest over two to four years. Compensation expense for the RSUs will be recognized over the vesting period of the awards based on the fair value of the stock at the issue date. As of September 30, 2025, there was $6,175,000 of unrecognized compensation cost related to the nonvested RSUs. The cost is expected to be recognized over a remaining period of 2.76 years.
Market Based Performance Stock Units
A summary of changes in the Company’s nonvested Market Based Performance Stock Units (“Market Based PSUs”) under the Omnibus Incentive Plan for the nine months ended September 30, 2025 were as follows:
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Market Based PSUs granted to employees under the Omnibus Incentive Plan vest after three years. The number of shares issued upon vesting will range from 0% to 175% of the Market Based PSUs granted based on the Company’s relative total shareholder return (“TSR”) as compared to the TSR of specified groups of peer banks and financial technology companies, and with respect to the Company's awards granted during and after 2023, may include an additional multiplier of up to 200% of the otherwise earned award based on the Company's absolute TSR. Compensation expense for the Market Based PSUs will be recognized over the vesting period of the awards based on the fair value of the award at the grant date. The fair value of Market Based PSUs granted is estimated using a Monte Carlo simulation. Expected volatilities were determined based on the historical volatilities of the Company and the specified peer group. The risk-free interest rate for the performance period was derived from the Treasury constant maturities yield curve on the valuation dates.
The fair value of the Market Based PSUs granted was determined using the following weighted-average assumptions:
Nine Months Ended September 30,
2025
2024
Grant date
May 1, 2025
May 1, 2024
Performance period
3.00 years
3.00 years
Stock price
$
54.38
$
72.00
Triumph Financial stock price volatility
42.22
%
42.31
%
Risk-free rate
3.62
%
4.67
%
As of September 30, 2025, there was $13,888,000 of unrecognized compensation cost related to the nonvested Market Based PSUs. The cost is expected to be recognized over a remaining period of 2.18 years.
Stock Options
A summary of the changes in the Company’s stock options under the Omnibus Incentive Plan for the nine months ended September 30, 2025 were as follows:
Stock Options
Shares
Weighted-Average Exercise Price
Weighted-Average Remaining Contractual Term (In Years)
Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2025
257,603
$
49.68
Granted
91,552
54.38
Exercised
(6,667)
32.76
Forfeited
(9,503)
64.28
Expired
(452)
$
72.00
Outstanding at September 30, 2025
332,533
$
50.87
6.33
$
2,306
Fully vested shares and shares expected to vest at September 30, 2025
332,533
$
50.87
6.33
$
2,306
Shares exercisable at September 30, 2025
178,312
$
44.63
4.09
$
2,306
Information related to the stock options for the nine months ended September 30, 2025 and 2024 was as follows:
Nine Months Ended September 30,
(Dollars in thousands, except per share amounts)
2025
2024
Aggregate intrinsic value of options exercised
$
214
$
895
Cash received from option exercises, net
218
425
Tax benefit realized from option exercises
45
188
Weighted average fair value per share of options granted
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Stock options awarded to employees under the Omnibus Incentive Plan are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant, vest over four years, and have ten year contractual terms. The fair value of stock options granted is estimated at the date of grant using the Black-Scholes option-pricing model. Expected volatilities are determined based on the Company’s historical volatility. The expected term of the options granted is determined based on the SEC simplified method, which calculates the expected term as the mid-point between the weighted average time to vesting and the contractual term. The risk-free interest rate for the expected term of the options is derived from the Treasury constant maturity yield curve on the valuation date.
The fair value of the stock options granted was determined using the following weighted-average assumptions:
Nine Months Ended September 30,
2025
2024
Risk-free interest rate
3.88
%
4.52
%
Expected term
6.25 years
6.25 years
Expected stock price volatility
48.48
%
46.50
%
Dividend yield
—
—
As of September 30, 2025, there was $2,625,000 of unrecognized compensation cost related to nonvested stock options granted under the Omnibus Incentive Plan. The cost is expected to be recognized over a remaining period of 3.03 years.
Employee Stock Purchase Plan
During the year ended December 31, 2019, the Company’s Board of Directors adopted, and the Company’s stockholders approved, the Company's 2019 Employee Stock Purchase Plan (“ESPP”). Under the ESPP, 2,500,000 shares of common stock were reserved for issuance. The ESPP enables eligible employees to purchase the Company’s common stock at a price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each six month offering period. During the nine months ended September 30, 2025 and 2024, 44,048 shares and 36,649 shares, respectively, were issued under the plan.
NOTE 13 — EARNINGS PER SHARE
The factors used in the earnings per share computation follow:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Basic
Net income (loss) to common stockholders
$
907
$
4,546
$
3,741
$
9,848
Weighted average common shares outstanding
23,752,331
23,330,635
23,569,712
23,268,887
Basic earnings (loss) per common share
$
0.04
$
0.19
$
0.16
$
0.42
Diluted
Net income (loss) to common stockholders
$
907
$
4,546
$
3,741
$
9,848
Weighted average common shares outstanding
23,752,331
23,330,635
23,569,712
23,268,887
Dilutive effects of:
Assumed exercises of stock options
59,389
95,472
65,104
89,349
Restricted stock awards
—
40,259
20,410
67,805
Restricted stock units
90,675
130,331
115,441
129,047
Performance stock units - market based
18,812
128,157
20,699
117,101
Employee stock purchase program
3,651
470
4,083
1,774
Average shares and dilutive potential common shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Stock options
181,647
64,315
141,531
43,389
Restricted stock units
—
7,500
3,750
7,818
Performance stock units - market based
77,074
—
42,846
24,798
NOTE 14 — REVENUE FROM CONTRACTS WITH CUSTOMERS
The Company records revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices can be fixed or variable; charged either on a periodic basis or based on activity. Except as disclosed below, the Company presents disaggregated revenue from contracts with customers in the consolidated statements of income.
Banking and Factoring Segments
The Banking segment derives its revenue principally from investments in interest-earning assets as well as noninterest income typical for the banking industry, and the Factoring segment derives the large majority of its revenue from interest income on purchased factored receivables. The majority of such revenue streams fall under Accounting Standards Codification Topic 310, “Receivables” (“Topic 310”) which is outside the scope of Topic 606. There are, however, certain Banking and Factoring activities that generate revenue under Topic 606. Descriptions of the Company's significant Banking and Factoring revenue-generating activities within the scope of Topic 606, which are included in non-interest income in the Company's consolidated statements of income, are as follows:
•Service charges on deposits. Service charges on deposits primarily consists of fees from the Company's deposit customers for account maintenance, account analysis, and overdraft services. Account maintenance fees and analysis fees are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs.
•Card income. Card income primarily consists of interchange fees. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized when the transaction processing services are provided to the cardholder.
•Net OREO gains (losses) and valuation adjustments. The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer.
•Fee income. Fee income for the Banking and Factoring segments primarily consists of transaction-based fees, including wire transfer fees, ACH and check fees, early termination fees, and other fees, earned from the Company's banking and factoring customers. Transaction based fees are recognized at the time the transaction is executed as that is the point in time the Company satisfies its performance obligations.
•Insurance commissions. Insurance commissions are earned for brokering insurance policies. The Company's primary performance obligations for insurance commissions are satisfied and revenue is recognized when the brokered insurance policies are executed.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Payments Segment
The Payments segment derives a portion of its revenue from interest income on factored receivables and commercial loans related to invoice payments. These factored receivables consist of (i) invoices where we offer a Carrier a QuickPay opportunity to receive payment at a discount in advance of the standard payment term for such invoice in exchange for the assignment of such invoice to us and (ii) factoring transactions where we purchase receivables payable to such freight brokers from their shipper clients. The Payments segment also offers commercial loans that result from our offering certain Brokers an additional liquidity option through the ability to settle their invoices with us on an extended term following our payment to their Carriers. There were no such commercial loans at September 30, 2025 and December 31, 2024. Such revenue falls under Topic 310 and is outside the scope of Topic 606.
The products and services offered through the Company's Payments segment connect Brokers, Shippers, Factors and Carriers through forward-thinking solutions that help each party successfully manage the life cycle of invoice presentment for services provided by Carrier through processing and audit of such invoice to its ultimate payment to the Carrier or the Factor. The Payments segment earns transaction revenue for such services from fees paid by its customers to receive auditing and payment processing of their invoices. Transaction revenue is recorded in Fee Income on the Consolidated Statements of Income and is subject to Topic 606. Transaction fees can be variable in nature. When such fees are variable, they are typically based upon the number of audit and payment transactions executed during a stated period; generally a calendar month. The customer is charged either a set fee per transaction or a set minimum fee for a stated number of transactions with the variable component being a per-invoice amount for transactions exceeding the stated minimum number. When applicable, the stated minimum number of transactions typically resets on a monthly basis. Transaction volume and related variable fees are known and recognized at each reporting period. Transaction fees can also be fixed in nature with such fees reflecting a set annual amount that is recognized ratably over the terms of the related contracts. In both variable and fixed arrangements, customers are typically billed monthly in arrears with payment due on 30 day terms and as such, no revenue is deferred.
The Payments segment also earns network fees for providing its customers access to the network. Network fees are recorded in Fee Income on the Consolidated Statements of Income and are subject to Topic 606. Network fees are generally a fixed annual amount and are recognized ratably over the terms of the related contracts. Customers are typically billed monthly in arrears with payment due on 30 day terms and as such, no revenue is deferred.
The Payments segment's service comprises a single performance obligation to provide stand-ready access to its payments and audit platforms for its customers which is satisfied over time as services are rendered. Given the nature of its services and related revenue, no significant judgments are made in applying Topic 606 and there are no refund, warranty, or similar obligations.
The Payments segment's contracts with its customers are usually short-term in nature and can generally be terminated by either party without a termination penalty or refund after the notice period has lapsed. Therefore, the contracts are defined at the transaction level and do not extend beyond the service already provided. The contracts generally renew automatically without any significant material rights. Some of the contracts include tiered pricing, which is based primarily on volume. The fee charged per transaction is adjusted up or down based on the volume processed for a specified period. Management has concluded that this volume-based pricing approach does not constitute a future material right since changes in the fee ranges are typically offered to classes of customers with similar volume.
The Payments segment recognizes fees charged to its customers on a gross basis as transaction revenue as it is the principal in respect of completing Payments segment transactions. As a principal to the transaction, the Payments segment controls the services on its platforms. The Payments segment bears primary responsibility for the fulfillment of the services, contracts directly with its customers, controls the product specifications, and defines the value proposal from its services. Further, the Payments segment has full discretion in determining the fee charged to its customers. The Payments segment is also responsible for providing customer support.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Capitalized contract costs consist of (i) deferred sales commissions that are incremental costs of obtaining customer contracts and (ii) deferred set-up costs, primarily direct payroll costs, for implementation services provided to customers prior to the launching of the Company’s products for general availability (go-live) to customers. Deferred sales commissions are amortized ratably over two years, taking into consideration the initial contract term, expected renewal periods, and sales commissions paid on such renewal periods. Deferred set-up costs are amortized ratably over four years which estimates the benefit period of the capitalized costs starting on the go-live date of the service. Deferred sales commissions and deferred set-up costs were included in other assets in the accompanying consolidated balance sheets and were $244,000 and $1,762,000, respectively, at September 30, 2025 and $319,000 and $1,354,000, respectively, at December 31, 2024. The amortization of deferred sales commissions and deferred set-up costs is included in salaries and employee benefits in the consolidated statements of income and was not significant for the nine months ended September 30, 2025 and 2024.
Given the nature of services provided, the Payments segment does not carry any material contract balances.
The table below shows the Payments segment’s revenue from transaction and network fees from external customers, which are disaggregated by customer category.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Broker fee income
$
7,131
$
4,804
$
18,752
$
13,311
Factor fee income
933
1,339
3,159
3,930
Other fee income
365
42
622
$
196
Total fee income
$
8,429
$
6,185
$
22,533
$
17,437
Intelligence Segment
The services offered through the Company's Intelligence segment drive efficiency, enhance decision-making, and enable Shippers, Brokers, and Carriers to operate more profitably in a very competitive over-the-road trucking market. With Triumph’s access to data from its Intelligence network and other sources, management believes that Triumph can develop products and services to offer to logistics service providers, allowing them to better plan for peak periods, competitively source freight capacity, and allocate resources efficiently, thus improving their profitability.
The Intelligence segment earns subscription revenue for such services from fees paid by its customers to receive access to the Intelligence platform via a software as a service agreement. Subscription revenue is recorded in Fee Income on the Consolidated Statements of Income and is subject to Topic 606. The customer is charged a monthly fixed subscription fee that is typically billed up-front each month with payment due on 30 day terms and as such, revenue is deferred and recognized ratably over the month the service is provided.
The Intelligence segment's service comprises a single performance obligation to provide stand-ready access to its Intelligence platform for its customers which is satisfied over time as services are rendered. Given the nature of its services and related revenue, no significant judgments are made in applying Topic 606 and there are no refund, warranty, or similar obligations other than standard constrained service level agreements.
The Intelligence segment's contracts with its customers are usually one or two years in nature and can generally be terminated by either party without a termination penalty or refund if either party gives the other party written notice of non-renewal at least 30 days prior to the expiration of the then-current term. Unless notice is given, the contracts generally renew automatically without any significant material rights. Some of the contracts include tiered pricing, where subscription fees will increase based primarily on an increase in customer revenue; however, such tiered pricing is dependent on customer performance and is constrained until known for revenue recognition purposes. Management has concluded that this tiered pricing approach does not constitute a future material right since changes in the fee ranges are typically offered to classes of customers with similar volume.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Intelligence segment recognizes fees charged to its customers on a gross basis as subscription revenue as it is the principal in respect of completing Intelligence segment transactions. As a principal to the transaction, the Intelligence segment controls the services on its platforms. The Intelligence segment bears primary responsibility for the fulfillment of the services, contracts directly with its customers, controls the product specifications, and defines the value proposal from its services. Further, the Intelligence segment has full discretion in determining the fee charged to its customers. The Intelligence segment is also responsible for providing customer support.
Capitalized contract costs consist of (i) deferred sales commissions that are incremental costs of obtaining customer contracts and (ii) deferred set-up costs, primarily direct payroll costs, for implementation services provided to customers prior to the launching of the Company’s products for general availability (go-live) to customers. Deferred sales commissions are amortized ratably over two years, taking into consideration the initial contract term, expected renewal periods, and sales commissions paid on such renewal periods. Deferred set-up costs are amortized ratably over four years which estimates the benefit period of the capitalized costs starting on the go-live date of the service. Deferred sales commissions and deferred set-up costs were included in other assets in the accompanying consolidated balance sheets and were immaterial at September 30, 2025 and December 31, 2024. The amortization of deferred sales commissions and deferred set-up costs is included in salaries and employee benefits in the consolidated statements of income and was not significant for the nine months ended September 30, 2025 and 2024.
Given that customers are billed monthly and most of the deferred revenue is recognized by the end of each reporting period, the Intelligence segment does not carry any material contract balances at September 30, 2025 and December 31, 2024.
NOTE 15 — LESSOR OPERATING LEASES
The table below shows the Company's revenue from operating leases, which is included in non-interest income in the Company's consolidated statements of income.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Fixed payments
$
389
$
978
$
1,071
$
2,073
Variable payments
229
441
665
994
Amortization of intangibles included in lease income
(18)
(27)
(56)
$
(57)
Total fee income
$
600
$
1,392
$
1,680
$
3,010
NOTE 16 — BUSINESS SEGMENT INFORMATION
The Company's reportable segments are Banking, Factoring, Payments, and Intelligence, which have been determined based upon their business processes and economic characteristics. This determination also gave consideration to the structure and management of various product lines. The Banking segment includes the operations of TBK Bank. The Banking segment derives its revenue principally from investments in interest earning assets as well as noninterest income typical for the banking industry. The Factoring segment derives its revenue from factoring services. The Payments segment includes the presentment, audit, and payment solutions offered to Shipper, Broker, and Factor clients in the trucking industry. The Payments segment derives its revenue from transaction fees and interest income on factored receivables related to invoice payments. These factored receivables consist of both invoices where we offer a Carrier a QuickPay opportunity to receive payment at a discount in advance of the standard payment term for such invoice in exchange for the assignment of such invoice to us and from offering Brokers the ability to settle their invoices with us on an extended term following our payment to their Carriers as an additional liquidity option for such Brokers. The Intelligence segment was launched at the beginning of the fourth quarter of 2024 to turn the over-the-road trucking data collected through our services into actionable insights for our customers. This launch coincided with our acquisition of the assets of Isometric Technologies Inc., a company that provides service and performance scoring and benchmarking capabilities to the over-the-road trucking industry. The operations of this segment were further supplemented with our acquisition of Greenscreens AI. Inc., a pricing solution for the logistics industry that delivers short-term freight market pricing intelligence and business insights, during the quarter ended June 30, 2025. The revenue for Intelligence offerings is derived through access and subscription fees, as well as seat licenses where applicable. Prior to the fourth quarter of 2024, there were no individuals allocated specifically to our data intelligence segment and an explicit data intelligence segment did not exist. Therefore, revision of prior period segment operating results is not applicable.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Prior to September 30, 2024, the Company disclosed Corporate as a reportable segment. The Company has determined that what was previously deemed the Corporate reportable segment consists of other business activities that do not represent a reportable segment, but rather, such activities belong in a Corporate and Other category as reported in the tabular disclosure below. It should be noted that such restructuring of the tabular disclosure did not result in any changes to the Company's revenue and expense allocation methodology described below. The Company restructured prior period tabular disclosures to achieve appropriate comparability.
Expenses that are directly attributable to the Company's Banking, Factoring, Payments, and Intelligence segments such as, but not limited to, occupancy, salaries and benefits to employees that are fully dedicated to the segment, and certain technology costs that can be attributed to specific users or functional areas within the segment are allocated as such. The Company continues to make considerable investments in shared services that benefit the entire organization and these expenses are allocated to the Corporate and Other category. The Company allocates such expenses to the Corporate and Other category in order for the Company's chief operating decision maker and investors to have clear visibility into the operating performance of each reportable segment.
The Company allocates intersegment interest expense to the Factoring and Payments segments based on one-month term SOFR for their funding needs. When the Payments segment is self-funded, with customer deposit funding in excess of its factored receivables, intersegment interest income is allocated based on the Federal Funds effective rate. Management believes that such intersegment interest allocations appropriately reflect the current interest rate environment and the relatively quick turn of the underlying receivables.
Reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. Changes in management structure or allocation methodologies and procedures may result in future changes to previously reported segment financial data. The accounting policies of the segments are substantially the same as those described in the “Summary of Significant Accounting Policies” in Note 1 of the Company’s 2024 Form 10-K.
Transactions between segments consist primarily of borrowed funds, payment network fees, and servicing fees. Intersegment interest expense is allocated to the Factoring and Payments segments as described above. Payment network fees are paid by the Factoring segment to the Payments segment for use of the payments network. Servicing fees are paid by the Payments segment to the Factoring segment for servicing factoring transactions with freight broker clients transferred from the Factoring segment to the Payments segment to align with the supply chain finance product offerings for this business. Servicing fees are paid by the Payments segment to the Factoring segment for servicing such product. Beginning prospectively on January 1, 2024, the Factoring and Payments segments began paying fees to our Banking segment for the Banking segment's execution of various banking services that benefit those segments. Credit loss expense is allocated based on the segment’s ACL determination. Noninterest income and expense directly attributable to a segment are assigned to the related segment. Various shared service costs such as human resources, accounting, finance, risk management and information technology expense are assigned to the Corporate and Other category if they are not directly attributable to a segment. Other segment expense consists of various loan and card related expenses and other insignificant miscellaneous costs not specifically reviewed by the Company's chief operating decision maker. Taxes are paid on a consolidated basis and are not allocated for segment purposes.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Total
Corporate
Nine Months Ended September 30, 2024
Banking
Factoring
Payments
Intelligence
Segments
and Other(1)
Consolidated
Total interest income
$
198,284
$
101,964
$
16,571
$
—
$
316,819
$
218
$
317,037
Intersegment interest allocations
20,643
(27,383)
6,740
—
—
—
—
Total interest expense
47,193
—
—
—
47,193
7,195
54,388
Net interest income (expense)
171,734
74,581
23,311
—
269,626
(6,977)
262,649
Credit loss expense (benefit)
10,207
3,859
55
—
14,121
193
14,314
Net interest income after credit loss expense
161,527
70,722
23,256
—
255,505
(7,170)
248,335
Noninterest income
21,613
7,089
17,732
—
46,434
3,229
49,663
Noninterest expense:
Salaries and employee benefits
50,580
37,709
27,736
—
116,025
49,612
165,637
Depreciation
5,203
1,572
760
—
7,535
4,010
11,545
Other occupancy, furniture and equipment
6,733
1,618
484
—
8,835
4,522
13,357
FDIC insurance and other regulatory assessments
1,973
—
—
—
1,973
—
1,973
Professional fees
3,196
3,815
1,968
—
8,979
3,854
12,833
Amortization of intangible assets
1,815
1,128
5,076
—
8,019
1,174
9,193
Advertising and promotion
1,678
694
1,173
—
3,545
1,093
4,638
Communications and technology
15,632
7,656
7,197
—
30,485
8,138
38,623
Software amortization
136
1,693
1,850
—
3,679
336
4,015
Travel and entertainment
832
696
1,308
—
2,836
1,617
4,453
Other
8,225
2,776
2,601
—
13,602
3,491
17,093
Total noninterest expense
96,003
59,357
50,153
—
205,513
77,847
283,360
Net intersegment noninterest income (expense)(2)
397
1,227
(1,624)
—
—
—
—
Net income (loss) before income tax expense
$
87,534
$
19,681
$
(10,789)
$
—
$
96,426
$
(81,788)
$
14,638
(1) Includes revenue and expense from the Company’s holding company, which does not meet the definition of an operating segment. Also includes corporate shared service costs such as the majority of salaries and benefits expense for the Company's executive leadership team, as well as other selling, general, and administrative shared services costs including human resources, accounting, finance, risk management and a significant amount of information technology expense.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(2) Net intersegment noninterest income (expense) includes:
(Dollars in thousands)
Banking
Factoring
Payments
Three Months Ended September 30, 2025
Factoring revenue received from Payments
$
—
$
911
$
(911)
Payments revenue received from Factoring
—
(329)
329
Banking revenue received from Payments and Factoring
158
(119)
(39)
Net intersegment noninterest income (expense)
$
158
$
463
$
(621)
Three Months Ended September 30, 2024
Factoring revenue received from Payments
$
—
$
864
$
(864)
Payments revenue received from Factoring
—
(289)
289
Banking revenue received from Payments and Factoring
139
(110)
(29)
Net intersegment noninterest income (expense)
$
139
$
465
$
(604)
Nine months ended September 30, 2025
Factoring revenue received from Payments
$
—
$
2,732
$
(2,732)
Payments revenue received from Factoring
—
(1,082)
1,082
Banking revenue received from Payments and Factoring
450
(339)
(111)
Net intersegment noninterest income (expense)
$
450
$
1,311
$
(1,761)
Nine months ended September 30, 2024
Factoring revenue received from Payments
$
—
$
2,364
$
(2,364)
Payments revenue received from Factoring
—
(818)
818
Banking revenue received from Payments and Factoring
397
(319)
(78)
Net intersegment noninterest income (expense)
$
397
$
1,227
$
(1,624)
Total assets and gross loans below include intercompany loans, which eliminate in consolidation. Effective January, 1, 2025, Triumph Financial Services LLC, the entity through which the Company previously conducted all of its factoring operations, was merged with and into TBK Bank, SSB. Concurrent with the legal entity merger, the Banking segment intercompany advance to the Factoring segment was extinguished.
This section presents management’s perspective on our financial condition and results of operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Company’s interim consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and with the consolidated financial statements and accompanying notes and other detailed information appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause results to differ materially from management’s expectations. See the “Forward-Looking Statements” section of this discussion for further information on forward-looking statements.
Overview
We are a financial holding company headquartered in Dallas, Texas and registered under the Bank Holding Company Act, that offers a diversified line of banking, factoring, payments, and intelligence services. Our principal subsidiary is TBK Bank, SSB, a Texas state savings bank and the entity through which we offer substantially all of our products and services. Effective January, 1, 2025, we merged Triumph Financial Services LLC, the entity through which we previously conducted all of our factoring operations, with and into TBK Bank, SSB. As of September 30, 2025, we had consolidated total assets of $6.357 billion, total loans held for investment of $4.987 billion, total deposits of $4.955 billion and total stockholders’ equity of $919.3 million.
We offer traditional banking services, commercial lending product lines focused on businesses that require specialized financial solutions and national lending product lines that further diversify our lending operations. Our banking operations commenced in 2010 and include a branch network developed through organic growth and acquisition, including concentrations the front range of Colorado, the Quad Cities market in Iowa and Illinois and a full-service branch in Dallas, Texas. Our traditional banking offerings include a full suite of lending and deposit products and services. These activities are focused on our local market areas and some products are offered on a nationwide basis. They generate a stable source of core deposits and a diverse asset base to support our overall operations. Our asset-based lending and equipment lending products are offered on a nationwide basis and generate attractive returns. Additionally, we offer mortgage warehouse lending and purchase liquid credit lending products on a nationwide basis to provide further asset base diversification and our mortgage warehouse lending generates stable deposits. Our Banking products and services share basic processes and have similar economic characteristics.
In addition to our traditional banking operations, we also operate a factoring business focused primarily on serving the over-the-road trucking industry. This business involves the provision of working capital to the trucking industry through the purchase of invoices generated by small to medium sized trucking fleets ("Carriers") at a discount to provide immediate working capital to such Carriers. In 2024, our factoring business also launched its Factoring as a Service ("FaaS") product. As part of our FaaS product, we offer certain back-office factoring services to the over-the-road transportation industry, enabling our FaaS customers to either supplement their own factoring operations or to offer factoring services to their customers wholly supported by our platform. Our factoring business operates in a highly specialized niche with unique processes and earns substantially higher yields on its factored accounts receivable portfolio than our other lending products described above.
Our payments business is a payments network for the over-the-road trucking industry. This platform was originally designed to manage Carrier payments for third party logistics companies, or 3PLs ("Brokers") and the manufacturers and other businesses that contract directly for the shipment of goods (“Shippers”), with a focus on increasing on-balance sheet factored receivable transactions through the offering of quick pay transactions for Carriers receiving such payments through the network. During 2021, we acquired HubTran, Inc., a software platform that offers workflow solutions for the processing and approval of Carrier Invoices for approval by Brokers or purchase by the factoring businesses providing working capital to Carriers ("Factors"). Following such acquisition, our strategy shifted from a capital-intensive on-balance sheet product with a greater focus on interest income to a network for the trucking industry with an additional focus on fee revenue. Our network connects Brokers, Shippers, Factors and Carriers through forward-thinking solutions that help each party successfully manage the life cycle of invoice presentment for services provided by Carrier through the processing and audit of such invoice to its ultimate payment to the Carrier or the Factor providing working capital to such Carrier. During 2024, we introduced our LoadPay product; a digital bank account developed for Carriers. LoadPay provides a user experience and financial products, including small business checking accounts, tailored to the financial needs of the small trucking companies that are the ultimate payees inside of the network. A key feature of the LoadPay product is our ability to rapidly fund invoices approved for payment through the network or approved for purchase as part of our factoring operations to the LoadPay account without the need for such payments to be processed through traditional payment rails such as ACH transfers. We also offer supply chain finance to Brokers, allowing them to pay their Carriers faster and drive Carrier loyalty. In addition, through the network, we provide tools and services to increase automation, mitigate fraud, create back-office efficiency and improve the payment experience. Our payments business also operates in a highly specialized niche with unique processes and key performance indicators.
Our data intelligence business, which we call Intelligence, was launched at the beginning of the fourth quarter of 2024 to turn the over-the-road trucking data collected through our services into actionable insights for our customers. This launch coincided with our acquisition of the assets of Isometric Technologies Inc., a company that provides service and performance scoring and benchmarking capabilities to the over-the-road trucking industry. During the second quarter of 2025, we also acquired Greenscreens AI, Inc. ("Greenscreens"), a company that provides a pricing solution for the logistics industry that delivers short-term freight market pricing intelligence and business insights. Data has the ability to drive efficiency, enhance decision-making, and enable Shippers, Brokers, and Carriers to operate more profitably in a very competitive over-the-road trucking market. With our access to data from our payments network and other sources, we believe we can develop products and services to offer to logistics service providers, allowing them to better plan for peak periods, competitively source freight capacity, and allocate resources efficiently, thus improving their profitability. Intelligence operates in a highly specialized niche with unique processes and key performance indicators.
At September 30, 2025, our business is primarily focused on providing financial services to participants in the for-hire trucking ecosystem in the United States, including Brokers, Shippers, Factors and Carriers. Within such ecosystem, we operate our payments platform, which connects such parties to streamline and optimize the presentment, audit and payment of transportation invoices. We also act as capital provider to the Carrier industry through our factoring business. We also offer data services through our intelligence offerings. Our traditional banking operations provide stable, low cost deposits to support our operations, a diversified lending portfolio to add stability to our balance sheet, and a suite of traditional banking products and services to participants in the for-hire trucking ecosystem to deepen our relationship with such clients.
We have determined our reportable segments are Banking, Factoring, Payments and Intelligence. For the nine months ended September 30, 2025, our Banking segment generated 58% of our total segment revenue (comprised of interest and noninterest income), our Factoring segment generated 30% of our total segment revenue, our Payments segment generated 11% of our total segment revenue, and our Intelligence segment generated 1% of our total segment revenue.
Third Quarter 2025 Overview
Net income available to common stockholders for the three months ended September 30, 2025 was $0.9 million, or $0.04 per diluted share, compared to net income available to common stockholders for the three months ended September 30, 2024 of $4.5 million, or $0.19 per diluted share. For the three months ended September 30, 2025, our return on average common equity was 0.41% and our return on average assets was 0.11%.
Net income available to common stockholders for the nine months ended September 30, 2025 was $3.7 million, or $0.16 per diluted share, compared to net income available to common stockholders for the nine months ended September 30, 2024 of $9.8 million, or $0.42 per diluted share. For the nine months ended September 30, 2025, our return on average common equity was 0.58% and our return on average assets was 0.13%.
At September 30, 2025, we had total assets of $6.357 billion, including gross loans held for investment of $4.987 billion, compared to $5.949 billion of total assets and $4.547 billion of gross loans held for investment at December 31, 2024. Total loans held for investment increased $440.0 million during the nine months ended September 30, 2025. Our Banking loans, which constitute 71% of our total loan portfolio at September 30, 2025, increased from $3.340 billion in aggregate as of December 31, 2024 to $3.559 billion
as of September 30, 2025, an increase of 6.6%. Our Factoring factored receivables, which constitute 24% of our total loan portfolio at September 30, 2025, increased from $1.033 billion in aggregate as of December 31, 2024 to $1.194 billion as of September 30, 2025, an increase of 15.6%. Our Payments factored receivables, which constitute 5% of our total loan portfolio at September 30, 2025, increased from $171.7 million in aggregate as of December 31, 2024 to $230.8 million as of September 30, 2025, an increase of 34.4%.
At September 30, 2025, we had total liabilities of $5.438 billion, including total deposits of $4.955 billion, compared to $5.058 billion of total liabilities and $4.821 billion of total deposits at December 31, 2024. Deposits increased $134.4 million during the nine months ended September 30, 2025.
At September 30, 2025, we had total stockholders' equity of $919.3 million. During the nine months ended September 30, 2025, total stockholders’ equity increased $28.4 million. Capital ratios remained strong with Tier 1 capital and total capital to risk weighted assets ratios of 10.20% and 12.09%, respectively, at September 30, 2025.
The total dollar value of invoices purchased by our Factoring segment during the three months ended September 30, 2025 was $2.998 billion with an average invoice size of $1,727. The average transportation invoice size for the three months ended September 30, 2025 was $1,690. This compares to invoice purchase volume of $2.610 billion with an average invoice size of $1,763 and average transportation invoice size of $1,724 during the same period a year ago.
Our Payments segment processed 8.8 million invoices paying Carriers a total of $10.662 billion during the three months ended September 30, 2025. This compares to processed volume of 6.3 million invoices for a total of $7.091 billion during the same period a year ago.
2025 Items of Note
Restructuring Activities
In August 2025, we announced a reduction in force involving approximately 5% of our workforce, as well as other cost saving initiatives including non-headcount related reductions in facilities, legacy technology, vendor spend, and travel. These actions are part of our initiatives to re-balance our cost structure in light of technology investments that have delivered significant efficiencies across the organization. These advancements have reduced the need for certain roles and prompted a reorganization of teams and responsibilities to better serve our transportation verticals. We believe these actions will strengthen our competitive position, enhance operational agility, and support sustainable long-term growth.
During the three months ended September 30, 2025, we recognized $3.1 million of expense related to the reduction in force, which consisted primarily of one-time termination charges arising from severance obligations and other customary employee benefit payments made in connection with a reduction in force. These costs were included in salaries and benefits expense in the consolidated statements of income and for segment reporting, $0.5 million of the expense was recognized by the Banking segment, $1.1 million was recognized by the Factoring segment, $0.5 million was recognized by the Payments segment, $0.2 million was recognized by the Intelligence segment, and $0.8 million was allocated to the corporate and other category. The Company also recognized $1.3 million of expense during the three months ended September 30, 2025 related to the cost saving initiatives, which consisted primarily of one-time contract amendment fees. These costs were included in professional fees in the consolidated statements of income and were allocated to the corporate and other category for segment reporting.
Greenscreens.ai
On May 8, 2025, we, through our wholly-owned subsidiary TBK Bank, SSB, acquired Greenscreens AI, Inc. ("Greenscreens"), a pricing solution for the logistics industry that delivers short-term freight market pricing intelligence and business insights, for $139.1 million in cash and $12.7 million of our common stock.
For further information on the above transactions see Note 2 – Acquisitions and Divestitures in the accompanying condensed notes to the consolidated financial statements included elsewhere in this report.
USPS Settlement
At June 30, 2025, we carried a receivable (the “Misdirected Payments Receivable”) payable by the United States Postal Service (“USPS”) arising from accounts factored to a large carrier. The balance of such Misdirected Payments Receivable, net of customer reserves, was $19.4 million. The amounts represented by this receivable were paid by the USPS directly to such customer in contravention of notices of assignment delivered to, and previously honored by, the USPS, which amount was then not remitted back to us by such customer as required. The USPS disputed their obligation to make such payment, citing purported deficiencies in the notices delivered to them. We were a party to litigation in the United States Court of Federal Claims against the USPS seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. On June 30, 2025, we reached an agreement with the USPS ("the USPS Settlement") whereby the USPS agreed to pay us $47.5 million to settle the litigation in the United States Court of Federal Claims and certain other related proceedings. Such settlement was entered into as part of a global settlement of the disputes related to the Misdirected Payments Receivable, other amounts we asserted were due to us from USPS for other balances owed to us as a result of their failure to honor our notices of assignment, and certain claims of the large carrier involved in this matter against the USPS for underpayment on certain transportation contracts in which we had a security interest. We received the full $47.5 million settlement proceeds on July 10, 2025. The proceeds of the USPS Settlement were applied as follows:
•$11.5 million to the aforementioned large carrier,
•$19.4 million to relieve the entire balance of Misdirected Payments Receivable, net of customer reserves,
•$1.1 million of interest and fees,
•$7.9 million of legal expense recovery
•$3.8 million to recovery of previously charged-off acquired over-formula advances related to the aforementioned large carrier, and
•$3.8 million to CVLG in accordance with the amended terms of the CVLG transaction.
The USPS Settlement had a $12.4 million and $11.5 million positive impact on pretax net income for the three months ended June 30, 2025 and nine months ended September 30, 2025, respectively made up of the prior period impacts of the interest and fees, legal expense recovery, and the recovery of the previously charged-off acquired over-formula advances. The $19.4 million Misdirected Payments Receivable balance was legally discharged upon receipt of the settlement proceeds on July 10, 2025.
2024 Items of Note
Isometric Technologies Inc
On December 1, 2024, we acquired the assets of Isometric Technologies Inc. ("ISO"), a freight technology company, for $10.0 million in cash. Isometric Technologies provides service and performance scoring and benchmarking capabilities to the over-the-road trucking industry.
For further information on the above transactions see Note 2 – Acquisitions and Divestitures in the accompanying condensed notes to the consolidated financial statements included elsewhere in this report.
Triumph Financial Headquarters Purchase
On March 20, 2024, we purchased a building in Dallas, TX that will be the future headquarters for Triumph Financial. The purchase price, including direct costs, was $54.6 million with approximately $51.7 million allocated to land and building and $2.9 million allocated to lease-related intangibles.
The largest driver of changes in revenue at our Factoring segment, and to a lesser extent, our Payments segment, is fluctuation in the freight markets, particularly in brokered freight, which is priced largely off the spot market (a reflection of real-time balance of carrier supply and shipper demand in the market) and subject to variability in diesel prices. The softness in freight during 2023, 2024, and 2025 was a combination of falling volumes and excess capacity. In recent quarters, average rates per mile have decreased and returned spot rates to levels last seen in 2019. For the spot rate market, the drop was a little higher than the drop in diesel prices over the same period. Spot rates had fallen below the cost per mile to operate for many carriers. As a result, we have observed a number of small and medium-sized trucking companies either leave the market by signing on with larger carriers or electing to sell their fleets or companies and move on to other endeavors, though the pace of these exits has slowed recently. The confluence of these circumstances has resulted in persistently low invoice prices and decreased prices of new and used equipment. Such invoice prices and prices of new and used equipment remain consistently below the years leading up to 2023. This has put pressure on the revenue of our Factoring segment as well as our equipment finance borrowers, resulting in increased equipment finance delinquencies and loan modifications. Equipment finance losses have been manageable, but continued softness in the freight markets could cause the Company to experience adverse effects on its business, financial condition, results of operations and cash flows that are not possible to predict at September 30, 2025.
Though the transportation factoring industry continues to fight headwinds due to higher cost of capital and lower average invoices, we have sufficient access to capital, manageable funding costs, and an ability to diversify transportation and factoring income. We continue to focus our efforts on technology initiatives to be more efficient, support the enterprise, and enhance our customer experience while delivering various products to strengthen our clients throughout their business lifecycle. Our plan is for managed growth in our factoring segment with a greater emphasis on enhancing efficiency and profitability. These plans may include use of new technology tools, including those that integrate artificial intelligence capabilities.
Common equity Tier 1 capital to risk-weighted assets
8.65
%
11.40
%
Total capital to risk-weighted assets
12.09
%
15.23
%
Total stockholders' equity to total assets
14.46
%
14.98
%
Tangible common stockholders' equity ratio (1)
7.87
%
10.33
%
(1)The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. The non-GAAP measures used by the Company include the following:
•"Tangible common stockholders' equity" is defined as common stockholders' equity less goodwill and other intangible assets.
•“Total tangible assets” is defined as total assets less goodwill and other intangible assets.
•“Tangible book value per share” is defined as tangible common stockholders’ equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets.
•“Tangible common stockholders’ equity ratio” is defined as the ratio of tangible common stockholders’ equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets.
•“Return on average tangible common equity” is defined as net income available to common stockholders divided by average tangible common stockholders’ equity.
(2)Asset quality ratios exclude loans held for sale, except for non-performing assets to total assets.
(3)Net charge-offs to average loans ratios are for the nine months ended September 30, 2025 and the year ended December 31, 2024.
GAAP Reconciliation of Non-GAAP Financial Measures
We believe the non-GAAP financial measures included above provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. The following reconciliation table provides a more detailed analysis of the non-GAAP financial measures:
Three months ended September 30, 2025 compared with three months ended September 30, 2024.
Net Income
We earned net income of $1.7 million for the three months ended September 30, 2025 compared to net income of $5.3 million for the three months ended September 30, 2024, a decrease of $3.6 million or 68.1%.
Three Months Ended September 30, 2025
(Dollars in thousands, except per share amounts)
2025
2024
$ Change
% Change
Interest income
$
108,940
$
108,075
$
865
0.8
%
Interest expense
21,107
19,376
1,731
8.9
%
Net interest income
87,833
88,699
(866)
(1.0)
%
Credit loss expense (benefit)
4,284
4,263
21
0.5
%
Net interest income after credit loss expense (benefit)
83,549
84,436
(887)
(1.1)
%
Noninterest income
21,448
17,497
3,951
22.6
%
Noninterest expense
103,714
95,646
8,068
8.4
%
Net income (loss) before income taxes
1,283
6,287
(5,004)
(79.6)
%
Income tax expense (benefit)
(425)
940
(1,365)
(145.2)
%
Net income (loss)
$
1,708
$
5,347
$
(3,639)
(68.1)
%
Details of the changes in the various components of net income are further discussed below.
Net Interest Income
Our operating results heavily depend on our net interest income, which is the difference between interest income on interest earning assets, including loans and securities, and interest expense incurred on interest bearing liabilities, including deposits and other borrowed funds. Interest rate fluctuations, as well as changes in the amount and type of interest earning assets and interest bearing liabilities, combine to affect net interest income. Our net interest income is affected by changes in the amount and mix of interest earning assets and interest bearing liabilities, referred to as a “volume change.” It is also affected by changes in yields earned on interest earning assets and rates paid on interest bearing liabilities, referred to as a “rate change.”
The following table presents the distribution of average assets, liabilities and equity, as well as interest income and fees earned on average interest earning assets and interest expense paid on average interest bearing liabilities. Average balances and interest are inclusive of assets and deposits classified as held for sale.
Three Months Ended September 30,
2025
2024
(Dollars in thousands)
Average Balance
Interest
Average
Rate(4)
Average Balance
Interest
Average
Rate(4)
Interest earning assets:
Cash and cash equivalents
268,704
2,987
4.41
%
563,683
7,712
5.44
%
Taxable securities
388,181
5,473
5.59
%
398,265
6,479
6.47
%
Tax-exempt securities
2,511
16
2.53
%
3,129
21
2.67
%
FHLB and other restricted stock
13,176
223
6.71
%
13,587
379
11.10
%
Loans (1)
4,864,878
100,241
8.17
%
4,200,306
93,484
8.85
%
Total interest earning assets
5,537,450
108,940
7.81
%
5,178,970
108,075
8.30
%
Noninterest earning assets:
Cash and cash equivalents
78,149
73,924
Other noninterest earning assets
809,672
619,009
Total assets
6,425,271
5,871,903
Interest bearing liabilities:
Deposits:
Interest bearing demand
689,220
856
0.49
%
721,482
987
0.54
%
Individual retirement accounts
40,176
125
1.23
%
47,397
158
1.33
%
Money market
584,459
3,989
2.71
%
580,281
4,128
2.83
%
Savings
518,854
1,480
1.13
%
538,367
1,609
1.19
%
Certificates of deposit
228,802
1,497
2.60
%
248,126
2,087
3.35
%
Brokered time deposits
744,436
8,017
4.27
%
404,537
5,072
4.99
%
Other brokered deposits
142,814
1,568
4.36
%
—
—
—
%
Total interest bearing deposits
2,948,761
17,532
2.36
%
2,540,190
14,041
2.20
%
Federal Home Loan Bank advances
166,141
1,865
4.45
%
213,424
2,936
5.47
%
Subordinated notes
69,797
661
3.76
%
108,984
1,227
4.48
%
Junior subordinated debentures
42,729
1,049
9.74
%
42,105
1,172
11.07
%
Other borrowings
—
—
—
%
11
—
—
%
Total interest bearing liabilities
3,227,428
21,107
2.59
%
2,904,714
19,376
2.65
%
Noninterest bearing liabilities and equity:
Noninterest bearing demand deposits
2,188,828
1,991,042
Other liabilities
83,556
87,712
Total equity
925,459
888,435
Total liabilities and equity
6,425,271
5,871,903
Net interest income
87,833
88,699
Interest spread (2)
5.22
%
5.65
%
Net interest margin (3)
6.29
%
6.81
%
(1)Balance totals include respective nonaccrual assets.
(2)Net interest spread is the yield on average interest earning assets less the rate on interest bearing liabilities.
(3)Net interest margin is the ratio of net interest income to average interest earning assets.
The following table presents loan yields earned on our loan portfolios:
Three Months Ended September 30,
2025
2024
(Dollars in thousands)
Average Balance
Interest
Average Rate
Average Balance
Interest
Average Rate
Banking
$
3,484,400
$
56,314
6.41
%
$
3,008,767
$
52,886
6.99
%
Factoring
1,167,092
37,157
12.63
%
1,023,570
34,905
13.57
%
Payments
213,386
6,769
12.59
%
167,969
5,693
13.48
%
Total loans
$
4,864,878
$
100,240
8.17
%
$
4,200,306
$
93,484
8.85
%
We earned net interest income of $87.8 million for the three months ended September 30, 2025 compared to $88.7 million for the three months ended September 30, 2024, a decrease of $0.9 million, or 1.0%, primarily driven by the following factors.
Interest income increased $0.9 million, or 0.8%, due to changes in average interest earning assets which increased $358.5 million, or 6.9%, including an increase in average total loans of $664.6 million, or 15.8%. The average balance of our higher yielding Factoring factored receivables increased $143.5 million, or 14.0%, and we experienced an increase in average Payments factored receivables. Average Banking loans increased $475.6 million, or 15.8% due to increases in the average balances of construction, land development, and land, residential real estate, commercial, consumer, and mortgage warehouse loans. Interest income from our Banking loans is impacted by our lower yielding mortgage warehouse lending product. The average mortgage warehouse lending balance was $1.149 billion for the three months ended September 30, 2025 compared to $762.7 million for the three months ended September 30, 2024.
Interest expense increased $1.7 million, or 8.9%, primarily driven by higher average interest-bearing liabilities which increased in total period over period, including average total interest bearing deposits which increased $408.6 million, or 16.1%. The increase in interest expense was partially offset by decreased rates on our interest bearing liabilities. Average noninterest bearing demand deposits grew $197.8 million.
Net interest margin decreased to 6.29% for the three months ended September 30, 2025 from 6.81% for the three months ended September 30, 2024, a decrease of 52 basis points or 7.6%.
The decrease in our net interest margin was most impacted by a decrease in our yield on interest earning assets of 49 basis points to 7.81% for the three months ended September 30, 2025. This decrease was primarily driven by lower yields on loans which decreased 68 basis points to 8.17% for the period. Yield on our Banking loans decreased 58 basis points period over period driving much of the decrease in the yield on our overall loan portfolio. Our yield on Factoring and Payments factored receivables also decreased period over period. Additionally, our higher yielding Factoring factored receivables as a percentage of the total loan portfolio decreased period over period which had an downward impact on our overall loan yield. Non-loan yields were lower across the board period over period.
The decrease in our net interest margin was also impacted by a decrease in our average cost of interest bearing liabilities of 6 basis points. This decrease in average cost was caused by decreased rates across our interest bearing liabilities period over period.
Our mortgage warehouse business has nearly self-funded for several quarters due to the servicing deposits of its customers. The average balance of such deposits was $838.4 million for the three months ended September 30, 2025. These deposits are noninterest bearing deposits on our balance sheet. Despite their classification, many of these deposits are not truly free of cost as our clients are compensated for these balances in the form of an earnings interest rebate rather than deposit interest. As a result, such noninterest bearing deposits decrease our loan yield rather than increase our deposit rates. It is important to note that our net interest margin is not affected by this arrangement. During the three months ended September 30, 2025, these deposits decreased our overall yield on loans by 63 bps and our overall cost of deposits and cost of funds would have been 60 bps and 56 bps higher, respectively.
The following table shows the effects that changes in average balances (volume) and average interest rates (rate) had on the interest earned on our interest earning assets and the interest incurred on our interest bearing:
Three Months Ended
September 30, 2025 vs. 2024
Increase (Decrease) Due to:
(Dollars in thousands)
Rate
Volume
Net Increase
Interest earning assets:
Cash and cash equivalents
$
(1,446)
$
(3,279)
$
(4,725)
Taxable securities
(864)
(142)
(1,006)
Tax-exempt securities
(1)
(4)
(5)
FHLB and other restricted stock
(149)
(7)
(156)
Loans
(6,937)
13,694
6,757
Total interest income
(9,397)
10,262
865
Interest bearing liabilities:
Interest bearing demand
(91)
(40)
(131)
Individual retirement accounts
(11)
(22)
(33)
Money market
(168)
29
(139)
Savings
(73)
(56)
(129)
Certificates of deposit
(464)
(126)
(590)
Brokered time deposits
(715)
3,660
2,945
Other brokered deposits
—
1,568
1,568
Total interest bearing deposits
(1,522)
5,013
3,491
Federal Home Loan Bank advances
(540)
(531)
(1,071)
Subordinated notes
(195)
(371)
(566)
Junior subordinated debentures
(138)
15
(123)
Other borrowings
—
—
—
Total interest expense
(2,395)
4,126
1,731
Change in net interest income
$
(7,002)
$
6,136
$
(866)
Credit Loss Expense
Credit loss expense is the amount of expense that, based on our judgment, is required to maintain the allowances for credit losses (“ACL”) at an appropriate level under the current expected credit loss model. The determination of the amount of the allowance is complex and involves a high degree of judgment and subjectivity. Refer to Note 1 of the Company’s 2024 Form 10-K for detailed discussion regarding ACL methodologies for available for sale debt securities, held to maturity securities and loans held for investment.
The following table presents the major categories of credit loss expense:
Three Months Ended September 30,
(Dollars in thousands)
2025
2024
$ Change
% Change
Credit loss expense (benefit) on loans
$
4,249
$
5,174
$
(925)
(17.9)
%
Credit loss expense (benefit) on off balance sheet credit exposures
35
(1,132)
1,167
103.1
%
Credit loss expense (benefit) on held to maturity securities
—
221
(221)
(100.0)
%
Credit loss expense on available for sale securities
For available for sale debt securities in an unrealized loss position, the Company evaluates the securities at each measurement date to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized as an ACL on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings via credit loss expense. At September 30, 2025 and June 30, 2025, the Company determined that all impaired available for sale securities experienced a decline in fair value below the amortized cost basis due to noncredit-related factors. Therefore, the Company carried no ACL at those respective dates and there was no credit loss expense recognized by the Company during the three months ended September 30, 2025. The same was true for the same period in the prior year.
The ACL on held to maturity ("HTM") securities is estimated at each measurement date on a collective basis by major security type. At September 30, 2025 and December 31, 2024, the Company’s held to maturity securities consisted of investments in the subordinated notes of collateralized loan obligation (“CLO”) funds. Expected credit losses for these securities are estimated using a discounted cash flow methodology which considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. At September 30, 2025 and June 30, 2025, the Company carried $3.2 million and $3.2 million, respectively, of these HTM securities at amortized cost. The required ACL on these balances was $1.4 million at September 30, 2025 and $1.4 million at June 30, 2025. We recognized no credit loss expense during the current quarter. Credit loss expense during the three months ended September 30, 2024 was $221 thousand. None of the overcollateralization triggers tied to the CLO securities were tripped as of September 30, 2025. Ultimately, the realized cash flows on CLO securities such as these will be driven by a variety of factors, including credit performance of the underlying loan portfolio, adjustments to the portfolio by the asset manager, and the timing of a potential call.
Our ACL on loans was $33.5 million as of September 30, 2025, compared to $40.7 million as of December 31, 2024, representing an ACL to total loans ratio of 0.67% and 0.90%, respectively.
Our credit loss expense on loans decreased $0.9 million, or 17.9%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
The decrease in credit loss expense was primarily driven by changes in required specific reserves. Such specific reserves decreased $5.5 million during the three months ended September 30, 2025 compared to an increase of $2.2 million during the same period a year ago. Additionally, changes to projected loss drivers and prepayment speeds that the Company forecasted over the reasonable and supportable forecast periods to calculate expected losses resulted in credit loss expense of $0.2 million during the three months ended September 30, 2025 compared to $0.5 million of credit loss expense during the same period a year ago.
The decrease in credit loss expense was partially offset by increased net charge-off activity. During the three months ended September 30, 2025, we had net charge-offs of $9.4 million compared to net charge-offs of $3.5 million during the same period a year ago. Further, changes in volume and mix of the loan portfolio resulted in credit loss expense of $0.2 million during the three months ended September 30, 2025 compared to a benefit to credit loss expense of $1.1 million during the same period a year ago.
Credit loss expense for off balance sheet credit exposures increased $1.2 million, primarily due to changes to outstanding commitments to fund and changes to assumed loss rates period over period.
Noninterest Income
The following table presents our major categories of noninterest income:
Noninterest income increased $4.0 million, or 22.6%. Changes in selected components of noninterest income in the above table are discussed below.
•Fee income. Fee income increased $5.2 million due to a $2.2 million increase in fee income from our Payments segment, a $2.2 million increase in fee income from our Intelligence segment mostly driven by the acquisition of Greenscreens during the three months ended September 30, 2025, and a $0.6 million increase in fee income from insurance services period over period.
•Other. Other noninterest income decreased $0.9 million due to a $0.8 million decrease in rental income generated by the property purchased by the Company during late March of 2024 period over period. Additionally, the Company experienced an unrealized loss on the market value of its revenue share asset of $0.3 million during the three months ended September 30, 2025 compared to a $0.4 million gain during the same period a year ago. These decreases were partially offset by a $0.4 million increase in bank owned life insurance income period over period.
Noninterest Expense
The following table presents our major categories of noninterest expense:
Three Months Ended September 30,
(Dollars in thousands)
2025
2024
$ Change
% Change
Salaries and employee benefits
$
60,192
$
55,447
$
4,745
8.6
%
Occupancy, furniture and equipment
7,862
8,701
(839)
(9.6)
%
FDIC insurance and other regulatory assessments
1,468
679
789
116.2
%
Professional fees
5,228
4,734
494
10.4
%
Amortization of intangible assets
2,956
3,600
(644)
(17.9)
%
Advertising and promotion
2,209
1,416
793
56.0
%
Communications and technology
12,295
12,422
(127)
(1.0)
%
Software amortization
2,868
1,484
1,384
93.3
%
Travel and entertainment
1,043
1,431
(388)
(27.1)
%
Other
7,593
5,732
1,861
32.5
%
Total noninterest expense
$
103,714
$
95,646
$
8,068
8.4
%
Noninterest expense increased $8.1 million, or 8.4%. Details of the more significant changes in the various components of noninterest expense are further discussed below.
•Salaries and Employee Benefits. Salaries and employee benefits expenses increased $4.7 million, or 8.6%. Employee salaries and payroll taxes increased $4.4 million and $0.2 million, respectively. Included in employee salaries for the three months ended September 30, 2025 was $3.1 million of severance expense resulting from our aforementioned restructuring activities. Our average full-time equivalent employees were 1,504.0 and 1,542.3 for the three months ended September 30, 2025 and 2024, respectively. Temporary labor expense was relatively flat, bonus expense decreased $0.5 million and commissions expense increased $0.4 million period over period. Additionally, employee benefits expense such as 401(k) benefits match, employee insurance and stock based compensation increased $0.2 million.
•Occupancy, Furniture and Equipment. Occupancy, furniture and equipment expenses decreased $0.8 million, or 9.6%, with no significant individual drivers of expense reduction.
•FDIC Insurance and Other Regulatory Assessments. FDIC insurance and other regulatory assessments increased $0.8 million, or 116.2%, primarily due to increased assessments period over period.
•Amortization of Intangible Assets. Amortization of intangible assets decreased $0.6 million, or 17.9%, primarily due to additional amortization resulting from the intangible assets related to the building we acquired during March of 2024 that was incurred during the three months ended September 30, 2024, but did not repeat during the same period of the current year.
•Advertising and Promotion. Advertising and promotion increased $0.8 million, or 56.0%, primarily due to increased advertising efforts.
•Software Amortization. Software amortization expense increased $1.4 million, or 93.3%, primarily due to additional software assets coming on line during late 2024 and early 2025.
•Other. Other noninterest expense includes loan-related expenses, training and recruiting, postage, insurance, and subscription services. Other noninterest expense increased $1.9 million, or 32.5% primarily due to a $0.9 million increase in loan related expenses.
Income Taxes
The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income and the effect of changes in valuation allowances maintained against deferred tax benefits.
Income tax expense decreased $1.3 million, from $0.9 million for the three months ended September 30, 2024 to $(0.4) million for the three months ended September 30, 2025. The effective tax rate was (33)% for the three months ended September 30, 2025, compared to 15% for the three months ended September 30, 2024. The effective tax rate for the three months ended September 30, 2025 was driven by lower actual pre-tax income, an increase in the estimated research and development tax credit and discrete tax items, and higher expected pre-tax income which dilutes the impact of our unfavorable permanent items. The effective tax rate for the three months ended September 30, 2024 was driven by an increase in the estimated research and development tax credit and higher pre-tax earnings.
Operating Segment Results
Our reportable segments are Banking, Factoring, Payments, and Intelligence, which have been determined based upon their business processes and economic characteristics. This determination also gave consideration to the structure and management of various product lines. The Banking segment includes the community banking products and services offered through TBK Bank. Our Banking segment derives its revenue principally from investments in interest earning assets as well as noninterest income typical for the banking industry. The Factoring segment derives its revenue from factoring services. The Payments segment includes the operations of TBK Bank's presentment, audit, and payment solutions to Shipper, Broker, and Factor clients in the trucking industry. The Payments segment derives its revenue from transaction fees and interest income on factored receivables related to invoice payments. These factored receivables consist of both invoices where we offer a Carrier a quickpay opportunity to receive payment at a discount in advance of the standard payment term for such invoice in exchange for the assignment of such invoice to us and from offering Brokers the ability to settle their invoices with us on an extended term following our payment to their Carriers as an additional liquidity option for such Brokers. Our data intelligence segment was launched at the beginning of the fourth quarter of 2024 to turn the over-the-road trucking data collected through our services into actionable insights for our customers. This launch coincided with our acquisition of the assets Isometric Technologies Inc., a company that provides service and performance scoring and benchmarking capabilities to the over-the-road trucking industry. The operations of this segment were further supplemented with our acquisition of Greenscreens AI, Inc., a pricing solution for the logistics industry that delivers short-term freight market pricing intelligence and business insights, during the quarter ended June 30, 2025. The revenue for Intelligence offerings is derived through access and subscription fees, as well as seat licenses where applicable. Prior to the fourth quarter of 2024, there were no individuals allocated specifically to our data intelligence segment and an explicit data intelligence segment did not exist. Therefore, revision of prior period segment operating results is not applicable.
Prior to September 30, 2024, the Company disclosed Corporate as a reportable segment. The Company has determined that what was previously deemed the Corporate reportable segment consists of other business activities that do not represent a reportable segment, but rather, such activities belong in a Corporate and Other category as reported in the tabular disclosure below. It should be noted that such restructuring of the tabular disclosure did not result in any changes to the Company's revenue and expense allocation methodology described below. The Company restructured prior period tabular disclosures to achieve appropriate comparability.
Expenses that are directly attributable to the Company's Banking, Factoring, Payments, and Intelligence segments such as, but not limited to, occupancy, salaries and benefits to employees that are fully dedicated to the segment, and certain technology costs that can be attributed to specific users or functional areas within the segment are allocated as such. The Company continues to make considerable investments in shared services that benefit the entire organization and these expenses are allocated to the Corporate and Other category. The Company allocates such expenses to the Corporate and Other category in order for the Company's chief operating decision maker and investors to have clear visibility into the operating performance of each reportable segment.
We allocate intersegment interest expense to the Factoring and Payments segments based on one-month term SOFR for their funding needs. When the Payments segment is self-funded, with customer deposit funding in excess of its factored receivables, intersegment interest income is allocated based on the Federal Funds effective rate. Management believes that such intersegment interest allocations appropriately reflect the current interest rate environment and the relatively quick turn of the underlying receivables.
Reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. Changes in management structure or allocation methodologies and procedures may result in future changes to previously reported segment financial data. The accounting policies of the segments are substantially the same as those described in the “Summary of Significant Accounting Policies” in Note 1 of the Company’s 2024 Form 10-K.
Transactions between segments consist primarily of borrowed funds, payment network fees, and servicing fees. Intersegment interest expense is allocated to the Factoring and Payments segments as described above. Payment network fees are paid by the Factoring segment to the Payments segment for use of the payments network. Servicing fees are paid by the Payments segment to the Factoring segment for servicing factoring transactions with freight broker clients transferred from our Factoring segment to our Payments segment to align with the supply chain finance product offerings for this business. Beginning prospectively on January 1, 2024, the Factoring and Payments segments began paying fees to our Banking segment for the Banking segment's execution of various banking services that benefit those segments. Credit loss expense is allocated based on the segment’s ACL determination. Noninterest income and expense directly attributable to a segment are assigned to it with various shared service costs such as human resources, accounting, finance, risk management and information technology expense assigned to the Corporate and Other category if they are not directly attributable to a segment. Other segment expense consists of various loan and card related expenses and other insignificant miscellaneous costs not specifically reviewed by the Company's chief operating decision maker. Taxes are paid on a consolidated basis and are not allocated for segment purposes.
The following tables present our primary operating results for our operating segments:
(1) Includes revenue and expense from the Company’s holding company, which does not meet the definition of an operating segment. Also includes corporate shared service costs such as the majority of salaries and benefits expense for our executive leadership team, as well as other selling, general, and administrative shared services costs including human resources, accounting, finance, risk management and a significant amount of information technology expense.
(2) Net intersegment noninterest income (expense) includes:
(Dollars in thousands)
Banking
Factoring
Payments
Three Months Ended September 30, 2025
Factoring revenue received from Payments
$
—
$
911
$
(911)
Payments revenue received from Factoring
—
(329)
329
Banking revenue received from Payments and Factoring
158
(119)
(39)
Net intersegment noninterest income (expense)
$
158
$
463
$
(621)
Three Months Ended September 30, 2024
Factoring revenue received from Payments
$
—
$
864
$
(864)
Payments revenue received from Factoring
—
(289)
289
Banking revenue received from Payments and Factoring
Our Banking segment’s operating income decreased $2.0 million, or 6.9%.
Interest income decreased $2.5 million, or 3.6%, at our Banking segment primarily as a result of decreased yields at our Banking segment in spite of increased average balances of interest earning assets. While average loans in our Banking segment, excluding intersegment loans, increased 15.8% from $3.009 billion for the three months ended September 30, 2024 to $3.484 billion for the three months ended September 30, 2025, this increase was partially offset by decreased yields. Outside of loans, all categories of interest earning assets at our Banking segment experienced decreased yields and the average cash and cash equivalents balance decreased period over period as a result of the Greenscreens acquisition during the second quarter of 2025.
Intersegment interest income allocated to our Banking segment decreased period over period due to increased funding provided by our Payments segment resulting in increased intersegment interest allocation to such segment. The decrease in intersegment interest income allocated to our Banking segment was also a result of decreased intercompany borrowing rates charged to our Factoring segment driven by decreases in rates in the macroeconomy.
Interest expense increased $2.4 million, or 14.2%, primarily driven by higher average interest-bearing liabilities which increased in total period over period, including average total interest bearing deposits which increased $408.6 million, or 16.1%. The increase in
interest expense was partially offset by decreased rates on our interest bearing liabilities. Further, our Banking segment experienced an increased usage of higher-priced brokered time deposits period over period.
Credit loss expense at our Banking segment is made up of credit loss expense related to loans and credit loss expense related to off balance sheet commitments to lend. Credit loss expense related to loans was $1.9 million for the three months ended September 30, 2025 compared to credit loss expense on loans of $4.0 million for the three months ended September 30, 2024. The decrease in credit loss expense was the result of decreased required specific reserves at our Banking segment and a decrease driven by changes to the projected loss drivers and prepayment speeds that the Company forecasted over the reasonable and supportable forecast periods. Such decreases were partially offset by an increase driven by changes in the volume and mix of our Banking segment's loan portfolio period over period and an increase in net charge-offs period over period.
Credit loss expense for off balance sheet credit exposures increased $0.3 million, from a benefit of $0.3 million of credit loss expense for the three months ended September 30, 2024 to an insignificant amount for the three months ended September 30, 2025, primarily due to changes to outstanding commitments to fund and changes to assumed loss rates period over period.
Noninterest income at our Banking segment increased period over period due to a $0.6 million increase in fee income and a $0.4 million increase in bank owned life insurance income period over period.
Noninterest expense at our Banking segment decreased period over period the details of which are illustrated in the table above. For the three months ended September 30, 2025, salaries and benefits expense included $0.5 million of expense resulting from our aforementioned restructuring activities.
Year to date, our aggregate outstanding balances for our banking products, excluding intercompany loans, has increased $218.8 million, or 6.6%, to $3.559 billion as of September 30, 2025. The following table sets forth our banking loans:
(1)Operating margin is a non-GAAP financial measure used as a supplemental measure to evaluate the performance of our Factoring segment. It provides meaningful supplemental information regarding the segment's operational performance and enhances investors' overall understanding of the Factoring segment's profitability and operational efficiency.
Our Factoring segment’s operating income increased $0.2 million, or 3.1%.
Our average invoice size decreased 2.0% from $1,763 for the three months ended September 30, 2024 to $1,727 for the three months ended September 30, 2025. This decrease is the result of a broad drop in transportation invoice prices across the industry as well as a change in mix as we add more short-haul fleets to our factoring purchases. That said, the number of invoices purchased increased 17.2% period over period.
Net interest income at our Factoring segment increased period over period. Overall average net funds employed (“NFE”) increased 19.9% during the three months ended September 30, 2025 compared to the same period in 2024. The increase in average NFE was the result of increased invoice purchase volume in the face of decreased average invoice sizes. See further discussion under the Recent Developments: Trucking Transportation section. We maintained a high concentration in transportation factoring balances, which typically generate a higher yield than our non-transportation factoring balances. This concentration was at 96% at September 30, 2025 and 97% at September 30, 2024. Net interest income at our Factoring segment was also impacted by a relatively flat intersegment interest allocation charge period over period driven by decreased rates in the macroeconomy offset by higher average balances at our Factoring segment.
Credit loss expense at our Factoring segment is made up of credit loss expense related to factored receivables and loans at our Factoring segment as well as credit loss expense related to off balance sheet commitments to lend. Credit loss expense related to factored receivables and loans was $2.3 million for the three months ended September 30, 2025 compared to credit loss expense on factored receivables of $1.2 million for the three months ended September 30, 2024. The increase in credit loss expense on factored receivables and loans was driven by increased net charge-offs at our Factoring segment as well as an increase in required ACL driven by changes in volume and mix of the portfolio period over period. These increases were partially offset by decreases in required specific reserves period over period. Changes to loss assumptions period over period did not have a meaningful impact to credit loss expense during either period.
There was a benefit to credit loss expense for off balance sheet credit exposures of $0.9 million during the three months ended September 30, 2024. There was no credit loss expense related to off balance sheet credit exposures during the three months ended September 30, 2025 as there were no such commitments to lend at that time.
Noninterest income at our Factoring segment decreased period over period primarily driven by a $0.3 million unrealized loss on the market value of the Factoring segment's revenue share asset during the three months ended September 30, 2025 compared to a $0.4 million gain during the same period a year ago.
Noninterest expense at our Factoring segment decreased period over period the details of which are illustrated in the table above. For the three months ended September 30, 2025, salaries and benefits expense included $1.1 million of expense resulting from our aforementioned restructuring activities.
Earnings (losses) before interest, taxes, depreciation, and amortization
$
3,107,000
$
70,000
EBITDA margin(1)
16.8
%
0.5
%
Number of invoices processed
8,826,848
6,278,246
Amount of payments processed
$
10,662,418,000
$
7,091,493,000
Network invoice volume
1,057,606
661,628
Network payment volume
$
1,696,817,000
$
1,063,228,000
(1)Earnings (losses) before interest, taxes, depreciation, and amortization ("EBITDA") and EBITDA margin (the ratio of EBITDA to total revenue) are non-GAAP financial measures used to provide meaningful supplemental information regarding the segment's operational performance and to enhance investors' overall understanding of such financial performance.
Our Payments segment's operating loss decreased $3.1 million, or 117.2%.
The number of invoices processed by our Payments segment increased 40.6% from 6,278,246 for the three months ended September 30, 2024 to 8,826,848 for the three months ended September 30, 2025, and the amount of payments processed increased 50.4% from $7.091 billion for the three months ended September 30, 2024 to $10.662 billion for the three months ended September 30, 2025.
A "network transaction" occurs when a fully integrated payor payments client receives an invoice from a fully integrated payee payments client. All network transactions are included in our payment processing volume above. These transactions are facilitated through our payments application programming interfaces ("APIs") with parties on both sides of the transaction using structured data; similar to how a credit card works at a point-of-sale terminal. The integrations largely automate the process and make it cheaper, faster and safer. During the three months ended September 30, 2025, we processed 1,057,606 network invoices representing a network payment volume of $1.697 billion. During the three months ended September 30, 2024, we processed 661,628 network invoices representing a network payment volume of $1.063 billion.
Net interest income increased due to increased average balance of interest earning assets at our Payments segment and increased intersegment interest allocation period over period. These increases were partially offset by decreased average rates at our Payments segment.
Noninterest income increased due to a $2.2 million increase in fee income earned from our payments and audit business during the three months ended September 30, 2025 compared to the same period a year ago.
Noninterest expense at our Payments segment decreased period over period the details of which are illustrated in the table above. For the three months ended September 30, 2025, salaries and benefits expense included $0.5 million of expense resulting from our aforementioned restructuring activities.
The acquisition of HubTran during the year ended December 31, 2021 allowed us to create a fully integrated payments network for transportation; servicing Brokers and Factors. Prior to the HubTran acquisition, our payments platform already offered tools and services to increase automation, mitigate fraud, create back-office efficiency and improve the payment experience. Through the acquisition of HubTran, we created additional value through the enhancement of its presentment, audit, and payment capabilities for Shippers, third party logistics companies (i.e., Brokers) and their Carriers, and Factors. The acquisition of HubTran was a meaningful inflection point in the operations of our payments and audit business as our strategy shifted from a capital-intensive on-balance sheet product with a focus on interest income to an open-loop payments network for the trucking industry with an additional focus on fee revenue. It is for this reason that management believes that earnings before interest, taxes, depreciation, and amortization enhance investors' overall understanding of the financial performance of the Payments segment.
Intelligence
(Dollars in thousands)
Three Months Ended September 30,
Intelligence
2025
2024
Total interest income
$
—
$
—
Intersegment interest allocations
—
—
Total interest expense
—
—
Net interest income (expense)
—
—
Credit loss expense (benefit)
—
—
Net interest income (expense) after credit loss expense
(1)Gross margin is a non-GAAP financial measure used as supplemental measure to evaluate the performance of our Intelligence segment. Cost of revenues is comprised primarily of salaries and benefits and communications and technology costs for employees providing services to the Company's customers. This includes the costs of the Company's personnel performing integration, customer support, third-party data center and customer training activities. Cost of revenues also includes the direct costs of third party hosting services as well as costs related to bad debt expense. We have elected to exclude amortization expense of capitalized developed software and acquired technology, as well as allocations of fixed asset depreciation expense and occupancy expenses from cost of revenues.
Our Intelligence segment's operating loss for the three months ended September 30, 2025 was $3.6 million. As previously disclosed, prior to the fourth quarter of 2024, the data intelligence line of business did not exist. Therefore, there are no comparative periods to discuss regarding our Intelligence segment. As illustrated in the table above, to date, the majority of the expenses related to our Intelligence segment are salaries and amortization of intangible assets related to the acquisition of Greenscreens.
Corporate and Other
(Dollars in thousands)
Three Months Ended September 30,
Corporate and Other
2025
2024
$ Change
% Change
Total interest income
$
83
$
87
$
(4)
(4.6)
%
Intersegment interest allocations
—
—
—
—
Total interest expense
1,710
2,400
(690)
(28.8)
%
Net interest income (expense)
(1,627)
(2,313)
686
29.7
%
Credit loss expense (benefit)
—
221
(221)
(100.0)
%
Net interest income (expense) after credit loss expense
Corporate and other is not a reportable segment, but rather includes certain revenue and expense from the Company's holding company as well as activities not allocated to specific business segments. Corporate and other reported an operating loss of $30.9 million for the three months ended September 30, 2025 compared to an operating loss of $28.1 million for the three months ended September 30, 2024.
The increased operating loss was driven by increased noninterest expense which was the result of a $2.2 million increase in salaries and benefits expense and a $2.1 million increase in professional fees. For the three months ended September 30, 2025, salaries and benefits expense and professional fees included $0.8 million and $1.3 million of expense resulting from our aforementioned restructuring activities, respectively. Noninterest income at our Corporate segment decreased primarily due to a $0.8 million decrease in rental income generated by the property purchased by the Company during late March of 2024 period over period. Additionally, Corporate experienced a $0.7 million decrease in interest expense period over period as a result of decreased average borrowings.
Results of Operations
Nine months ended September 30, 2025 compared with nine months ended September 30, 2024
Net Income
We earned net income of $6.1 million for the nine months ended September 30, 2025 compared to $12.3 million for the nine months ended September 30, 2024, a decrease of $6.2 million or 49.8%.
Nine Months Ended September 30, 2025
(Dollars in thousands, except per share amounts)
2025
2024
$ Change
% Change
Interest income
$
320,411
$
317,037
$
3,374
1.1
%
Interest expense
59,517
54,388
5,129
9.4
%
Net interest income
260,894
262,649
(1,755)
(0.7)
%
Credit loss expense (benefit)
4,912
14,314
(9,402)
(65.7)
%
Net interest income after credit loss expense (benefit)
255,982
248,335
7,647
3.1
%
Noninterest income
58,022
49,663
8,359
16.8
%
Noninterest expense
304,727
283,360
21,367
7.5
%
Net income (loss) before income taxes
9,277
14,638
(5,361)
(36.6)
%
Income tax expense (benefit)
3,132
2,386
746
31.3
%
Net income (loss)
$
6,145
$
12,252
$
(6,107)
(49.8)
%
Details of the changes in the various components of net income are further discussed below.
Net Interest Income
Our operating results depend primarily on our net interest income, which is the difference between interest income on interest earning assets, including loans and securities, and interest expense incurred on interest bearing liabilities, including deposits and other borrowed funds. Interest rate fluctuations, as well as changes in the amount and type of interest earning assets and interest bearing liabilities, combine to affect net interest income. Our net interest income is affected by changes in the amount and mix of interest earning assets and interest bearing liabilities, referred to as a “volume change.” It is also affected by changes in yields earned on interest earning assets and rates paid on interest bearing liabilities, referred to as a “rate change.”
The following table presents the distribution of average assets, liabilities and equity, as well as interest income and fees earned on average interest earning assets and interest expense paid on average interest bearing liabilities. Average balances and interest are inclusive of assets and deposits classified as held for sale.
Nine Months Ended September 30,
2025
2024
(Dollars in thousands)
Average Balance
Interest
Average
Rate(4)
Average Balance
Interest
Average
Rate(4)
Interest earning assets:
Cash and cash equivalents
$
349,221
$
11,611
4.45
%
$
463,081
$
18,945
5.46
%
Taxable securities
392,203
16,470
5.61
%
349,710
17,306
6.61
%
Tax-exempt securities
2,531
48
2.54
%
3,263
68
2.78
%
FHLB and other restricted stock
14,937
718
6.43
%
11,619
845
9.71
%
Loans (1)
4,688,787
291,564
8.31
%
4,147,308
279,873
9.01
%
Total interest earning assets
5,447,679
320,411
7.86
%
4,974,981
317,037
8.51
%
Noninterest earning assets:
Cash and cash equivalents
75,444
80,197
Other noninterest earning assets
740,560
599,626
Total assets
$
6,263,683
$
5,654,804
Interest bearing liabilities:
Deposits:
Interest bearing demand
$
714,847
$
2,626
0.49
%
$
733,930
$
3,002
0.55
%
Individual retirement accounts
41,650
389
1.25
%
49,574
497
1.34
%
Money market
593,943
11,800
2.66
%
571,860
12,196
2.85
%
Savings
518,871
4,202
1.08
%
537,825
4,411
1.10
%
Certificates of deposit
228,588
4,538
2.65
%
256,297
5,897
3.07
%
Brokered time deposits
643,243
21,055
4.38
%
374,162
14,508
5.18
%
Other brokered deposits
85,793
2,824
4.40
%
29,577
1,202
5.43
%
Total interest bearing deposits
2,826,935
47,434
2.24
%
2,553,225
41,713
2.18
%
Federal Home Loan Bank advances
209,487
7,001
4.47
%
132,828
5,481
5.51
%
Subordinated notes
69,747
2,004
3.84
%
108,864
3,676
4.51
%
Junior subordinated debentures
42,583
3,078
9.66
%
41,952
3,518
11.20
%
Other borrowings
—
—
—
%
4
—
—
%
Total interest bearing liabilities
3,148,752
59,517
2.53
%
2,836,873
54,388
2.56
%
Noninterest bearing liabilities and equity:
Noninterest bearing demand deposits
2,120,926
1,852,360
Other liabilities
81,279
82,722
Total equity
912,725
882,849
Total liabilities and equity
$
6,263,682
$
5,654,804
Net interest income
$
260,894
$
262,649
Interest spread (2)
5.33
%
5.95
%
Net interest margin (3)
6.40
%
7.05
%
(1)Balance totals include respective nonaccrual assets.
(2)Net interest spread is the yield on average interest earning assets less the rate on interest bearing liabilities.
(3)Net interest margin is the ratio of net interest income to average interest earning assets.
The following table presents loan yields earned on our loan portfolios:
Nine Months Ended September 30,
2025
2024
(Dollars in thousands)
Average Balance
Interest
Average Rate
Average Balance
Interest
Average Rate
Banking
$
3,368,907
$
164,675
6.54
%
$
2,992,402
$
161,338
7.20
%
Factoring
1,122,584
108,528
12.93
%
980,847
101,964
13.89
%
Payments
197,296
18,362
12.44
%
174,059
16,571
12.72
%
Total loans
$
4,688,787
$
291,565
8.31
%
$
4,147,308
$
279,873
9.01
%
We earned net interest income of $260.9 million for the nine months ended September 30, 2025 compared to $262.6 million for the nine months ended September 30, 2024, a decrease of $1.7 million, or 0.6%, primarily driven by the following factors.
Interest income increased $3.4 million, or 1.1%, due to changes in average interest earning assets which increased $472.7 million, or 9.5% including an increase in average total loans of $541.5 million, or 13.1%. The average balance of our higher yielding Factoring factored receivables increased $141.7 million, or 14.5%, and we experienced an increase in average Payments factored receivables. We experienced an increase in average Banking loans of $376.5 million, or 12.6% due to increases in the average balances of construction, land development, and land, residential real estate, commercial, consumer, and mortgage warehouse loans. Interest income from our Banking loans is impacted by our lower yielding mortgage warehouse lending product. The average mortgage warehouse lending balance was $1.052 billion for the nine months ended September 30, 2025 compared to $693.0 million for the nine months ended September 30, 2024.
Interest expense increased $5.1 million, or 9.4%, primarily driven by higher average interest-bearing liabilities which increased in total period over period, including average total interest bearing deposits which increased $273.7 million, or 10.7%. The increase in interest expense was partially offset by decreased rates on our interest bearing liabilities. Average noninterest bearing deposits grew $268.6 million.
Net interest margin decreased to 6.40% for the nine months ended September 30, 2025 from 7.05% for the nine months ended September 30, 2024, a decrease of 65 basis points, or 9.2%.
Our net interest margin was impacted by a decrease in yield on our interest earning assets of 65 basis points to 7.86% for the nine months ended September 30, 2025. This decrease was primarily driven by lower yields on loans which decreased 70 basis points to 8.31% for the period. Yield on our Banking loans decreased 66 basis points period over period driving much of the decrease in the yield on our overall loan portfolio. Our yield on Factoring and Payments factored receivables also decreased period over period. That said, our higher yielding Factoring and Payments factored receivables as a percentage of the total loan portfolio increased period over period which had an upward impact on our overall loan yield. Non-loan yields were lower across the board period over period.
The decrease in our net interest margin was also impacted by a decrease in our average cost of interest bearing liabilities of 3 basis points. This decrease in average cost was caused by decreased rates across our interest bearing liabilities period over period.
Our mortgage warehouse business has nearly self-funded for several quarters due to the servicing deposits of its customers. The average balance of such deposits was $755.3 million for the nine months ended September 30, 2025. These deposits are noninterest bearing deposits on our balance sheet. Despite their classification, many of these deposits are not truly free of cost as our clients are compensated for these balances in the form of an earnings interest rebate rather than deposit interest. As a result, such noninterest bearing deposits decrease our loan yield rather than increase our deposit rates. It is important to note that our net interest margin is not affected by this arrangement. During the nine months ended September 30, 2025, these deposits decreased our overall yield on loans by 50 bps and our overall cost of deposits and cost of funds would have been 48 bps and 45 bps higher, respectively.
The following table shows the effects that changes in average balances (volume) and average interest rates (rate) had on the interest earned on our interest earning assets and the interest incurred on our interest bearing liabilities:
Nine Months Ended
September 30, 2025 vs. 2024
Increase (Decrease) Due to:
Net Increase
(Dollars in thousands)
Rate
Volume
Interest earning assets:
Cash and cash equivalents
$
(3,548)
$
(3,786)
$
(7,334)
Taxable securities
(2,620)
1,784
(836)
Tax-exempt securities
(6)
(14)
(20)
FHLB and other restricted stock
(286)
159
(127)
Loans
(21,980)
33,671
11,691
Total interest income
(28,440)
31,814
3,374
Interest bearing liabilities:
Interest bearing demand
(306)
(70)
(376)
Individual retirement accounts
(34)
(74)
(108)
Money market
(835)
439
(396)
Savings
(56)
(153)
(209)
Certificates of deposit
(809)
(550)
(1,359)
Brokered time deposits
(2,261)
8,808
6,547
Other brokered deposits
(228)
1,850
1,622
Total interest bearing deposits
(4,529)
10,250
5,721
Federal Home Loan Bank advances
(1,042)
2,562
1,520
Subordinated notes
(548)
(1,124)
(1,672)
Junior subordinated debentures
(486)
46
(440)
Other borrowings
—
—
—
Total interest expense
(6,605)
11,734
5,129
Change in net interest income
$
(21,835)
$
20,080
$
(1,755)
Credit Loss Expense
Credit loss expense is the amount of expense that, based on our judgment, is required to maintain the allowances for credit losses (“ACL”) at an appropriate level under the current expected credit loss model. The determination of the amount of the allowance is complex and involves a high degree of judgment and subjectivity. Refer to Note 1 of the Company’s 2024 Form 10-K for detailed discussion regarding ACL methodologies for available for sale debt securities, held to maturity securities and loans held for investment.
The following table presents the major categories of credit loss expense:
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
$ Change
% Change
Credit loss expense on loans
$
5,047
$
14,151
$
(9,104)
(64.3)
%
Credit loss expense on off balance sheet credit exposures
(183)
(30)
(153)
(510.0)
%
Credit loss expense on held to maturity securities
48
193
(145)
(75.1)
%
Credit loss expense on available for sale securities
For available for sale debt securities in an unrealized loss position, the Company evaluates the securities at each measurement date to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized as an ACL on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings via credit loss expense. At December 31, 2024 and September 30, 2025, the Company determined that all impaired available for sale securities experienced a decline in fair value below the amortized cost basis due to noncredit-related factors. Therefore, the Company carried no ACL at those respective dates and there was no credit loss expense recognized by the Company during the nine months ended September 30, 2025. The same was true for the same period in the prior year.
The ACL on held to maturity securities is estimated at each measurement date on a collective basis by major security type. At September 30, 2025 and December 31, 2024, the Company’s held to maturity securities consisted investments in the subordinated notes of collateralized loan obligation (“CLO”) funds. Expected credit losses for these securities are estimated using a discounted cash flow methodology which considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. At September 30, 2025 and December 31, 2024, the Company carried $3.2 million and $5.4 million of these HTM securities at amortized cost, respectively. The ACL on these balances was $1.4 million at September 30, 2025 and $3.5 million at December 31, 2024. During the nine months ended September 30, 2025, the Company charged off one of its three investments in these CLO funds in the amount of $2.2 million. The charge-off was fully reserved in a prior period and as a result, there was no impact to credit loss expense during the nine months ended September 30, 2025. We recognized credit loss expense of $48 thousand during the nine months ended September 30, 2025. During the nine months ended September 30, 2024, we recognized credit loss expense of $193 thousand. None of the overcollateralization triggers tied to the CLO securities were tripped as of September 30, 2025. Ultimately, the realized cash flows on CLO securities such as these will be driven by a variety of factors, including credit performance of the underlying loan portfolio, adjustments to the portfolio by the asset manager, and the timing of a potential call.
Our ACL on loans was $33.5 million as of September 30, 2025, compared to $40.7 million as of December 31, 2024, representing an ACL to total loans ratio of 0.67% and 0.90% respectively.
Our credit loss expense on loans decreased $9.1 million, or 64.3%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
During the nine months ended September 30, 2025, the Company acquired a $23.4 million nonperforming loan for $3.3 million. The loan was purchased credit deteriorated ("PCD") and therefore, a $10.8 million ACL was established on Day 1 resulting in a discount of $9.3 million. Prior to September 30, 2025, the Company determined that the $10.8 million ACL was uncollectible and charged off the entire amount. Such charge-off had no impact on credit loss expense.
The decrease in credit loss expense was primarily driven by a decrease in required specific reserves. Such specific reserves decreased $9.6 million during the nine months ended September 30, 2025 compared to an increase in specific reserves of $3.5 million during the same period a year ago. Additionally, changes to projected loss drivers and prepayment speeds that the Company forecasted over the reasonable and supportable forecast periods to calculate expected losses resulted in $0.4 million of credit loss expense during the nine months ended September 30, 2025 compared to $2.5 million of credit loss expense during the same period a year ago.
The decrease in credit loss expense was partially offset by increased net charge-off activity. Excluding the $10.8 million charge-off on the acquired PCD loan which had no impact on credit loss expense, we had a net charge-offs of $12.2 million during the nine months ended September 30, 2025 compared to net charge-offs of $8.1 million during the same period a year ago. Such net charge-offs for the nine months ended September 30, 2025 includes the aforementioned $3.8 million recovery resulting from the USPS Settlement. Further, changes in volume and mix of the loan portfolio resulted in credit loss expense of $2.0 million during the nine months ended September 30, 2025 compared to a benefit to credit loss expense of $0.1 million during the same period a year ago.
Credit loss expense for off balance sheet credit exposures decreased $0.2 million, primarily due to changes to outstanding commitments to fund and assumed loss rates period over period.
The following table presents our major categories of noninterest income:
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
$ Change
% Change
Service charges on deposits
$
5,185
$
5,402
$
(217)
(4.0
%)
Card income
5,687
6,088
(401)
(6.6
%)
Net gains (losses) on sale of loans
443
184
259
140.8
%
Fee income
36,174
26,329
9,845
37.4
%
Insurance commissions
4,013
4,545
(532)
(11.7
%)
Other
6,520
7,115
(595)
(8.4
%)
Total noninterest income
$
58,022
$
49,663
$
8,359
16.8
%
Noninterest income increased $8.4 million, or 16.8%. Changes in selected components of noninterest income in the above table are discussed below.
•Fee income. Fee income increased $9.8 million, or 37.4% due to a $5.1 million increase in fee income from our Payments segment, a $4.1 million increase in fee income from our Intelligence segment mostly driven by the acquisition of Greenscreens during the nine months ended September 30, 2025, and a $1.5 million increase in fee income from insurance services period over period.
•Insurance commissions. Insurance commissions decreased $0.5 million, or 11.7%, due to lower volumes of processed policies.
•Other. Other noninterest income decreased $0.6 million, or 8.4% primarily due to a $1.3 million decrease in rental income generated by the property purchased by the Company during late March of 2024 period over period. Additionally, the Company experienced an unrealized loss on the market value of its revenue share asset of $47 thousand during the nine months ended September 30, 2025 compared to a $1.3 million gain during the same period a year ago. These decreases were partially offset by a $1.2 million increase in bank owned life insurance income and a $0.6 million increase in gain on disposal of business assets period over period.
Noninterest Expense
The following table presents our major categories of noninterest expense:
Noninterest expense increased $21.4 million, or 7.5%. Details of the more significant changes in the various components of noninterest expense are further discussed below.
•Salaries and Employee Benefits. Salaries and employee benefits expenses increased $13.2 million, or 7.9%. Employee salaries and payroll tax expense increased $10.7 million and $0.4 million, respectively. Included in employee salaries for the nine months ended September 30, 2025 was $3.1 million of severance expense resulting from our aforementioned restructuring activities. Our average full-time equivalent employees were 1,542.6 and 1,543.9 for the nine months ended September 30, 2025 and 2024, respectively. Bonus expense increased $0.4 million, commissions expense increased $1.2 million, and temporary labor expense increased $0.1 million period over period. Employee benefits expense such as 401(k) matching, employee insurance, and stock based compensation paid to employees increased $0.4 million.
•FDIC Insurance and Other Regulatory Assessments. FDIC insurance and other regulatory assessments increased $1.1 million, or 56.6%, primarily due to increased assessments period over period.
•Professional Fees. Professional fees decreased $1.9 million, or 14.5%, primarily due to the recovery of $6.5 million of previously expensed legal fees through the USPS Settlement during the nine months ended September 30, 2025. This decrease was partially offset by $4.0 million of professional fees incurred during the nine months ended September 30, 2025 as a result of the Greenscreens acquisition.
•Advertising and promotion. Advertising and promotion expenses increased $0.9 million, or 18.8%, primarily due to increased advertising efforts.
•Communications and Technology. Communications and technology expenses decreased $1.8 million, or 4.6%, primarily due to decreased IT professional services fees.
•Software amortization. Software amortization increased $3.7 million, or 92.4%, primarily due to additional software assets coming on line during late 2024 and early 2025.
•Other. Other noninterest expense includes loan-related expenses, training and recruiting, postage, insurance, and subscription services. Other noninterest expense increased $7.3 million, or 42.9% primarily due to a $2.0 million settlement of litigation (unrelated to the USPS Settlement) during the nine months ended September 30, 2025, $2.4 million of current period lease termination payments related to the building we acquired during March 2024, and an increase of $1.6 million in loan-related expenses period over period.
Income Taxes
The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income and the effect of changes in valuation allowances maintained against deferred tax benefits.
Income tax expense increased $0.7 million, or 31.3%, from $2.4 million for the nine months ended September 30, 2024 to $3.1 million for the nine months ended September 30, 2025. The effective tax rate was 34% for the nine months ended September 30, 2025 and 16% for the nine months ended September 30, 2024. The effective tax rate for the nine months ended September 30, 2025 was impacted by limited restricted stock stock-based compensation deductibility, higher state tax rates, higher disallowed expenses including some transaction costs paid in connection with the Greenscreens acquisition, and research and development tax credits. The effective tax rate for the nine months ended September 30, 2024 was impacted by an adjustment to our disallowance related to highly compensated individuals and research and development tax credits.
Operating Segment Results
Our reportable segments are Banking, Factoring, Payments, and Intelligence, which have been determined based upon their business processes and economic characteristics. This determination also gave consideration to the structure and management of various product lines. The Banking segment includes the community banking products and services offered through TBK Bank. Our Banking segment derives its revenue principally from investments in interest earning assets as well as noninterest income typical for the banking industry. The Factoring segment derives its revenue from factoring services. The Payments segment includes the operations of TBK Bank's presentment, audit, and payment solutions to Shipper, Broker, and Factor clients in the trucking industry. The Payments segment derives its revenue from transaction fees and interest income on factored receivables related to invoice payments. These factored receivables consist of both invoices where we offer a Carrier a quickpay opportunity to receive payment at a discount in advance of the standard payment term for such invoice in exchange for the assignment of such invoice to us and from offering
Brokers the ability to settle their invoices with us on an extended term following our payment to their Carriers as an additional liquidity option for such Brokers. Our data intelligence segment was launched at the beginning of the fourth quarter of 2024 to turn the over-the-road trucking data collected through our services into actionable insights for our customers. This launch coincided with our acquisition of the assets Isometric Technologies Inc., a company that provides service and performance scoring and benchmarking capabilities to the over-the-road trucking industry. The operations of this segment were further supplemented with our acquisition of Greenscreens AI, Inc., a pricing solution for the logistics industry that delivers short-term freight market pricing intelligence and business insights, during the quarter ended June 30, 2025. The revenue for Intelligence offerings is derived through access and subscription fees, as well as seat licenses where applicable. Prior to the fourth quarter of 2024, there were no individuals allocated specifically to our data intelligence segment and an explicit data intelligence segment did not exist. Therefore, revision of prior period segment operating results is not applicable.
Prior to September 30, 2024, the Company disclosed Corporate as a reportable segment. The Company has determined that what was previously deemed the Corporate reportable segment consists of other business activities that do not represent a reportable segment, but rather, such activities belong in a Corporate and Other category as reported in the tabular disclosure below. It should be noted that such restructuring of the tabular disclosure did not result in any changes to the Company's revenue and expense allocation methodology described below. The Company restructured prior period tabular disclosures to achieve appropriate comparability.
Expenses that are directly attributable to the Company's Banking, Factoring, Payments, and Intelligence segments such as, but not limited to, occupancy, salaries and benefits to employees that are fully dedicated to the segment, and certain technology costs that can be attributed to specific users or functional areas within the segment are allocated as such. The Company continues to make considerable investments in shared services that benefit the entire organization and these expenses are allocated to the Corporate and Other category. The Company allocates such expenses to the Corporate and Other category in order for the Company's chief operating decision maker and investors to have clear visibility into the operating performance of each reportable segment.
We allocate intersegment interest expense to the Factoring and Payments segments based on one-month term SOFR for their funding needs. When the Payments segment is self-funded, with customer deposit funding in excess of its factored receivables, intersegment interest income is allocated based on the Federal Funds effective rate. Management believes that such intersegment interest allocations appropriately reflect the current interest rate environment and the relatively quick turn of the underlying receivables.
Reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. Changes in management structure or allocation methodologies and procedures may result in future changes to previously reported segment financial data. The accounting policies of the segments are substantially the same as those described in the “Summary of Significant Accounting Policies” in Note 1 of the Company’s 2024 Form 10-K.
Transactions between segments consist primarily of borrowed funds, payment network fees, and servicing fees. Intersegment interest expense is allocated to the Factoring and Payments segments as described above. Payment network fees are paid by the Factoring segment to the Payments segment for use of the payments network. Servicing fees are paid by the Payments segment to the Factoring segment for servicing factoring transactions with freight broker clients transferred from our Factoring segment to our Payments segment to align with the supply chain finance product offerings for this business. Beginning prospectively on January 1, 2024, the Factoring and Payments segments began paying fees to our Banking segment for the Banking segment's execution of various banking services that benefit those segments. Credit loss expense is allocated based on the segment’s ACL determination. Noninterest income and expense directly attributable to a segment are assigned to it with various shared service costs such as human resources, accounting, finance, risk management and information technology expense assigned to the Corporate and Other category if they are not directly attributable to a segment. Other segment expense consists of various loan and card related expenses and other insignificant miscellaneous costs not specifically reviewed by the Company's chief operating decision maker. Taxes are paid on a consolidated basis and are not allocated for segment purposes.
(1) Includes revenue and expense from the Company’s holding company, which does not meet the definition of an operating segment. Also includes corporate shared service costs such as the majority of salaries and benefits expense for our executive leadership team, as well as other selling, general, and administrative shared services costs including human resources, accounting, finance, risk management and a significant amount of information technology expense.
(2) Net intersegment noninterest income (expense) includes:
(Dollars in thousands)
Banking
Factoring
Payments
Nine Months Ended September 30, 2025
Factoring revenue received from Payments
$
—
$
2,732
$
(2,732)
Payments revenue received from Factoring
—
(1,082)
1,082
Banking revenue received from Payments and Factoring
$
450
$
(339)
$
(111)
Net intersegment noninterest income (expense)
$
450
$
1,311
$
(1,761)
Nine Months Ended September 30, 2024
Factoring revenue received from Payments
$
—
$
2,364
$
(2,364)
Payments revenue received from Factoring
—
(818)
818
Banking revenue received from Payments and Factoring
Our Banking segment’s operating income decreased $6.5 million, or 7.4%.
Total interest income decreased $5.0 million, or 2.5%, at our Banking segment primarily as a result of decreased yields at our Banking segment in spite of increased average balances of interest earning assets. While average loans in our Banking segment, excluding intersegment loans, increased 12.6% from $2.992 billion for the nine months ended September 30, 2024 to $3.369 billion for the nine months ended September 30, 2025, this increase was partially offset by decreased yields. Outside of loans, all categories of interest earning assets at our Banking segment experienced decreased yields and the average cash and cash equivalents balance decreased period over period as a result of the Greenscreens acquisition during the second quarter of 2025.
Interest expense increased $7.2 million, or 15.3% primarily due to higher average balances in our Banking interest bearing liabilities. Average total interest bearing deposits increased $273.7 million, or 10.7%. The increase in interest expense was partially offset by decreased rates on our interest bearing liabilities. Further, our Banking segment experienced an increased usage of higher-priced brokered time deposits period over period.
Credit loss expense at our Banking segment is made up of credit loss expense related to loans and credit loss expense related to off balance sheet commitments to lend. Credit loss expense related to loans was $4.9 million for the nine months ended September 30, 2025 compared to credit loss expense on loans of $10.2 million for the nine months ended September 30, 2024. The decrease in credit loss expense was the result of decreased required specific reserves at our Banking segment and a decrease driven by changes to the projected loss drivers and prepayment speeds that the Company forecasted over the reasonable and supportable forecast periods. Such decreases were partially offset by an increase driven by changes in the volume and mix of our Banking segment's loan portfolio period over period and an increase in net charge-offs period over period.
Credit loss expense for off balance sheet credit exposures decreased $0.2 million from an insignificant amount of credit loss expense for the nine months ended September 30, 2024 to a $0.2 million benefit to credit loss expense for the nine months ended September 30, 2025, primarily due to changes to outstanding commitments to fund and assumed loss rates period over period.
Noninterest income at our Banking segment increased period over period due to a $1.3 million increase in fee income at our Banking segment and a $1.2 million increase in BOLI income at our Banking segment. These increases were partially offset by a $0.5 million decrease in card in come and a $0.5 million decrease of insurance commissions at our Banking segment.
Noninterest expense at our Banking segment decreased period over period the details of which are illustrated in the table above. For the nine months ended September 30, 2025, salaries and benefits expense included $0.5 million of expense resulting from our aforementioned restructuring activities.
During the nine months ended September 30, 2025, the aggregate outstanding balances of our banking products increased $218.8 million, or 6.6%, to $3.559 billion as of September 30, 2025. See the Financial Condition section below for further discussion of changes in loan balances:
(1)Operating margin is a non-GAAP financial measure used as a supplemental measure to evaluate the performance of our Factoring segment. It provides meaningful supplemental information regarding the segment's operational performance and enhances investors' overall understanding of the Factoring segment's profitability and operational efficiency. For the nine months ended September 30, 2025, operating income and factoring total revenue were impacted by $1.2 million of interest and fees resulting from the USPS Settlement and such settlement further impacted operating income by $6.5 million of legal expense accrual reversal and $3.8 million of recovery of factoring balances charged off in a prior period. Operating income was also impacted by a $2.0 million legal settlement that was unrelated to the USPS Settlement. Such items had a 7.92% impact on operating margin, a 0.15% impact on yield on average receivables, and a 0.16% impact on yield on average net funds employed for the nine months ended September 30, 2025.
(2)The current period charge-off rate for the nine months ended September 30, 2025 reflects a $3.8 million recovery of factoring balances charged off in a prior period. Such recovery impacted the charge-off rate for that period by (0.33%).
Our Factoring segment’s operating income increased $15.2 million, or 77.3%.
Our average invoice size decreased 2.3% from $1,781 for the nine months ended September 30, 2024 to $1,740 for the nine months ended September 30, 2025 This decrease is the result of a broad drop in transportation invoice prices across the industry as well as a change in mix as we add more short-haul fleets to our factoring purchases. The number of invoices purchased increased 15.2% period over period.
Net interest income at our Factoring segment increased period over period. Overall average net funds employed (“NFE”) increased 18.4% during the nine months ended September 30, 2025 compared to the same period in 2024. The increase in average NFE was the result of increased invoice purchase volume in the face of decreased average invoice sizes. See further discussion under the Recent Developments: Trucking Transportation section. We maintained high concentration in transportation factoring balances, which typically generate a higher yield than our non-transportation factoring balances. This concentration was at 97% at September 30, 2024 and 96% at September 30, 2025. Net interest income at our Factoring segment was also impacted by an increase in its intersegment interest allocation charge period over period driven by higher average Factoring balances and partially offset by lower intercompany rates consistent with lower rates in the broader macro economy.
Credit loss expense at our Factoring segment is made up of credit loss expense related to factored receivables and loans at our Factoring segment as well as credit loss expense related to off balance sheet commitments to lend to the extent there are any such commitments. Credit loss expense related to factored receivables and loans was a benefit of $0.1 million for the nine months ended September 30, 2025 compared to credit loss expense of $3.9 million for the nine months ended September 30, 2024. The decrease in credit loss expense on factored receivables and loans was driven by decreased net charge-offs period over period including the $3.8 million recovery resulting from the USPS settlement. The decrease was also driven by a decrease in required specific reserves. These decreases were partially offset by increases to the ACL driven by changes in volume and mix of the portfolio period over period and changes in loss assumptions period over period. Credit loss expense for off balance sheet credit exposures was $0.0 million for the nine months ended September 30, 2024 and $0.0 million for the nine months ended September 30, 2025 as there were no commitments to lend at the end of the current period.
The decrease in noninterest income at our Factoring segment was due to a $0.6 million decrease in early termination fees and the Factoring segment experienced an unrealized loss on the market value of its revenue share asset of $47 thousand during the nine months ended September 30, 2025 compared to a $1.3 million gain during the same period a year ago.
Noninterest expense at our Factoring segment decreased period over period the details of which are illustrated in the table above. For the nine months ended September 30, 2025, professional fees, a component of noninterest expense, at our Factoring segment reflect a $6.5 million recovery of previously expensed legal fees associated with the USPS Settlement. Other noninterest expense at our Factoring segment reflects a $2.0 million expense driven by settlement of litigation unrelated to the USPS Settlement for the nine months ended September 30, 2025. For the nine months ended September 30, 2025, salaries and benefits expense included $1.0 million of expense resulting from our aforementioned restructuring activities.
Earnings (losses) before interest, taxes, depreciation, and amortization
$
5,492,000
$
(3,103,000)
EBITDA margin(1)
10.8
%
(7.4)
%
Number of invoices processed
24,509,457
18,058,041
Amount of payments processed
$
29,521,449,000
$
20,158,760,000
Network invoice volume
2,781,740
1,984,605
Network payment volume
$
4,443,943,000
$
3,231,445,000
(1)Earnings (losses) before interest, taxes, depreciation, and amortization ("EBITDA") and EBITDA margin (the ratio of EBITDA to total revenue) are non-GAAP financial measures used to provide meaningful supplemental information regarding the segment's operational performance and to enhance investors' overall understanding of such financial performance.
Our Payments segment's operating loss decreased $7.6 million, or 70.4%.
The number of invoices processed by our Payments segment increased 35.7% from 18,058,041 for the nine months ended September 30, 2024 to 24,509,457 for the nine months ended September 30, 2025, and the amount of payments processed increased 46.4% from $20.159 billion for the nine months ended September 30, 2024 to $29.521 billion for the nine months ended September 30, 2025.
We began processing network transactions during the first quarter of 2022. When a fully integrated payments customer payor receives an invoice from a fully integrated payments customer payee, we call that a “network transaction.” All network transactions are included in our payment processing volume above. These transactions are facilitated through payments platform APIs with parties on both sides of the transaction using structured data; similar to how a credit card works at a point-of-sale terminal. The integrations largely automate the process and make it cheaper, faster and safer. During the nine months ended September 30, 2025, we processed 2,781,740 network invoices representing a network payment volume of $4.444 billion. During the nine months ended September 30, 2024, we processed 1,984,605 network invoices representing a network payment volume of $3.231 billion.
Net interest income increased due to increased average balance of interest earning assets at our Payments segment and increased intersegment interest allocation period over period. Changes in average rates at our Payments segment were little changed period over period.
Noninterest income increased due to a $5.1 million increase in fee income earned from our payments and audit business during the nine months ended September 30, 2025 compared to the same period a year ago. There were no other significant changes in the components of noninterest income at our Payments segment period over period.
Noninterest expense at our Payments segment was relatively flat period over period the details of which are illustrated in the table above. For the nine months ended September 30, 2025, salaries and benefits expense included $0.5 million of expense resulting from our aforementioned restructuring activities.
The acquisition of HubTran during 2021 allowed us to create a fully integrated payments network for trucking; servicing brokers and factors. Our payments platform already offered tools and services to increase automation, mitigate fraud, create back-office efficiency and improve the payment experience. Through the acquisition of HubTran, we created additional value through the enhancement of its presentment, audit, and payment capabilities for third party logistics companies (i.e., freight brokers) and their carriers, and factors. The acquisition of HubTran was a meaningful inflection point in the operations of our payments and audit business as our strategy shifted from a capital-intensive on-balance sheet product with a focus on interest income to an open-loop payments network for the trucking industry with a focus on fee revenue. It is for this reason that management believes that earnings before interest, taxes, depreciation, and amortization and the adjustment to that metric enhance investors' overall understanding of the financial performance of the Payments segment.
Intelligence
(Dollars in thousands)
Nine Months Ended September 30,
Intelligence
2025
2024
Total interest income
$
—
$
—
Intersegment interest allocations
—
—
Total interest expense
—
—
Net interest income (expense)
—
—
Credit loss expense (benefit)
—
—
Net interest income (expense) after credit loss expense
—
—
Noninterest income
4,457
—
Noninterest expense:
Salaries and employee benefits
8,485
—
Depreciation
29
—
Other occupancy, furniture and equipment
38
—
FDIC insurance and other regulatory assessments
—
—
Professional fees
4,077
—
Amortization of intangible assets
2,422
—
Advertising and promotion
108
—
Communications and technology
886
—
Software amortization
14
—
Travel and entertainment
375
—
Other
220
—
Total noninterest expense
16,654
—
Net income (loss) before income tax expense
$
(12,197)
$
—
Our Intelligence segment's operating loss for the nine months ended September 30, 2025 was $12.2 million. As previously disclosed, prior to the fourth quarter of 2024, the data intelligence line of business did not exist. Therefore, there are no comparative periods to discuss regarding our Intelligence segment. As illustrated in the table above, to date, the majority of the expenses related to our Intelligence segment are salaries and benefits expense, professional fees, and amortization of intangible assets. A majority of the professional fees recognized at our Intelligence segment during the nine months ended September 30, 2025 relate to our acquisition of Greenscreens.
Net interest income (expense) after credit loss expense
(4,884)
(7,170)
2,286
31.9
%
Noninterest income
2,377
3,229
(852)
(26.4
%)
Noninterest expense:
Salaries and employee benefits
55,207
49,612
5,595
11.3
%
Depreciation
4,607
4,010
597
14.9
%
Other occupancy, furniture and equipment
4,620
4,522
98
2.2
%
FDIC insurance and other regulatory assessments
—
—
—
—
%
Professional fees
7,516
3,854
3,662
95.0
%
Amortization of intangible assets
727
1,174
(447)
(38.1
%)
Advertising and promotion
985
1,093
(108)
(9.9
%)
Communications and technology
6,555
8,138
(1,583)
(19.5
%)
Software amortization
825
336
489
145.5
%
Travel and entertainment
1,499
1,617
(118)
(7.3
%)
Other
6,196
3,491
2,705
77.5
%
Total noninterest expense
88,737
77,847
10,890
14.0
%
Net income (loss) before income tax expense
$
(91,244)
$
(81,788)
$
(9,456)
(11.6
%)
Corporate and other is not a reportable segment, but rather includes certain revenue and expense from the Company's holding company as well as activities not allocated to specific business segments. Corporate and other reported an operating loss of $91.2 million for the nine months ended September 30, 2025 compared to an operating loss of $81.8 million for the nine months ended September 30, 2024.
The increased operating loss was driven by increased noninterest expense which was the result of a $5.6 million increase in salaries and benefits expense and a $3.7 million increase in professional fees. For the nine months ended September 30, 2025, salaries and benefits expense and professional fees included $0.8 million and $1.3 million of expense resulting from our aforementioned restructuring activities, respectively. Further, Corporate experienced a $2.7 million increase in other noninterest expense driven by $2.4 million of current period lease termination payments related to the building we acquired during March 2024. Noninterest income at our Corporate segment decreased primarily due to a $1.3 million decrease in rental income from the same property. Additionally, Corporate experienced a $2.1 million decrease in interest expense period over period as a result of decreased average borrowings.
Financial Condition
Assets
Total assets were $6.357 billion at September 30, 2025, compared to $5.949 billion at December 31, 2024, an increase of $408.2 million, the components of which are discussed below.
Loan Portfolio
Loans held for investment were $4.987 billion at September 30, 2025, compared with $4.547 billion at December 31, 2024.
The following table shows our total loan portfolio by portfolio segments:
September 30, 2025
December 31, 2024
$ Change
% Change
(Dollars in thousands)
% of Total
% of Total
Commercial real estate
$
769,314
15
%
$
777,689
17
%
$
(8,375)
(1.1
%)
Construction, land development, land
204,247
4
%
203,804
4
%
443
0.2
%
1-4 family residential
180,970
4
%
154,020
3
%
26,950
17.5
%
Farmland
43,208
1
%
56,366
1
%
(13,158)
(23.3
%)
Commercial
1,144,872
23
%
1,119,245
25
%
25,627
2.3
%
Factored receivables
1,424,631
29
%
1,204,510
27
%
220,121
18.3
%
Consumer
17,235
—
%
8,000
—
%
9,235
115.4
%
Mortgage warehouse
1,202,445
24
%
1,023,326
23
%
179,119
17.5
%
Total Loans
$
4,986,922
100
%
$
4,546,960
100
%
$
439,962
9.7
%
Commercial Real Estate Loans. Our commercial real estate loans decreased $8.4 million, or 1.1%, due to paydowns that outpaced new origination activity. A significant portion of our loan portfolio at September 30, 2025 consisted of commercial real estate loans secured by properties. Such loans can involve high principal loan amounts, and the repayment of these loans is dependent, in large part, on a borrower's ongoing business operations or on income generated from the properties. The table below sets forth the Company's commercial real estate loan portfolio, by portfolio industry sector and collateral location as of September 30, 2025.
(Dollars in thousands)
Illinois
New York
Texas
Colorado
New Jersey
Iowa
Other
Total
Non-owner occupied
Office
$
3,575
$
35,842
$
17,947
$
3,773
$
82,763
$
352
$
2,874
$
147,126
Multifamily
11,900
—
1,351
9,794
—
146
105,909
129,100
Retail
5,447
57,341
—
9,186
—
2,480
30,814
105,268
Industrial
7,939
37,225
1,761
1,040
—
86
11,368
59,419
Hospitality
907
—
—
4,226
—
—
33,222
38,355
Other
24,228
2,546
25,381
9,123
—
748
19,944
81,970
53,996
132,954
46,440
37,142
82,763
3,812
204,131
561,238
Owner occupied
Industrial
20,612
—
2,533
6,159
—
20,472
13,191
62,967
Hospitality
2,978
—
—
3,732
—
8,618
(1)
15,327
Restaurant
18,613
—
—
4,121
—
1,277
2,586
26,597
Retail
1,457
—
—
9,073
—
540
1,465
12,535
Office
1,883
111
—
6,226
—
616
749
9,585
Other
4,194
—
—
17,406
—
39,308
20,157
81,065
49,737
111
2,533
46,717
—
70,831
38,147
208,076
Total commercial real estate
$
103,733
$
133,065
$
48,973
$
83,859
$
82,763
$
74,643
$
242,278
$
769,314
Construction and Development Loans. Our construction and development loans increased $0.4 million, or 0.2%, due to origination and draw activity that outpaced paydowns and conversions to term loans.
Residential Real Estate Loans. Our one-to-four family residential loans increased $27.0 million, or 17.5%, due to new origination activity that outpaced paydowns.
Farmland Loans. Our farmland loans decreased $13.2 million, or 23.3%, due to paydowns that outpaced modest origination activity.
Commercial Loans. Our commercial loans held for investment increased $25.6 million, or 2.3%, due to increased equipment lending balances, other commercial lending balances, and agriculture lending balances. This increase was partially offset by decreases in asset-based lending and liquid credit lending. Our other commercial lending products, comprised primarily of general commercial loans originated in our community banking markets, increased $1.1 million, or 0.4%.
Factored Receivables. Our factored receivables increased $220.1 million, or 18.3%. See discussion of our factoring subsidiary in the Operating Segment Results for analysis of the key drivers impacting the change in the ending factored receivables balance during the period.
Consumer Loans. Our consumer loans increased $9.2 million, or 115.4%, due to origination activity that outpaced paydowns during the period.
Mortgage Warehouse. Our mortgage warehouse facilitiesincreased$179.1 million, or17.5%, due to seasonal changes in utilization.Client utilization of mortgage warehouse facilities may experience significant fluctuation on a day-to-day basis given mortgage origination market conditions.Our average mortgage warehouse lending balance was $1.149 billion for the three months ended September 30, 2025 compared to $762.7 million for the three months ended September 30, 2024 and $1.052 billion for the nine months ended September 30, 2025 compared to $693.0 million for the nine months ended September 30, 2024.
The following tables set forth the contractual maturities, including scheduled principal repayments, of our loan portfolio and the distribution between fixed and floating interest rate loans:
September 30, 2025
(Dollars in thousands)
One Year or Less
After One but within Five Years
After Five but within Fifteen Years
After Fifteen Years
Total
Commercial real estate
$
350,007
$
389,183
$
30,103
$
21
$
769,314
Construction, land development, land
111,859
92,084
304
—
204,247
1-4 family residential
9,886
25,041
5,762
140,281
180,970
Farmland
6,395
23,513
12,544
756
43,208
Commercial
389,818
722,472
32,582
—
1,144,872
Factored receivables
1,424,631
—
—
—
1,424,631
Consumer
7,529
9,154
546
6
17,235
Mortgage warehouse
1,202,445
—
—
—
1,202,445
$
3,502,570
$
1,261,447
$
81,841
$
141,064
$
4,986,922
Sensitivity of loans to changes in interest rates:
After One but within Five Years
After Five but within Fifteen Years
After Fifteen Years
Predetermined (fixed) interest rates
Commercial real estate
$
270,257
$
1,325
$
—
Construction, land development, land
67,093
249
—
1-4 family residential
19,918
1,471
55,511
Farmland
19,284
187
—
Commercial
571,087
7,809
—
Factored receivables
—
—
—
Consumer
9,154
546
6
Mortgage warehouse
—
—
—
$
956,793
$
11,587
$
55,517
Floating interest rates
Commercial real estate
$
118,926
$
28,778
$
21
Construction, land development, land
24,991
55
—
1-4 family residential
5,123
4,291
84,770
Farmland
4,229
12,357
756
Commercial
151,385
24,773
—
Factored receivables
—
—
—
Consumer
—
—
—
Mortgage warehouse
—
—
—
$
304,654
$
70,254
$
85,547
Total
$
1,261,447
$
81,841
$
141,064
As of September 30, 2025, most of the Company’s non-factoring business activity is with customers located within certain states. The states of Texas (19%), Colorado (11%), Illinois (11%), and Iowa (4%) make up 45% of the Company’s gross loans, excluding factored receivables. Therefore, the Company’s exposure to credit risk is affected by changes in the economies in these states. At December 31, 2024, the states of Texas (22%), Illinois (12%), Colorado (10%), and Iowa (4%) made up 48% of the Company’s gross loans, excluding factored receivables.
Further, a majority (96%) of our factored receivables, representing approximately 28% of our total loan portfolio as of September 30, 2025, are receivables purchased from trucking fleets, owner-operators, and freight brokers in the transportation industry. Although such concentration may cause our future interest income with respect to our factoring operations to be correlated with demand for the transportation industry in the United States generally, we feel that the credit risk with respect to our outstanding portfolio is appropriately mitigated as we limit the amount of receivables acquired from individual debtors and creditors thereby achieving diversification across a number of companies and industries. At December 31, 2024, 97% of our factored receivables, representing approximately 26% of our total loan portfolio, were receivables purchased from trucking fleets, owner-operators, and freight brokers in the transportation industry.
Nonperforming Assets
We have established procedures to assist us in maintaining the overall quality of our loan portfolio. In addition, we have adopted underwriting guidelines to be followed by our lending officers and require senior management review of proposed extensions of credit exceeding certain thresholds. When delinquencies exist, we monitor them for any negative or adverse trends. Our loan review procedures include approval of lending policies and underwriting guidelines by the board of directors of our bank subsidiary, independent loan review, approval of large credit relationships by our bank subsidiary’s Management Loan Committee and loan quality documentation procedures. We, like other financial institutions, are subject to the risk that our loan portfolio will be subject to increasing pressures from deteriorating borrower credit due to general economic conditions.
To manage the credit risks associated with its loan portfolio, management may, depending on current or anticipated economic conditions and related exposures, apply enhanced risk management measures to loans through analysis of a specific borrower's financial condition, including cash flow, collateral values, and guarantees, among other credit factors. In response to the current market dynamics, including economic uncertainties and elevated market interest rates since 2022, the Company has enhanced its stress testing to mitigate interest rate reset risk with a specific emphasis on borrowers’ abilities to absorb the impact of higher interest loan rates.
The following table sets forth the allocation of our nonperforming assets among our different asset categories as of the dates indicated. We classify nonperforming assets as nonaccrual loans and securities, factored receivables greater than 90 days past due, OREO, and other repossessed assets. The balances of nonperforming loans reflect the recorded investment in these assets, including deductions for purchase discounts.
(Dollars in thousands)
September 30, 2025
December 31, 2024
Nonperforming loans:
Commercial real estate
$
8,382
$
11,254
Construction, land development, land
—
2,410
1-4 family residential
1,011
810
Farmland
732
1,996
Commercial
56,454
73,437
Factored receivables
1,140
23,289
Consumer
18
116
Mortgage warehouse
—
—
Total nonperforming loans held for investment
67,737
113,312
Held to maturity securities
1,913
4,073
Equity investments without readily determinable fair value
—
2,462
Other real estate owned, net
210
—
Other repossessed assets
335
425
Total nonperforming assets
$
70,195
$
120,272
Nonperforming assets to total assets
1.10
%
2.02
%
Nonperforming loans to total loans held for investment
1.36
%
2.49
%
Total past due loans to total loans held for investment
Nonperforming loans decreased $45.6 million, or 40.2%, due to a $7.5 million payoff of a nonperforming multifamily relationship, a combined $30.4 million decrease in two large nonperforming equipment finance relationships, a combined $9.7 million decrease in threee large nonperforming liquid credit relationships, the sale of a $2.5 million nonperforming construction relationship, a $2.0 million partial charge-off of a nonperforming other commercial lending relationship a $1.5 million payoff of a nonperforming farmland relationship, and a $22.1 million decrease in nonperforming factored receivables. The decrease in nonperforming factored receivables includes the reduction of the $19.4 million Misdirected Payments Receivable, net of customer reserves. These decreases were partially offset by the addition of a nonperforming asset based lending relationship of $22.5 million discussed further in Item 1. Legal Proceedings of Part II of this document, a $5.4 million increase driven by the addition of three large nonperforming equipment finance relationships, and a $6.6 million increase driven by the addition of two large nonperforming commercial real estate relationships.
OREO increased $0.2 million with no material additions or removals during the period.
As a result of the activity previously described and changes in our period end total loans held for investment, the ratio of nonperforming loans to total loans held for investment decreased to 1.36% at September 30, 2025 from 2.49% at December 31, 2024.
Our ratio of nonperforming assets to total assets decreased to 1.10% at September 30, 2025 from 2.02% at December 31, 2024. This is due to the aforementioned loan activity, and also impacted by decreases in nonperforming equity investments and held to maturity securities as well as changes in our period end total assets.
Past due loans to total loans held for investment decreased to 1.91% at September 30, 2025 from 3.27% at December 31, 2024, reflecting decreases in past due loans across several loan segments.
Allowance for Credit Losses on Loans
The ACL is a valuation allowance estimated at each balance sheet date in accordance with US GAAP that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. When the Company deems all or a portion of a loan to be uncollectible the appropriate amount is written off and the ACL is reduced by the same amount. Subsequent recoveries, if any, are credited to the ACL when received. See Note 1 of the Company’s 2024 Form 10-K and notes to the consolidated financial statements included elsewhere in this report for discussion of our ACL methodology on loans. Allocations of the ACL may be made for specific loans, but the entire allowance is available for any loan that, in the Company’s judgment, should be charged-off.
Loan loss valuation allowances are recorded on specific at-risk balances, typically consisting of collateral dependent loans and factored invoices greater than 90 days past due with negative cash reserves.
The following table sets forth the ACL by category of loan:
September 30, 2025
December 31, 2024
(Dollars in thousands)
Allocated Allowance
% of Loan Portfolio
ACL to Loans
Allocated Allowance
% of Loan Portfolio
ACL to Loans
Commercial real estate
$
4,472
15
%
0.58
%
$
3,825
17
%
0.49
%
Construction, land development, land
2,220
4
%
1.09
%
2,873
4
%
1.41
%
1-4 family residential
1,768
4
%
0.98
%
1,404
3
%
0.91
%
Farmland
295
1
%
0.68
%
386
1
%
0.68
%
Commercial
14,131
23
%
1.23
%
21,419
25
%
1.91
%
Factored receivables
9,032
29
%
0.63
%
9,600
27
%
0.80
%
Consumer
447
—
%
2.59
%
185
—
%
2.31
%
Mortgage warehouse
1,184
24
%
0.10
%
1,022
23
%
0.10
%
Total Loans
$
33,549
100
%
0.67
%
$
40,714
100
%
0.90
%
The ACL decreased $7.2 million, or 17.6%. This decrease reflects net charge-offs of $23.0 million and credit loss expense of $5.0 million. It should be noted that the $10.8 million ACL on the acquired PCD loan was booked as part of the loan purchase with no impact on credit loss expense. Therefore, the corresponding $10.8 million charge-off also had no impact on credit loss expense.
A driver of the change in ACL is change in the loss drivers that the Company forecasted to calculate expected losses at September 30, 2025 as compared to December 31, 2024. Such change had a negative impact on the Company’s loss drivers and assumptions over the reasonable and supportable forecast period and resulted in an increase of $0.4 million of ACL period over period.
The Company uses the discounted cash flow (DCF) method to estimate ACL for the commercial real estate, construction, land development, land, 1-4 family residential, commercial (excluding liquid credit), and consumer loan pools. For all loan pools utilizing the DCF method, the Company utilizes and forecasts national unemployment as a loss driver. The Company also utilizes and forecasts either one-year percentage change in national retail sales (commercial real estate – non multifamily, commercial general, commercial agriculture, commercial asset-based lending, commercial equipment finance, consumer), one-year percentage change in the national home price index (1-4 family residential and construction, land development, land), or one-year percentage change in national gross domestic product (commercial real estate – multifamily) as a second loss driver depending on the nature of the underlying loan pool and how well that loss driver correlates to expected future losses. Consistent forecasts of the loss drivers are used across the loan segments. The Company also forecasts prepayment speeds for use in the DCF models with higher prepayment speeds resulting in lower required ACL levels and vice versa for shorter prepayment speeds. These assumed prepayment speeds are based upon our historical prepayment speeds by loan type adjusted for the expected impact of the future interest rate environment. The impact of these assumed prepayment speeds is lesser in magnitude than the aforementioned loss driver assumptions.
For all DCF models at September 30, 2025, the Company has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over eight quarters on a straight-line basis. The Company leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by the Company when developing the forecast metrics. At September 30, 2025 as compared to December 31, 2024, the Company forecasted a modest increase in national unemployment and modest degradation in one-year percentage change in national retail sales, one-year percentage change in national home price index, and one-year percentage change in national gross domestic product. At September 30, 2025 for national unemployment, the Company projected a low percentage in the first quarter followed by a gradual rise in the following three quarters. For percentage change in national retail sales, the Company projected small increases in the first two projected quarters followed by a decline to negative levels over the last two projected quarters to a level below recent actual periods. For percentage change in national home price index, the Company projected a breakeven level in the first projected quarter followed by a steep drop to negative levels for the remaining three quarters with such negative levels peaking in the fourth projected quarter. For percentage change in national gross domestic product, management projected very low growth for the first two projected quarters with low levels of contraction for the final two projected quarters. At September 30, 2025, the Company used its historical prepayment speeds with minimal adjustment.
The Company uses a loss-rate method to estimate expected credit losses for the farmland, liquid credit, factored receivables, and mortgage warehouse loan pools. For each of these loan segments, the Company applies an expected loss ratio based on internal and peer historical losses adjusted as appropriate for qualitative factors. Qualitative loss factors are based on the Company's judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions. Loss factors used to calculate the required ACL on pools that use the loss-rate method reflect the forecasted economic conditions described above.
The following tables show our credit ratios and an analysis of our credit loss expense:
(Dollars in thousands)
September 30, 2025
December 31, 2024
Allowance for credit losses on loans
$
33,549
$
40,714
Total loans held for investment
$
4,986,922
$
4,546,960
Allowance to total loans held for investment
0.67
%
0.90
%
Nonaccrual loans
$
66,597
$
90,023
Total loans held for investment
$
4,986,922
$
4,546,960
Nonaccrual loans to total loans held for investment
Quarter to date net loans charged off increased $5.9 million. Net charge-offs during the three months ended September 30, 2025 reflect the charge-off of a $2.4 million factoring relationship, a $3.0 million partial charge-off of a liquid credit lending relationship, and a $2.1 million partial charge-off of an equipment lending relationship. There were no individually significant charge-offs during the three months ended September 30, 2024.
Nine Months Ended September 30,
2025
2024
(Dollars in thousands)
Net Charge-Offs
Average Loans HFI
Net Charge-Off Ratio
Net Charge-Offs
Average Loans HFI
Net Charge-Off Ratio
Commercial real estate
$
86
$
765,117
0.01
%
$
831
$
805,127
0.10
%
Construction, land development, land
203
214,312
0.09
%
(1)
191,433
—
%
1-4 family residential
78
166,081
0.05
%
28
127,517
0.02
%
Farmland
—
47,057
—
%
—
58,611
—
%
Commercial
20,554
1,110,297
1.85
%
3,652
1,106,184
0.33
%
Factored receivables
1,749
1,317,324
0.13
%
3,371
1,154,906
0.29
%
Consumer
322
13,013
2.47
%
246
8,636
2.85
%
Mortgage warehouse
—
1,052,230
—
%
—
693,012
—
%
Total Loans
$
22,992
$
4,685,431
0.49
%
$
8,127
$
4,145,426
0.20
%
Year to date net loans charged off increased $14.9 million. Net charge-offs during the nine months ended September 30, 2025 reflect the $10.8 million charge off on the acquired PCD loan that had no impact on earnings. Such charge-offs also reflect the $3.8 million recovery resulting from the USPS settlement, a $3.7 million partial charge-off of a liquid credit relationship a $3.0 million partial charge-off of a separate liquid credit relationship, a $2.4 million charge-off of a factoring relationship, and a $2.1 million partial charge-off of an equipment lending relationship. There were no individually significant charge-offs during the nine months ended September 30, 2024.
Securities
As of September 30, 2025 and December 31, 2024, we held equity securities with readily determinable fair values of $4.6 million and $4.4 million, respectively. These securities represent investments in a publicly traded Community Reinvestment Act mutual fund and are subject to market pricing volatility, with changes in fair value reflected in earnings.
As of September 30, 2025, we held debt securities classified as available for sale with a fair value of $378.1 million, a decrease of $3.5 million from $381.6 million at December 31, 2024. The following table illustrates the changes in our available for sale debt securities:
Available For Sale Debt Securities:
(Dollars in thousands)
September 30, 2025
December 31, 2024
$ Change
% Change
Mortgage-backed securities, residential
$
95,416
$
84,185
$
11,231
13.3
%
Asset-backed securities
851
905
(54)
(6.0)
%
State and municipal
2,819
3,063
(244)
(8.0)
%
CLO Securities
277,643
291,913
(14,270)
(4.9)
%
Corporate bonds
261
262
(1)
(0.4)
%
SBA pooled securities
1,098
1,233
(135)
(10.9)
%
$
378,088
$
381,561
$
(3,473)
(0.9)
%
Our available for sale CLO portfolio consists of investment grade positions in high ranking tranches within their respective securitization structures. As of September 30, 2025, the Company determined that all impaired available for sale securities experienced a decline in fair value below their amortized cost basis due to noncredit-related factors. Therefore, the Company carried no ACL at September 30, 2025. Our available for sale securities can be used for pledging to secure FHLB borrowings and public deposits, or can be sold to meet liquidity needs.
As of September 30, 2025, we held investments classified as held to maturity with an amortized cost, net of ACL, of $1.8 million, a decrease of $0.1 million from $1.9 million at December 31, 2024. See previous discussion of Credit Loss Expense related to our held to maturity securities for further details regarding the nature of these securities and the required ACL at September 30, 2025.
The following tables set forth the amortized cost and average yield of our debt securities, by type and contractual maturity:
Maturity as of September 30, 2025
One Year or Less
After One but within Five Years
After Five but within Ten Years
After Ten Years
Total
(Dollars in thousands)
Amortized Cost
Average Yield
Amortized Cost
Average Yield
Amortized Cost
Average Yield
Amortized Cost
Average Yield
Amortized Cost
Average Yield
Mortgage-backed securities
$
6,238
2.28
%
$
804
2.32
%
$
545
3.84
%
$
91,536
5.04
%
$
99,123
4.84
%
Asset-backed securities
—
—
%
—
—
%
838
5.61
%
—
—
%
838
5.61
%
State and municipal
190
3.22
%
2,176
2.73
%
504
2.65
%
—
—
%
2,870
2.75
%
CLO securities
—
—
%
—
—
%
38,776
6.19
%
237,605
5.78
%
276,381
5.84
%
Corporate bonds
—
—
%
—
—
%
265
5.07
%
—
—
%
265
5.07
%
SBA pooled securities
—
—
%
—
—
%
315
2.87
%
828
3.98
%
1,143
3.68
%
Total available for sale securities
$
6,428
2.30
%
$
2,980
2.62
%
$
41,243
6.07
%
$
329,969
5.57
%
$
380,620
5.54
%
Held to maturity securities:
$
—
—
%
$
3,165
4.13
%
$
—
—
%
$
—
—
%
$
3,165
4.13
%
Liabilities
Total liabilities were $5.438 billion as of September 30, 2025, compared to $5.058 billion at December 31, 2024, an increase of $379.8 million, the components of which are discussed below.
Our total deposits increased $134.4 million, or 2.8%, primarily due to an increase in noninterest bearing demand deposits, savings deposits, and brokered time deposits. The Company experienced decreases in all other material deposit categories. Other brokered deposits are non-maturity deposits obtained from wholesale sources. As of September 30, 2025, interest bearing demand deposits, noninterest bearing deposits, money market deposits, other brokered deposits, and savings deposits accounted for 80% of our total deposits, while individual retirement accounts, certificates of deposit, and brokered time deposits made up 20% of total deposits. At September 30, 2025 and December 31, 2024, our estimated uninsured deposits were $1.291 billion and $1.488 billion, respectively.
At September 30, 2025 we held $64.6 million of time deposits that meet or exceed the Federal Deposit Insurance Corporation ("FDIC") insurance limit. The following table provides information on the maturity distribution of time deposits exceeding the FDIC insurance limit as of September 30, 2025:
The following table summarizes our average deposit balances and weighted average rates:
Three Months Ended September 30, 2025
Three Months Ended September 30, 2024
(Dollars in thousands)
Average Balance
Weighted Avg Rates
% of Total
Average Balance
Weighted Avg Rates
% of Total
Interest bearing demand
$
689,220
0.49
%
13
%
$
721,482
0.54
%
16
%
Individual retirement accounts
40,176
1.23
%
1
%
47,397
1.33
%
1
%
Money market
584,459
2.71
%
11
%
580,281
2.83
%
13
%
Savings
518,854
1.13
%
10
%
538,367
1.19
%
12
%
Certificates of deposit
228,802
2.60
%
4
%
248,126
3.35
%
5
%
Brokered time deposits
744,436
4.27
%
14
%
404,537
4.99
%
9
%
Other brokered deposits
142,814
4.36
%
3
%
—
—
%
—
%
Total interest bearing deposits
2,948,761
2.36
%
56
%
2,540,190
2.20
%
56
%
Noninterest bearing demand
2,188,828
—
44
%
1,991,042
—
44
%
Total deposits
$
5,137,589
1.35
%
100
%
$
4,531,232
1.23
%
100
%
Nine Months Ended September 30, 2025
Nine Months Ended September 30, 2024
(Dollars in thousands)
Average Balance
Weighted Avg Yields
% of Total
Average Balance
Weighted Avg Yields
% of Total
Interest bearing demand
$
714,847
0.49
%
14
%
$
733,930
0.55
%
17
%
Individual retirement accounts
41,650
1.25
%
1
%
49,574
1.34
%
1
%
Money market
593,943
2.66
%
12
%
571,860
2.85
%
13
%
Savings
518,871
1.08
%
10
%
537,825
1.10
%
12
%
Certificates of deposit
228,588
2.65
%
5
%
256,297
3.07
%
6
%
Brokered time deposits
643,243
4.38
%
13
%
374,162
5.18
%
8
%
Other brokered deposits
85,793
4.40
%
2
%
29,577
5.43
%
1
%
Total interest bearing deposits
2,826,935
2.24
%
57
%
2,553,225
2.18
%
58
%
Noninterest bearing demand
2,120,926
—
43
%
1,852,360
—
42
%
Total deposits
$
4,947,861
1.28
%
100
%
$
4,405,585
1.26
%
100
%
The Company's deposit base is made up of a high number of customers with accounts spread across 63 locations in six states. Our deposit base is diverse in terms of both geography and industry, comprised largely of retail as well small-to-medium sized business customers. The majority of our deposits are FDIC insured.
Other Borrowings
FHLB Advances
The following provides a summary of our FHLB advances as of and for the nine months ended September 30, 2025 and the year ended December 31, 2024:
(Dollars in thousands)
September 30, 2025
December 31, 2024
Amount outstanding at end of period
$
280,000
$
30,000
Weighted average interest rate at end of period
4.42
%
4.79
%
Average amount outstanding during the period
209,487
120,369
Weighted average interest rate during the period
4.47
%
5.38
%
Highest month end balance during the period
355,000
280,000
Our FHLB advances are collateralized by assets, including a blanket pledge of certain loans. At September 30, 2025 and December 31, 2024, we had $692.7 million and $819.1 million, respectively, in unused and available advances from the FHLB.
On November 27, 2019, the Company issued $39.5 million of Fixed-to-Floating Rate Subordinated Notes due 2029 (the “2019 Notes”). The 2019 Notes initially incurred interest at 4.875% per annum, payable semi-annually in arrears, to, but excluding, November 27, 2024. The 2019 Notes were redeemed on November 27, 2024 at a redemption price equal to the outstanding principal amount of the 2019 Notes plus accrued and unpaid interest to, but excluding, the date of redemption.
On August 26, 2021, the Company issued $70.0 million of Fixed-to-Floating Rate Subordinated Notes due 2031 (the “2021 Notes”). The 2021 Notes initially bear interest at 3.500% per annum, payable semi-annually in arrears, to, but excluding, September 1, 2026, and, thereafter and to, but excluding, the maturity date or earlier redemption, interest shall be payable quarterly in arrears, at an annual floating rate equal to a benchmark rate, initially three-month SOFR, as determined for the applicable quarterly period, plus 2.860%. The Company may, at its option, beginning on September 1, 2026 and on any scheduled interest payment date thereafter, redeem the 2021 Notes, in whole or in part, at a redemption price equal to the outstanding principal amount of the 2021 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the date of redemption.
The Subordinated Notes are included on the consolidated balance sheets as liabilities at their carrying values; however, for regulatory purposes, the $69.8 million and $69.7 million carrying value of these obligations at September 30, 2025 and December 31, 2024, respectively, were eligible for inclusion in Tier 2 regulatory capital. Issuance costs related to the Subordinated Notes have been netted against the subordinated notes liability on the balance sheet. The debt issuance costs are being amortized using the effective interest method through maturity and recognized as a component of interest expense.
The Subordinated Notes are subordinated in right of payment to the Company’s existing and future senior indebtedness and are structurally subordinated to the Company’s subsidiaries’ existing and future indebtedness and other obligations.
Junior Subordinated Debentures
The following provides a summary of our junior subordinated debentures as of September 30, 2025:
(Dollars in thousands)
Face Value
Carrying Value
Maturity Date
Interest Rate
National Bancshares Capital Trust II
$
15,464
$
13,904
September 2033
Three Month SOFR + 3.26%
National Bancshares Capital Trust III
17,526
14,068
July 2036
Three Month SOFR + 1.64%
ColoEast Capital Trust I
5,155
3,987
September 2035
Three Month SOFR + 1.86%
ColoEast Capital Trust II
6,700
5,126
March 2037
Three Month SOFR + 2.05%
Valley Bancorp Statutory Trust I
3,093
2,949
September 2032
Three Month SOFR + 3.66%
Valley Bancorp Statutory Trust II
3,093
2,795
July 2034
Three Month SOFR + 3.01%
$
51,031
$
42,829
These debentures are unsecured obligations and were issued to trusts that are unconsolidated subsidiaries. The trusts in turn issued trust preferred securities with identical payment terms to unrelated investors. The debentures may be called by the Company at par plus any accrued but unpaid interest; however, we have no current plans to redeem them prior to maturity. Interest on the debentures is calculated quarterly, based on a contractual rate equal to three month SOFR plus a weighted average spread of 2.41%. As part of the purchase accounting adjustments made with the National Bancshares, Inc. acquisition on October 15, 2013, the ColoEast acquisition on August 1, 2016, and the Valley acquisition on December 9, 2017, we adjusted the carrying value of the junior subordinated debentures to fair value as of the respective acquisition dates. The discounts on the debentures will continue to be amortized through maturity and recognized as a component of interest expense.
The debentures are included on our consolidated balance sheet as liabilities; however, for regulatory purposes, these obligations are eligible for inclusion in regulatory capital, subject to certain limitations. All of the carrying value of $42.8 million was allowed in the calculation of Tier I capital as of September 30, 2025.
Capital Resources and Liquidity Management
Capital Resources
Our stockholders’ equity totaled $919.3 million as of September 30, 2025, compared to $890.9 million as of December 31, 2024, an increase of $28.4 million. Stockholders’ equity increased during this period primarily due to our net income, stock based compensation expense, and the issuance of common stock pursuant to our employee stock purchase plan.
We define liquidity as our ability to generate sufficient cash to fund current loan demand, deposit withdrawals, other cash demands and disbursement needs, and otherwise to operate on an ongoing basis.
We manage liquidity at the holding company level as well as that of our bank subsidiary. The management of liquidity at both levels is critical, because the holding company and our bank subsidiary have different funding needs and sources, and each is subject to regulatory guidelines and requirements which require minimum levels of liquidity. We believe that our liquidity ratios meet or exceed those guidelines and that our present position is adequate to meet our current and future liquidity needs.
As part of our liquidity management process, we regularly stress test our balance sheet to ensure that we are continually able to withstand unexpected liquidity shocks such as sudden or protracted material deposit runoff. This analysis explicitly contemplates the immediate runoff of any meaningful deposit concentrations such as the servicing deposits that we hold on behalf of our mortgage warehouse customers.
Our liquidity requirements are met primarily through cash flow from operations, receipt of pre-paid and maturing balances in our loan and investment portfolios, debt financing and increases in customer deposits. Our liquidity position is supported by management of liquid assets and liabilities and access to other sources of funds. Liquid assets include cash, interest earning deposits in banks, federal funds sold, securities available for sale and maturing or prepaying balances in our investment and loan portfolios. Liquid liabilities include core deposits, federal funds purchased, securities sold under repurchase agreements and other borrowings. Other sources of funds include the sale of loans, brokered deposits, the issuance of additional collateralized borrowings such as FHLB advances or borrowings from the Federal Reserve, the issuance of debt securities and the issuance of common securities. For additional information regarding our operating, investing and financing cash flows, see the Consolidated Statements of Cash Flows provided in our consolidated financial statements.
In addition to the liquidity provided by the sources described above, our subsidiary bank maintains correspondent relationships with other banks in order to sell loans or purchase overnight funds should additional liquidity be needed. As of September 30, 2025, TBK Bank had $772.3 million of unused borrowing capacity from the Federal Reserve Bank discount window and unsecured federal funds lines of credit with seven unaffiliated banks totaling $227.5 million, with no amounts advanced against those lines. Additionally, as of September 30, 2025, we had $692.7 million in unused and available advances from the FHLB. We have historically utilized FHLB advances to support the fluctuating and sometimes unpredictable balances in our mortgage warehouse lending portfolio, and we continue to have the ability to do so.
Contractual Obligations
The following table summarizes our contractual obligations and other commitments to make future payments as of September 30, 2025. The amount of the obligations presented in the table reflect principal amounts only and exclude the amount of interest we are obligated to pay. Also excluded from the table are a number of obligations to be settled in cash. These excluded items are reflected in our consolidated balance sheet and include deposits with no stated maturity, trade payables, and accrued interest payable.
Payments Due by Period - September 30, 2025
(Dollars in thousands)
Total
One Year or Less
After One but within Three Years
After Three but within Five Years
After Five Years
Federal Home Loan Bank advances
$
280,000
$
250,000
$
30,000
$
—
$
—
Subordinated notes
70,000
—
—
—
70,000
Junior subordinated debentures
51,031
—
—
—
51,031
Operating lease agreements
27,718
5,813
10,247
8,348
3,310
Time deposits with stated maturity dates
973,320
950,294
20,716
2,310
—
Total contractual obligations
$
1,402,069
$
1,206,107
$
60,963
$
10,658
$
124,341
Regulatory Capital Requirements
Our capital management consists of providing equity to support our current and future operations. We are subject to various regulatory capital requirements administered by federal and state 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 Company’s or TBK Bank’s financial statements. For further information regarding our regulatory capital requirements, see Note 10 – Regulatory Matters in the accompanying condensed notes to the consolidated financial statements included elsewhere in this report.
In the normal course of business, we enter into various transactions, which, in accordance with GAAP, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. These transactions include commitments to extend credit and standby and commercial letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. For further information, see Note 8 – Off-Balance Sheet Loan Commitments in the accompanying condensed notes to the consolidated financial statements included elsewhere in this report.
Critical Accounting Policies and Estimates
Our accounting policies are fundamental to understanding our management’s discussion and analysis of our results of operations and financial condition. We have identified certain significant accounting policies which involve a higher degree of judgment and complexity in making certain estimates and assumptions that affect amounts reported in our consolidated financial statements. The significant accounting policy which we believe to be the most critical in preparing our consolidated financial statements is the determination of the allowance for credit losses. Since December 31, 2024, there have been no changes in critical accounting policies as further described under “Critical Accounting Policies and Estimates” and in Note 1 to the Consolidated Financial Statements in our 2024 Form 10-K.
Recently Issued Accounting Pronouncements
See Note 1 – Summary of Significant Accounting Policies in the accompanying condensed notes to consolidated financial statements included elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on our consolidated financial statements.
Forward-Looking Statements
This document contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable of a future or forward-looking nature. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control, particularly with regard to developments related to COVID-19. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but are not limited to, the following:
•business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas;
•our ability to mitigate our risk exposures;
•our ability to maintain our historical earnings trends;
•changes in management personnel;
•interest rate risk;
•concentration of our products and services in the transportation industry;
•credit risk associated with our loan portfolio;
•lack of seasoning in our loan portfolio;
•deteriorating asset quality and higher loan charge-offs;
•time and effort necessary to resolve nonperforming assets;
•inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;
•risks related to the integration of acquired businesses, including our recent acquisition of Greenscreens, and any future acquisitions;
•our ability to successfully identify and address the risks associated with our possible future acquisitions, and the risks that our prior and possible future acquisitions make it more difficult for investors to evaluate our business, financial condition and results of operations, and impairs our ability to accurately forecast our future performance;
•lack of liquidity;
•fluctuations in the fair value and liquidity of the securities we hold for sale;
•impairment of investment securities, goodwill, other intangible assets or deferred tax assets;
•our risk management strategies;
•environmental liability associated with our lending activities;
•increased competition in the bank and non-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms;
•the accuracy of our financial statements and related disclosures;
•material weaknesses in our internal control over financial reporting;
•system failures or failures to prevent breaches of our network security;
•the institution and outcome of litigation and other legal proceedings against us or to which we become subject;
•changes in carry-forwards of net operating losses;
•changes in federal tax law or policy;
•the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Act and their application by our regulators as well as privacy, cybersecurity, and artificial intelligence regulation and oversight;
•governmental monetary and fiscal policies;
•changes in the scope and cost of FDIC, insurance and other coverages;
•failure to receive regulatory approval for future acquisitions; and
•increases in our capital requirements.
The foregoing factors should not be construed as exhaustive. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Asset/Liability Management and Interest Rate Risk
The principal objective of our asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of interest rate risk while maximizing net income and preserving adequate levels of liquidity and capital. The board of directors of our subsidiary bank has oversight of our asset and liability management function, which is managed by our Chief Financial Officer. Our Chief Financial Officer meets with our senior executive management team regularly to review, among other things, the sensitivity of our assets and liabilities to market interest rate changes, local and national market conditions and market interest rates. That group also reviews our liquidity, capital, deposit mix, loan mix and investment positions.
As a financial institution, our primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most of our assets and liabilities, and the fair value of all interest-earning assets and interest-bearing liabilities, other than those which have a short term to maturity. Interest rate risk is the potential of economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair values.
We manage our exposure to interest rates primarily by structuring our balance sheet in the ordinary course of business. We do not typically enter into derivative contracts for the purpose of managing interest rate risk, but we may elect to do so in the future. Based upon the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets.
We use an interest rate risk simulation model to test the interest rate sensitivity of net interest income and the balance sheet. Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable changes in projected net interest margin. These scenarios, known as rate shocks, simulate an instantaneous change in interest rates and use various assumptions, including, but not limited to, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, and reinvestment and replacement of asset and liability cash flows. We also analyze the economic value of equity as a secondary measure of interest rate risk. This is a complementary measure to net interest income where the calculated value is the result of the fair value of assets less the fair value of liabilities. The economic value of equity is a longer term view of interest rate risk because it measures the present value of all future cash flows. The impact of changes in interest rates on this calculation is analyzed for the risk to our future earnings and is used in conjunction with the analyses on net interest income.
The following table summarizes simulated change in net interest income versus unchanged rates as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Following 12 Months
Months 13-24
Following 12 Months
Months 13-24
+400 basis points
8.4
%
9.8
%
10.1
%
13.2
%
+300 basis points
6.4
%
7.4
%
7.6
%
9.9
%
+200 basis points
4.4
%
5.0
%
5.1
%
6.6
%
+100 basis points
2.3
%
2.6
%
2.6
%
3.3
%
Flat rates
0.0
%
0.0
%
0.0
%
0.0
%
-100 basis points
(2.1
%)
(2.6
%)
(2.6
%)
(3.7
%)
-200 basis points
(4.4
%)
(5.7
%)
(5.4
%)
(7.5
%)
-300 basis points
(6.8
%)
(9.1
%)
(8.2
%)
(11.8
%)
-400 basis points
(8.4
%)
(11.4
%)
(11.0
%)
(16.0
%)
The following table presents the change in our economic value of equity as of September 30, 2025 and December 31, 2024, assuming immediate parallel shifts in interest rates:
Economic Value of Equity at Risk (%)
September 30, 2025
December 31, 2024
+400 basis points
8.3
%
9.3
%
+300 basis points
6.6
%
7.3
%
+200 basis points
4.5
%
5.2
%
+100 basis points
2.0
%
2.6
%
Flat rates
0.0
%
0.0
%
-100 basis points
(4.8
%)
(5.6
%)
-200 basis points
(10.0
%)
(11.5
%)
-300 basis points
(15.5
%)
(17.7
%)
-400 basis points
(20.4
%)
(24.2
%)
Many assumptions are used to calculate the impact of interest rate fluctuations. Actual results may be significantly different than our projections due to several factors, including the timing and frequency of rate changes, market conditions and the shape of the yield curve. The computations of interest rate risk shown above do not include actions that our management may undertake to manage the risks in response to anticipated changes in interest rates, and actual results may also differ due to any actions taken in response to the changing rates.
As part of our asset/liability management strategy, our management has emphasized the origination of shorter duration loans as well as variable rate loans to limit the negative exposure to a rate increase. We also desire to acquire deposit transaction accounts, particularly noninterest or low interest-bearing non-maturity deposit accounts, whose cost is less sensitive to changes in interest rates. We intend to focus our strategy on utilizing our deposit base and operating platform to increase these deposit transaction accounts.
ITEM 4
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply judgment in evaluating its controls and procedures. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time we are a party to various litigation matters incidental to the conduct of our business. Except as set forth below, we are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.
TBK Bank, SSB (the “Bank”), the wholly-owned bank subsidiary of the Company, is the agent bank for a $60.5 million floorplan loan facility, of which the Bank holds approximately $22.5 million, for which Tricolor Holdings, LLC (“Tricolor”) is the lead borrower. On September 10, 2025, Tricolor and its affiliates filed for Chapter 7 bankruptcy in the United States District Court for the Northern District of Texas. Public reports have surfaced alleging that Tricolor was engaged in fraud; however, the details of this alleged fraud are not yet known. The floorplan loan facility is secured by a first-priority security interest in the vehicle inventory and certain other assets of Tricolor. As of September 30, 2025, the Bank believes its collateral position adequately secures the outstanding balance of the loan facility. As the bankruptcy proceedings progress, however, the Bank may discover additional information regarding the status of Tricolor’s vehicle inventory. Other creditors have asserted that they have interests in some of the vehicles in which the Bank asserts a first-priority security interest. To the extent necessary, the bankruptcy court may ultimately have to determine the Bank’s and other creditors’ interest in specific vehicles that the Bank believes to be part of Tricolor’s vehicle inventory. The Company may also be subject to additional claims asserted by creditors or the trustee in the bankruptcy proceedings. Should any of such factual determinations or developments in the bankruptcy proceedings negatively impact the Bank’s assessment of its collateral position or otherwise have a negative impact on the Company, the Company might incur losses which could be material to our business, financial condition and results of operations.
Item 1A. Risk Factors
There have been no material changes in the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On August 29, 2024, Mr. Aaron P. Graft, the Company’s President and Chief Executive Officer, adopted a written plan for the sale of our common stock that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (the “Graft Trading Plan”). The Graft Trading Plan covers the sale of up to 54,000 shares of the Company’s common stock in several transactions over a period commencing after the later of (1) 91 days from the execution of the Graft Trading Plan and (2) the third trading day following the public disclosure of the Company’s financial results on Form 10-Q for the quarter ended September 30, 2024, and will cease upon the earlier of November 28, 2025 or the sale of all shares subject to the Graft Trading Plan.
On March 4, 2025, Mr. Edward J. Schreyer, the Company’s Executive Vice President and Chief Operating Officer, adopted a written plan for the sale of our common stock that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (the “Schreyer Trading Plan”). The Schreyer Trading Plan covers the sale of up to 90 percent of the net shares (after applicable tax withholding) of the Company’s common stock received by Mr. Schreyer upon the May 1, 2025 vesting of equity awards previously issued to Mr. Schreyer, to occur in several transactions over a period commencing after the later of (1) 90 days from the execution of the Schreyer Trading Plan and (2) the second trading day following the public disclosure of the Company’s financial results on Form 10-Q for the quarter ended March 31, 2025, and will cease upon the earlier of January 31, 2026 or the sale of all shares subject to the Schreyer Trading Plan. As of September 2, 2025, all shares subject to the Schreyer Trading Plan had been sold and the Schreyer Trading Plan was terminated.
On March 12, 2025, Mr. Adam D. Nelson, the Company’s Executive Vice President and General Counsel, adopted a written plan for the sale of our common stock that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (the “Nelson Trading Plan”). The Nelson Trading Plan covers the sale of up to 10,000 shares of the Company’s common stock in several transactions over a period commencing after the later of (1) 90 days from the execution of the Nelson Trading Plan and (2) the second trading day following the public disclosure of the Company’s financial results on Form 10-Q for the quarter ended March 31, 2025, and will cease upon the earlier of March 31, 2026 or the sale of all shares subject to the Nelson Trading Plan.
As of the end of the third quarter of 2025, none of our other directors or executive officers adopted Rule 10b5-1 trading plans and none of our directors or executive officers terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
* Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to the Securities and Exchange Commission upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TRIUMPH FINANCIAL INC.
(Registrant)
Date:
October 15, 2025
/s/ Aaron P. Graft
Aaron P. Graft President and Chief Executive Officer