ThZeal - The Zeal

tbk-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________

FORM 10-Q

___________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 001-36722

___________________________________________________________

TRIUMPH FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________


Texas						20-0477066
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

12700 Park Central Drive, Suite 1700

Dallas, Texas 75251

(Address of principal executive offices)

(214) 365-6900

(Registrant’s telephone number, including area code)

___________________________________________________________

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. Yes x 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). Yes x 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, 23,419,740 shares, as of April 14, 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

NASDAQ Global Select Market

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

TFINP

NASDAQ Global Select Market

Table of Contents

TRIUMPH FINANCIAL, INC.

FORM 10-Q

March 31, 2025

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements
	Consolidated Balance Sheets	2
	Consolidated Statements of Income	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of Changes in Stockholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Condensed Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	80

Item 4.	Controls and Procedures	81

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	81

Item 1A.	Risk Factors	82

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	82

Item 3.	Defaults Upon Senior Securities	82

Item 4.	Mine Safety Disclosures	82

Item 5.	Other Information	82

Item 6.	Exhibits	83

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

Table of Contents

TRIUMPH FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS

March 31, 2025 and December 31, 2024

(Dollar amounts in thousands)


	March 31, 2025		December 31, 2024
	(Unaudited)
ASSETS
Cash and due from banks	$	72,131	$	73,836
Interest bearing deposits with other banks	430,813		256,281
Total cash and cash equivalents	502,944		330,117
Securities - equity investments with readily determinable fair values	4,512		4,445
Securities - available for sale	411,925		381,561
Securities - held to maturity, net of allowance for credit losses of $1,476 and $3,491, respectively, fair value of $2,460 and $2,514, respectively	1,731		1,876
Loans held for sale	2,950		1,172
Loans, net of allowance for credit losses of $36,229 and $40,714, respectively	4,629,994		4,506,246
Federal Home Loan Bank and other restricted stock	12,987		14,054
Premises and equipment, net	150,247		160,737
Capitalized software, net	40,869		37,971
Goodwill	241,949		241,949
Intangible assets, net	13,963		16,259
Bank-owned life insurance	63,200		62,690
Deferred tax asset, net	11,868		13,581
Other assets	179,255		176,317
Total assets	$	6,268,394	$	5,948,975
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Noninterest bearing	$	2,260,048	$	1,964,457
Interest bearing	2,716,702		2,856,363
Total deposits	4,976,750		4,820,820
Federal Home Loan Bank advances	205,000		30,000
Subordinated notes	69,732		69,662
Junior subordinated debentures	42,507		42,352
Other liabilities	80,478		95,222
Total liabilities	5,374,467		5,058,056
Commitments and contingencies - See Note 7 and Note 8
Stockholders' equity - See Note 11
Preferred stock	45,000		45,000
Common stock, 23,419,740 and 23,391,411 shares outstanding, respectively	292		291
Additional paid-in-capital	572,143		567,884
Treasury stock, at cost	(268,520)		(268,356)
Retained earnings	548,431		549,215
Accumulated other comprehensive income (loss)	(3,419)		(3,115)
Total stockholders’ equity	893,927		890,919
Total liabilities and stockholders' equity	$	6,268,394	$	5,948,975

See accompanying condensed notes to consolidated financial statements.

Table of Contents

TRIUMPH FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended March 31, 2025 and 2024

(Dollar amounts in thousands, except per share amounts)

(Unaudited)


	Three Months Ended March 31,
		2025		2024
Interest and dividend income:
Loans, including fees		$	53,576	$	53,552
Factored receivables, including fees		38,694		37,909
Securities		5,308		5,351
FHLB and other restricted stock		249		232
Cash deposits		4,443		4,903
Total interest income		102,270		101,947
Interest expense:
Deposits		14,397		12,152
Subordinated notes		682		1,224
Junior subordinated debentures		994		1,184
Other borrowings		1,814		1,352
Total interest expense		17,887		15,912
Net interest income		84,383		86,035
Credit loss expense (benefit)		1,330		5,896
Net interest income after credit loss expense (benefit)		83,053		80,139
Noninterest income:
Service charges on deposits		1,596		1,727
Card income		1,797		1,868

Net gains (losses) on sale of loans		134		(192)
Fee income		9,114		8,683
Insurance commissions		1,250		1,568
Other		3,299		1,345
Total noninterest income		17,190		14,999
Noninterest expense:
Salaries and employee benefits		58,718		54,185
Occupancy, furniture and equipment		8,442		7,636
FDIC insurance and other regulatory assessments		727		653
Professional fees		6,064		3,541
Amortization of intangible assets		2,400		2,724
Advertising and promotion		1,464		1,214
Communications and technology		12,244		11,894
Software amortization		1,992		1,174
Travel and entertainment		1,492		1,509
Other		6,630		5,841
Total noninterest expense		100,173		90,371
Net income before income tax expense		70		4,767
Income tax expense		53		609
Net income		$	17	$	4,158
Dividends on preferred stock		(801)		(801)
Net income (loss) available to common stockholders		$	(784)	$	3,357
Earnings per common share
Basic		$	(0.03)	$	0.14
Diluted		$	(0.03)	$	0.14

See accompanying condensed notes to consolidated financial statements.

Table of Contents

TRIUMPH FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2025 and 2024

(Dollar amounts in thousands)

(Unaudited)


	Three Months Ended March 31,
		2025		2024
Net income		$	17	$	4,158
Other comprehensive income:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period		(404)		(210)
Tax effect		100		3
Unrealized holding gains (losses) arising during the period, net of taxes		(304)		(207)
Reclassification of amount realized through sale or call of securities		—		—
Tax effect		—		—
Reclassification of amount realized through sale or call of securities, net of taxes		—		—
Change in unrealized gains (losses) on securities, net of tax		(304)		(207)
Total other comprehensive income (loss)		(304)		(207)
Comprehensive income (loss)		$	(287)	$	3,951

See accompanying condensed notes to consolidated financial statements.

Table of Contents

TRIUMPH FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2025 and 2024

(Dollar amounts in thousands)

(Unaudited)


	Preferred Stock		Common Stock			Additional Paid-in- Capital		Treasury Stock			Retained Earnings		Accumulated		Total Stockholders' Equity
	Liquidation Preference Amount		Shares Outstanding	Par Amount				Shares Outstanding	Cost				Other Comprehensive Income (Loss)
Balance, January 1, 2025	$	45,000	23,391,411	$	291	$	567,884	5,729,802	$	(268,356)	$	549,215	$	(3,115)	$	890,919
Vesting of restricted stock units and performance stock units	—		8,973	—		—		—	—		—		—		—
Stock option exercises, net	—		495	—		25		—	—		—		—		25
Issuance of common stock pursuant to the Employee Stock Purchase Plan	—		20,892	1		1,367		—	—		—		—		1,368
Stock based compensation	—		—	—		2,831		—	—		—		—		2,831
Forfeiture of restricted stock awards	—		(575)	—		36		575	(36)		—		—		—
Purchase of treasury stock, net	—		(1,456)	—		—		1,456	(128)		—		—		(128)
Dividends on preferred stock	—		—	—		—		—	—		(801)		—		(801)
Net income	—		—	—		—		—	—		17		—		17
Other comprehensive income (loss)	—		—	—		—		—	—		—		(304)		(304)
Balance, March 31, 2025	$	45,000	23,419,740	$	292	$	572,143	5,731,833	$	(268,520)	$	548,431	$	(3,419)	$	893,927


	Preferred Stock		Common Stock			Additional Paid-in- Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Liquidation Preference Amount		Shares Outstanding	Par Amount				Shares Outstanding	Cost
Balance, January 1, 2024	$	45,000	23,302,414	$	290	$	550,743	5,683,841	$	(265,038)	$	536,331	$	(2,926)	$	864,400

Vesting of restricted stock and performance stock units	—		9,877	—		—		—	—		—		—		—
Stock option exercises, net	—		5,401	—		144		—	—		—		—		144
Issuance of common stock pursuant to the Employee Stock Purchase Plan	—		18,328	—		1,099		—	—		—		—		1,099
Stock based compensation	—		—	—		3,627		—	—		—		—		3,627

Purchase of treasury stock, net	—		(1,023)	—		—		1,023	(81)		—		—		(81)
Dividends on preferred stock	—		—	—		—		—	—		(801)		—		(801)
Net income	—		—	—		—		—	—		4,158		—		4,158
Other comprehensive income (loss)	—		—	—		—		—	—		—		(207)		(207)
Balance, March 31, 2024	$	45,000	23,334,997	$	290	$	555,613	5,684,864	$	(265,119)	$	539,688	$	(3,133)	$	872,339

See accompanying condensed notes to consolidated financial statements.

Table of Contents

TRIUMPH FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2025 and 2024

(Dollar amounts in thousands)

(Unaudited)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities:
Net income	$	17	$	4,158
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	3,944		3,612
Net accretion on loans	(247)		(471)
Amortization of subordinated notes issuance costs	70		129
Amortization of junior subordinated debentures	155		149
Net (accretion) amortization on securities	(131)		(343)
Amortization of intangible assets	2,400		2,724
Software amortization	1,992		1,174
Deferred taxes, net	1,814		857
Credit loss expense (benefit)	1,330		5,896
Stock based compensation	2,831		3,627

Net (gains) losses on equity securities	(67)		47

Origination of loans held for sale	(4,611)		(165)

Proceeds from sale of loans originated or purchased for sale	5,725		123
Net (gains) losses on sale of loans	(134)		192
Net change in operating leases	(111)		(539)
Change in estimated fair value of indemnification asset	204		205
Change in estimated fair value of revenue share asset	(173)		(472)
(Increase) decrease in other assets	(4,809)		(2,758)
Increase (decrease) in other liabilities	(13,156)		(28,871)
Net cash provided by (used in) operating activities	(2,957)		(10,726)
Cash flows from investing activities:

Purchases of securities available for sale	(85,001)		(33,108)

Proceeds from maturities, calls, and pay downs of securities available for sale	54,318		12,739
Proceeds from maturities, calls, and pay downs of securities held to maturity	46		67
Purchases of loans held for investment	(4,437)		(995)
Proceeds from sale of loans	2,989		3,895
Net change in loans	(126,125)		(38,971)
(Purchases) sales of premises and equipment, net	6,546		(52,699)

Expenditures for capitalized software	(4,890)		(5,244)
(Purchases) redemptions of FHLB and other restricted stock, net	1,067		9,514

Acquired intangible assets	(123)		(2,920)

Net cash provided by (used in) investing activities	(155,610)		(107,722)
Cash flows from financing activities:
Net increase (decrease) in deposits	155,930		473,485
Increase (decrease) in Federal Home Loan Bank advances	175,000		(225,000)


Preferred stock dividends	(801)		(801)
Stock option exercises, net	25		144
Proceeds from employee stock purchase plan common stock issuance	1,368		1,099
Purchase of treasury stock, net	(128)		(81)
Net cash provided by (used in) financing activities	331,394		248,846
Net increase (decrease) in cash and cash equivalents	172,827		130,398
Cash and cash equivalents at beginning of period	330,117		286,635
Cash and cash equivalents at end of period	502,944		417,033

See accompanying condensed notes to consolidated financial statements.

Table of Contents

TRIUMPH FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2025 and 2024

(Dollar amounts in thousands)

(Unaudited)


	Three Months Ended March 31,
	2025		2024
Supplemental cash flow information:
Interest paid	$	17,130	$	16,190
Income taxes paid, net	$	(45)	$	133
Cash paid for operating lease liabilities	$	1,478	$	1,893
Supplemental noncash disclosures:

Loans held for investment transferred to loans held for sale	$	5,747	$	6,521


Lease liabilities arising from obtaining right-of-use assets	$	35	$	1,182

Table of Contents

TRIUMPH FINANCIAL, INC.

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 months ended March 31, 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. 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 TriumphPay division, 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.

Table of Contents

TRIUMPH FINANCIAL, INC.

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. 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.

NOTE 2 — ACQUISITIONS AND DIVESTITURES

Greenscreens.ai

On February 26, 2025, the Company, through its wholly-owned subsidiary TBK Bank, SSB, entered into an Agreement and Plan of Merger providing for the acquisition of GreenScreens AI, Inc. (Greenscreens.ai), a pricing solution for the logistics industry that delivers short-term freight market pricing intelligence and business insights, by TBK Bank, SSB for $140,000,000 in cash and approximately $20,000,000 in the Company's common stock. The acquisition is subject to customary closing conditions, including receipt of regulatory approval, and is expected to close in the second quarter of 2025.

Table of Contents

TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 between our Factoring, Payments, and Intelligence segments 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 $4,512,000 and $4,445,000 at March 31, 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 March 31,
(Dollars in thousands)		2025		2024
Unrealized gains (losses) on equity securities held at the reporting date		$	67	$	(47)
Realized gains (losses) on equity securities sold during the period		—		—
		$	67	$	(47)

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TRIUMPH FINANCIAL, INC.

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)	March 31, 2025		December 31, 2024
Equity Securities without readily determinable fair value, at cost	$	73,901	$	71,807
Upward adjustments based on observable price changes, cumulative	10,163		10,163
Equity Securities without readily determinable fair value, carrying value	$	84,064	$	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 March 31, 2025. Both investments have been allocated to our Payments segment and are included in other assets in the Company's consolidated balance sheets.

There were no realized or unrealized gains or losses recognized on equity securities without readily determinable fair values during the three months ended March 31, 2025 and 2024.

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 months ended March 31, 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:


(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
March 31, 2025
Available for sale securities:
Mortgage-backed securities, residential	$	107,424	$	90	$	(4,619)	$	—	$	102,895
Asset-backed securities	883		—		(2)		—		881
State and municipal	2,906		—		(93)		—		2,813
CLO securities	303,664		345		(158)		—		303,851
Corporate bonds	266		—		(9)		—		257
SBA pooled securities	1,283		10		(65)		—		1,228
Total available for sale securities	$	416,426	$	445	$	(4,946)	$	—	$	411,925


(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrecognized Losses		Fair Value
March 31, 2025
Held to maturity securities:
CLO securities	$	3,207	$	—	$	(747)	$	2,460
Allowance for credit losses	(1,476)
Total held to maturity securities, net of ACL	$	1,731

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


(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 Unrealized 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 March 31, 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	$	223	$	223	$	—	$	—
Due from one year to five years	2,180		2,143		3,207		2,460
Due from five years to ten years	40,815		40,738		—		—
Due after ten years	263,618		263,817		—		—
	306,836		306,921		3,207		2,460
Mortgage-backed securities, residential	107,424		102,895		—		—
Asset-backed securities	883		881		—		—
SBA pooled securities	1,283		1,228		—		—
	$	416,426	$	411,925	$	3,207	$	2,460

There were no sales of debt securities during the three months ended March 31, 2025 and 2024.

Debt securities with a carrying amount of approximately $28,963,000 and $25,818,000 at March 31, 2025 and December 31, 2024, respectively, were pledged to secure public deposits, customer repurchase agreements, and for other purposes required or permitted by law.

Accrued interest on available for sale securities totaled $4,069,000 and $4,755,000 at March 31, 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 months ended March 31, 2025 and 2024.

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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
March 31, 2025
Available for sale securities:
Mortgage-backed securities, residential	$	46,178	$	(302)	$	29,053	$	(4,317)	$	75,231	$	(4,619)
Asset-backed securities	—		—		881		(2)		881		(2)
State and municipal	358		(2)		2,347		(91)		2,705		(93)
CLO securities	93,882		(158)		—		—		93,882		(158)
Corporate bonds	257		(9)		—		—		257		(9)
SBA pooled securities	—		—		874		(65)		874		(65)
	$	140,675	$	(471)	$	33,155	$	(4,475)	$	173,830	$	(4,946)


	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 March 31, 2025, the Company had 96 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 March 31, 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 March 31, 2025.

The following table presents the activity in the allowance for credit losses for held to maturity debt securities:


(Dollars in thousands)	Three Months Ended March 31,
Held to Maturity CLO Securities		2025		2024
Allowance for credit losses:
Beginning balance		$	3,491	$	3,190
Credit loss expense		145		(55)
Charge-offs		(2,160)		—
Allowance for credit losses ending balance		$	1,476	$	3,135

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 March 31, 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 March 31, 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.

NOTE 4 — LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans Held for Sale

The following table presents loans held for sale:


(Dollars in thousands)	March 31, 2025		December 31, 2024
1-4 family residential	$	142	$	1,167
Commercial	2,808		5
Total loans held for sale	$	2,950	$	1,172

Loans Held for Investment

Loans

The following table presents the amortized cost and unpaid principal balance of loans held for investment:


	March 31, 2025						December 31, 2024
(Dollars in thousands)	Amortized Cost		Unpaid Principal		Difference		Amortized Cost		Unpaid Principal		Difference
Commercial real estate	$	811,244	$	811,577	$	(333)	$	777,689	$	777,980	$	(291)
Construction, land development, land	204,021		204,391		(370)		203,804		204,268		(464)
1-4 family residential	159,105		158,745		360		154,020		153,711		309
Farmland	47,311		47,519		(208)		56,366		56,450		(84)
Commercial	1,121,740		1,123,429		(1,689)		1,119,245		1,120,551		(1,306)
Factored receivables	1,350,656		1,354,741		(4,085)		1,204,510		1,208,486		(3,976)
Consumer	7,088		7,090		(2)		8,000		8,005		(5)
Mortgage warehouse	965,058		965,058		—		1,023,326		1,023,326		—
Total loans held for investment	4,666,223		$	4,672,550	$	(6,327)	4,546,960		$	4,552,777	$	(5,817)
Allowance for credit losses	(36,229)						(40,714)
	$	4,629,994					$	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 $1,769,000 and $2,689,000 at March 31, 2025 and December 31, 2024, respectively, and (2) net deferred origination and factoring fees totaling $4,558,000 and $3,128,000 at March 31, 2025 and December 31, 2024, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $38,865,000 and $36,838,000 at March 31, 2025 and December 31, 2024, respectively, and was included in other assets on the Company's consolidated balance sheets.

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of March 31, 2025, most of the Company’s non-factoring business activity is with customers located within certain states. The states of Texas (21%), Illinois (12%), Colorado (11%), and Iowa (4%) make up 48% 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 (97%) of the Company's factored receivables, representing approximately 28% of the Company's total loan portfolio as of March 31, 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 March 31, 2025 and December 31, 2024, the Company had $262,017,000 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.

At March 31, 2025 and December 31, 2024 the balance of the Over-Formula Advance Portfolio, acquired from Transport Financial Solutions during 2020, included in factored receivables was $999,000 and $1,429,000, respectively. These balances were fully reserved as of those respective dates.

At March 31, 2025 the Company carried a separate receivable (the "Misdirected Payments") payable by the United States Postal Service (“USPS”) arising from accounts factored to the largest Over-Formula Advance Portfolio carrier. The balance of such Misdirected Payments, net of customer reserves, was $19,361,000 at March 31, 2025. This amount is separate from the acquired Over-Formula Advances. 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 disputes their obligation to make such payment, citing purported deficiencies in the notices delivered to them. We are 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. Based on our legal analysis and discussions with our counsel advising us on this matter, we continue to believe it is probable that we will prevail in such action and that the USPS will have the capacity to make payment on such receivable. Consequently, we have not reserved for such balance as of March 31, 2025.

Loans with carrying amounts of $1,598,747,000 and $1,744,145,000 at March 31, 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		Ending Balance
Three months ended March 31, 2025
Commercial real estate	$	3,825	$	945	$	(116)	$	3	$	4,657
Construction, land development, land	2,873		(234)		—		—		2,639
1-4 family residential	1,404		41		(1)		2		1,446
Farmland	386		(60)		—		—		326
Commercial	21,419		(931)		(4,371)		74		16,191
Factored receivables	9,600		1,509		(1,408)		150		9,851
Consumer	185		102		(179)		47		155
Mortgage warehouse	1,022		(58)		—		—		964
	$	40,714	$	1,314	$	(6,075)	$	276	$	36,229

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


(Dollars in thousands)	Beginning Balance		Credit Loss Expense		Charge-offs		Recoveries		Ending Balance
Three months ended March 31, 2024
Commercial real estate	$	6,030	$	(364)	$	—	$	—	$	5,666
Construction, land development, land	965		1,701		(14)		—		2,652
1-4 family residential	927		50		—		2		979
Farmland	442		(35)		—		—		407
Commercial	14,060		3,051		(584)		33		16,560
Factored receivables	11,896		556		(1,558)		298		11,192
Consumer	171		37		(117)		44		135
Mortgage warehouse	728		(87)		—		—		641
	$	35,219	$	4,909	$	(2,273)	$	377	$	38,232

The decrease in required ACL during the three months ended March 31, 2025 is a function of net charge-offs of $5,799,000 and credit loss expense of $1,314,000.

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.

For all DCF models at March 31, 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 March 31, 2025 as compared to December 31, 2024, the Company forecasted minimal change in national unemployment while forecasting some 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 March 31, 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 a small increase in the first projected quarter followed by a decline to negative levels over the last three projected quarters to a level below recent actual periods. For percentage change in national home price index, the Company projected an increase 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 low-to-near-zero growth for each projected quarter with the exception of positive growth in the first projected quarter. At September 30, 2024, 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.

Table of Contents

TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the three months ended March 31, 2025, changes in projected loss drivers and prepayment assumptions over the reasonable and supportable forecast period increased the required ACL by $492,000. Changes in loan volume and mix increased the required ACL by $602,000. Changes in required specific reserves decreased the ACL by $5,579,000. Net charge-offs during the period were $5,799,000.

For the three months ended March 31, 2024, changes in projected loss drivers and prepayment assumptions over the reasonable and supportable forecast period increased the required ACL by $904,000. Changes in loan volume and mix increased the required ACL by $765,000. Increases in required specific reserves increased the required ACL by $1,345,000. Net charge-offs during the period were $1,896,000.

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
March 31, 2025
Commercial real estate	$	23,344	$	—	$	—	$	—	$	23,344	$	3
Construction, land development, land	2,285		—		—		—		2,285		—
1-4 family residential	794		—		—		—		794		47
Farmland	1,423		—		68		53		1,544		—
Commercial	46		—		48,430		13,436		61,912		3,644
Factored receivables	—		30,578		—		—		30,578		3,490
Consumer	—		—		—		100		100		—
Mortgage warehouse	—		—		—		—		—		—
Total	$	27,892	$	30,578	$	48,498	$	13,589	$	120,557	$	7,184

Commercial loans secured by Other collateral primarily consist of large liquid credit loans secured by the underlying enterprise values of the borrowers.

At March 31, 2025 the balance of the Over-Formula Advance Portfolio included in factored receivables was $999,000 and was fully reserved. At March 31, 2025 the balance of factoring Misdirected Payments, net of customer reserves, was $19,361,000 and carried no ACL allocation.


(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

Table of Contents

TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At December 31, 2024 the balance of the Over-Formula Advance Portfolio included in factored receivables was $1,429,000 and carried an ACL allocation of $1,429,000. At December 31, 2024 the balance of factoring Misdirected Payments, net of customer reserves, was $19,361,000 and carried no ACL allocation.

Past Due and Nonaccrual Loans

The following tables present an aging of contractually past due loans:


(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
March 31, 2025
Commercial real estate	$	17,099	$	6,500	$	3,708	$	27,307	$	783,937	$	811,244	$	709
Construction, land development, land	—		—		2,285		2,285		201,736		204,021		—
1-4 family residential	1,234		347		179		1,760		157,345		159,105		—
Farmland	75		125		287		487		46,824		47,311		—
Commercial	12,196		14,418		39,699		66,313		1,055,427		1,121,740		20
Factored receivables	21,738		6,188		24,975		52,901		1,297,755		1,350,656		24,975
Consumer	—		6		—		6		7,082		7,088		—
Mortgage warehouse	—		—		—		—		965,058		965,058		—
Total	$	52,342	$	27,584	$	71,133	$	151,059	$	4,515,164	$	4,666,223	$	25,704


(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 March 31, 2025 and December 31, 2024, total past due Over-Formula Advances recorded in factored receivables was $999,000 and $1,429,000, respectively, all of which was considered past due 90 days or more. At March 31, 2025 and December 31, 2024, the entire balance of Misdirected Payments was considered past due 90 days or more. The balance of such Misdirected Payments, net of customer reserves, totaled $19,361,000 at March 31, 2025 and December 31, 2024. 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.

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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:


	March 31, 2025				December 31, 2024
(Dollars in thousands)	Total Nonaccrual		Nonaccrual With No ACL		Total Nonaccrual		Nonaccrual With No ACL
Commercial real estate	$	7,252	$	6,513	$	11,254	$	10,481
Construction, land development, land	2,285		2,285		2,410		2,410
1-4 family residential	769		722		810		763
Farmland	601		601		1,996		1,996
Commercial	61,714		48,742		73,437		45,405
Factored receivables	—		—		—		—
Consumer	100		100		116		116
Mortgage warehouse	—		—		—		—
	$	72,721	$	58,963	$	90,023	$	61,171

The following table presents accrued interest on nonaccrual loans reversed through interest income:


	Three Months Ended March 31,
(Dollars in thousands)		2025		2024
Commercial real estate		$	14	$	—
Construction, land development, land		—		2
1-4 family residential		—		1
Farmland		—		—
Commercial		3		183
Factored receivables		—		—
Consumer		—		—
Mortgage warehouse		—		—
		$	17	$	186

There was no interest earned on nonaccrual loans during the three months ended March 31, 2025 and 2024.

The following table presents information regarding nonperforming loans:


(Dollars in thousands)	March 31, 2025		December 31, 2024
Nonaccrual loans	$	72,721	$	90,023
Factored receivables greater than 90 days past due	23,976		23,289
	$	96,697	$	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.

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 March 31, 2025 and December 31, 2024, based on the most recent analysis performed, the risk category of loans is as follows:

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


													Revolving Loans		Revolving Loans Converted To Term Loans		Total
(Dollars in thousands)	Year of Origination
March 31, 2025	2025		2024		2023		2022		2021		Prior
Commercial real estate
Pass	$	89,741	$	202,854	$	82,726	$	47,493	$	78,438	$	112,047	$	87,577	$	37	$	700,913
Classified	—		—		87,540		—		1,437		20,610		744		—		110,331
Total commercial real estate	$	89,741	$	202,854	$	170,266	$	47,493	$	79,875	$	132,657	$	88,321	$	37	$	811,244
YTD gross charge-offs	$	—	$	—	$	116	$	—	$	—	$	—	$	—	$	—	$	116

Construction, land development, land
Pass	$	755	$	121,280	$	73,114	$	840	$	840	$	414	$	4,493	$	—	$	201,736
Classified	—		—		—		—		—		2,285		—		—		2,285
Total construction, land development, land	$	755	$	121,280	$	73,114	$	840	$	840	$	2,699	$	4,493	$	—	$	204,021
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

1-4 family residential
Pass	$	10,558	$	44,502	$	18,666	$	12,967	$	15,078	$	22,295	$	29,971	$	1,148	$	155,185
Classified	—		—		1,410		—		1,294		1,156		60		—		3,920
Total 1-4 family residential	$	10,558	$	44,502	$	20,076	$	12,967	$	16,372	$	23,451	$	30,031	$	1,148	$	159,105
YTD gross charge-offs	$	—	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	1

Farmland
Pass	$	1,375	$	14,431	$	4,943	$	3,631	$	4,288	$	16,569	$	1,225	$	53	$	46,515
Classified	—		—		—		—		—		796		—		—		796
Total farmland	$	1,375	$	14,431	$	4,943	$	3,631	$	4,288	$	17,365	$	1,225	$	53	$	47,311
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial
Pass	$	85,630	$	296,614	$	111,366	$	69,210	$	17,683	$	13,172	$	441,957	$	436	$	1,036,068
Classified	—		12,750		34,323		21,600		3,656		4,096		9,247		—		85,672
Total commercial	$	85,630	$	309,364	$	145,689	$	90,810	$	21,339	$	17,268	$	451,204	$	436	$	1,121,740
YTD gross charge-offs	$	—	$	49	$	4,284	$	12	$	26	$	—	$	—	$	—	$	4,371

Factored receivables
Pass	$	1,318,977	$	—	$	—	$	—	$	—	$	999	$	—	$	—	$	1,319,976
Classified	11,319		—		—		—		—		19,361		—		—		30,680
Total factored receivables	$	1,330,296	$	—	$	—	$	—	$	—	$	20,360	$	—	$	—	$	1,350,656
YTD gross charge-offs	$	—	$	1,408	$	—	$	—	$	—	$	—	$	—	$	—	$	1,408

Consumer
Pass	$	1,178	$	2,038	$	1,423	$	464	$	244	$	756	$	869	$	15	$	6,987
Classified	—		—		—		2		58		41		—		—		101
Total consumer	$	1,178	$	2,038	$	1,423	$	466	$	302	$	797	$	869	$	15	$	7,088
YTD gross charge-offs	$	—	$	35	$	144	$	—	$	—	$	—	$	—	$	—	$	179

Mortgage warehouse
Pass	$	965,058	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	965,058
Classified	—		—		—		—		—		—		—		—		—
Total mortgage warehouse	$	965,058	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	965,058
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total loans
Pass	$	2,473,272	$	681,719	$	292,238	$	134,605	$	116,571	$	166,252	$	566,092	$	1,689	$	4,432,438
Classified	11,319		12,750		123,273		21,602		6,445		48,345		10,051		—		233,785
Total loans	$	2,484,591	$	694,469	$	415,511	$	156,207	$	123,016	$	214,597	$	576,143	$	1,689	$	4,666,223
YTD gross charge-offs	$	—	$	1,492	$	4,545	$	12	$	26	$	—	$	—	$	—	$	6,075

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


													Revolving Loans		Revolving Loans Converted To Term Loans		Total
(Dollars in thousands)	Year of Origination
December 31, 2024	2024		2023		2022		2021		2020		Prior
Commercial real estate
Pass	$	212,265	$	77,836	$	48,149	$	79,860	$	90,460	$	28,579	$	87,634	$	125	$	624,908
Classified	6,283		116,794		—		9,591		659		19,454		—		—		152,781
Total commercial real estate	$	218,548	$	194,630	$	48,149	$	89,451	$	91,119	$	48,033	$	87,634	$	125	$	777,689
YTD gross charge-offs	$	—	$	—	$	352	$	425	$	54	$	—	$	—	$	—	$	831

Construction, land development, land
Pass	$	126,504	$	67,977	$	850	$	950	$	257	$	178	$	4,678	$	—	$	201,394
Classified	—		—		—		—		—		2,410		—		—		2,410
Total construction, land development, land	$	126,504	$	67,977	$	850	$	950	$	257	$	2,588	$	4,678	$	—	$	203,804
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

1-4 family residential
Pass	$	45,087	$	19,836	$	13,458	$	17,192	$	6,326	$	18,287	$	32,144	$	302	$	152,632
Classified	113		626		100		204		—		254		91		—		1,388
Total 1-4 family residential	$	45,200	$	20,462	$	13,558	$	17,396	$	6,326	$	18,541	$	32,235	$	302	$	154,020
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	72	$	—	$	—	$	72

Farmland
Pass	$	14,914	$	6,077	$	8,726	$	4,334	$	6,472	$	12,866	$	898	$	73	$	54,360
Classified	68		53		1,503		—		11		371		—		—		2,006
Total farmland	$	14,982	$	6,130	$	10,229	$	4,334	$	6,483	$	13,237	$	898	$	73	$	56,366
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial
Pass	$	325,712	$	125,419	$	81,599	$	28,177	$	8,249	$	8,686	$	442,362	$	221	$	1,020,425
Classified	6,659		56,378		12,365		6,275		6,680		3		10,460		—		98,820
Total commercial	$	332,371	$	181,797	$	93,964	$	34,452	$	14,929	$	8,689	$	452,822	$	221	$	1,119,245
YTD gross charge-offs	$	934	$	1,540	$	2,209	$	452	$	579	$	153	$	351	$	—	$	6,218

Factored receivables
Pass	$	1,170,308	$	—	$	—	$	—	$	1,429	$	—	$	—	$	—	$	1,171,737
Classified	13,412		—		—		—		19,361		—		—		—		32,773
Total factored receivables	$	1,183,720	$	—	$	—	$	—	$	20,790	$	—	$	—	$	—	$	1,204,510
YTD gross charge-offs	$	5,628	$	1,558	$	—	$	—	$	—	$	—	$	—	$	—	$	7,186

Consumer
Pass	$	4,242	$	1,710	$	587	$	312	$	203	$	720	$	110	$	—	$	7,884
Classified	16		—		3		63		—		34		—		—		116
Total consumer	$	4,258	$	1,710	$	590	$	375	$	203	$	754	$	110	$	—	$	8,000
YTD gross charge-offs	$	—	$	457	$	20	$	5	$	—	$	1	$	—	$	—	$	483

Mortgage warehouse
Pass	$	1,023,326	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,023,326
Classified	—		—		—		—		—		—		—		—		—
Total mortgage warehouse	$	1,023,326	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,023,326
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total loans
Pass	$	2,922,358	$	298,855	$	153,369	$	130,825	$	113,396	$	69,316	$	567,826	$	721	$	4,256,666
Classified	26,551		173,851		13,971		16,133		26,711		22,526		10,551		—		290,294
Total loans	$	2,948,909	$	472,706	$	167,340	$	146,958	$	140,107	$	91,842	$	578,377	$	721	$	4,546,960
YTD gross charge-offs	$	6,562	$	3,555	$	2,581	$	882	$	633	$	226	$	351	$	—	$	14,790

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TRIUMPH FINANCIAL, INC.

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:


	Term Extension
					Financial Effect
(Dollars in thousands)	Amortized Cost		% of Portfolio		Term Extended By






















Three Months Ended March 31, 2025
Commercial real estate	$	83,350	10.3	%	0.3 years

1-4 family residential	19		—	%	4.8 years

Commercial	1,678		0.1	%	0.3 years



	$	85,047	1.8	%

Three Months Ended March 31, 2024
Commercial real estate	$	195	—	%	0.3 years

1-4 family residential	271		0.2	%	0.3 years
Farmland	604		1.0	%	0.3 years
Commercial	690		0.1	%	0.3 years



	$	1,760	—	%


	Payment Delay
					Financial Effect
(Dollars in thousands)	Amortized Cost		% of Portfolio		Payments Delayed By






















Three Months Ended March 31, 2025




Commercial	$	566	0.1	%	0.5 years



	$	566	—	%

Generally, if a loan to a borrower experiencing financial difficulty is modified, the Company will seek to obtain credit enhancements when possible.

The following table presents the payment status of loans that have been modified in the last twelve months:


	March 31, 2025
(Dollars in thousands)	Current		Past Due 30-89 Days		Past Due 90 Days or More		Total
Commercial real estate	$	85,786	$	16,091	$	—	$	101,877

1-4 family residential	19		—		—		19

Commercial	11,618		91		—		11,709

Consumer	15		—		—		15

	$	97,438	$	16,182	$	—	$	113,620

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At March 31, 2025, the Company had $18,000 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 months ended March 31, 2025 and 2024 and were modified 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 March 31, 2025 and December 31, 2024, the Company had no 1-4 family residential real estate loans for which formal foreclosure proceedings were in process.

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS

Goodwill and intangible assets consist of the following:


(Dollars in thousands)	March 31, 2025		December 31, 2024
Goodwill	$	241,949	$	241,949


	March 31, 2025						December 31, 2024
(Dollars in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Core deposit intangibles	$	43,578	$	(40,691)	$	2,887	$	43,578	$	(40,310)	$	3,268
Customer relationship intangibles	30,014		(23,574)		6,440		30,014		(23,053)		6,961
Software intangible assets	18,612		(16,332)		2,280		18,612		(15,168)		3,444
Other intangible assets	5,750		(3,394)		2,356		5,627		(3,041)		2,586
	$	97,954	$	(83,991)	$	13,963	$	97,831	$	(81,572)	$	16,259

The changes in goodwill and intangible assets during the three months ended March 31, 2025 and 2024 are as follows:


	Three Months Ended March 31,
(Dollars in thousands)	2025		2024
Beginning balance	$	258,208	$	257,355

Acquired intangible assets	123		2,920





Amortization of intangibles	(2,400)		(2,724)
Amortization of intangibles included in lease income	(19)		—
Ending balance	$	255,912	$	257,551

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

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 $1,731,000 and $1,876,000 at March 31, 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

Various legal claims have arisen from time to time in the normal course of business which, in the opinion of management as of March 31, 2025, will have no material effect on the Company’s consolidated financial statements.

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:


	March 31, 2025						December 31, 2024
(Dollars in thousands)	Fixed Rate		Variable Rate		Total		Fixed Rate		Variable Rate		Total
Unused lines of credit	$	134,422	$	467,827	$	602,249	$	103,784	$	486,414	$	590,198
Standby letters of credit	$	6,785	$	4,430	$	11,215	$	16,630	$	7,320	$	23,950
Commitments to purchase loans	$	—	$	11,998	$	11,998	$	—	$	9,500	$	9,500
Mortgage warehouse commitments	$	—	$	846,741	$	846,741	$	—	$	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.

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 March 31, 2025 and December 31, 2024, the allowance for credit losses on off-balance sheet credit exposures totaled $2,572,000 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 March 31,
(Dollars in thousands)		2025		2024
Credit loss expense (benefit)		$	(129)	$	1,042

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.

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
March 31, 2025	Level 1		Level 2		Level 3
Assets measured at fair value on a recurring basis
Securities available for sale
Mortgage-backed securities, residential	$	—	$	102,895	$	—	$	102,895
Asset-backed securities	—		881		—		881
State and municipal	—		2,813		—		2,813
CLO securities	—		303,851		—		303,851
Corporate bonds	—		257		—		257
SBA pooled securities	—		1,228		—		1,228
	$	—	$	411,925	$	—	$	411,925

Equity securities with readily determinable fair values
Mutual fund	$	4,512	$	—	$	—	$	4,512

Loans held for sale	$	—	$	2,950	$	—	$	2,950

Indemnification asset	$	—	$	—	$	475	$	475

Revenue share asset	$	—	$	—	$	2,507	$	2,507

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(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 March 31, 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 $500,000 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 March 31,
(Dollars in thousands)		2025		2024
Beginning balance		$	679	$	1,497
Indemnification asset recognized in business combination		—		—
Change in fair value of indemnification asset recognized in earnings		(204)		(205)
Indemnification reduction		—		—
Ending balance		$	475	$	1,292

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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 March 31, 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 $3,476,000 and $3,329,000, 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 March 31,
(Dollars in thousands)		2025		2024
Beginning balance		$	2,616	$	2,516
Revenue share asset recognized		—		—
Change in fair value of revenue share asset recognized in earnings		173		472
Revenue share payments received		(282)		(299)
Ending balance		$	2,507	$	2,689

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 March 31, 2025 and December 31, 2024.


(Dollars in thousands)	Fair Value Measurements Using						Total Fair Value
March 31, 2025	Level 1		Level 2		Level 3
Collateral dependent loans
Commercial real estate	$	—	$	—	$	736	$	736
1-4 family residential	—		—		—		—
Commercial	—		—		9,329		9,329
Factored receivables	—		—		27,088		27,088



	$	—	$	—	$	37,153	$	37,153

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(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
1-4 family residential	—		—		—		—
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 March 31, 2025 and December 31, 2024 were as follows:


(Dollars in thousands)	Carrying Amount		Fair Value Measurements Using						Total Fair Value
March 31, 2025			Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	502,944	$	502,944	$	—	$	—	$	502,944
Securities - held to maturity	1,731		—		—		2,460		2,460
Loans not previously presented, gross	4,629,070		42,229		—		4,522,477		4,564,706
FHLB and other restricted stock	12,987		N/A		N/A		N/A		N/A
Accrued interest receivable	43,706		43,706		—		—		43,706

Financial liabilities:
Deposits	4,976,750		—		4,972,817		—		4,972,817

Federal Home Loan Bank advances	205,000		—		205,000		—		205,000
Subordinated notes	69,732		—		56,699		—		56,699
Junior subordinated debentures	42,507		—		43,735		—		43,735
Accrued interest payable	10,299		10,299		—		—		10,299

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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 March 31, 2025 and December 31, 2024, the Company and TBK Bank meet all capital adequacy requirements to which they are subject.

As of March 31, 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 March 31, 2025 that management believes have changed TBK Bank’s category.

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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
March 31, 2025	Amount		Ratio	Amount		Ratio	Amount		Ratio
Total capital (to risk weighted assets)
Triumph Financial, Inc.	$	801,401	14.9%	$	429,444	8.0%	N/A		N/A
TBK Bank, SSB	$	786,191	14.7%	$	427,582	8.0%	$	534,477	10.0%

Tier 1 capital (to risk weighted assets)
Triumph Financial, Inc.	$	692,391	12.9%	$	322,083	6.0%	N/A		N/A
TBK Bank, SSB	$	748,389	14.0%	$	320,686	6.0%	$	427,582	8.0%

Common equity Tier 1 capital (to risk weighted assets)
Triumph Financial, Inc.	$	604,884	11.3%	$	241,562	4.5%	N/A		N/A
TBK Bank, SSB	$	748,389	14.0%	$	240,515	4.5%	$	347,410	6.5%

Tier 1 capital (to average assets)
Triumph Financial, Inc.	$	692,391	12.0%	$	230,018	4.0%	N/A		N/A
TBK Bank, SSB	$	748,389	13.0%	$	229,913	4.0%	$	287,391	5.0%

As of 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.

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.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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The capital conservation buffer set forth by the Basel III regulatory capital framework was 2.5% at March 31, 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 March 31, 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)	March 31, 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


	March 31, 2025		December 31, 2024
Shares authorized	50,000,000		50,000,000
Shares issued	29,151,573		29,121,213
Treasury shares	(5,731,833)		(5,729,802)
Shares outstanding	23,419,740		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 $2,831,000 and $3,627,000 for the three months ended March 31, 2025 and 2024.

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 2,900,000 shares.

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Restricted Stock Awards

A summary of changes in the Company’s nonvested Restricted Stock Awards (“RSAs”) under the Omnibus Incentive Plan for the three months ended March 31, 2025 were as follows:


Nonvested RSAs	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2025	48,868	90.18
Granted	—	—
Vested	(217)	88.63
Forfeited	(575)	87.77
Nonvested at March 31, 2025	48,076	90.20

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 March 31, 2025, there was $85,000 of unrecognized compensation cost related to the nonvested RSAs. The cost is expected to be recognized over a remaining period of 0.17 years.

Restricted Stock Units

A summary of changes in the Company’s nonvested Restricted Stock Units (“RSUs”) under the Omnibus Incentive Plan for the three months ended March 31, 2025 were as follows:


Nonvested RSUs	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2025	224,568	66.07
Granted	5,223	75.96
Vested	(8,973)	96.76
Forfeited	(17,006)	60.67
Nonvested at March 31, 2025	203,812	65.42

RSUs granted to employees under the Omnibus Incentive Plan typically vest over 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 March 31, 2025, there was $4,255,000 of unrecognized compensation cost related to the nonvested RSUs. The cost is expected to be recognized over a remaining period of 2.42 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 three months ended March 31, 2025 were as follows:


Nonvested Market Based PSUs	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2025	167,780	$	93.10
Granted	—	—
Performance adjustment	—	—
Vested	—	—
Forfeited	(3,749)	103.90
Nonvested at March 31, 2025	164,031	$	92.85

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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 2023 and 2024 awards 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.

As of March 31, 2025, there was $7,015,000 of unrecognized compensation cost related to the nonvested Market Based PSUs. The cost is expected to be recognized over a remaining period of 1.79 years.

Stock Options

A summary of the changes in the Company’s stock options under the Omnibus Incentive Plan for the three months ended March 31, 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	—	—
Exercised	(495)	51.25
Forfeited or expired	(3,479)	63.14
Outstanding at March 31, 2025	253,629	$	49.49	5.72	$	3,615

Fully vested shares and shares expected to vest at March 31, 2025	253,629	$	49.49	5.72	$	3,615

Shares exercisable at March 31, 2025	148,137	$	38.90	3.89	$	3,351

Information related to the stock options for the three months ended March 31, 2025 and 2024 was as follows:


	Three Months Ended March 31,
(Dollars in thousands, except per share amounts)	2025		2024
Aggregate intrinsic value of options exercised	$	14	$	289
Cash received from option exercises, net	25		144
Tax benefit realized from option exercises	3		61

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.

As of March 31, 2025, there was $1,160,000 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 2.68 years.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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 three months ended March 31, 2025 and 2024, 20,892 shares and 18,328 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 March 31,
(Dollars in thousands)		2025		2024
Basic
Net income (loss) to common stockholders		$	(784)	$	3,357
Weighted average common shares outstanding		23,362,400		23,201,259
Basic earnings (loss) per common share		$	(0.03)	$	0.14
Diluted
Net income (loss) to common stockholders		$	(784)	$	3,357
Weighted average common shares outstanding		23,362,400		23,201,259
Dilutive effects of:
Assumed exercises of stock options		—		87,567
Restricted stock awards		—		102,417
Restricted stock units		—		137,321
Performance stock units - market based		—		119,777

Employee stock purchase program		—		1,921
Average shares and dilutive potential common shares		23,362,400		23,650,262
Diluted earnings (loss) per common share		$	(0.03)	$	0.14

Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows:


	Three Months Ended March 31,
		2025	2024
Stock options		253,629	45,764
Restricted stock awards		48,076	—
Restricted stock units		203,812	7,500
Performance stock units - market based		82,020	—

Employee stock purchase program		—	—

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.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.

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. The balance of such commercial loans was $0 at March 31, 2025 and December 31, 2024. Such revenue falls under Topic 310 and is outside the scope of Topic 606.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Payments segment under its brand name, TriumphPay, 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 TriumphPay’s 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 TriumphPay 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.

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 $302,000 and $1,508,000, respectively, at March 31, 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 three months ended March 31, 2025 and 2024.

Given the nature of services provided, the Payments segment does not carry any material contract balances.

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 March 31,
(Dollars in thousands)		2025		2024
Broker fee income		$	5,178	$	4,115
Factor fee income		1,233		1,295
Other fee income		107		$	61
Total fee income		$	6,518	$	5,471

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 March 31,
(Dollars in thousands)		2025		2024
Fixed payments		$	549	$	—
Variable payments		294		—
Amortization of intangibles included in lease income		(19)		$	—
Total fee income		$	824	$	—

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 operations of TBK Bank's TriumphPay division, which provides a presentment, audit, and payment solution 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 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.

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 TriumphPay's supply chain finance product offerings. 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.

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


(Dollars in thousands)									Total		Corporate
Three months ended March 31, 2025	Banking		Factoring		Payments		Intelligence		Segments		and Other(1)		Consolidated
Total interest income	$	63,493	$	33,331	$	5,363	$	—	$	102,187	$	83	$	102,270
Intersegment interest allocations	4,735		(7,653)		2,918		—		—		—		—
Total interest expense	16,211		—		—		—		16,211		1,676		17,887
Net interest income (expense)	52,017		25,678		8,281		—		85,976		(1,593)		84,383
Credit loss expense (benefit)	507		560		118		—		1,185		145		1,330
Net interest income after credit loss expense	51,510		25,118		8,163		—		84,791		(1,738)		83,053
Noninterest income	7,003		1,719		6,531		395		15,648		1,542		17,190
Noninterest expense:
Salaries and employee benefits	16,317		13,222		9,613		1,484		40,636		18,082		58,718
Depreciation	1,630		503		230		7		2,370		1,574		3,944
Other occupancy, furniture and equipment	2,102		537		168		7		2,814		1,684		4,498
FDIC insurance and other regulatory assessments	727		—		—		—		727		—		727
Professional fees	1,065		1,852		206		951		4,074		1,990		6,064
Amortization of intangible assets	385		193		1,551		116		2,245		155		2,400
Advertising and promotion	511		254		381		30		1,176		288		1,464
Communications and technology	5,015		2,274		2,469		227		9,985		2,259		12,244
Software amortization	56		594		1,196		2		1,848		144		1,992
Travel and entertainment	238		183		377		118		916		576		1,492
Other	3,025		741		922		66		4,754		1,876		6,630
Total noninterest expense	31,071		20,353		17,113		3,008		71,545		28,628		100,173
Net intersegment noninterest income (expense)(2)	137		435		(572)		—		—		—		—
Net income (loss) before income tax expense	$	27,579	$	6,919	$	(2,991)	$	(2,613)	$	28,894	$	(28,824)	$	70

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


(Dollars in thousands)									Total		Corporate
Three months ended March 31, 2024	Banking		Factoring		Payments		Intelligence		Segments		and Other(1)		Consolidated
Total interest income	$	63,994	$	32,752	$	5,157	$	—	$	101,903	$	44	$	101,947
Intersegment interest allocations	6,744		(8,905)		2,161		—		—		—		—
Total interest expense	13,504		—		—		—		13,504		2,408		15,912
Net interest income (expense)	57,234		23,847		7,318		—		88,399		(2,364)		86,035
Credit loss expense (benefit)	4,527		1,355		69		—		5,951		(55)		5,896
Net interest income after credit loss expense	52,707		22,492		7,249		—		82,448		(2,309)		80,139
Noninterest income	6,476		2,903		5,543		—		14,922		77		14,999
Noninterest expense:
Salaries and employee benefits	16,809		12,261		9,131		—		38,201		15,984		54,185
Depreciation	1,799		506		244		—		2,549		1,063		3,612
Other occupancy, furniture and equipment	2,357		525		144		—		3,026		998		4,024
FDIC insurance and other regulatory assessments	653		—		—		—		653		—		653
Professional fees	674		603		793		—		2,070		1,471		3,541
Amortization of intangible assets	618		404		1,702		—		2,724		—		2,724
Advertising and promotion	337		246		360		—		943		271		1,214
Communications and technology	4,983		2,298		2,083		—		9,364		2,530		11,894
Software amortization	15		581		527		—		1,123		51		1,174
Travel and entertainment	285		250		517		—		1,052		457		1,509
Other	2,599		1,019		984		—		4,602		1,239		5,841
Total noninterest expense	31,129		18,693		16,485		—		66,307		24,064		90,371
Net intersegment noninterest income (expense)(2)	121		389		(510)		—		—		—		—
Net income (loss) before income tax expense	$	28,175	$	7,091	$	(4,203)	$	—	$	31,063	$	(26,296)	$	4,767

(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.

(2) Net intersegment noninterest income (expense) includes:


(Dollars in thousands)	Banking		Factoring		Payments
Three Months Ended March 31, 2025
Factoring revenue received from Payments	$	—	$	911	$	(911)
Payments revenue received from Factoring	—		(372)		372
Banking revenue received from Payments and Factoring	137		(104)		(33)
Net intersegment noninterest income (expense)	$	137	$	435	$	(572)

Three Months Ended March 31, 2024
Factoring revenue received from Payments	$	—	$	750	$	(750)
Payments revenue received from Factoring	—		(265)		265
Banking revenue received from Payments and Factoring	121		(96)		(25)
Net intersegment noninterest income (expense)	$	121	$	389	$	(510)

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TRIUMPH FINANCIAL, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.


(Dollars in thousands)									Total		Corporate
March 31, 2025	Banking		Factoring		Payments		Intelligence		Segments		and Other		Eliminations		Consolidated
Total assets	$	5,028,042	$	1,229,605	$	590,360	$	10,456	$	6,858,463	$	659,295	$	(1,249,364)	$	6,268,394
Gross loans	$	3,317,987	$	1,147,509	$	204,227	$	—	$	4,669,723	$	—	$	(3,500)	$	4,666,223


(Dollars in thousands)									Total		Corporate
December 31, 2024	Banking		Factoring		Payments		Intelligence		Segments		and Other		Eliminations		Consolidated
Total assets	$	5,443,452	$	1,186,342	$	590,063	$	10,099	$	7,229,956	$	1,119,825	$	(2,400,806)	$	5,948,975
Gross loans	$	3,944,146	$	1,034,992	$	171,668	$	—	$	5,150,806	$	—	$	(603,846)	$	4,546,960

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ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 March 31, 2025, we had consolidated total assets of $6.268 billion, total loans held for investment of $4.666 billion, total deposits of $4.977 billion and total stockholders’ equity of $893.9 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, TriumphPay, is a payments network for the over-the-road trucking industry. TriumphPay was originally designed as a platform 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 TriumphPay platform. During 2021, TriumphPay 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, the TriumphPay 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. TriumphPay 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 TriumphPay network. A key feature of the LoadPay product is our ability to rapidly fund invoices approved for payment through the TriumphPay

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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. TriumphPay offers supply chain finance to Brokers, allowing them to pay their Carriers faster and drive Carrier loyalty. TriumphPay provides tools and services to increase automation, mitigate fraud, create back-office efficiency and improve the payment experience. TriumphPay 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. 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 TriumphPay 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. Going forward, Intelligence will operate in a highly specialized niche with unique processes and key performance indicators.

At March 31, 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 TriumphPay 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 have begun to 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 three months ended March 31, 2025, our Banking segment generated 60% 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 10% of our total segment revenue, and our Intelligence segment generated less than 1% of our total segment revenue.

First Quarter 2025 Overview

We incurred a net loss to common stockholders for the three months ended March 31, 2025 of $0.8 million, or $(0.03) per diluted share, compared to net income available to common stockholders for the three months ended March 31, 2024 of $3.4 million, or $0.14 per diluted share. For the three months ended March 31, 2025, our return on average common equity was (0.37)% and our return on average assets was 0.00%.

At March 31, 2025, we had total assets of $6.268 billion, including gross loans held for investment of $4.666 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 $119.3 million during the three months ended March 31, 2025. Our Banking loans, which constitute 71% of our total loan portfolio at March 31, 2025, decreased from $3.340 billion in aggregate as of December 31, 2024 to $3.314 billion as of March 31, 2025, a decrease of 0.8%. Our Factoring factored receivables, which constitute 25% of our total loan portfolio at March 31, 2025, increased from $1,032.8 million in aggregate as of December 31, 2024 to $1,146.4 million as of March 31, 2025, an increase of 11.0%. Our Payments factored receivables, which constitute 4% of our total loan portfolio at March 31, 2025, increased from $171.7 million in aggregate as of December 31, 2024 to $204.2 million as of March 31, 2025, an increase of 19.0%.

At March 31, 2025, we had total liabilities of $5.374 billion, including total deposits of $4.977 billion, compared to $5.058 billion of total liabilities and $4.821 billion of total deposits at December 31, 2024. Deposits increased $155.9 million during the three months ended March 31, 2025.

At March 31, 2025, we had total stockholders' equity of $893.9 million. During the three months ended March 31, 2025, total stockholders’ equity increased $3.0 million. Capital ratios remained strong with Tier 1 capital and total capital to risk weighted assets ratios of 12.90% and 14.93%, respectively, at March 31, 2025.

The total dollar value of invoices purchased by our Factoring segment during the three months ended March 31, 2025 was $2.708 billion with an average invoice size of $1,808. The average transportation invoice size for the three months ended March 31, 2025 was $1,769. This compares to invoice purchase volume of $2.470 billion with an average invoice size of $1,806 and average transportation invoice size of $1,771 during the same period a year ago.

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Our Payments segment processed 7.2 million invoices paying Carriers a total of $8.778 billion during the three months ended March 31, 2025. This compares to processed volume of 5.7 million invoices for a total of $6.380 billion during the same period a year ago.

2025 Items of Note

Greenscreens.ai

On February 26, 2025, we, through our wholly-owned subsidiary TBK Bank, SSB, entered into an Agreement and Plan of Merger providing for the acquisition of GreenScreens AI, Inc. (Greenscreens.ai), a pricing solution for the logistics industry that delivers short-term freight market pricing intelligence and business insights, by TBK Bank, SSB for $140 million in cash and approximately $20 million in our common stock. The acquisition is subject to customary closing conditions, including receipt of regulatory approval, and is expected to close in the second quarter of 2025.

Items related to our July 2020 acquisition of TFS

As disclosed on our SEC Forms 8-K filed on July 8, 2020 and September 23, 2020, we acquired the transportation factoring assets of TFS, a wholly owned subsidiary of Covenant Logistics Group, Inc. ("CVLG"), and subsequently amended the terms of that transaction. There were no material developments related to that transaction that impacted our operating results for the three months ended March 31, 2025.

At March 31, 2025, the carrying value of the acquired over-formula advances was $1.0 million, the total reserve on acquired over-formula advances was $1.0 million and the balance of our indemnification asset, the value of the payment that would be due to us from CVLG in the event that these over-advances are charged off, was $0.5 million.

As of March 31, 2025 we carry a separate receivable (the “Misdirected Payments”) payable by the United States Postal Service (“USPS”) arising from accounts factored to the largest over-formula advance carrier. The balance of such Misdirected Payments, net of customer reserves, was $19.4 million at March 31, 2025. This amount is separate from the acquired Over-Formula Advances. 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 disputes their obligation to make such payment, citing purported deficiencies in the notices delivered to them. We are 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. Based on our legal analysis and discussions with our counsel advising us on this matter, we continue to believe it is probable that we will prevail in such action and that the USPS will have the capacity to make payment on such receivable. Consequently, we have not reserved for such balance as of March 31, 2025. The full amount of such receivable is reflected in non-performing and past due factored receivables as of March 31, 2025 in accordance with our policy. As of March 31, 2025, the entire Misdirected Payments amount was greater than 90 days past due.

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.

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Trucking transportation and factoring

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 into the first quarter of 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 March 31, 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.

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Financial Highlights


	Three Months Ended March 31,
(Dollars in thousands, except per share amounts)		2025			2024
Income Statement Data:
Interest income		$	102,270		$	101,947
Interest expense		17,887			15,912
Net interest income		84,383			86,035
Credit loss expense (benefit)		1,330			5,896
Net interest income after credit loss expense (benefit)		83,053			80,139


Noninterest income		17,190			14,999
Noninterest expense		100,173			90,371
Net income (loss) before income taxes		70			4,767
Income tax expense (benefit)		53			609
Net income (loss)		$	17		$	4,158
Dividends on preferred stock		(801)			(801)
Net income available (loss) to common stockholders		$	(784)		$	3,357

Per Share Data:
Basic earnings (loss) per common share		$	(0.03)		$	0.14
Diluted earnings (loss) per common share		$	(0.03)		$	0.14
Weighted average shares outstanding - basic		23,362,400			23,201,259
Weighted average shares outstanding - diluted		23,362,400			23,650,262





Performance ratios - Annualized:
Return on average assets		—		%	0.31		%
Return on average total equity		0.01		%	1.90		%
Return on average common equity		(0.37)		%	1.62		%
Return on average tangible common equity (1)		(0.53)		%	2.33		%
Yield on loans		8.37		%	9.09		%
Cost of interest bearing deposits		2.14		%	1.99		%
Cost of total deposits		1.23		%	1.17		%
Cost of total funds		1.45		%	1.45		%
Net interest margin		6.49		%	7.29		%

Net noninterest expense to average assets		5.61		%	5.62		%

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(Dollars in thousands, except per share amounts)	March 31, 2025			December 31, 2024
Balance Sheet Data:
Total assets	$	6,268,394		$	5,948,975
Cash and cash equivalents	502,944			330,117
Investment securities	418,168			387,882
Loans held for investment, net	4,629,994			4,506,246
Total liabilities	5,374,467			5,058,056
Noninterest bearing deposits	2,260,048			1,964,457
Interest bearing deposits	2,716,702			2,856,363
FHLB advances	205,000			30,000
Subordinated notes	69,732			69,662
Junior subordinated debentures	42,507			42,352
Total stockholders’ equity	893,927			890,919
Preferred stockholders' equity	45,000			45,000
Common stockholders' equity	848,927			845,919

Per Share Data:
Book value per share	$	36.25		$	36.16
Tangible book value per share (1)	$	25.32		$	25.13
Shares outstanding end of period	23,419,740			23,391,411

Asset Quality ratios(2):
Past due to total loans	3.24		%	3.27		%
Nonperforming loans to total loans	2.07		%	2.49		%
Nonperforming assets to total assets	1.64		%	2.02		%
ACL to nonperforming loans	37.47		%	35.93		%
ACL to total loans	0.78		%	0.90		%
Net charge-offs to average loans(3)	0.13		%	0.31		%

Capital ratios:
Tier 1 capital to average assets	12.04		%	12.03		%
Tier 1 capital to risk-weighted assets	12.90		%	13.06		%
Common equity Tier 1 capital to risk-weighted assets	11.27		%	11.40		%
Total capital to risk-weighted assets	14.93		%	15.23		%
Total stockholders' equity to total assets	14.26		%	14.98		%
Tangible common stockholders' equity ratio (1)	9.86		%	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.

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•“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 three months ended March 31, 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 March 31,
(Dollars in thousands, except per share amounts)		2025			2024








Average total stockholders' equity		$	902,260		$	879,825
Average preferred stock liquidation preference		(45,000)			(45,000)
Average total common stockholders' equity		857,260			834,825
Average goodwill and other intangibles		(257,399)			(256,070)
Average tangible common equity		$	599,861		$	578,755

Net income available to common stockholders		$	(784)		$	3,357
Average tangible common equity		599,861			578,755
Return on average tangible common equity		(0.53)		%	2.33		%












Net noninterest expense to average assets ratio:
Total noninterest expense		$	100,173		$	90,371
Total noninterest income		17,190			14,999
Net noninterest expenses		$	82,983		$	75,372
Average total assets		$	5,994,040		$	5,391,520
Net noninterest expense to average assets ratio		5.61		%	5.62		%


(Dollars in thousands, except per share amounts)	March 31, 2025			December 31, 2024
Total stockholders' equity	$	893,927		$	890,919
Preferred stock liquidation preference	(45,000)			(45,000)
Total common stockholders' equity	848,927			845,919
Goodwill and other intangibles	(255,912)			(258,208)
Tangible common stockholders' equity	$	593,015		$	587,711
Common shares outstanding	23,419,740			23,391,411
Tangible book value per share	$	25.32		$	25.13

Total assets at end of period	$	6,268,394		$	5,948,975
Goodwill and other intangibles	(255,912)			(258,208)
Tangible assets at period end	$	6,012,482		$	5,690,767
Tangible common stockholders' equity ratio	9.86		%	10.33		%

Results of Operations

Three months ended March 31, 2025 compared with three months ended March 31, 2024.

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Net Income

We earned net income of $17 thousand for the three months ended March 31, 2025 compared to net income of $4.2 million for the three months ended March 31, 2024, a decrease of $4.2 million or 99.6%.


	Three Months Ended March 31, 2025
(Dollars in thousands, except per share amounts)	2025		2024		$ Change		% Change
Interest income	$	102,270	$	101,947	$	323	0.3	%
Interest expense	17,887		15,912		1,975		12.4	%
Net interest income	84,383		86,035		(1,652)		(1.9)	%
Credit loss expense (benefit)	1,330		5,896		(4,566)		(77.4)	%
Net interest income after credit loss expense (benefit)	83,053		80,139		2,914		3.6	%
Noninterest income	17,190		14,999		2,191		14.6	%
Noninterest expense	100,173		90,371		9,802		10.8	%
Net income (loss) before income taxes	70		4,767		(4,697)		(98.5)	%
Income tax expense (benefit)	53		609		(556)		(91.3)	%
Net income (loss)	$	17	$	4,158	$	(4,141)	(99.6)	%

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.”

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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 March 31,
	2025				2024
(Dollars in thousands)	Average Balance	Interest	Average Rate(4)		Average Balance	Interest	Average Rate(4)
Interest earning assets:
Cash and cash equivalents	402,655	4,443	4.48	%	360,694	4,903	5.47	%
Taxable securities	379,049	5,292	5.66	%	321,344	5,326	6.67	%
Tax-exempt securities	2,548	16	2.55	%	3,508	25	2.87	%
FHLB and other restricted stock	13,958	249	7.23	%	13,649	232	6.84	%
Loans (1)	4,471,710	92,270	8.37	%	4,045,366	91,461	9.09	%
Total interest earning assets	5,269,920	102,270	7.87	%	4,744,561	101,947	8.64	%
Noninterest earning assets:
Cash and cash equivalents	70,183				81,535
Other noninterest earning assets	653,937				565,424
Total assets	5,994,040				5,391,520
Interest bearing liabilities:
Deposits:
Interest bearing demand	733,151	856	0.47	%	731,747	851	0.47	%
Individual retirement accounts	43,112	134	1.26	%	51,433	163	1.27	%
Money market	611,244	3,880	2.57	%	569,596	3,970	2.80	%
Savings	518,690	1,367	1.07	%	533,695	1,322	1.00	%
Certificates of deposit	231,662	1,520	2.66	%	263,561	1,864	2.84	%
Brokered time deposits	569,200	6,419	4.57	%	284,518	3,742	5.29	%
Other brokered deposits	19,899	221	4.50	%	17,860	240	5.40	%
Total interest bearing deposits	2,726,958	14,397	2.14	%	2,452,410	12,152	1.99	%
Federal Home Loan Bank advances	164,167	1,814	4.48	%	98,407	1,352	5.53	%
Subordinated notes	69,693	682	3.97	%	108,739	1,224	4.53	%
Junior subordinated debentures	42,431	994	9.50	%	41,799	1,184	11.39	%

Total interest bearing liabilities	3,003,249	17,887	2.42	%	2,701,355	15,912	2.37	%
Noninterest bearing liabilities and equity:
Noninterest bearing demand deposits	2,005,305				1,724,532
Other liabilities	83,226				85,808
Total equity	902,260				879,825
Total liabilities and equity	5,994,040				5,391,520
Net interest income		84,383				86,035
Interest spread (2)			5.45	%			6.27	%
Net interest margin (3)			6.49	%			7.29	%

(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.

(4)Ratios have been annualized.

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The following table presents loan yields earned on our loan portfolios:


	Three Months Ended March 31,
	2025						2024
(Dollars in thousands)	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
Banking	$	3,237,692	$	53,576	6.71	%	$	2,932,646	$	53,552	7.34	%
Factoring	1,060,482		33,331		12.75	%	942,414		32,752		13.98	%
Payments	173,536		5,363		12.53	%	170,306		5,157		12.18	%
Total loans	$	4,471,710	$	92,270	8.37	%	$	4,045,366	$	91,461	9.09	%

We earned net interest income of $84.4 million for the three months ended March 31, 2025 compared to $86.0 million for the three months ended March 31, 2024, a decrease of $1.6 million, or 1.9%, primarily driven by the following factors.

Interest income increased $0.3 million, or 0.3%, due to changes in average interest earning assets which increased $525.4 million, or 11.1%, including an increase in average total loans of $426.3 million, or 10.5%. The average balance of our higher yielding Factoring factored receivables increased $118.1 million, or 12.5%, and we experienced an increase in average Payments factored receivables. Average Banking loans increased $305.0 million, or 10.4% due to increases in the average balances of construction, residential real estate, 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 $936.5 million for the three months ended March 31, 2025 compared to $633.9 million for the three months ended March 31, 2024.

Interest expense increased $2.0 million, or 12.4%, primarily driven by higher average interest-bearing liabilities which increased in total period over period, including average total interest bearing deposits which increased $274.5 million, or 11.2%. The increase in interest expense was partially offset by decreased rates on our interest bearing liabilities. Average noninterest bearing demand deposits grew $280.8 million.

Net interest margin decreased to 6.49% for the three months ended March 31, 2025 from 7.29% for the three months ended March 31, 2024, a decrease of 80 basis points or 11.0%.

The decrease in our net interest margin was most impacted by a decrease in our yield on interest earning assets of 77 basis points to 7.87% for the three months ended March 31, 2025. This decrease was primarily driven by lower yields on loans which decreased 72 basis points to 8.37% for the period. Yield on our Banking loans decreased 63 basis points period over period driving much of the decrease in the yield on our overall loan portfolio. Our yield on Factoring factored receivables also decreased period over period while our yield on Payments factored receivables increased slightly. Further, our higher yielding Factoring and Payments factored receivables as a percentage of the total loan portfolio decreased period over period which had a downward impact on our overall loan yield. Non-loan yields were lower across the board period over period with the exception of FHLB and other restricted stock.

The decrease in our net interest margin was also impacted by an increase in our average cost of interest bearing liabilities of 5 basis points. This increase in average cost was caused by increased usage of higher-priced brokered time deposits 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 $646.1 million for the three months ended March 31, 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 March 31, 2025, these deposits decreased our overall yield on loans by 52 bps and our overall cost of deposits and cost of funds would have been 49 bps and 46 bps higher, respectively.

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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
	March 31, 2025 vs. 2024
	Increase (Decrease) Due to:
(Dollars in thousands)	Rate		Volume		Net Increase
Interest earning assets:
Cash and cash equivalents	$	(923)	$	463	$	(460)
Taxable securities	(840)		806		(34)
Tax-exempt securities	(3)		(6)		(9)
FHLB and other restricted stock	11		6		17
Loans	(7,988)		8,797		809
Total interest income	(9,743)		10,066		323
Interest bearing liabilities:
Interest bearing demand	3		2		5
Individual retirement accounts	(3)		(26)		(29)
Money market	(354)		264		(90)
Savings	85		(40)		45
Certificates of deposit	(135)		(209)		(344)
Brokered time deposits	(533)		3,210		2,677
Other brokered deposits	(42)		23		(19)
Total interest bearing deposits	(979)		3,224		2,245
Federal Home Loan Bank advances	(265)		727		462
Subordinated notes	(160)		(382)		(542)
Junior subordinated debentures	(205)		15		(190)
Other borrowings	—		—		—
Total interest expense	(1,609)		3,584		1,975
Change in net interest income	$	(8,134)	$	6,482	$	(1,652)

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 March 31,
(Dollars in thousands)	2025		2024		$ Change		% Change
Credit loss expense (benefit) on loans	$	1,314	$	4,909	$	(3,595)	(73.2)	%
Credit loss expense (benefit) on off balance sheet credit exposures	(129)		1,042		(1,171)		(112.4)	%
Credit loss expense (benefit) on held to maturity securities	145		(55)		200		363.6	%
Credit loss expense on available for sale securities	—		—		—		—
Total credit loss expense (benefit)	$	1,330	$	5,896	$	(4,566)	(77.4)	%

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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 March 31, 2025 and December 31, 2024, 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 March 31, 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 March 31, 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 March 31, 2025 and December 31, 2024, the Company carried $3.2 million and $5.4 million, respectively, of these HTM securities at amortized cost. The required ACL on these balances was $1.5 million at March 31, 2025 and $3.5 million at December 31, 2024. During the three months ended March 31, 2025, the Company charged off one of it's 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 three months ended March 31, 2025. We experienced $0.1 million of credit loss expense during the current quarter. Credit loss expense during the three months ended March 31, 2024 was a benefit of $0.1 million. None of the overcollateralization triggers tied to the CLO securities were tripped as of March 31, 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 $36.2 million as of March 31, 2025, compared to $40.7 million as of December 31, 2024, representing an ACL to total loans ratio of 0.78% and 0.90%, respectively.

Our credit loss expense on loans decreased $3.6 million, or 73.2%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The decrease in credit loss expense was primarily driven by changes in required specific reserves. Such specific reserves decreased $5.6 million during the three months ended March 31, 2025 compared to an increase of $1.3 million during the same period a year ago. 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 $0.5 million during the three months ended March 31, 2025 compared to $0.9 million of credit loss expense during the same period a year ago. Further, changes in volume and mix of the loan portfolio resulted in credit loss expense of $0.6 million during the three months ended March 31, 2025 compared to $0.8 million of credit loss expense during the same period a year ago.

The decrease in credit loss expense was impacted by net charge-off activity during the period. Net charge-offs during the three months ended March 31, 2025 were $5.8 million compared to $1.9 million during the same period a year ago. Approximately $5.7 million of the $5.8 million net charge-offs for the three months ended March 31, 2025 were reserved in a prior period while approximately $1.4 million of the $1.9 million net charge-offs for the three months ended March 31, 2024 were reserved in a prior period. Prior period reserves are included in the discussion of changes in specific reserves above.

Credit loss expense for off balance sheet credit exposures decreased $1.2 million, primarily due to changes to outstanding commitments to fund and changes to assumed loss rates period over period.

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Noninterest Income

The following table presents our major categories of noninterest income:


	Three Months Ended March 31,
(Dollars in thousands)	2025		2024		$ Change		% Change
Service charges on deposits	$	1,596	$	1,727	$	(131)	(7.6)	%
Card income	1,797		1,868		(71)		(3.8)	%

Net gains (losses) on sale of loans	134		(192)		326		169.8	%
Fee income	9,114		8,683		431		5.0	%
Insurance commissions	1,250		1,568		(318)		(20.3)	%
Other	3,299		1,345		1,954		145.3	%
Total noninterest income	$	17,190	$	14,999	$	2,191	14.6	%

Noninterest income increased $2.2 million, or 14.6%. Changes in selected components of noninterest income in the above table are discussed below.

•Other. Other noninterest income increased $2.0 million due to a $0.4 million increase in bank owned life insurance income period over period, an $0.8 million gain on sale of business assets during the three months ended March 31, 2025 that did not occur during the same period last year, and $0.8 million of rental income on the property purchased by the Company during late March of 2024.

Noninterest Expense

The following table presents our major categories of noninterest expense:


	Three Months Ended March 31,
(Dollars in thousands)	2025		2024		$ Change		% Change
Salaries and employee benefits	$	58,718	$	54,185	$	4,533	8.4	%
Occupancy, furniture and equipment	8,442		7,636		806		10.6	%
FDIC insurance and other regulatory assessments	727		653		74		11.3	%
Professional fees	6,064		3,541		2,523		71.3	%
Amortization of intangible assets	2,400		2,724		(324)		(11.9)	%
Advertising and promotion	1,464		1,214		250		20.6	%
Communications and technology	12,244		11,894		350		2.9	%
Software amortization	1,992		1,174		818		69.7	%
Travel and entertainment	1,492		1,509		(17)		(1.1)	%
Other	6,630		5,841		789		13.5	%
Total noninterest expense	$	100,173	$	90,371	$	9,802	10.8	%

Noninterest expense increased $9.8 million, or 10.8%. 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 $4.5 million, or 8.4%. Employee salaries and payroll taxes increased $4.2 million and $0.1 million, respectively. Our average full-time equivalent employees were 1,547.7 and 1,518.3 for the three months ended March 31, 2025 and 2024, respectively. Temporary labor expense decreased $0.4 million, bonus expense increased $0.2 million and commissions expense increased $0.1 million period over period. Additionally, employee benefits expense such as 401(k) benefits match, employee insurance and stock based compensation increased $0.3 million. For the three months ended March 31, 2025, salaries and employee benefits included $1.3 million of severance driven by changes in leadership at the organization.

•Occupancy, Furniture and Equipment. Occupancy, furniture and equipment expenses increased $0.8 million, or 10.6%, primarily due to $0.9 million of expense related to the building we acquired during March of 2024.

•Professional Fees. Professional fees increased $2.5 million, or 71.3%, primarily due to a $2.3 million increase in legal fees period over period partially driven by the pending Greenscreens.ai acquisition.

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•Software Amortization. Software amortization expense increased $0.8 million, or 69.7%, primarily due to additional software assets coming on line during late 2024.

•Other. Other noninterest expense includes loan-related expenses, training and recruiting, postage, insurance, and subscription services. Other noninterest expense increased $0.8 million, or 13.5% primarily due to a $0.7 million lease termination payment made to a tenant of the building we acquired during March 2024. There were no other significant variances in other noninterest expense 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 decreased $0.5 million, from $0.6 million for the three months ended March 31, 2024 to $0.1 million for the three months ended March 31, 2025. The effective tax rate was 76% for the three months ended March 31, 2025, compared to 13% for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2025 was impacted by the relatively small numbers used to calculate such rate. The effective tax rate for the three months ended March 31, 2024 was impacted by an adjustment to our disallowance related to highly compensated individuals.

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 operations of 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 TriumphPay division, which provides a 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 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.

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.

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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 TriumphPay's supply chain finance product offerings. 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:


(Dollars in thousands)									Total		Corporate
Three Months Ended March 31, 2025	Banking		Factoring		Payments		Intelligence		Segments		and Other(1)		Consolidated
Total interest income	$	63,493	$	33,331	$	5,363	$	—	$	102,187	$	83	$	102,270
Intersegment interest allocations	4,735		(7,653)		2,918		—		—		—		—
Total interest expense	16,211		—		—		—		16,211		1,676		17,887
Net interest income (expense)	52,017		25,678		8,281		—		85,976		(1,593)		84,383
Credit loss expense (benefit)	507		560		118		—		1,185		145		1,330
Net interest income after credit loss expense	51,510		25,118		8,163		—		84,791		(1,738)		83,053
Noninterest income	7,003		1,719		6,531		395		15,648		1,542		17,190
Noninterest expense:
Salaries and employee benefits	16,317		13,222		9,613		1,484		40,636		18,082		58,718
Depreciation	1,630		503		230		7		2,370		1,574		3,944
Other occupancy, furniture and equipment	2,102		537		168		7		2,814		1,684		4,498
FDIC insurance and other regulatory assessments	727		—		—		—		727		—		727
Professional fees	1,065		1,852		206		951		4,074		1,990		6,064
Amortization of intangible assets	385		193		1,551		116		2,245		155		2,400
Advertising and promotion	511		254		381		30		1,176		288		1,464
Communications and technology	5,015		2,274		2,469		227		9,985		2,259		12,244
Software amortization	56		594		1,196		2		1,848		144		1,992
Travel and entertainment	238		183		377		118		916		576		1,492
Other	3,025		741		922		66		4,754		1,876		6,630
Total noninterest expense	31,071		20,353		17,113		3,008		71,545		28,628		100,173
Net intersegment noninterest income (expense)(2)	137		435		(572)		—		—		—		—
Net income (loss) before income tax expense	$	27,579	$	6,919	$	(2,991)	$	(2,613)	$	28,894	$	(28,824)	$	70

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(Dollars in thousands)									Total		Corporate
Three Months Ended March 31, 2024	Banking		Factoring		Payments		Intelligence		Segments		and Other(1)		Consolidated
Total interest income	$	63,994	$	32,752	$	5,157	$	—	$	101,903	$	44	$	101,947
Intersegment interest allocations	6,744		(8,905)		2,161		—		—		—		—
Total interest expense	13,504		—		—		—		13,504		2,408		15,912
Net interest income (expense)	57,234		23,847		7,318		—		88,399		(2,364)		86,035
Credit loss expense (benefit)	4,527		1,355		69		—		5,951		(55)		5,896
Net interest income after credit loss expense	52,707		22,492		7,249		—		82,448		(2,309)		80,139
Noninterest income	6,476		2,903		5,543		—		14,922		77		14,999
Noninterest expense:
Salaries and employee benefits	16,809		12,261		9,131		—		38,201		15,984		54,185
Depreciation	1,799		506		244		—		2,549		1,063		3,612
Other occupancy, furniture and equipment	2,357		525		144		—		3,026		998		4,024
FDIC insurance and other regulatory assessments	653		—		—		—		653		—		653
Professional fees	674		603		793		—		2,070		1,471		3,541
Amortization of intangible assets	618		404		1,702		—		2,724		—		2,724
Advertising and promotion	337		246		360		—		943		271		1,214
Communications and technology	4,983		2,298		2,083		—		9,364		2,530		11,894
Software amortization	15		581		527		—		1,123		51		1,174
Travel and entertainment	285		250		517		—		1,052		457		1,509
Other	2,599		1,019		984		—		4,602		1,239		5,841
Total noninterest expense	31,129		18,693		16,485		—		66,307		24,064		90,371
Net intersegment noninterest income (expense)(2)	121		389		(510)		—		—		—		—
Net income (loss) before income tax expense	$	28,175	$	7,091	$	(4,203)	$	—	$	31,063	$	(26,296)	$	4,767

(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 March 31, 2025
Factoring revenue received from Payments	$	—	$	911	$	(911)
Payments revenue received from Factoring	—		(372)		372
Banking revenue received from Payments and Factoring	137		(104)		(33)
Net intersegment noninterest income (expense)	$	137	$	435	$	(572)

Three Months Ended March 31, 2024
Factoring revenue received from Payments	$	—	$	750	$	(750)
Payments revenue received from Factoring	—		(265)		265
Banking revenue received from Payments and Factoring	121		(96)		(25)
Net intersegment noninterest income (expense)	$	121	$	389	$	(510)

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(Dollars in thousands)									Total		Corporate
March 31, 2025	Banking		Factoring		Payments		Intelligence		Segments		and Other		Eliminations		Consolidated
Total assets	$	5,028,042	$	1,229,605	$	590,360	$	10,456	$	6,858,463	$	659,295	$	(1,249,364)	$	6,268,394
Gross loans	$	3,317,987	$	1,147,509	$	204,227	$	—	$	4,669,723	$	—	$	(3,500)	$	4,666,223

(Dollars in thousands)									Total		Corporate
December 31, 2024	Banking		Factoring		Payments		Intelligence		Segments		and Other		Eliminations		Consolidated
Total assets	$	5,443,452	$	1,186,342	$	590,063	$	10,099	$	7,229,956	$	1,119,825	$	(2,400,806)	$	5,948,975
Gross loans	$	3,944,146	$	1,034,992	$	171,668	$	—	$	5,150,806	$	—	$	(603,846)	$	4,546,960

Banking


(Dollars in thousands)	Three Months Ended March 31,
Banking	2025		2024		$ Change		% Change
Total interest income	$	63,493	$	63,994	$	(501)	(0.8)	%
Intersegment interest allocations	4,735		6,744		(2,009)		(29.8)	%
Total interest expense	16,211		13,504		2,707		20.0	%
Net interest income (expense)	52,017		57,234		(5,217)		(9.1)	%
Credit loss expense (benefit)	507		4,527		(4,020)		(88.8)	%
Net interest income after credit loss expense	51,510		52,707		(1,197)		(2.3)	%
Noninterest income	7,003		6,476		527		8.1	%
Noninterest expense:
Salaries and employee benefits	16,317		16,809		(492)		(2.9)	%
Depreciation	1,630		1,799		(169)		(9.4)	%
Other occupancy, furniture and equipment	2,102		2,357		(255)		(10.8)	%
FDIC insurance and other regulatory assessments	727		653		74		11.3	%
Professional fees	1,065		674		391		58.0	%
Amortization of intangible assets	385		618		(233)		(37.7)	%
Advertising and promotion	511		337		174		51.6	%
Communications and technology	5,015		4,983		32		0.6	%
Software amortization	56		15		41		273.3	%
Travel and entertainment	238		285		(47)		(16.5)	%
Other	3,025		2,599		426		16.4	%
Total noninterest expense	31,071		31,129		(58)		(0.2)	%
Net intersegment noninterest income (expense)	137		121		16		13.2	%
Operating income (loss)	$	27,579	$	28,175	$	(596)	(2.1)	%

Our Banking segment’s operating income decreased $0.6 million, or 2.1%.

Interest income decreased $0.5 million, or 0.8%, 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. More specifically, average loans in our Banking segment, excluding intersegment loans, increased 10.4% from $2.933 billion for the three months ended March 31, 2024 to $3.238 billion for the three months ended March 31, 2025; however, this increase was more than offset by decreased yields. 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 $2.7 million, or 20.0%, primarily driven by higher average interest-bearing liabilities which increased in total period over period, including average total interest bearing deposits which increased $274.5 million, or 11.2%. The increase in interest expense was partially offset by decreased rates on our interest bearing liabilities. That said, our Banking segment experienced an increase in average cost of interest bearing liabilities due to increased usage of higher-priced brokered time deposits period over period.

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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 $0.6 million for the three months ended March 31, 2025 compared to credit loss expense on loans of $4.4 million for the three months ended March 31, 2024. The decrease in credit loss expense was the result of decreased specific reserves, a decrease driven by changes to the projected loss drivers and prepayment speeds that the Company forecasted over the reasonable and supportable forecast periods, and a decrease driven by changes in the volume and mix of our Banking segment's loan portfolio period over period. Such decreases were partially offset by an increase in net charge-offs period over period.

Credit loss expense for off balance sheet credit exposures decreased $0.2 million, from $0.1 million for the three months ended March 31, 2024 to a benefit of $0.1 million for the three months ended March 31, 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 $0.4 million increase in bank owned life insurance income period over period. There were no other significant changes in the components of noninterest income at our Banking segment period over period.

As illustrated in the table above, noninterest expense was relatively flat period over period. There were no significant changes in the components of noninterest expense at our Banking segment period over period.

Year to date, our aggregate outstanding balances for our banking products, excluding intercompany loans, has decreased $25.8 million, or 0.8%, to $3.314 billion as of March 31, 2025. The following table sets forth our banking loans:


(Dollars in thousands)	March 31, 2025		December 31, 2024		$ Change		% Change
Banking
Commercial real estate	$	811,244	$	777,689	$	33,555	4.3	%
Construction, land development, land	204,021		203,804		217		0.1	%
1-4 family residential	159,105		154,020		5,085		3.3	%
Farmland	47,311		56,366		(9,055)		(16.1)	%
Commercial - General	274,697		285,469		(10,772)		(3.8)	%
Commercial - Agriculture	49,529		49,365		164		0.3	%
Commercial - Equipment	529,359		511,855		17,504		3.4	%
Commercial - Asset-based lending	214,000		205,353		8,647		4.2	%
Commercial - Liquid Credit	53,075		65,053		(11,978)		(18.4)	%
Consumer	7,088		8,000		(912)		(11.4)	%
Mortgage Warehouse	965,058		1,023,326		(58,268)		(5.7)	%
Total banking loans	$	3,314,487	$	3,340,300	$	(25,813)	(0.8)	%

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Factoring


(Dollars in thousands)	Three Months Ended March 31,
Factoring	2025		2024		$ Change		% Change
Total interest income	$	33,331	$	32,752	$	579	1.8	%
Intersegment interest allocations	(7,653)		(8,905)		1,252		14.1	%
Total interest expense	—		—		—		—
Net interest income (expense)	25,678		23,847		1,831		7.7	%
Credit loss expense (benefit)	560		1,355		(795)		(58.7)	%
Net interest income (expense) after credit loss expense	25,118		22,492		2,626		11.7	%
Noninterest income	1,719		2,903		(1,184)		(40.8)	%
Noninterest expense:
Salaries and employee benefits	13,222		12,261		961		7.8	%
Depreciation	503		506		(3)		(0.6)	%
Other occupancy, furniture and equipment	537		525		12		2.3	%
FDIC insurance and other regulatory assessments	—		—		—		—	%
Professional fees	1,852		603		1,249		207.1	%
Amortization of intangible assets	193		404		(211)		(52.2)	%
Advertising and promotion	254		246		8		3.3	%
Communications and technology	2,274		2,298		(24)		(1.0)	%
Software amortization	594		581		13		2.2	%
Travel and entertainment	183		250		(67)		(26.8)	%
Other	741		1,019		(278)		(27.3)	%
Total noninterest expense	20,353		18,693		1,660		8.9	%
Net intersegment noninterest income (expense)	435		389		46		11.8	%
Net income (loss) before income tax expense	$	6,919	$	7,091	$	(172)	(2.4)	%

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	Three Months Ended March 31,
	2025			2024
Factored receivable period end balance	$	1,146,429,000		$	976,761,000
Commercial loans period end balance	$	1,080,000		$	—
Yield on average receivable balance	12.75		%	13.98		%
Current quarter charge-off rate	0.11		%	0.13		%
Factored receivables - transportation concentration	97		%	97		%

Interest income, including fees	$	33,331,000		$	32,752,000
Non-interest income	1,719,000			2,903,000
Intersegment noninterest income	911,000			750,000
Factored receivable total revenue	35,961,000			36,405,000
Average net funds employed	948,729,000			839,136,000
Yield on average net funds employed	15.37		%	17.45		%

Operating income (loss)	$	6,919,000		$	7,091,000
Factoring total revenue	$	35,961,000		$	36,405,000
Operating margin(1)	19.24		%	19.48		%

Accounts receivable purchased	$	2,707,805,000		$	2,469,797,000
Number of invoices purchased	1,497,644			1,367,625
Average invoice size	$	1,808		$	1,806
Average invoice size - transportation	$	1,769		$	1,771
Average invoice size - non-transportation	$	4,019		$	4,099

(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 decreased $0.2 million, or 2.4%.

Our average invoice size increased 0.1% from $1,806 for the three months ended March 31, 2024 to $1,808 for the three months ended March 31, 2025. Additionally, the number of invoices purchased increased 9.5% period over period.

Net interest income at our Factoring segment increased period over period. Overall average net funds employed (“NFE”) increased 13.1% during the three months ended March 31, 2025 compared to the same period in 2024. The increase in average NFE was the result of increased invoice purchase volume as average invoice prices were relatively flat period over period. The transportation market remains soft. 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 97% at March 31, 2025 and 97% at March 31, 2024. Net interest income at our Factoring segment was also impacted by a decrease in its intersegment interest allocation charge period over period driven by decreased rates in the macroeconomy.

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 $0.6 million for the three months ended March 31, 2025 compared to credit loss expense on factored receivables of $0.5 million for the three months ended March 31, 2024. The increase in credit loss expense on factored receivables and loans was driven by changes in volume and mix of the portfolio period over period and changes in loss assumptions period over period. The increase in credit loss expense on loans was partially offset by decreased specific reserves and net charge-offs at our Factoring segment were flat period over period. We experienced credit loss expense for off balance sheet credit exposures of $0.9 million during the three months ended March 31, 2024. There was no credit loss expense related to off balance sheet credit exposures during the three months ended March 31, 2025 as there were no such commitments to lend at that time.

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Noninterest income at our Factoring segment decreased period over period due to a $0.8 million decrease in early termination fees and a $0.3 million decrease in gains on our revenue share asset period over period. There were no other significant variances in noninterest income at our Factoring segment.

As illustrated in the table above, the increase in noninterest expense at our Factoring segment was primarily due to increased salaries and benefits expense and increased professional fees. There were no other significant changes in the components of noninterest expense at our Factoring segment period over period.

Payments


(Dollars in thousands)	Three Months Ended March 31,
Payments	2025		2024		$ Change		% Change
Total interest income	$	5,363	$	5,157	$	206	4.0	%
Intersegment interest allocations	2,918		2,161		757		35.0	%
Total interest expense	—		—		—		—	%
Net interest income (expense)	8,281		7,318		963		13.2	%
Credit loss expense (benefit)	118		69		49		71.0	%
Net interest income after credit loss expense	8,163		7,249		914		12.6	%
Noninterest income	6,531		5,543		988		17.8	%
Noninterest expense:
Salaries and employee benefits	9,613		9,131		482		5.3	%
Depreciation	230		244		(14)		(5.7)	%
Other occupancy, furniture and equipment	168		144		24		16.7	%
FDIC insurance and other regulatory assessments	—		—		—		—	%
Professional fees	206		793		(587)		(74.0)	%
Amortization of intangible assets	1,551		1,702		(151)		(8.9)	%
Advertising and promotion	381		360		21		5.8	%
Communications and technology	2,469		2,083		386		18.5	%
Software amortization	1,196		527		669		126.9	%
Travel and entertainment	377		517		(140)		(27.1)	%
Other	922		984		(62)		(6.3)	%
Total noninterest expense	17,113		16,485		628		3.8	%
Net intersegment noninterest income (expense)	(572)		(510)		(62)		(12.2)	%
Net income (loss) before income tax expense	$	(2,991)	$	(4,203)	$	1,212	28.8	%

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	Three Months Ended March 31,
	2025			2024
Supply chain financing factored receivables	$	122,583,000		$	98,593,000
QuickPay factored receivables	81,644,000			78,693,000
Factored receivable period end balance	$	204,227,000		$	177,286,000

Supply chain finance interest income	$	2,695,000		$	2,553,000
QuickPay interest income	2,668,000			2,604,000
Intersegment interest income	2,918,000			2,161,000
Total interest income	8,281,000			7,318,000
Broker noninterest income	5,178,000			4,115,000
Factor noninterest income	1,233,000			1,295,000
Other noninterest income	120,000			133,000
Intersegment noninterest income	372,000			265,000
Total noninterest income	6,903,000			5,808,000
Total revenue	$	15,184,000		$	13,126,000

Intersegment interest expense allocation	$	—		$	—
Credit loss expense (benefit)	118,000			69,000
Noninterest expense	17,113,000			16,485,000
Intersegment noninterest expense	944,000			775,000
Total expense	$	18,175,000		$	17,329,000

Operating income (loss)	$	(2,991,000)		$	(4,203,000)
Intersegment interest expense	—			—
Depreciation expense	230,000			244,000
Software amortization expense	1,196,000			527,000
Intangible amortization expense	1,551,000			1,702,000
Earnings (losses) before interest, taxes, depreciation, and amortization	$	(14,000)		$	(1,730,000)



EBITDA margin(1)	(0.1)		%	(13)		%

Number of invoices processed	7,182,044			5,717,016
Amount of payments processed	$	8,777,825,000		$	6,379,680,000
Network invoice volume	719,531			621,209
Network payment volume	$	1,167,464,000		$	1,035,099,000

(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 $1.2 million, or 28.8%.

The number of invoices processed by our Payments segment increased 25.6% from 5,717,016 for the three months ended March 31, 2024 to 7,182,044 for the three months ended March 31, 2025, and the amount of payments processed increased 37.6% from $6.380 billion for the three months ended March 31, 2024 to $8.778 billion for the three months ended March 31, 2025.

A "network transaction" occurs when a fully integrated TriumphPay payor receives an invoice from a fully integrated TriumphPay payee. All network transactions are included in our payment processing volume above. These transactions are facilitated through TriumphPay 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 March 31, 2025, we processed 719,531 network invoices representing a network payment volume of $1.167 billion. During the three months ended March 31, 2024, we processed 621,209 network invoices representing a network payment volume of $1.035 billion.

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Net interest income increased due to increased average rates at our Payments segment, increased average balance of interest earning assets at our Payments segment, and increased intersegment interest allocation period over period.

Noninterest income increased due to a $1.2 million increase in payment and audit fees, including intersegment fees, earned by TriumphPay during the three months ended March 31, 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.

As illustrated in the table above, the increase in noninterest expense at our Payments segment was primarily due to increased salaries and benefits expense, communications and technology expense, and software amortization during the three months ended March 31, 2025 compared to the same period a year ago. It should be noted that salaries and benefits expense for the three months ended March 31, 2025 includes $1.1 million of severance expense associated with our realignment of leadership at our Payments segment. The increase in noninterest expense was partially offset by a decrease in professional fees period over period. There were no other significant changes in the components of noninterest expense at our Factoring segment period over period.

The acquisition of HubTran during the year ended December 31, 2021 allows TriumphPay to create a fully integrated payments network for transportation; servicing Brokers and Factors. TriumphPay already offered tools and services to increase automation, mitigate fraud, create back-office efficiency and improve the payment experience. Through the acquisition of HubTran, TriumphPay 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 TriumphPay as the TriumphPay strategy has 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 enhance investors' overall understanding of the financial performance of the Payments segment. Further, as a result of the HubTran acquisition, management recorded $27.3 million of intangible assets that has led to meaningful amounts of intangible amortization.

Intelligence


(Dollars in thousands)	Three Months Ended March 31,
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	—		—
Other noninterest income	395		—
Noninterest expense:
Salaries and employee benefits	1,484		—
Depreciation	7		—
Other occupancy, furniture and equipment	7		—
FDIC insurance and other regulatory assessments	—		—
Professional fees	951		—
Amortization of intangible assets	116		—
Advertising and promotion	30		—
Communications and technology	227		—
Software amortization	2		—
Travel and entertainment	118		—
Other	66		—
Total noninterest expense	3,008		—
Net income (loss) before income tax expense	$	(2,613)	$	—

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Our Intelligence segment's operating loss for the three months ended March 31, 2025 was $2.6 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 expense related to our Intelligence segment is salaries and benefits expense and professional fees. A majority of the professional fees recognized at our Intelligence segment during the three months ended March 31, 2025 relate to our pending acquisition of Greenscreens.ai.

Corporate and Other


(Dollars in thousands)	Three Months Ended March 31,
Corporate and Other	2025		2024		$ Change		% Change
Total interest income	$	83	$	44	$	39	88.6	%
Intersegment interest allocations	—		—		—		—
Total interest expense	1,676		2,408		(732)		(30.4)	%
Net interest income (expense)	(1,593)		(2,364)		771		32.6	%
Credit loss expense (benefit)	145		(55)		200		363.6	%
Net interest income (expense) after credit loss expense	(1,738)		(2,309)		571		24.7	%
Other noninterest income	1,542		77		1,465		1,902.6	%
Noninterest expense:
Salaries and employee benefits	18,082		15,984		2,098		13.1	%
Depreciation	1,574		1,063		511		48.1	%
Other occupancy, furniture and equipment	1,684		998		686		68.7	%
FDIC insurance and other regulatory assessments	—		—		—		—	%
Professional fees	1,990		1,471		519		35.3	%
Amortization of intangible assets	155		—		155		100.0	%
Advertising and promotion	288		271		17		6.3	%
Communications and technology	2,259		2,530		(271)		(10.7)	%
Software amortization	144		51		93		182.4	%
Travel and entertainment	576		457		119		26.0	%
Other	1,876		1,239		637		51.4	%
Total noninterest expense	28,628		24,064		4,564		19.0	%
Net income (loss) before income tax expense	$	(28,824)	$	(26,296)	$	(2,528)	(9.6)	%

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 $28.8 million for the three months ended March 31, 2025 compared to an operating loss of $26.3 million for the three months ended March 31, 2024.

The increased operating loss was driven by increased noninterest expense which was the result of a $2.1 million increase in salaries and benefits expense. Additionally, Corporate experienced a $0.5 million increase in depreciation expense, a $0.7 million increase in occupancy expense, a $0.5 million increase in professional fees, and a $0.6 million increase in other noninterest income driven by a lease termination fee paid to a tenant of the building we acquired during March 2024. The increased operating loss was partially offset by increased noninterest income which was the result of a $0.8 million gain on sale of business assets during the three months ended March 31, 2025 that did not occur during the same period last year and $0.8 million of rental income on the property purchased by the Company during late March of 2024. Further, Corporate experienced a $0.7 million decrease in interest expense period over period as a result of decreased average borrowings.

Financial Condition

Assets

Total assets were $6.268 billion at March 31, 2025, compared to $5.949 billion at December 31, 2024, an increase of $319.4 million, the components of which are discussed below.

Loan Portfolio

Loans held for investment were $4.666 billion at March 31, 2025, compared with $4.547 billion at December 31, 2024.

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The following table shows our total loan portfolio by portfolio segments:


	March 31, 2025				December 31, 2024				$ Change		% Change
(Dollars in thousands)			% of Total				% of Total
Commercial real estate	$	811,244	17	%	$	777,689	17	%	$	33,555	4.3	%
Construction, land development, land	204,021		4	%	203,804		4	%	217		0.1	%
1-4 family residential	159,105		3	%	154,020		3	%	5,085		3.3	%
Farmland	47,311		1	%	56,366		1	%	(9,055)		(16.1	%)
Commercial	1,121,740		25	%	1,119,245		25	%	2,495		0.2	%
Factored receivables	1,350,656		29	%	1,204,510		27	%	146,146		12.1	%
Consumer	7,088		—	%	8,000		—	%	(912)		(11.4	%)
Mortgage warehouse	965,058		21	%	1,023,326		23	%	(58,268)		(5.7	%)
Total Loans	$	4,666,223	100	%	$	4,546,960	100	%	$	119,263	2.6	%

Commercial Real Estate Loans. Our commercial real estate loans increased $33.6 million, or 4.3%, due to new origination activity that outpaced paydowns. A significant portion of our loan portfolio at March 31, 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 March 31, 2025.


(Dollars in thousands)	Illinois		New York		Texas		Colorado		New Jersey		Iowa		Other		Total
Non-owner occupied
Office	$	3,732	$	25,597	$	18,280	$	3,671	$	83,350	$	361	$	14,346	$	149,337
Multifamily	45,192		—		479		9,989		—		498		111,716		167,874
Retail	5,984		69,536		—		6,835		—		2,145		30,929		115,429
Industrial	7,179		37,393		1,768		1,081		—		120		11,481		59,022
Hospitality	—		—		1,625		10,647		—		8,741		27,957		48,970
Other	25,081		—		25,182		9,438		—		774		21,976		82,451
	87,168		132,526		47,334		41,661		83,350		12,639		218,405		623,083
Owner occupied
Industrial	21,003		—		2,678		4,942		—		21,490		18,868		68,981
Hospitality	3,020		—		—		3,843		—		102		35		7,000
Restaurant	15,559		—		—		4,256		—		1,329		7,359		28,503
Retail	1,623		—		—		9,489		—		544		1,519		13,175
Office	2,134		115		—		6,423		—		735		1,391		10,798
Other	3,987		—		—		17,252		—		32,781		5,684		59,704
	47,326		115		2,678		46,205		—		56,981		34,856		188,161
Total commercial real estate	$	134,494	$	132,641	$	50,012	$	87,866	$	83,350	$	69,620	$	253,261	$	811,244

Construction and Development Loans. Our construction and development loans increased $0.2 million, or 0.1%, 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 $5.1 million, or 3.3%, due to new origination activity that outpaced paydowns.

Farmland Loans. Our farmland loans decreased $9.1 million, or 16.1%, due to paydowns that outpaced modest origination activity.

Commercial Loans. Our commercial loans held for investment increased $2.5 million, or 0.2%, due to increased equipment lending balances, asset-based lending balances, and agriculture balances. The increase was partially offset by decreased liquid credit lending as well as a decrease in other commercial lending. Our other commercial lending products, comprised primarily of general commercial loans originated in our community banking markets, decreased $11.8 million, or 4.1%.

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The following table shows our commercial loans:


(Dollars in thousands)	March 31, 2025		December 31, 2024		$ Change		% Change
Commercial
Equipment	$	529,359	$	511,855	$	17,504	3.4	%
Asset-based lending	214,000		205,353		8,647		4.2	%
Liquid credit	53,075		65,053		(11,978)		(18.4	%)
Agriculture	49,529		49,365		164		0.3	%
Other commercial lending	275,777		287,619		(11,842)		(4.1	%)
Total commercial loans	$	1,121,740	$	1,119,245	$	2,495	0.2	%

Factored Receivables. Our factored receivables increased $146.1 million, or 12.1%. At March 31, 2025, the balance of the Over-Formula Advance Portfolio included in factored receivables was $1.0 million. At March 31, 2025, the balance of factoring Misdirected Payments, net of customer reserves, was $19.4 million. 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 decreased $0.9 million, or 11.4%, due to paydowns that outpaced modest origination activity.

Mortgage Warehouse. Our mortgage warehouse facilities decreased $58.3 million, or 5.7%, 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 $936.5 million for the three months ended March 31, 2025 compared to $633.9 million for the three months ended March 31, 2024.

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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:


	March 31, 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	$	402,830	$	376,775	$	31,608	$	31	$	811,244
Construction, land development, land	106,008		96,927		1,086		—		204,021
1-4 family residential	8,074		28,189		7,419		115,423		159,105
Farmland	5,244		27,632		13,550		885		47,311
Commercial	387,499		701,169		33,072		—		1,121,740
Factored receivables	1,350,656		—		—		—		1,350,656
Consumer	790		5,421		871		6		7,088
Mortgage warehouse	965,058		—		—		—		965,058
	$	3,226,159	$	1,236,113	$	87,606	$	116,345	$	4,666,223

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			$	246,555	$	1,367	$	—
Construction, land development, land			70,943		175		—
1-4 family residential			23,189		1,966		37,249
Farmland			23,945		645		—
Commercial			539,099		6,843		—
Factored receivables			—		—		—
Consumer			5,421		871		6
Mortgage warehouse			—		—		—
			$	909,152	$	11,867	$	37,255
Floating interest rates
Commercial real estate			$	130,220	$	30,241	$	31
Construction, land development, land			25,984		911		—
1-4 family residential			5,000		5,453		78,174
Farmland			3,687		12,905		885
Commercial			162,070		26,229		—
Factored receivables			—		—		—
Consumer			—		—		—
Mortgage warehouse			—		—		—
			$	326,961	$	75,739	$	79,090

Total			$	1,236,113	$	87,606	$	116,345

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Further, a majority (97%) of our factored receivables, representing approximately 28% of our total loan portfolio as of March 31, 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)	March 31, 2025			December 31, 2024
Nonperforming loans:
Commercial real estate	$	7,252		$	11,254
Construction, land development, land	2,285			2,410
1-4 family residential	769			810
Farmland	601			1,996
Commercial	61,714			73,437
Factored receivables	23,976			23,289
Consumer	100			116
Mortgage warehouse	—			—
Total nonperforming loans	96,697			113,312
Held to maturity securities	1,913			4,073
Equity investments without readily determinable fair value	4,166			2,462
Other real estate owned, net	—			—
Other repossessed assets	307			425
Total nonperforming assets	$	103,083		$	120,272

Nonperforming assets to total assets	1.64		%	2.02		%
Nonperforming loans to total loans held for investment	2.07		%	2.49		%
Total past due loans to total loans held for investment	3.24		%	3.27		%

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Nonperforming loans decreased $16.6 million, or 14.7%, due to a $7.5 million payoff of a nonperforming multifamily relationship, a $6.9 million decrease in nonperforming equipment finance relationships, a $6.6 million decrease in nonperforming liquid credit relationships, a $1.5 million payoff of a nonperforming farmland relationship, and a $1.0 million charge-off of a nonperforming other commercial lending relationship. These decreases were partially offset by a $5.6 million increase in nonperforming equipment finance relationships, a $2.8 million addition of a commercial real estate relationship, and an increase of $0.7 million of nonperforming factored receivables. The entire balance of Misdirected Payments is included in nonperforming loans (specifically, factored receivables) in accordance with our policy. The balance of such Misdirected Payments, net of customer reserves, was $19.4 million, at March 31, 2025.

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 2.07% at March 31, 2025 from 2.49% at December 31, 2024.

Our ratio of nonperforming assets to total assets decreased to 1.64% at March 31, 2025 from 2.02% at December 31, 2024. This is due to the aforementioned loan activity, slightly offset by an increase in nonperforming equity investments, and changes in our period end total assets.

Past due loans to total loans held for investment decreased to 3.24% at March 31, 2025 from 3.27% at December 31, 2024, with minimal changes in past due commercial loans and past due factored receivables. Both the $1.0 million acquired factoring Over-Formula Advance balance and the $19.4 million balance of Misdirected Payments, net of customer reserves, are considered greater than 90 days past due at March 31, 2025.

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:


	March 31, 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	$	4,657	17	%	0.57	%	$	3,825	17	%	0.49	%
Construction, land development, land	2,639		4	%	1.29	%	2,873		4	%	1.41	%
1-4 family residential	1,446		3	%	0.91	%	1,404		3	%	0.91	%
Farmland	326		1	%	0.69	%	386		1	%	0.68	%
Commercial	16,191		25	%	1.44	%	21,419		25	%	1.91	%
Factored receivables	9,851		29	%	0.73	%	9,600		27	%	0.80	%
Consumer	155		—	%	2.19	%	185		—	%	2.31	%
Mortgage warehouse	964		21	%	0.10	%	1,022		23	%	0.10	%
Total Loans	$	36,229	100	%	0.78	%	$	40,714	100	%	0.90	%

The ACL decreased $4.5 million, or 11.0%. This decrease reflects net charge-offs of $5.8 million and credit loss expense of $1.3 million. Refer to the Results of Operations: Credit Loss Expense section for discussion of material charge-offs and credit loss expense. At quarter end, our entire remaining Over-Formula Advance position was down from $1.4 million at December 31, 2024 to $1.0 million at March 31, 2025 and the entire balance at March 31, 2025 was fully reserved. At March 31, 2025, the Misdirected Payments amount, net of customer reserves, was $19.4 million. Based on our legal analysis and discussions with our counsel advising us on this matter, we continue to believe it is probable that we will prevail in such action and that the USPS will have the capacity to make payment on such receivable. Consequently, we have not reserved for such balance as of March 31, 2025.

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A driver of the change in ACL is change in the loss drivers that the Company forecasted to calculate expected losses at March 31, 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 $0.5 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.

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)	March 31, 2025			December 31, 2024
Allowance for credit losses on loans	$	36,229		$	40,714
Total loans held for investment	$	4,666,223		$	4,546,960
Allowance to total loans held for investment	0.78		%	0.90		%

Nonaccrual loans	$	72,721		$	90,023
Total loans held for investment	$	4,666,223		$	4,546,960
Nonaccrual loans to total loans held for investment	1.56		%	1.98		%

Allowance for credit losses on loans	$	36,229		$	40,714
Nonaccrual loans	$	72,721		$	90,023
Allowance for credit losses to nonaccrual loans	49.82		%	45.23		%

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	Three Months Ended March 31,
	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	$	113	$	768,011	0.01	%	$	—	$	813,429	—	%
Construction, land development, land	—		209,416		—	%	14		147,527		0.01	%
1-4 family residential	(1)		156,223		—	%	(2)		126,535		—	%
Farmland	—		52,956		—	%	—		60,086		—	%
Commercial	4,297		1,106,975		0.39	%	551		1,140,390		0.05	%
Factored receivables	1,258		1,231,478		0.10	%	1,260		1,112,720		0.11	%
Consumer	132		8,081		1.63	%	73		9,545		0.76	%
Mortgage warehouse	—		936,529		—	%	—		633,876		—	%
Total Loans	$	5,799	$	4,469,669	0.13	%	$	1,896	$	4,044,108	0.05	%

Quarter to date net loans charged off increased $3.9 million with no individually significant charge-offs during the three months ended March 31, 2024. Net charge-offs during the three months ended March 31, 2025 reflect a $3.7 million partial charge-off of a liquid credit relationship, a $0.7 million charge-off of a separate liquid credit relationship, and a $1.0 million charge off of another commercial lending relationship.

Securities

As of March 31, 2025 and December 31, 2024, we held equity securities with readily determinable fair values of $4.5 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 March 31, 2025, we held debt securities classified as available for sale with a fair value of $411.9 million, an increase of $30.4 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)	March 31, 2025		December 31, 2024		$ Change		% Change
Mortgage-backed securities, residential	$	102,895	$	84,185	$	18,710	22.2	%
Asset-backed securities	881		905		(24)		(2.7)	%
State and municipal	2,813		3,063		(250)		(8.2)	%
CLO Securities	303,851		291,913		11,938		4.1	%
Corporate bonds	257		262		(5)		(1.9)	%
SBA pooled securities	1,228		1,233		(5)		(0.4)	%
	$	411,925	$	381,561	$	30,364	8.0	%

Our available for sale CLO portfolio consists of investment grade positions in high ranking tranches within their respective securitization structures. As of March 31, 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 March 31, 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 March 31, 2025, we held investments classified as held to maturity with an amortized cost, net of ACL, of $1.7 million, a decrease of $0.2 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 March 31, 2025.

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The following tables set forth the amortized cost and average yield of our debt securities, by type and contractual maturity:


	Maturity as of March 31, 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	$	6,804	2.28	%	$	738	2.35	%	$	728	2.71	%	$	99,154	3.85	%	$	107,424	3.73	%
Asset-backed securities	—		—	%	—		—	%	883		6.25	%	—		—	%	883		6.25	%
State and municipal	223		3.38	%	2,180		2.73	%	503		2.65	%	—		—	%	2,906		2.77	%
CLO securities	—		—	%	—		—	%	40,046		6.21	%	263,618		5.31	%	303,664		5.43	%
Corporate bonds	—		—	%	—		—	%	266		5.07	%	—		—	%	266		5.07	%
SBA pooled securities	—		—	%	—		—	%	346		3.12	%	937		3.36	%	1,283		3.30	%
Total available for sale securities	$	7,027	2.31	%	$	2,918	2.63	%	$	42,772	6.07	%	$	363,709	4.91	%	$	416,426	4.97	%

Held to maturity securities:	$	—	—	%	$	3,207	4.13	%	$	—	—	%	$	—	—	%	$	3,207	4.13	%

Liabilities

Total liabilities were $5.374 billion as of March 31, 2025, compared to $5.058 billion at December 31, 2024, an increase of $316.4 million, the components of which are discussed below.

Deposits

The following table summarizes our deposits:


(Dollars in thousands)	March 31, 2025		December 31, 2024		$ Change		% Change
Noninterest bearing demand	$	2,260,048	$	1,964,457	$	295,591	15.0	%
Interest bearing demand	731,477		697,949		33,528		4.8	%
Individual retirement accounts	42,344		43,937		(1,593)		(3.6	%)
Money market	610,120		629,610		(19,490)		(3.1	%)
Savings	525,133		515,545		9,588		1.9	%
Certificates of deposit	231,076		232,232		(1,156)		(0.5	%)
Brokered time deposits	576,552		490,650		85,902		17.5	%
Other brokered deposits	—		246,440		(246,440)		(100.0	%)
Total Deposits	$	4,976,750	$	4,820,820	$	155,930	3.2	%

Our total deposits increased $155.9 million, or 3.2%, primarily due to an increase in noninterest bearing demand deposits, interest 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 March 31, 2025, interest bearing demand deposits, noninterest bearing deposits, money market deposits, other brokered deposits, and savings deposits accounted for 83% of our total deposits, while individual retirement accounts, certificates of deposit, and brokered time deposits made up 17% of total deposits. At March 31, 2025 and December 31, 2024, our estimated uninsured deposits were $1.602 billion and $1.488 billion, respectively.

At March 31, 2025 we held $63.7 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 March 31, 2025:


(Dollars in thousands)	Over $250,000
Maturity
3 months or less	$	26,486
Over 3 through 6 months	21,947
Over 6 through 12 months	11,084
Over 12 months	1,652
	$	61,169

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The following table summarizes our average deposit balances and weighted average rates:


	Three Months Ended March 31, 2025						Three Months Ended March 31, 2024

(Dollars in thousands)	Average Balance		Weighted Avg Rates		% of Total		Average Balance		Weighted Avg Rates		% of Total
Interest bearing demand	$	733,151	0.47	%	15	%	$	731,747	0.47	%	18	%
Individual retirement accounts	43,112		1.26	%	1	%	51,433		1.27	%	1	%
Money market	611,244		2.57	%	13	%	569,596		2.80	%	14	%
Savings	518,690		1.07	%	11	%	533,695		1.00	%	13	%
Certificates of deposit	231,662		2.66	%	5	%	263,561		2.84	%	6	%
Brokered time deposits	569,200		4.57	%	12	%	284,518		5.29	%	7	%
Other brokered deposits	19,899		4.50	%	—	%	17,860		5.40	%	—	%
Total interest bearing deposits	2,726,958		2.14	%	57	%	2,452,410		1.99	%	59	%
Noninterest bearing demand	2,005,305		—		43	%	1,724,532		—		41	%
Total deposits	$	4,732,263	1.23	%	100	%	$	4,176,942	1.17	%	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, and the runoff of certain deposit types we saw throughout the prior year appears to have been a continuation of the trend we saw over several quarters prior to that: the normalizing of pandemic-era surge balances and the movement of rate-sensitive excess balances to other investments.

Other Borrowings

FHLB Advances

The following provides a summary of our FHLB advances as of and for the three months ended March 31, 2025 and the year ended December 31, 2024:


(Dollars in thousands)	March 31, 2025			December 31, 2024
Amount outstanding at end of period	$	205,000		$	30,000
Weighted average interest rate at end of period	4.62		%	4.79		%
Average amount outstanding during the period	164,167			120,369
Weighted average interest rate during the period	4.48		%	5.38		%
Highest month end balance during the period	205,000			280,000

Our FHLB advances are collateralized by assets, including a blanket pledge of certain loans. At March 31, 2025 and December 31, 2024, we had $558.4 million and $819.1 million, respectively, in unused and available advances from the FHLB.

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Subordinated Notes

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 $69.7 million and $69.7 million carrying value of these obligations at March 31, 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 March 31, 2025:


(Dollars in thousands)	Face Value		Carrying Value		Maturity Date	Interest Rate
National Bancshares Capital Trust II	$	15,464	$	13,823	September 2033	Three Month SOFR + 3.26%
National Bancshares Capital Trust III	17,526		13,942		July 2036	Three Month SOFR + 1.64%
ColoEast Capital Trust I	5,155		3,943		September 2035	Three Month SOFR + 1.86%
ColoEast Capital Trust II	6,700		5,076		March 2037	Three Month SOFR + 2.05%
Valley Bancorp Statutory Trust I	3,093		2,941		September 2032	Three Month SOFR + 3.66%
Valley Bancorp Statutory Trust II	3,093		2,782		July 2034	Three Month SOFR + 3.01%
	$	51,031	$	42,507

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 $42.5 million was allowed in the calculation of Tier I capital as of March 31, 2025.

Capital Resources and Liquidity Management

Capital Resources

Our stockholders’ equity totaled $893.9 million as of March 31, 2025, compared to $890.9 million as of December 31, 2024, an increase of $3.0 million. Stockholders’ equity increased during this period primarily due to stock based compensation expense and the issuance of common stock pursuant to our employee stock purchase plan.

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Liquidity Management

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 March 31, 2025, TBK Bank had $781.5 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 March 31, 2025, we had $558.4 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. Further, as of March 31, 2025, we had $181.0 million in unused and available capacity to deliver factored receivables to another bank should additional liquidity be needed.

Contractual Obligations

The following table summarizes our contractual obligations and other commitments to make future payments as of March 31, 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 - March 31, 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	$	205,000	$	175,000	$	30,000	$	—	$	—
Subordinated notes	70,000		—		—		—		70,000
Junior subordinated debentures	51,031		—		—		—		51,031
Operating lease agreements	30,075		5,831		10,614		8,297		5,333
Time deposits with stated maturity dates	849,972		824,379		22,216		3,377		—
Total contractual obligations	$	1,206,078	$	1,005,210	$	62,830	$	11,674	$	126,364

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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.

Off-Balance Sheet Arrangements

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;

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•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 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.

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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 March 31, 2025 and December 31, 2024:


	March 31, 2025				December 31, 2024
	Following 12 Months		Months 13-24		Following 12 Months		Months 13-24
+400 basis points	11.8	%	13.6	%	10.1	%	13.2	%
+300 basis points	8.9	%	10.2	%	7.6	%	9.9	%
+200 basis points	5.9	%	6.8	%	5.1	%	6.6	%
+100 basis points	3.0	%	3.4	%	2.6	%	3.3	%
Flat rates	0.0	%	0.0	%	0.0	%	0.0	%
-100 basis points	(2.9	%)	(3.4	%)	(2.6	%)	(3.7	%)
-200 basis points	(5.7	%)	(7.2	%)	(5.4	%)	(7.5	%)
-300 basis points	(8.7	%)	(11.2	%)	(8.2	%)	(11.8	%)
-400 basis points	(11.3	%)	(14.8	%)	(11.0	%)	(16.0	%)

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The following table presents the change in our economic value of equity as of March 31, 2025 and December 31, 2024, assuming immediate parallel shifts in interest rates:


	Economic Value of Equity at Risk (%)
	March 31, 2025		December 31, 2024
+400 basis points	11.6	%	9.3	%
+300 basis points	9.1	%	7.3	%
+200 basis points	6.3	%	5.2	%
+100 basis points	3.0	%	2.6	%
Flat rates	0.0	%	0.0	%
-100 basis points	(6.2	%)	(5.6	%)
-200 basis points	(12.6	%)	(11.5	%)
-300 basis points	(19.3	%)	(17.7	%)
-400 basis points	(25.7	%)	(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 March 31, 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.

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We are party to a lawsuit in the United States Court of Federal Claims seeking a ruling that the United States Postal Service (“USPS”) is obligated to make payment to us with respect to invoices totaling approximately $19.4 million, net of customer reserves, that it separately paid to our customer, a vendor to the USPS who hauled mail pursuant to contracts it has with such entity, in violation of notices provided to the USPS that such payments were to be made directly to us (the “Misdirected Payments”). Although we believe we have valid claims that the USPS is obligated to make payment to us on such receivable and that the USPS will have the capacity to make such payment, the issues in this litigation are novel issues of law that have little to no precedent and there can be no assurances that a court will agree with our interpretation of the law on these matters. If a court were to rule against us in this litigation, our only recourse would be against our customer, who failed to remit the Misdirected Payments to us as required when received, and who may not have capacity to make such payment to us. Consequently, we could incur losses up to the full amount of the Misdirected Payments in such event, 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

None.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Insider Trading Arrangements

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 anticipated 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.

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 first 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).

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Item 6. Exhibits

Exhibits (Exhibits marked with a “†” denote management contracts or compensatory plans or arrangements)


3.1						Second Amended and Restated Certificate of Formation of the Registrant, effective November 7, 2014, incorporated by reference to Exhibit 3.1 to Form 8-K filed with the SEC on November 13, 2014.

3.2						Certificate of Amendment to Second Amended and Restated Certificate of Formation of Triumph Bancorp, Inc., incorporated by reference to Exhibit 3.1 to Form 8-K filed with the SEC on May 10, 2018.

3.3						Certificate of Amendment to Second Amended and Restated Certificate of Formation of Triumph Bancorp, Inc., incorporated by reference to Exhibit 3.1 to Form 8-K filed with the SEC on December 1, 2022.

3.4						Second Amended and Restated Bylaws of the Registrant, effective November 7, 2014, incorporated by reference to Exhibit 3.2 to Form 8-K filed with the SEC on November 13, 2014.

3.5						Amendment No. 1 to Second Amended and Restated Bylaws of Triumph Bancorp, Inc., incorporated by reference to Exhibit 3.2 to Form 8-K filed with the SEC on May 10, 2018.

3.6						Amendment No. 2 to Second Amended and Restated Bylaws of Triumph Bancorp, Inc., incorporated by reference to Exhibit 3.2 to Form 8-K filed with the SEC on December 1, 2022.









31.1						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						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).

101.SCH						Inline XBRL Taxonomy Extension Schema Document.

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104						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.

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SIGNATURES

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:	April 16, 2025	/s/ Aaron P. Graft
		Aaron P. Graft President and Chief Executive Officer

Date:	April 16, 2025	/s/ W. Bradley Voss
		W. Bradley Voss Chief Financial Officer