TRIUMPH FINCL(TFINP) - 2025 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Triumph Financial's unaudited consolidated financial statements for Q3 2025, detailing financial position and performance Consolidated Balance Sheets This section provides a detailed overview of Triumph Financial's consolidated balance sheet, highlighting key assets, liabilities, and equity changes Consolidated Balance Sheet Highlights (September 30, 2025 vs. December 31, 2024): | Metric (in thousands) | Sep 30, 2025 | Dec 31, 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Total Assets | $6,357,149 | $5,948,975 | $408,174 | 6.86% | | Total Liabilities | $5,437,816 | $5,058,056 | $379,760 | 7.51% | | Total Deposits | $4,955,246 | $4,820,820 | $134,426 | 2.79% | | Total Stockholders' Equity | $919,333 | $890,919 | $28,414 | 3.19% | | Loans, net | $4,953,373 | $4,506,246 | $447,127 | 9.92% | | Goodwill | $353,898 | $241,949 | $111,949 | 46.27% | | Intangible assets, net | $52,291 | $16,259 | $36,032 | 221.62% | Consolidated Statements of Income This section presents Triumph Financial's consolidated income statements, detailing revenues, expenses, and net income for the periods ended September 30, 2025 and 2024 Consolidated Statements of Income Highlights (Three Months Ended September 30, 2025 vs. 2024): | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Total interest income | $108,940 | $108,075 | $865 | 0.80% | | Total interest expense| $21,107 | $19,376 | $1,731 | 8.93% | | Net interest income | $87,833 | $88,699 | $(866) | -0.98% | | Credit loss expense | $4,284 | $4,263 | $21 | 0.49% | | Total noninterest income | $21,448 | $17,497 | $3,951 | 22.58% | | Total noninterest expense | $103,714 | $95,646 | $8,068 | 8.44% | | Net income | $1,708 | $5,347 | $(3,639) | -68.06% | | Net income available to common stockholders | $907 | $4,546 | $(3,639) | -80.05% | | Basic EPS | $0.04 | $0.19 | $(0.15) | -78.95% | | Diluted EPS | $0.04 | $0.19 | $(0.15) | -78.95% | Consolidated Statements of Income Highlights (Nine Months Ended September 30, 2025 vs. 2024): | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Total interest income | $320,411 | $317,037 | $3,374 | 1.06% | | Total interest expense| $59,517 | $54,388 | $5,129 | 9.43% | | Net interest income | $260,894 | $262,649 | $(1,755) | -0.67% | | Credit loss expense | $4,912 | $14,314 | $(9,402) | -65.69% | | Total noninterest income | $58,022 | $49,663 | $8,359 | 16.83% | | Total noninterest expense | $304,727 | $283,360 | $21,367 | 7.54% | | Net income | $6,145 | $12,252 | $(6,107) | -49.84% | | Net income available to common stockholders | $3,741 | $9,848 | $(6,107) | -61.91% | | Basic EPS | $0.16 | $0.42 | $(0.26) | -61.90% | | Diluted EPS | $0.16 | $0.42 | $(0.26) | -61.90% | Consolidated Statements of Comprehensive Income This section presents Triumph Financial's consolidated statements of comprehensive income, including net income and other comprehensive income (loss) Consolidated Statements of Comprehensive Income (Three Months Ended September 30, 2025 vs. 2024): | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | ---------: | ---------: | ---------: | ---------: | | Net income | $1,708 | $5,347 | $(3,639) | -68.06% | | Other comprehensive income (loss), net of tax | $722 | $1,577 | $(855) | -54.22% | | Comprehensive income (loss) | $2,430 | $6,924 | $(4,494) | -64.91% | Consolidated Statements of Comprehensive Income (Nine Months Ended September 30, 2025 vs. 2024): | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | ---------: | ---------: | ---------: | ---------: | | Net income | $6,145 | $12,252 | $(6,107) | -49.84% | | Other comprehensive income (loss), net of tax | $1,192 | $1,108 | $84 | 7.58% | | Comprehensive income (loss) | $7,337 | $13,360 | $(6,023) | -45.08% | Consolidated Statements of Changes in Stockholders' Equity This section details changes in Triumph Financial's stockholders' equity, including common stock, retained earnings, and comprehensive income adjustments Changes in Stockholders' Equity (January 1, 2025 to September 30, 2025): | Metric (in thousands) | Balance, Jan 1, 2025 | Balance, Sep 30, 2025 | Change ($) | | :-------------------- | -------------------: | --------------------: | ---------: | | Total Stockholders' Equity | $890,919 | $919,333 | $28,414 | | Common Stock Shares Outstanding | 23,391,411 | 23,763,401 | 371,990 | | Additional Paid-in Capital | $567,884 | $593,624 | $25,740 | | Retained Earnings | $549,215 | $552,956 | $3,741 | | Accumulated Other Comprehensive Income (Loss) | $(3,115) | $(1,923) | $1,192 | - Key activities contributing to the change in stockholders' equity for the nine months ended September 30, 2025, include net income of $6,145,000, issuance of common stock totaling $12,732,000, stock-based compensation of $10,274,000, and an increase in accumulated other comprehensive income (loss) of $1,192,000. These were partially offset by dividends on preferred stock of $2,404,000 and treasury stock purchases of $2,227,000[17][18] Consolidated Statements of Cash Flows This section presents Triumph Financial's consolidated cash flow statements, categorizing cash movements into operating, investing, and financing activities Consolidated Statements of Cash Flows (Nine Months Ended September 30, 2025 vs. 2024): | Metric (in thousands) | 2025 | 2024 | Change ($) | | :-------------------- | -----------: | -----------: | ---------: | | Net cash provided by (used in) operating activities | $30,583 | $37,723 | $(7,140) | | Net cash provided by (used in) investing activities | $(595,975) | $(336,206) | $(259,769) | | Net cash provided by (used in) financing activities | $382,497 | $501,128 | $(118,631) | | Net increase (decrease) in cash and cash equivalents | $(182,895) | $202,645 | $(385,540) | | Cash and cash equivalents at end of period | $147,222 | $489,280 | $(342,058) | - Operating cash flows decreased primarily due to lower net income. Investing activities saw a significant increase in net cash used, driven by net cash paid for acquisitions ($137.5 million in 2025 vs. $0 in 2024) and increased net change in loans ($449.2 million used in 2025 vs. $190.9 million used in 2024). Financing activities decreased due to a lower net increase in deposits and a higher increase in Federal Home Loan Bank advances in 2025 compared to 2024[21] Condensed Notes to Consolidated Financial Statements This section provides condensed notes to the consolidated financial statements, offering additional details and context for reported figures NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines Triumph Financial's significant accounting policies, including its business segments, recent settlements, and restructuring activities - Triumph Financial, Inc. is a financial holding company offering banking, factoring, payments, and intelligence services, primarily through its subsidiary TBK Bank, SSB. Effective January 1, 2025, Triumph Financial Services LLC (factoring operations) merged into TBK Bank, SSB[25][26] - Reportable Segments: The Company operates in four reportable segments: Banking, Factoring, Payments, and Intelligence. The Intelligence segment was launched in Q4 2024 with the acquisition of Isometric Technologies Inc. and further supplemented by Greenscreens AI. Inc. in Q2 2025. - USPS Settlement: On June 30, 2025, the Company settled litigation with the USPS for $47.5 million, resolving disputes related to misdirected payments. The settlement had an $11.5 million positive impact on pretax net income for the nine months ended September 30, 2025. - Restructuring Activities: In August 2025, the Company initiated a reduction in force (approx. 5% of workforce) and other cost-saving measures, incurring $3.1 million in severance and $1.3 million in contract amendment fees during Q3 2025. These costs were allocated across segments and corporate[29][34][43][44][45][46] NOTE 2 — ACQUISITIONS AND DIVESTITURES This note details Triumph Financial's acquisition activities, including the Greenscreens AI and Isometric Technologies Inc. purchases, and their financial impact Greenscreens AI, Inc. Acquisition (May 8, 2025): | Metric (in thousands) | Amount | | :-------------------- | -----------: | | Cash paid | $139,118 | | Stock consideration | $12,732 | | Total consideration | $151,850 | | Goodwill recognized | $111,949 | | Intangible assets acquired (customer relationship, software) | $44,720 | - Greenscreens AI Acquisition: Acquired for $151.85 million (cash and stock), adding pricing intelligence for the logistics industry. Goodwill of $111.9 million was recognized, allocated primarily to the Intelligence segment ($80.4 million). - Isometric Technologies Inc. Acquisition: Acquired on December 1, 2024, for $10.0 million in cash, providing service and performance scoring for the trucking industry. Goodwill of $8.24 million was recognized and allocated to the Intelligence segment[51][52][53][58] NOTE 3 — SECURITIES This note provides details on Triumph Financial's securities portfolio, including equity and debt securities, their fair values, and credit loss allowances Equity Securities with Readily Determinable Fair Values (September 30, 2025 vs. December 31, 2024): | Metric (in thousands) | Sep 30, 2025 | Dec 31, 2024 | | :-------------------- | -----------: | -----------: | | Carrying Value | $4,569 | $4,445 | Available for Sale Securities (September 30, 2025 vs. December 31, 2024): | Metric (in thousands) | Sep 30, 2025 | Dec 31, 2024 | | :-------------------- | -----------: | -----------: | | Fair Value | $378,088 | $381,561 | | Gross Unrealized Gains | $1,566 | $1,725 | | Gross Unrealized Losses | $(4,098) | $(5,822) | - The Company holds debt securities classified as available for sale and held to maturity. Available for sale securities in an unrealized loss position are primarily due to noncredit-related factors (interest rates, market conditions), and no allowance for credit losses has been recorded for them. Held to maturity securities, primarily CLO subordinated notes, had an allowance for credit losses of $1.4 million at September 30, 2025, down from $3.5 million at December 31, 2024, following a $2.16 million charge-off of an uncollectible CLO fund investment[65][73][75] NOTE 4 — LOANS AND ALLOWANCE FOR CREDIT LOSSES This note details Triumph Financial's loan portfolio, including growth trends, allowance for credit losses, and overall credit quality metrics Loans Held for Investment (September 30, 2025 vs. December 31, 2024): | Loan Type (in thousands) | Sep 30, 2025 | Dec 31, 2024 | Change ($) | Change (%) | | :----------------------- | -----------: | -----------: | ---------: | ---------: | | Commercial real estate | $769,314 | $777,689 | $(8,375) | -1.08% | | Construction, land development, land | $204,247 | $203,804 | $443 | 0.22% | | 1-4 family residential | $180,970 | $154,020 | $26,950 | 17.50% | | Farmland | $43,208 | $56,366 | $(13,158) | -23.34% | | Commercial | $1,144,872 | $1,119,245 | $25,627 | 2.29% | | Factored receivables | $1,424,631 | $1,204,510 | $220,121 | 18.28% | | Consumer | $17,235 | $8,000 | $9,235 | 115.44% | | Mortgage warehouse | $1,202,445 | $1,023,326 | $179,119 | 17.50% | | Total Loans | $4,986,922 | $4,546,960 | $439,962 | 9.68% | Allowance for Credit Losses (ACL) Activity (Nine Months Ended September 30, 2025): | Metric (in thousands) | Amount | | :-------------------- | -----------: | | Beginning balance | $40,714 | | Credit Loss Expense | $5,047 | | Charge-offs | $(27,953) | | Recoveries | $4,961 | | Initial ACL on Loans Purchased with Credit Deterioration | $10,780 | | Ending balance | $33,549 | - Loan Portfolio Growth: Total loans held for investment increased by $439.96 million (9.68%) to $4.987 billion at September 30, 2025, driven by growth in factored receivables, mortgage warehouse, and 1-4 family residential loans. - ACL Decrease: The Allowance for Credit Losses (ACL) decreased by $7.165 million (17.6%) to $33.549 million, primarily due to net charge-offs of $22.992 million (including a $10.78 million charge-off on a purchased credit deteriorated loan with no impact on credit loss expense) and a decrease in required specific reserves. - Credit Quality: Nonperforming loans decreased by $45.575 million (40.2%) to $67.737 million, leading to a decrease in the nonperforming loans to total loans ratio from 2.49% to 1.36%. Past due loans to total loans also decreased from 3.27% to 1.91%[78][89][90][109][126][432] NOTE 5 — GOODWILL AND INTANGIBLE ASSETS This note explains changes in Triumph Financial's goodwill and intangible assets, primarily driven by recent acquisitions and their associated valuations Goodwill and Intangible Assets (September 30, 2025 vs. December 31, 2024): | Metric (in thousands) | Sep 30, 2025 | Dec 31, 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Goodwill | $353,898 | $241,949 | $111,949 | 46.27% | | Intangible assets, net | $52,291 | $16,259 | $36,032 | 221.62% | - Goodwill increased significantly due to the Greenscreens AI acquisition, which added $111.9 million in goodwill. Intangible assets also saw a substantial increase, primarily from acquired customer relationships and software related to the Greenscreens acquisition[53][54][130] NOTE 6 — VARIABLE INTEREST ENTITIES This note discusses Triumph Financial's investments in variable interest entities, specifically CLO funds, and the determination of non-consolidation - The Company holds investments in subordinated notes of closed Collateralized Loan Obligation (CLO) funds, totaling $1.766 million at September 30, 2025. These are classified as held-to-maturity securities. The Company determined these CLO funds are variable interest entities but is not the primary beneficiary, thus not requiring consolidation[131][132] NOTE 7 — LEGAL CONTINGENCIES This note discloses Triumph Financial's legal contingencies, including a significant floorplan loan facility for Tricolor Holdings, LLC, facing bankruptcy and fraud allegations - TBK Bank, SSB is the agent bank for a $60.5 million floorplan loan facility for Tricolor Holdings, LLC, holding $22.5 million. - Tricolor filed for Chapter 7 bankruptcy on September 10, 2025, amidst fraud allegations. - The Bank believes its collateral position adequately secures the loan, but potential disputes over vehicle inventory and additional claims in bankruptcy proceedings could lead to material losses for the Company[133] NOTE 8 — OFF-BALANCE SHEET LOAN COMMITMENTS This note details Triumph Financial's off-balance sheet loan commitments, including unused lines of credit and mortgage warehouse commitments, and associated credit loss allowances Off-Balance Sheet Commitments (September 30, 2025 vs. December 31, 2024): | Metric (in thousands) | Sep 30, 2025 | Dec 31, 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Unused lines of credit | $572,032 | $590,198 | $(18,166) | -3.08% | | Standby letters of credit | $11,036 | $23,950 | $(12,914) | -53.92% | | Commitments to purchase loans | $287 | $9,500 | $(9,213) | -96.98% | | Mortgage warehouse commitments | $625,792 | $810,913 | $(185,121) | -22.83% | - The Company's off-balance sheet commitments, including unused lines of credit and mortgage warehouse commitments, decreased significantly. An allowance for credit losses of $2.518 million was recorded for these exposures at September 30, 2025[138][141] NOTE 9 — FAIR VALUE DISCLOSURES This note provides fair value disclosures for Triumph Financial's assets and liabilities, categorizing measurements into Level 1, 2, and 3 based on input observability Assets Measured at Fair Value on a Recurring Basis (September 30, 2025): | Asset Type (in thousands) | Level 1 | Level 2 | Level 3 | Total Fair Value | | :------------------------ | ------: | ---------: | ------: | ---------------: | | Securities available for sale | $0 | $378,088 | $0 | $378,088 | | Equity securities with readily determinable fair values | $4,569 | $0 | $0 | $4,569 | | Loans held for sale | $0 | $9,741 | $0 | $9,741 | | Indemnification asset | $0 | $0 | $74 | $74 | | Revenue share asset | $0 | $0 | $1,772 | $1,772 | - The Company categorizes fair value measurements into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (significant unobservable inputs). Most recurring fair value assets, like available-for-sale securities and loans held for sale, are classified as Level 2. The indemnification and revenue share assets are Level 3, reflecting unobservable inputs and management's assumptions[142][144][145][150][152] NOTE 10 — REGULATORY MATTERS This note outlines Triumph Financial's regulatory capital matters, including capital ratios and compliance with adequacy requirements for both the holding company and its bank subsidiary Capital Ratios (September 30, 2025): | Ratio Type | Triumph Financial, Inc. | TBK Bank, SSB | | :-------------------------- | ----------------------: | ------------: | | Total capital (to risk weighted assets) | 12.1% | 11.8% | | Tier 1 capital (to risk weighted assets) | 10.2% | 11.2% | | Common equity Tier 1 capital (to risk weighted assets) | 8.6% | 11.2% | | Tier 1 capital (to average assets) | 9.6% | 10.4% | - Both Triumph Financial, Inc. and its subsidiary TBK Bank, SSB, met all capital adequacy requirements as of September 30, 2025, with TBK Bank categorized as 'well capitalized'. The temporary regulatory capital benefits from ASU 2016-13 were fully reversed after December 31, 2024[161][162][165] NOTE 11 — STOCKHOLDERS' EQUITY This note details Triumph Financial's stockholders' equity structure, including authorized and outstanding shares of preferred and common stock Stockholders' Equity Structure (September 30, 2025): | Metric | Amount/Value | | :-------------------- | -----------: | | Preferred Stock Series C (Shares authorized) | 51,750 | | Preferred Stock Series C (Shares issued/outstanding) | 45,000 | | Preferred Stock Series C (Liquidation preference amount) | $45,000,000 | | Common Stock (Shares authorized) | 50,000,000 | | Common Stock (Shares outstanding) | 23,763,401 | NOTE 12 — STOCK BASED COMPENSATION This note describes Triumph Financial's stock-based compensation plans, including expense recognition, unrecognized costs, and employee stock purchases Stock-Based Compensation Expense (Nine Months Ended September 30): | Year | Amount (in thousands) | | :--- | --------------------: | | 2025 | $10,274 | | 2024 | $11,092 | - Omnibus Incentive Plan: The Company's 2014 Omnibus Incentive Plan allows for various equity awards, including restricted stock awards (RSAs), restricted stock units (RSUs), and market-based performance stock units (Market Based PSUs). - Unrecognized Compensation Cost: As of September 30, 2025, there was $6.175 million of unrecognized compensation cost related to RSUs (expected to be recognized over 2.76 years) and $13.888 million for Market Based PSUs (over 2.18 years). For stock options, $2.625 million remains unrecognized (over 3.03 years). - Employee Stock Purchase Plan (ESPP): Under the ESPP, 44,048 shares were issued in the nine months ended September 30, 2025, allowing eligible employees to purchase common stock at a discount[173][176][180][184][185] NOTE 13 — EARNINGS PER SHARE This note presents Triumph Financial's basic and diluted earnings per common share for the three and nine months ended September 30 Earnings Per Common Share (Three Months Ended September 30): | Metric | 2025 | 2024 | | :----- | ----: | ----: | | Basic | $0.04 | $0.19 | | Diluted| $0.04 | $0.19 | Earnings Per Common Share (Nine Months Ended September 30): | Metric | 2025 | 2024 | | :----- | ----: | ----: | | Basic | $0.16 | $0.42 | | Diluted| $0.16 | $0.42 | NOTE 14 — REVENUE FROM CONTRACTS WITH CUSTOMERS This note outlines Triumph Financial's revenue recognition policies from customer contracts across its Banking, Factoring, Payments, and Intelligence segments - The Company recognizes revenue from contracts with customers in accordance with ASC Topic 606, identifying performance obligations, transaction prices, and recognizing revenue as obligations are satisfied. - Banking & Factoring: Revenue primarily from interest-earning assets (Topic 310), but also includes Topic 606 revenue from service charges on deposits, card income, net OREO gains/losses, fee income, and insurance commissions. - Payments Segment: Earns transaction and network fees (Topic 606) for auditing and payment processing services in the trucking industry, recognized over time as services are rendered. Also earns interest income on factored receivables (Topic 310). - Intelligence Segment: Earns subscription revenue (Topic 606) from access and subscription fees to its platform, recognized ratably over the service period. Contracts are typically one to two years[189][190][192][193][194][202][203] Payments Segment Fee Income from External Customers (Three Months Ended September 30): | Customer Category | 2025 (in thousands) | 2024 (in thousands) | | :---------------- | ------------------: | ------------------: | | Broker fee income | $7,131 | $4,804 | | Factor fee income | $933 | $1,339 | | Other fee income | $365 | $42 | | Total fee income | $8,429 | $6,185 | NOTE 15 — LESSOR OPERATING LEASES This note provides details on Triumph Financial's lessor operating lease revenue, including fixed and variable payments and amortization of intangibles Lessor Operating Lease Revenue (Nine Months Ended September 30): | Revenue Type (in thousands) | 2025 | 2024 | | :-------------------------- | ----: | ----: | | Fixed payments | $1,071| $2,073| | Variable payments | $665 | $994 | | Amortization of intangibles included in lease income | $(56) | $(57) | | Total fee income | $1,680| $3,010| NOTE 16 — BUSINESS SEGMENT INFORMATION This note provides information on Triumph Financial's business segments (Banking, Factoring, Payments, Intelligence), their revenue contributions, and expense allocation methodologies - The Company's reportable segments are Banking, Factoring, Payments, and Intelligence, determined by business processes and economic characteristics. - The Intelligence segment was launched in Q4 2024, so prior period comparative results are not applicable. - Expenses directly attributable to segments are allocated, while shared service costs (e.g., HR, IT) are assigned to the Corporate and Other category for clear visibility into segment performance. - Intersegment interest expense is allocated to Factoring and Payments based on one-month term SOFR, or Federal Funds effective rate when Payments is self-funded[212][215][216][218] Total Segment Revenue Contribution (Nine Months Ended September 30, 2025): | Segment | % of Total Segment Revenue | | :----------- | -------------------------: | | Banking | 58% | | Factoring | 30% | | Payments | 11% | | Intelligence | 1% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Triumph Financial's Q3 2025 financial condition and results, covering performance, asset quality, liquidity, capital, and risks Overview This section provides an overview of Triumph Financial, Inc.'s business, its primary services, and key consolidated financial metrics as of September 30, 2025 - Triumph Financial, Inc. is a financial holding company offering banking, factoring, payments, and intelligence services, primarily through TBK Bank, SSB. - As of September 30, 2025, consolidated total assets were $6.357 billion, total loans held for investment were $4.987 billion, total deposits were $4.955 billion, and total stockholders' equity was $919.3 million. - The business is primarily focused on providing financial services to the for-hire trucking ecosystem in the United States, including Brokers, Shippers, Factors, and Carriers[234][239] Segment Revenue Contribution (Nine Months Ended September 30, 2025): | Segment | % of Total Segment Revenue | | :----------- | -------------------------: | | Banking | 58% | | Factoring | 30% | | Payments | 11% | | Intelligence | 1% | Third Quarter 2025 Overview This section provides a high-level overview of Triumph Financial's key financial performance and operational highlights for the third quarter of 2025 Key Financial Metrics (Three Months Ended September 30, 2025 vs. 2024): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | -----------: | -----------: | ---------: | ---------: | | Net income available to common stockholders | $0.9 million | $4.5 million | $(3.6) million | -80.0% | | Diluted EPS | $0.04 | $0.19 | $(0.15) | -78.9% | | Return on average common equity | 0.41% | 2.14% | -1.73% | -80.8% | | Return on average assets | 0.11% | 0.36% | -0.25% | -69.4% | Balance Sheet Growth (September 30, 2025 vs. December 31, 2024): | Metric | Sep 30, 2025 | Dec 31, 2024 | Change ($) | Change (%) | | :-------------------------- | -----------: | -----------: | ---------: | ---------: | | Total Assets | $6.357 billion | $5.949 billion | $408 million | 6.86% | | Gross Loans Held for Investment | $4.987 billion | $4.547 billion | $440 million | 9.68% | | Total Deposits | $4.955 billion | $4.821 billion | $134 million | 2.78% | | Total Stockholders' Equity | $919.3 million | $890.9 million | $28.4 million | 3.19% | - Factoring segment purchased $2.998 billion in invoices (average size $1,727) in Q3 2025, up from $2.610 billion (average size $1,763) in Q3 2024. - Payments segment processed 8.8 million invoices totaling $10.662 billion in Q3 2025, up from 6.3 million invoices totaling $7.091 billion in Q3 2024[248][249] 2025 Items of Note This section highlights significant events and strategic initiatives for Triumph Financial in 2025, including restructuring, acquisitions, and a major litigation settlement - Restructuring Activities: In August 2025, the Company reduced its workforce by approximately 5% and implemented other cost-saving initiatives. This resulted in $3.1 million in severance expenses and $1.3 million in contract amendment fees in Q3 2025. - Greenscreens.ai Acquisition: On May 8, 2025, Triumph acquired Greenscreens AI, Inc. for $139.1 million in cash and $12.7 million in common stock, enhancing its logistics pricing intelligence capabilities[250][251][252] - The USPS Settlement on June 30, 2025, resulted in a $47.5 million payment to resolve litigation, including $19.4 million to relieve the Misdirected Payments Receivable. This settlement had an $11.5 million positive impact on pretax net income for the nine months ended September 30, 2025[254][255][259] 2024 Items of Note This section outlines notable events for Triumph Financial in 2024, including the acquisition of Isometric Technologies Inc. and the purchase of its new headquarters building - Isometric Technologies Inc. Acquisition: On December 1, 2024, Triumph acquired Isometric Technologies Inc. for $10.0 million in cash, adding service and performance scoring for the trucking industry. - Triumph Financial Headquarters Purchase: On March 20, 2024, the Company purchased a building in Dallas, TX, for $54.6 million to serve as its future headquarters[256][258] Trucking transportation and factoring This section discusses the impact of freight market fluctuations on Triumph Financial's Factoring and Payments segments, including rates, volumes, and strategic responses - The Factoring and Payments segments are significantly impacted by fluctuations in freight markets, particularly brokered freight, which has seen falling volumes and excess capacity in 2023-2025. - Average rates per mile have decreased to 2019 levels, impacting invoice prices and equipment values, leading to increased equipment finance delinquencies and loan modifications. - Despite headwinds, the Company maintains sufficient capital access and is focusing on technology initiatives, including AI, to enhance efficiency and profitability in its factoring segment[260][261] Financial Highlights This section presents key financial highlights for Triumph Financial, including income statement, balance sheet, and asset quality data for recent periods Income Statement Data (Nine Months Ended September 30, 2025 vs. 2024): | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Net interest income | $260,894 | $262,649 | $(1,755) | -0.67% | | Credit loss expense | $4,912 | $14,314 | $(9,402) | -65.69% | | Noninterest income | $58,022 | $49,663 | $8,359 | 16.83% | | Noninterest expense | $304,727 | $283,360 | $21,367 | 7.54% | | Net income | $6,145 | $12,252 | $(6,107) | -49.84% | | Diluted EPS | $0.16 | $0.42 | $(0.26) | -61.90% | Balance Sheet Data (September 30, 2025 vs. December 31, 2024): | Metric (in thousands) | Sep 30, 2025 | Dec 31, 2024 | | :-------------------- | -----------: | -----------: | | Total assets | $6,357,149 | $5,948,975 | | Loans held for investment, net | $4,953,373 | $4,506,246 | | Total deposits | $4,955,246 | $4,820,820 | | Total stockholders' equity | $919,333 | $890,919 | Asset Quality Ratios (September 30, 2025 vs. December 31, 2024): | Metric | Sep 30, 2025 | Dec 31, 2024 | | :-------------------------- | -----------: | -----------: | | Past due to total loans | 1.91% | 3.27% | | Nonperforming loans to total loans | 1.36% | 2.49% | | Nonperforming assets to total assets | 1.10% | 2.02% | | ACL to total loans | 0.67% | 0.90% | Results of Operations - Three months ended September 30, 2025 compared with three months ended September 30, 2024 This section analyzes Triumph Financial's operating results for Q3 2025 compared to Q3 2024, focusing on net income, EPS, net interest income, and expenses Net Income & EPS (Three Months Ended September 30): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----- | -----------: | -----------: | ---------: | ---------: | | Net income | $1,708,000 | $5,347,000 | $(3,639,000) | -68.1% | | Diluted EPS | $0.04 | $0.19 | $(0.15) | -78.9% | Net Interest Income (Three Months Ended September 30): | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Net interest income | $87,833 | $88,699 | $(866) | -1.0% | | Net interest margin | 6.29% | 6.81% | -52 bps | -7.6% | | Yield on loans | 8.17% | 8.85% | -68 bps | -7.7% | | Cost of interest bearing liabilities | 2.59% | 2.65% | -6 bps | -2.3% | - Credit Loss Expense: Total credit loss expense remained relatively flat at $4.284 million (2025) vs. $4.263 million (2024). Credit loss expense on loans decreased by $0.9 million due to decreased required specific reserves, partially offset by increased net charge-offs ($9.4 million in 2025 vs. $3.5 million in 2024). - Noninterest Income: Increased by $4.0 million (22.6%) to $21.448 million, driven by a $5.2 million increase in fee income (Payments and Intelligence segments) and partially offset by a $0.9 million decrease in other noninterest income. - Noninterest Expense: Increased by $8.1 million (8.4%) to $103.714 million, primarily due to a $4.7 million increase in salaries and employee benefits (including $3.1 million severance from restructuring) and a $1.4 million increase in software amortization. Professional fees increased by $0.5 million, including $1.3 million from cost-saving initiatives[283][286][288][289][290][291][292][293][294][301] Results of Operations - Nine months ended September 30, 2025 compared with nine months ended September 30, 2024 This section analyzes Triumph Financial's operating results for the nine months ended September 30, 2025, compared to the same period in 2024, covering key income and expense drivers Net Income & EPS (Nine Months Ended September 30): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----- | -----------: | -----------: | ---------: | ---------: | | Net income | $6,145,000 | $12,252,000 | $(6,107,000) | -49.8% | | Diluted EPS | $0.16 | $0.42 | $(0.26) | -61.9% | Net Interest Income (Nine Months Ended September 30): | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Net interest income | $260,894 | $262,649 | $(1,755) | -0.7% | | Net interest margin | 6.40% | 7.05% | -65 bps | -9.2% | | Yield on loans | 8.31% | 9.01% | -70 bps | -7.8% | | Cost of interest bearing liabilities | 2.53% | 2.56% | -3 bps | -1.2% | - Credit Loss Expense: Decreased by $9.4 million (65.7%) to $4.912 million, primarily due to a $9.6 million decrease in required specific reserves and lower credit loss expense from projected loss drivers. Net charge-offs (excluding the $10.8 million PCD loan charge-off) increased to $12.2 million from $8.1 million, including a $3.8 million recovery from the USPS settlement. - Noninterest Income: Increased by $8.4 million (16.8%) to $58.022 million, driven by a $9.8 million increase in fee income (Payments and Intelligence segments), partially offset by decreases in insurance commissions and other noninterest income. - Noninterest Expense: Increased by $21.4 million (7.5%) to $304.727 million, mainly due to a $13.2 million increase in salaries and employee benefits (including $3.1 million severance), a $3.7 million increase in software amortization, and a $7.3 million increase in other noninterest expense (including a $2.0 million litigation settlement and $2.4 million lease termination payments). Professional fees decreased by $1.9 million due to a $6.5 million recovery from the USPS Settlement, offset by $4.0 million in Greenscreens acquisition costs[356][359][361][362][364][366][367][371] Financial Condition This section analyzes Triumph Financial's financial condition, including asset growth, loan portfolio changes, deposit trends, and other borrowings Total Assets (September 30, 2025 vs. December 31, 2024): | Metric (in thousands) | Sep 30, 2025 | Dec 31, 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Total Assets | $6,357,149 | $5,948,975 | $408,174 | 6.86% | | Loans held for investment | $4,986,922 | $4,546,960 | $439,962 | 9.68% | | Securities | $384,423 | $387,882 | $(3,459) | -0.89% | Nonperforming Assets (September 30, 2025 vs. December 31, 2024): | Metric (in thousands) | Sep 30, 2025 | Dec 31, 2024 | Change ($) | Change (%) | | :-------------------- | -----------: | -----------: | ---------: | ---------: | | Total nonperforming assets | $70,195 | $120,272 | $(50,077) | -41.64% | | Nonperforming loans to total loans held for investment | 1.36% | 2.49% | -1.13% | -45.38% | - Loan Portfolio: Increased by $439.96 million (9.68%) to $4.987 billion, driven by growth in factored receivables, mortgage warehouse, and 1-4 family residential loans. Commercial real estate and farmland loans decreased. - Allowance for Credit Losses (ACL): Decreased by $7.2 million (17.6%) to $33.5 million, reflecting net charge-offs of $23.0 million and credit loss expense of $5.0 million. The ACL to total loans ratio decreased to 0.67% from 0.90%. - Deposits: Total deposits increased by $134.4 million (2.8%) to $4.955 billion, primarily due to increases in noninterest bearing demand deposits and brokered time deposits. Uninsured deposits were $1.291 billion at September 30, 2025. - Other Borrowings: FHLB advances increased to $280.0 million from $30.0 million. Subordinated notes and junior subordinated debentures remained relatively stable, with $69.8 million and $42.8 million outstanding, respectively[410][411][414][415][416][417][418][432][445][448][451][453] Off-Balance Sheet Arrangements This section describes Triumph Financial's off-balance sheet arrangements, including credit commitments and standby letters of credit, and their associated risks - The Company engages in off-balance sheet arrangements, including commitments to extend credit and standby letters of credit, to meet customer financing needs. These instruments carry credit and interest rate risk, with an allowance for credit losses of $2.518 million recorded for these exposures[141][464] Critical Accounting Policies and Estimates This section identifies Triumph Financial's critical accounting policies and estimates, emphasizing the significant judgment involved in determining the allowance for credit losses - The most critical accounting policy is the determination of the allowance for credit losses, which involves significant judgment and complexity. No material changes to critical accounting policies have occurred since December 31, 2024[465] Recently Issued Accounting Pronouncements This section refers to Note 1 for details on recently issued accounting pronouncements and their expected impact on Triumph Financial's financial statements - The Company refers to Note 1 for details on recently issued accounting pronouncements and their expected impact on consolidated financial statements[466] Forward-Looking Statements This section highlights that the document contains forward-looking statements subject to various risks and uncertainties, which may cause actual results to differ materially - The document contains forward-looking statements subject to risks and uncertainties, including business and economic conditions, credit risk, integration of acquired businesses, interest rate risk, and regulatory changes. Actual results may differ materially from expectations[467][468] Item 3. Quantitative and Qualitative Disclosures About Market Risks This section details the Company's exposure to market risks, primarily interest rate volatility, and its asset/liability management strategies Asset/Liability Management and Interest Rate Risk This section describes how Triumph Financial manages interest rate risk through simulation models and economic value of equity analysis to optimize net income and maintain liquidity - The primary market risk is interest rate volatility, impacting income, expense, and fair value of assets/liabilities. - The Company uses an interest rate risk simulation model and economic value of equity analysis to test sensitivity to interest rate changes, with oversight from the subsidiary bank's board of directors and senior executive management. - Management emphasizes originating shorter-duration and variable-rate loans and acquiring noninterest or low interest-bearing non-maturity deposit accounts to mitigate negative exposure to rate increases[471][473][475][477] Simulated Change in Net Interest Income (September 30, 2025): | Rate Shift | Following 12 Months | 13-24 Months | | :---------------- | ------------------: | -----------: | | +400 basis points | 8.4% | 9.8% | | +100 basis points | 2.3% | 2.6% | | -100 basis points | (2.1%) | (2.6%) | | -400 basis points | (8.4%) | (11.4%) | Economic Value of Equity at Risk (September 30, 2025): | Rate Shift | % Change | | :---------------- | -------: | | +400 basis points | 8.3% | | +100 basis points | 2.0% | | -100 basis points | (4.8%) | | -400 basis points | (20.4%) | Item 4. Controls and Procedures Management confirms effective disclosure controls and procedures as of September 30, 2025, with no material changes in internal control Disclosure Controls and Procedures The Company's CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2025 - The Company's CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2025, providing reasonable assurance of achieving control objectives[479] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2025[480] PART II - OTHER INFORMATION Item 1. Legal Proceedings This section discloses ongoing legal matters, specifically a Chapter 7 bankruptcy filing by Tricolor Holdings, LLC, impacting a $60.5 million loan facility - TBK Bank, SSB is the agent bank for a $60.5 million floorplan loan facility for Tricolor Holdings, LLC, holding $22.5 million. - Tricolor filed for Chapter 7 bankruptcy on September 10, 2025, with public reports alleging fraud. - The Bank believes its collateral position adequately secures the loan, but potential disputes over vehicle inventory and additional claims could materially impact the Company's financial condition[483] Item 1A. Risk Factors No material changes to the Company's risk factors have occurred since the December 31, 2024 Annual Report on Form 10-K - No material changes in risk factors have occurred since the Annual Report on Form 10-K for December 31, 2024[484] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds are reported for the period - No unregistered sales of equity securities or use of proceeds to report[485] Item 3. Defaults Upon Senior Securities No applicable defaults upon senior securities are reported for the period - Not applicable; no defaults upon senior securities to report[487] Item 4. Mine Safety Disclosures No applicable mine safety disclosures are reported for the period - Not applicable; no mine safety disclosures to report[488] Item 5. Other Information This section details insider trading arrangements, specifically Rule 10b5-1(c) trading plans adopted by executive officers - Aaron P. Graft (President and CEO): Adopted a Rule 10b5-1 trading plan on August 29, 2024, to sell up to 54,000 shares by November 28, 2025. - Edward J. Schreyer (EVP and COO): Adopted a Rule 10b5-1 trading plan on March 4, 2025, to sell up to 90% of net shares from vested equity awards. This plan was terminated as of September 2, 2025, after all shares were sold. - Adam D. Nelson (EVP and General Counsel): Adopted a Rule 10b5-1 trading plan on March 12, 2025, to sell up to 10,000 shares by March 31, 2026[489][490][491] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, agreements, and certifications - Includes organizational documents (Certificate of Formation, Bylaws), a Separation Agreement, and certifications from the CEO and CFO. - Also includes Inline XBRL Instance Document and Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[494][495]