Triumph Financial, Inc.

Previous wording

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 June 30, 2025, we had consolidated total assets of $6.495 billion, total loans held for investment of $4.953 billion, total deposits of $5.186 billion and total stockholders’ equity of $912.4 million.

Current wording

We are a financial holding company headquartered in Dallas, Texas and registered under the Bank Holding Company Act, that offers a diversified line of banking, factoring, payments, and intelligence services. Our principal subsidiary is TBK Bank, SSB, a Texas state savings bank and the entity through which we offer substantially all of our products and services. Effective January, 1, 2025, we merged Triumph Financial Services LLC, the entity through which we previously conducted all of our factoring operations, with and into TBK Bank, SSB. As of September 30, 2025, we had consolidated total assets of $6.357 billion, total loans held for investment of $4.987 billion, total deposits of $4.955 billion and total stockholders’ equity of $919.3 million.

Previous wording

We have determined our reportable segments are Banking, Factoring, Payments and Intelligence. For the six months ended June 30, 2025, our Banking segment generated 59% 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 1% of our total segment revenue.

Current wording

We have determined our reportable segments are Banking, Factoring, Payments and Intelligence. For the nine months ended September 30, 2025, our Banking segment generated 58% of our total segment revenue (comprised of interest and noninterest income), our Factoring segment generated 30% of our total segment revenue, our Payments segment generated 11% of our total segment revenue, and our Intelligence segment generated 1% of our total segment revenue.

Previous wording

Net income available to common stockholders for the three months ended June 30, 2025 was $3.6 million, or $0.15 per diluted share, compared to net income available to common stockholders for the three months ended June 30, 2024 of $1.9 million, or $0.08 per diluted share. For the three months ended June 30, 2025, our return on average common equity was 1.68% and our return on average assets was 0.28%.

Current wording

Net income available to common stockholders for the three months ended September 30, 2025 was $0.9 million, or $0.04 per diluted share, compared to net income available to common stockholders for the three months ended September 30, 2024 of $4.5 million, or $0.19 per diluted share. For the three months ended September 30, 2025, our return on average common equity was 0.41% and our return on average assets was 0.11%.

Previous wording

Net income available to common stockholders for the six months ended June 30, 2025 was $2.8 million, or $0.12 per diluted share, compared to net income available to common stockholders for the six months ended June 30, 2024 of $5.3 million, or $0.22 per diluted share. For the six months ended June 30, 2025, our return on average common equity was 0.66% and our return on average assets was 0.14%.

Current wording

Net income available to common stockholders for the nine months ended September 30, 2025 was $3.7 million, or $0.16 per diluted share, compared to net income available to common stockholders for the nine months ended September 30, 2024 of $9.8 million, or $0.42 per diluted share. For the nine months ended September 30, 2025, our return on average common equity was 0.58% and our return on average assets was 0.13%.

Previous wording

At June 30, 2025, we had total assets of $6.495 billion, including gross loans held for investment of $4.953 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 $406.2 million during the six months ended June 30, 2025. Our Banking loans, which constitute 72% of our total loan portfolio at June 30, 2025, increased from $3.340 billion in aggregate as of December 31, 2024 to $3.549 billion as of June 30, 2025, an increase of 6.3%. Our Factoring factored receivables, which constitute 24% of our total loan portfolio at June 30, 2025, increased from $1.033 billion in aggregate as of December 31, 2024 to $1.175 billion as of June 30, 2025, an increase of 13.7%. Our Payments factored receivables, which constitute 5% of our total loan portfolio at June 30, 2025, increased from $171.7 million in aggregate as of December 31, 2024 to $226.5 million as of June 30, 2025, an increase of 32.0%.

Current wording

At September 30, 2025, we had total assets of $6.357 billion, including gross loans held for investment of $4.987 billion, compared to $5.949 billion of total assets and $4.547 billion of gross loans held for investment at December 31, 2024. Total loans held for investment increased $440.0 million during the nine months ended September 30, 2025. Our Banking loans, which constitute 71% of our total loan portfolio at September 30, 2025, increased from $3.340 billion in aggregate as of December 31, 2024 to $3.559 billion as of September 30, 2025, an increase of 6.6%. Our Factoring factored receivables, which constitute 24% of our total loan portfolio at September 30, 2025, increased from $1.033 billion in aggregate as of December 31, 2024 to $1.194 billion as of September 30, 2025, an increase of 15.6%. Our Payments factored receivables, which constitute 5% of our total loan portfolio at September 30, 2025, increased from $171.7 million in aggregate as of December 31, 2024 to $230.8 million as of September 30, 2025, an increase of 34.4%.

Previous wording

At June 30, 2025, we had total liabilities of $5.582 billion, including total deposits of $5.186 billion, compared to $5.058 billion of total liabilities and $4.821 billion of total deposits at December 31, 2024. Deposits increased $365.3 million during the six months ended June 30, 2025.

Current wording

At September 30, 2025, we had total liabilities of $5.438 billion, including total deposits of $4.955 billion, compared to $5.058 billion of total liabilities and $4.821 billion of total deposits at December 31, 2024. Deposits increased $134.4 million during the nine months ended September 30, 2025.

Previous wording

At June 30, 2025, we had total stockholders' equity of $912.4 million. During the six months ended June 30, 2025, total stockholders’ equity increased $21.5 million. Capital ratios remained strong with Tier 1 capital and total capital to risk weighted assets ratios of 9.98% and 11.95%, respectively, at June 30, 2025.

Current wording

At September 30, 2025, we had total stockholders' equity of $919.3 million. During the nine months ended September 30, 2025, total stockholders’ equity increased $28.4 million. Capital ratios remained strong with Tier 1 capital and total capital to risk weighted assets ratios of 10.20% and 12.09%, respectively, at September 30, 2025.

Previous wording

The total dollar value of invoices purchased by our Factoring segment during the three months ended June 30, 2025 was $2.874 billion with an average invoice size of $1,693. The average transportation invoice size for the three months ended June 30, 2025 was $1,663. This compares to invoice purchase volume of $2.542 billion with an average invoice size of $1,775 and average transportation invoice size of $1,738 during the same period a year ago.

Current wording

The total dollar value of invoices purchased by our Factoring segment during the three months ended September 30, 2025 was $2.998 billion with an average invoice size of $1,727. The average transportation invoice size for the three months ended September 30, 2025 was $1,690. This compares to invoice purchase volume of $2.610 billion with an average invoice size of $1,763 and average transportation invoice size of $1,724 during the same period a year ago.

Previous wording

Our Payments segment processed 8.5 million invoices paying Carriers a total of $10.081 billion during the three months ended June 30, 2025. This compares to processed volume of 6.1 million invoices for a total of $6.688 billion during the same period a year ago.

Current wording

Our Payments segment processed 8.8 million invoices paying Carriers a total of $10.662 billion during the three months ended September 30, 2025. This compares to processed volume of 6.3 million invoices for a total of $7.091 billion during the same period a year ago.

Previous wording

As of June 30, 2025, we carried a receivable (the “Misdirected Payments Receivable”) payable by the United States Postal Service (“USPS”) arising from accounts factored to a large carrier. The balance of such Misdirected Payments Receivable, net of customer reserves, was $19.4 million. The amounts represented by this receivable were paid by the USPS directly to such customer in contravention of notices of assignment delivered to, and previously honored by, the USPS, which amount was then not remitted back to us by such customer as required. The USPS disputed their obligation to make such payment, citing purported deficiencies in the notices delivered to them. We have been a party to litigation in the United States Court of Federal Claims against the USPS seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. On June 30, 2025, we reached an agreement with the USPS ("the USPS Settlement") whereby the USPS agreed to pay us $47.5 million to settle the litigation in the United States Court of Federal Claims and certain other related proceedings. Such settlement was entered into as part of a global settlement of the disputes related to the Misdirected Payments Receivable, other amounts we asserted were due to us from USPS for other balances owed to us as a result of their failure to honor our notices of assignment, and certain claims of the large carrier involved in this matter against the USPS for underpayment on certain transportation contracts in which we had a security interest. We received the full $47.5 million settlement proceeds on July 10, 2025. The proceeds of the USPS Settlement will be applied as follows:

Current wording

At June 30, 2025, we carried a receivable (the “Misdirected Payments Receivable”) payable by the United States Postal Service (“USPS”) arising from accounts factored to a large carrier. The balance of such Misdirected Payments Receivable, net of customer reserves, was $19.4 million. The amounts represented by this receivable were paid by the USPS directly to such customer in contravention of notices of assignment delivered to, and previously honored by, the USPS, which amount was then not remitted back to us by such customer as required. The USPS disputed their obligation to make such payment, citing purported deficiencies in the notices delivered to them. We were a party to litigation in the United States Court of Federal Claims against the USPS seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. On June 30, 2025, we reached an agreement with the USPS ("the USPS Settlement") whereby the USPS agreed to pay us $47.5 million to settle the litigation in the United States Court of Federal Claims and certain other related proceedings. Such settlement was entered into as part of a global settlement of the disputes related to the Misdirected Payments Receivable, other amounts we asserted were due to us from USPS for other balances owed to us as a result of their failure to honor our notices of assignment, and certain claims of the large carrier involved in this matter against the USPS for underpayment on certain transportation contracts in which we had a security interest. We received the full $47.5 million settlement proceeds on July 10, 2025. The proceeds of the USPS Settlement were applied as follows:

Previous wording

The USPS Settlement had a $12.4 million and $11.5 million positive impact on pretax net income for the three and six months ended June 30, 2025, respectively made up of the prior period impacts of the interest and fees, legal expense recovery, and the recovery of the previously charged-off acquired over-formula advances. The $19.4 million Misdirected Payments Receivable balance was legally discharged upon receipt of the settlement proceeds on July 10, 2025.

Current wording

The USPS Settlement had a $12.4 million and $11.5 million positive impact on pretax net income for the three months ended June 30, 2025 and nine months ended September 30, 2025, respectively made up of the prior period impacts of the interest and fees, legal expense recovery, and the recovery of the previously charged-off acquired over-formula advances. The $19.4 million Misdirected Payments Receivable balance was legally discharged upon receipt of the settlement proceeds on July 10, 2025.

Previous wording

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 half 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 June 30, 2025.

Current wording

The largest driver of changes in revenue at our Factoring segment, and to a lesser extent, our Payments segment, is fluctuation in the freight markets, particularly in brokered freight, which is priced largely off the spot market (a reflection of real-time balance of carrier supply and shipper demand in the market) and subject to variability in diesel prices. The softness in freight during 2023, 2024, and 2025 was a combination of falling volumes and excess capacity. In recent quarters, average rates per mile have decreased and returned spot rates to levels last seen in 2019. For the spot rate market, the drop was a little higher than the drop in diesel prices over the same period. Spot rates had fallen below the cost per mile to operate for many carriers. As a result, we have observed a number of small and medium-sized trucking companies either leave the market by signing on with larger carriers or electing to sell their fleets or companies and move on to other endeavors, though the pace of these exits has slowed recently. The confluence of these circumstances has resulted in persistently low invoice prices and decreased prices of new and used equipment. Such invoice prices and prices of new and used equipment remain consistently below the years leading up to 2023. This has put pressure on the revenue of our Factoring segment as well as our equipment finance borrowers, resulting in increased equipment finance delinquencies and loan modifications. Equipment finance losses have been manageable, but continued softness in the freight markets could cause the Company to experience adverse effects on its business, financial condition, results of operations and cash flows that are not possible to predict at September 30, 2025.

Previous wording

(3)Net charge-offs to average loans ratios are for the six months ended June 30, 2025 and the year ended December 31, 2024.

Current wording

(3)Net charge-offs to average loans ratios are for the nine months ended September 30, 2025 and the year ended December 31, 2024.

Previous wording

We earned net income of $4.4 million for the three months ended June 30, 2025 compared to net income of $2.7 million for the three months ended June 30, 2024, an increase of $1.7 million or 60.9%.

Current wording

We earned net income of $1.7 million for the three months ended September 30, 2025 compared to net income of $5.3 million for the three months ended September 30, 2024, a decrease of $3.6 million or 68.1%.

Previous wording

We earned net interest income of $88.7 million for the three months ended June 30, 2025 compared to $87.9 million for the three months ended June 30, 2024, an increase of $0.8 million, or 0.9%, primarily driven by the following factors.

Current wording

We earned net interest income of $87.8 million for the three months ended September 30, 2025 compared to $88.7 million for the three months ended September 30, 2024, a decrease of $0.9 million, or 1.0%, primarily driven by the following factors.

Previous wording

Interest income increased $2.2 million, or 2.0%, due to changes in average interest earning assets which increased $533.3 million, or 10.7%, including an increase in average total loans of $529.6 million, or 12.6%. The average balance of our higher yielding Factoring factored receivables increased $162.7 million, or 16.7%, and we experienced an increase in average Payments factored receivables. Average Banking loans increased $346.3 million, or 11.4% due to increases in the average balances of residential real estate, consumer, and mortgage warehouse loans. Interest income from our Banking loans is impacted by our lower yielding mortgage warehouse lending product. The average mortgage warehouse lending balance was $1.068 billion for the three months ended June 30, 2025 compared to $681.7 million for the three months ended June 30, 2024.

Current wording

Interest income increased $0.9 million, or 0.8%, due to changes in average interest earning assets which increased $358.5 million, or 6.9%, including an increase in average total loans of $664.6 million, or 15.8%. The average balance of our higher yielding Factoring factored receivables increased $143.5 million, or 14.0%, and we experienced an increase in average Payments factored receivables. Average Banking loans increased $475.6 million, or 15.8% due to increases in the average balances of construction, land development, and land, residential real estate, commercial, consumer, and mortgage warehouse loans. Interest income from our Banking loans is impacted by our lower yielding mortgage warehouse lending product. The average mortgage warehouse lending balance was $1.149 billion for the three months ended September 30, 2025 compared to $762.7 million for the three months ended September 30, 2024.

Previous wording

Interest expense increased $1.4 million, or 7.5%, primarily driven by higher average interest-bearing liabilities which increased in total period over period, including average total interest bearing deposits which increased $135.4 million, or 5.1%. The increase in interest expense was partially offset by decreased rates on our interest bearing liabilities. Average noninterest bearing demand deposits grew $334.5 million.

Current wording

Interest expense increased $1.7 million, or 8.9%, primarily driven by higher average interest-bearing liabilities which increased in total period over period, including average total interest bearing deposits which increased $408.6 million, or 16.1%. The increase in interest expense was partially offset by decreased rates on our interest bearing liabilities. Average noninterest bearing demand deposits grew $197.8 million.

Previous wording

Net interest margin decreased to 6.43% for the three months ended June 30, 2025 from 7.07% for the three months ended June 30, 2024, a decrease of 64 basis points or 9.1%.

Current wording

Net interest margin decreased to 6.29% for the three months ended September 30, 2025 from 6.81% for the three months ended September 30, 2024, a decrease of 52 basis points or 7.6%.

Previous wording

The decrease in our net interest margin was most impacted by a decrease in our yield on interest earning assets of 69 basis points to 7.92% for the three months ended June 30, 2025. This decrease was primarily driven by lower yields on loans which decreased 69 basis points to 8.41% for the period. Yield on our Banking loans decreased 77 basis points period over period driving much of the decrease in the yield on our overall loan portfolio. Our yield on Factoring and Payments factored receivables also decreased period over period. That said, our higher yielding Factoring and Payments factored receivables as a percentage of the total loan portfolio increased period over period which had an upward impact on our overall loan yield. Non-loan yields were lower across the board period over period.

Current wording

The decrease in our net interest margin was most impacted by a decrease in our yield on interest earning assets of 49 basis points to 7.81% for the three months ended September 30, 2025. This decrease was primarily driven by lower yields on loans which decreased 68 basis points to 8.17% for the period. Yield on our Banking loans decreased 58 basis points period over period driving much of the decrease in the yield on our overall loan portfolio. Our yield on Factoring and Payments factored receivables also decreased period over period. Additionally, our higher yielding Factoring factored receivables as a percentage of the total loan portfolio decreased period over period which had an downward impact on our overall loan yield. Non-loan yields were lower across the board period over period.

Previous wording

The decrease in our net interest margin was also impacted by a decrease in our average cost of interest bearing liabilities of 9 basis points. This decrease in average cost was caused by decreased rates across our interest bearing liabilities period over period.

Current wording

The decrease in our net interest margin was also impacted by a decrease in our average cost of interest bearing liabilities of 6 basis points. This decrease in average cost was caused by decreased rates across our interest bearing liabilities period over period.

Previous wording

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 $781.3 million for the three months ended June 30, 2025. These deposits are noninterest bearing deposits on our balance sheet. Despite their classification, many of these deposits are not truly free of cost as our clients are compensated for these balances in the form of an earnings interest rebate rather than deposit interest. As a result, such noninterest bearing deposits decrease our loan yield rather than increase our deposit rates. It is important to note that our net interest margin is not affected by this arrangement. During the three months ended June 30, 2025, these deposits decreased our overall yield on loans by 58 bps and our overall cost of deposits and cost of funds would have been 56 bps and 51 bps higher, respectively.

Current wording

Our mortgage warehouse business has nearly self-funded for several quarters due to the servicing deposits of its customers. The average balance of such deposits was $838.4 million for the three months ended September 30, 2025. These deposits are noninterest bearing deposits on our balance sheet. Despite their classification, many of these deposits are not truly free of cost as our clients are compensated for these balances in the form of an earnings interest rebate rather than deposit interest. As a result, such noninterest bearing deposits decrease our loan yield rather than increase our deposit rates. It is important to note that our net interest margin is not affected by this arrangement. During the three months ended September 30, 2025, these deposits decreased our overall yield on loans by 63 bps and our overall cost of deposits and cost of funds would have been 60 bps and 56 bps higher, respectively.

Previous wording

The ACL on held to maturity ("HTM") securities is estimated at each measurement date on a collective basis by major security type. At June 30, 2025 and December 31, 2024, the Company’s held to maturity securities consisted of investments in the subordinated notes of collateralized loan obligation (“CLO”) funds. Expected credit losses for these securities are estimated using a discounted cash flow methodology which considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. At June 30, 2025 and March 31, 2025, the Company carried $3.2 million and $3.2 million, respectively, of these HTM securities at amortized cost. The required ACL on these balances was $1.4 million at June 30, 2025 and $1.5 million at March 31, 2025. We recognized a benefit to credit loss expense of $0.1 million during the current quarter. Credit loss expense during the three months ended June 30, 2024 was $27 thousand. None of the overcollateralization triggers tied to the CLO securities were tripped as of June 30, 2025. Ultimately, the realized cash flows on CLO securities such as these will be driven by a variety of factors, including credit performance of the underlying loan portfolio, adjustments to the portfolio by the asset manager, and the timing of a potential call.

Current wording

The ACL on held to maturity ("HTM") securities is estimated at each measurement date on a collective basis by major security type. At September 30, 2025 and December 31, 2024, the Company’s held to maturity securities consisted of investments in the subordinated notes of collateralized loan obligation (“CLO”) funds. Expected credit losses for these securities are estimated using a discounted cash flow methodology which considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. At September 30, 2025 and June 30, 2025, the Company carried $3.2 million and $3.2 million, respectively, of these HTM securities at amortized cost. The required ACL on these balances was $1.4 million at September 30, 2025 and $1.4 million at June 30, 2025. We recognized no credit loss expense during the current quarter. Credit loss expense during the three months ended September 30, 2024 was $221 thousand. None of the overcollateralization triggers tied to the CLO securities were tripped as of September 30, 2025. Ultimately, the realized cash flows on CLO securities such as these will be driven by a variety of factors, including credit performance of the underlying loan portfolio, adjustments to the portfolio by the asset manager, and the timing of a potential call.

Previous wording

Our ACL on loans was $38.7 million as of June 30, 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.

Current wording

Our ACL on loans was $33.5 million as of September 30, 2025, compared to $40.7 million as of December 31, 2024, representing an ACL to total loans ratio of 0.67% and 0.90%, respectively.

Previous wording

Our credit loss expense on loans decreased $4.6 million, or 112.7%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Current wording

Our credit loss expense on loans decreased $0.9 million, or 17.9%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Previous wording

The decrease in credit loss expense was partially offset by changes in required specific reserves. Such specific reserves increased $1.5 million during the three months ended June 30, 2025 compared to an insignificant increase during the same period a year ago. Further, changes in volume and mix of the loan portfolio resulted in credit loss expense of $1.2 million during the three months ended June 30, 2025 compared to $0.2 million of credit loss expense during the same period a year ago.

Current wording

The decrease in credit loss expense was partially offset by increased net charge-off activity. During the three months ended September 30, 2025, we had net charge-offs of $9.4 million compared to net charge-offs of $3.5 million during the same period a year ago. Further, changes in volume and mix of the loan portfolio resulted in credit loss expense of $0.2 million during the three months ended September 30, 2025 compared to a benefit to credit loss expense of $1.1 million during the same period a year ago.

Previous wording

Credit loss expense for off balance sheet credit exposures decreased$0.1 million, primarily due to changes to outstanding commitments to fund and changes to assumed loss rates period over period.

Current wording

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

Previous wording

Noninterest income increased $2.2 million, or 12.9%. Changes in selected components of noninterest income in the above table are discussed below.

Current wording

Noninterest income increased $4.0 million, or 22.6%. Changes in selected components of noninterest income in the above table are discussed below.

Previous wording

•Fee income. Fee income increased $4.2 million due to a $1.8 million increase in fee income from our Payments segment, a $1.6 million increase in fee income from our Intelligence segment mostly driven by the acquisition of Greenscreens during the three months ended June 30, 2025, and a $0.7 million increase in fee income from insurance services period over period.

Current wording

•Fee income. Fee income increased $5.2 million due to a $2.2 million increase in fee income from our Payments segment, a $2.2 million increase in fee income from our Intelligence segment mostly driven by the acquisition of Greenscreens during the three months ended September 30, 2025, and a $0.6 million increase in fee income from insurance services period over period.

Previous wording

•Other. Other noninterest income decreased $1.6 million due to a $0.5 million gain on sale of equity securities during the three months ended June 30, 2024 that did not repeat during the current period and a $1.4 million decrease in rental income generated by the property purchased by the Company during late March of 2024 period over period. These decreases were partially offset by a $0.4 million increase in bank owned life insurance income period over period.

Current wording

•Other. Other noninterest income decreased $0.9 million due to a $0.8 million decrease in rental income generated by the property purchased by the Company during late March of 2024 period over period. Additionally, the Company experienced an unrealized loss on the market value of its revenue share asset of $0.3 million during the three months ended September 30, 2025 compared to a $0.4 million gain during the same period a year ago. These decreases were partially offset by a $0.4 million increase in bank owned life insurance income period over period.

Previous wording

Noninterest expense increased $3.5 million, or 3.6%. Details of the more significant changes in the various components of noninterest expense are further discussed below.

Current wording

Noninterest expense increased $8.1 million, or 8.4%. Details of the more significant changes in the various components of noninterest expense are further discussed below.

Previous wording

•Salaries and Employee Benefits. Salaries and employee benefits expenses increased $3.9 million, or 6.9%. Employee salaries and payroll taxes increased $2.0 million and $0.1 million, respectively. Our average full-time equivalent employees were 1,576.0 and 1,571.0 for the three months ended June 30, 2025 and 2024, respectively. Temporary labor expense decreased $0.5 million, bonus expense increased $0.7 million and commissions expense increased $0.7 million period over period. Additionally, employee benefits expense such as 401(k) benefits match, employee insurance and stock based compensation decreased $0.1 million.

Current wording

•Salaries and Employee Benefits. Salaries and employee benefits expenses increased $4.7 million, or 8.6%. Employee salaries and payroll taxes increased $4.4 million and $0.2 million, respectively. Included in employee salaries for the three months ended September 30, 2025 was $3.1 million of severance expense resulting from our aforementioned restructuring activities. Our average full-time equivalent employees were 1,504.0 and 1,542.3 for the three months ended September 30, 2025 and 2024, respectively. Temporary labor expense was relatively flat, bonus expense decreased $0.5 million and commissions expense increased $0.4 million period over period. Additionally, employee benefits expense such as 401(k) benefits match, employee insurance and stock based compensation increased $0.2 million.

Previous wording

•Software Amortization. Software amortization expense increased $1.5 million, or 111.1%, primarily due to additional software assets coming on line during late 2024 and early 2025.

Current wording

•Software Amortization. Software amortization expense increased $1.4 million, or 93.3%, primarily due to additional software assets coming on line during late 2024 and early 2025.

Previous wording

•Other. Other noninterest expense includes loan-related expenses, training and recruiting, postage, insurance, and subscription services. Other noninterest expense increased $4.7 million, or 84.9% primarily due to a $2.0 million settlement of litigation (unrelated to the USPS Settlement) during the three months ended June 30, 2025, $1.8 million of current period lease termination payments related to the building we acquired during March 2024, and an increase of $0.7 million in loan-related expenses period over period. There were no other significant variances in other noninterest expense period over period.

Current wording

•Other. Other noninterest expense includes loan-related expenses, training and recruiting, postage, insurance, and subscription services. Other noninterest expense increased $1.9 million, or 32.5% primarily due to a $0.9 million increase in loan related expenses.

Previous wording

Our Banking segment’s operating income decreased $3.9 million, or 12.9%.

Current wording

Our Banking segment’s operating income decreased $2.0 million, or 6.9%.

Previous wording

Interest income decreased $2.0 million, or 3.1%, 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 11.4% from $3.036 billion for the three months ended June 30, 2024 to $3.382 billion for the three months ended June 30, 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.

Current wording

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.

Previous wording

Interest expense increased $2.1 million, or 12.6%, primarily driven by higher average interest-bearing liabilities which increased in total period over period, including average total interest bearing deposits which increased $135.4 million, or 5.1%. The increase in interest expense was partially offset by decreased rates on our interest bearing liabilities. Further, our Banking segment experienced an increased usage of higher-priced brokered time deposits period over period.

Current wording

Interest expense increased $2.4 million, or 14.2%, primarily driven by higher average interest-bearing liabilities which increased in total period over period, including average total interest bearing deposits which increased $408.6 million, or 16.1%. The increase in interest expense was partially offset by decreased rates on our interest bearing liabilities. Further, our Banking segment experienced an increased usage of higher-priced brokered time deposits period over period.

Previous wording

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 $2.3 million for the three months ended June 30, 2025 compared to credit loss expense on loans of $1.9 million for the three months ended June 30, 2024. The increase in credit loss expense was the result of increased specific reserves and an increase driven by changes in the volume and mix of our Banking segment's loan portfolio period over period. Such increases were partially offset by 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 a decrease in net charge-offs period over period.

Current wording

Credit loss expense at our Banking segment is made up of credit loss expense related to loans and credit loss expense related to off balance sheet commitments to lend. Credit loss expense related to loans was $1.9 million for the three months ended September 30, 2025 compared to credit loss expense on loans of $4.0 million for the three months ended September 30, 2024. The decrease in credit loss expense was the result of decreased required specific reserves at our Banking segment and a decrease driven by changes to the projected loss drivers and prepayment speeds that the Company forecasted over the reasonable and supportable forecast periods. Such decreases were partially offset by an increase driven by changes in the volume and mix of our Banking segment's loan portfolio period over period and an increase in net charge-offs period over period.

Previous wording

Credit loss expense for off balance sheet credit exposures decreased $0.2 million, from $0.1 million of credit loss expense for the three months ended June 30, 2024 to a benefit of $0.1 million for the three months ended June 30, 2025, primarily due to changes to outstanding commitments to fund and changes to assumed loss rates period over period.

Current wording

Credit loss expense for off balance sheet credit exposures increased $0.3 million, from a benefit of $0.3 million of credit loss expense for the three months ended September 30, 2024 to an insignificant amount for the three months ended September 30, 2025, primarily due to changes to outstanding commitments to fund and changes to assumed loss rates period over period.

Previous wording

Noninterest income at our Banking segment increased period over period due to a $0.8 million increase in fee income and a $0.4 million increase in bank owned life insurance income period over period. These increases were partially offset by a $0.5 million decrease in gain on sale of equity securities. There were no other significant changes in the components of noninterest income at our Banking segment period over period.

Current wording

Noninterest income at our Banking segment increased period over period due to a $0.6 million increase in fee income and a $0.4 million increase in bank owned life insurance income period over period.

Previous wording

Noninterest expense at our Banking segment decreased period over period the details of which are illustrated in the table above.

Current wording

Noninterest expense at our Banking segment decreased period over period the details of which are illustrated in the table above. For the three months ended September 30, 2025, salaries and benefits expense included $0.5 million of expense resulting from our aforementioned restructuring activities.